Oracle to Recreate TikTok’s Algorithm in the US

19:46And that's really shifted. And you've seen growth equity perform extremely well. And that's day-to-day keeps going higher. So you have the Russell 1000 growth index is up, I think, over 17 % right now year to date. And of late with the news and after earnings, growth is clearly where investors want to be. They're comfortable taking risk right now.

20:10Caroline Hyde:Apple is up 4 % in this session. And the reason that that's notable is that it actually, believe it or not, most of the way through September, takes it into positive territory for 2025. We talked a lot in the middle of the year about the contribution of the MAG7 names to the market overall. But as a moment in time to do that at this part of the year, what do you make of it? Yeah, it's impressive, right? You mentioned Apple. I mean, that stock not long ago was really, you know, investors were checked out. Analysts were negative. People were questioning Apple what they were doing. And now, as you said, it's positive on the year, just an incredible move.

20:50And the Mag 7, even Tesla, a name that is still down for the year, but it's had a very big move here the last several weeks. And so the Mag 7 is clearly leading the markets right now. You're seeing that day after day. Eric, should you stay committed to that then? Just the trend has been relentlessly higher since April, but the valuation story just gets harder and harder to swallow. I agree. As a financial advisor, and I have lots of positions in these names, it is concerning because the valuations are just so high. And you ask, can this momentum continue? Are investors going to continue to buy these names?

21:28And yeah, I mean, you don't see any signs it's going to weaken. The trends are so powerfully on the upside. So I think you hold them. But clearly, you know, new money going in, I would be cautious because these valuations are so high. And so you perhaps diversify, you don't re-up your bets if they've been winning of late. But is earnings going to be the tell? Is it going to be geopolitics that does the tell? What ultimately makes us question how valuable some of these companies are? Yeah, we'll see. I mean, right now, earnings after the second quarter certainly are leading these names. And some of the big announcements, right, with Oracle, which you guys have been talking about all day, clearly tremendous momentum with the announcements they've made in AI.

22:11And so I do think it's earnings that's going to lead them higher. As for investors, yeah, I think you hold your positions, but you look and see how overweight or how large a position do I have in these names? And are you comfortable having this bigger risk position in your portfolio?

22:31Caroline Hyde:In the context of corporate earnings in tech, you know, the signal from certain names is that kind of soft data set or hard data set even that the people are looking for. I'm putting you on the spot, but we get Micron in the next 36 hours. You know, they might tell us something big picture about the direction of travel for AI infrastructure. Is that still like the watch item for a lot of desks? Well, I think the broader, the whole sector of semiconductors, which Micron is in, overall has performed well. You have seen certain names get hit, but overall, the group, I track the SMH index, has done very well.

23:11And so, yeah, Micron is certainly going to be important. And I know there were some positive analyst calls, I want to say today, on Micron. So, yeah, that's a big name. And that could fuel the market to go higher if they have a good result.

23:23Caroline Hyde:Well, so in the course of this conversation, we've said how remarkable this is, the timing of it, the sentiment in the market. give us the Eric Bailey prediction for what happens in the balance of 2025. You know, I've been calling for a little bit of a pullback and I've been wrong. I expected that at these valuations, we would see some kind of correction. You know, since that April drop, we have just been on a chair. So I do expect the markets to get bumpier, but I don't see it being a long-term trend. I think any correction, buyers will step in and we're going to continue on this run. It's going to take a lot to get this market to get negative.

24:07Eric Bailey from Stewart Partners, appreciate your time today and the push forward.

24:18Caroline Hyde:Welcome back to Bloomberg Tech. We're thinking very much about the news story on$100 ,000 H1B application fees. And in the markets, I'm looking at Infosys. These are the US-listed shares of Infosys, the Indian technology company, up modestly in this Monday session, but a big drop Friday when Bloomberg first reported that$100 ,000 figure. There's a lot of emphasis on the IT and outsourcing names out there. There was big downward pressure in Indian listed technology names overnight. There's also a big scramble for American technology companies to understand how this impacts their ability to hire and what it means for existing H-1B visa holders.

25:03Caroline Hyde:For more on the state of H-1B visas and immigration in the U.S., Hiba Anva, Ericsson Immigration Group partner, joins us now. The confusion was when this first was confirmed Friday, there wasn't clarity on whether it applied to new applicants to H-1B or existing as well. Then over the weekend, the White House clarified that it was just new applicants. But Hiba, could we just start by you reflecting on your weekend, the discussions you've had with clients in the technology sector and how you've managed this process? Certainly. So you're absolutely right. Initially, there was not clarification as to whether or not the$100 ,000 fee would apply to existing H-1B visa holders or new applicants.

25:45There was also confusion about whether or not this was a one-time fee versus a continuous annual fee. And what essentially happened for the first 24 hours following the proclamation was pretty close to chaos. We had several clients who are very well-known tech companies who either contacted H-1B employees who happened to be outside of the United States at the time the proclamation came out, asking them to try their best to come back before the $100 ,000 fee took effect. And then also we had a lot of companies, not just the companies that we work with, but very well-known companies in the market, tell their employees to wait before engaging in any international travel until we know more.

26:30There was also instances of international flights that were getting ready to take off where several passengers requested to deplane specifically because they wanted to avoid their companies being charged$100 ,000 fee if they attempted to reenter after international trip. So like I said, the first 24 hours were extremely confusing and we did the best that we could to provide the guidance that the companies need in order to communicate to their employees with what very little we knew.

27:00Caroline Hyde:Hiba,$100 ,000 is the fee. From this point on, what is the strategy for America's biggest technology companies and also smaller startups? Do you think that it's a manageable fee? And what is the kind of process from here? Do they just slow down hiring in the H-1B category? agree. A$100 ,000 fee for an H-1B visa petition is not manageable at all for startups, for small businesses, even for mid-sized businesses. I think that this is going to make it extremely difficult, if not nearly impossible, for startups, small businesses, or mid-sized businesses to hire the talent that they need in order to be able to compete on a global scale.

27:44For larger tech companies that have more resources. I think that the ability to manage a fee of this amount is not going to be as difficult as it is for startups. But I want everyone to remember that a lot of these extremely successful international companies were once themselves startups. And so any policy that makes it harder for American startups or small businesses to innovate is going to impact our competitiveness down the line. What's been extraordinary for many has been just seeing where the outsized impact is had, who it's had upon. And in particular, it's people coming from India, it's people coming from China, Hiba.

28:22The argument coming from the administration is that the H-1B visa process wasn't being used as it should be. Have you got any evidence of that? I have no evidence of that. I think that there are quite a few checks and balances built into the H-1B process as it stands today. And that's actually inclusive of several levels of scrutiny as well as extensive background checks. And there is prima facie evidence, basically, in other words, preliminary evidence that has to be submitted along with the initial application for an H-1B visa in order for that application to be successful in the first place.

28:58And so I haven't seen any evidence of misuse. I think that it's a really critical tool for our companies, both tech and in various other industries, in order for them to stay competitive. I also think it's important to point out that people normally associate the H-1B visa with tech companies, which is very true. But there's a variety of different industries that rely on the H-1B visa, including research institutions, universities and health care. And so this has the potential to really impact a lot of different American institutions, assuming that this goes forward and is not paused by litigation.

29:32Now, we did see that there was an update coming from the administration that potentially doctors would have a carve out from$100 ,000 in terms of a fee Hibber. But let's go back to California, the state that's most impacted, according to our data, and indeed Texas, New York, New Jersey. The companies that are based there, and then we look at the, as you say, the industries, professors, scientists, technology services, manufacturing information. These companies, what do they do? Do they hire outside of the U.S. to be able to make up for the talent shortfall while the training goes on in the U.S.?

30:05Or is there any idea that there is enough talent here to satisfy the needs? That's one of the concerns resulting from this fee. The concern is that a lot of companies would choose to either pause hiring, in particular international hiring, but also may choose to shift their operations abroad. And that is going to have downstream effects for the company as well as U.S. workers that work for the company. So that's one of the concerns. The other concern, as you mentioned, is that there's a variety of different companies that rely on the H-1B visa. And so there is language in the proclamation that carves out exceptions for an individual who the government deems is in the national interest of the U.S.

30:46However, what we still need to understand is the way in which these arguments requesting a national interest exception are actually going to be treated and adjudicated. As it stands now, the evidentiary standards for successfully making that argument are actually quite high. So I don't think that the language that carves out an exception is going to help any of the concerns that the industry has.

31:10Caroline Hyde:Heber, Bloomberg's reported at length that the expectation is immediate legal challenges. to this executive order. And they note in that reporting that Congress has traditionally set in a legislative or codified way fees and other associated costs. Could you just explain where you stand today, where the precedent is to challenge this, and any action that you might take on behalf of clients to challenge it? I think that anybody who's getting ready to make a legal challenge to this is going to incorporate a few key grounds in their argument. One is that it is the responsibility of Congress to make immigration laws set immigration fees.

31:52Also, you know, the president is basing this proclamation on a law that does grant the president broad authority in terms of restricting entry of foreign nationals into the United States if there is a national security concern or if that individual's entry to the U.S. is somehow detrimental to the U.S. However, there has to be some substantive factual evidence in support of that, which I would imagine folks who seek to challenge this proclamation will argue does not exist. And so those are the grounds that I'm going to be watching out for in terms of the upcoming legal challenges. One thing that I do want to note, however, is that the recent Supreme Court decision in Trump versus Casa made it very difficult for a single federal judge to issue a nationwide injunction, pausing some sort of presidential action from taking effect.

32:40And so one thing I know that I'm going to be watching out for is basically whether or not somebody chooses to file a class action lawsuit, how broad that class is defined, and whether or not a federal judge certifies it. Hey, Vanva, incredibly busy. We really thank you for your time today, Erickson Immigration Group. Now, interestingly, ARC CEO Kathy Wood weighed in on the issue of H-1B visas and the fees, saying the changes are part of a negotiating process. as she predicts that it will actually end up being loosened. Just take a listen to what she said on Blingbo TV earlier. This is part of President Trump's negotiating process, and I think he's negotiating quite intensively right now with India.

33:23I think India would have the biggest impact here in terms of workers in the United States. So I think this is a little bit like tariffs, and it's going to capture all the headlines and it's going to really take the oxygen out of the room because there's a lot of really good fundamental activity happening in the United States relating to policy. Well, a lot of that, a lot of the innovation, a lot of that Silicon Valley kind of goodness really comes from the talent and the labor pool. We've been talking about this for quite some time in terms of how do you train your engineers, you train Americans to do a lot of what Silicon Valley depends on foreign workers to do.

34:07Does this impact innovation in Silicon Valley? And does it impact mega cap stocks, tech companies that are dependent on this? Well, from what we know of this administration, they ultimately want to keep students who have been educated in the U.S., foreign students that have been educated in the U.S., in the U.S. So So really, I just think this is part of the negotiation with India and that when all is said and done, we're probably going to loosen up the H-1 visa program. But in the short term, is that going to have an impact on tech companies? I think what it's going to do is force tech companies to do what they're already doing, and that has become more efficient.

34:52And the other thing to note is, you know, coding is changing dramatically. The number of coding jobs and openings has dropped dramatically because of AI. All of us can become coders. This is natural language programming. Generative AI is prompting chat GPT to get your programs going. We can all do that. That's simplifying it. But I do think it gives you a sense of the kind of productivity, possibilities that will impact these tech companies longer term.

35:28Caroline Hyde:ARC CEO Kathy Wood there along with Bloomberg's Kritty Gupta. Okay, coming up, the maker of the Aura Ring is set to become an$11 billion company with a new Series E financing round. We're going to speak to the CEO about how the company plans to use that new funding and a lot more. That's next. This is Bloomberg Tech. Hi, I'm Tom Keene, inviting you to join me for the Bloomberg Surveillance Podcast. It's about making you smarter every business day. I'm Paul Sweeney. We bring you complete coverage of stocks, bonds, commodities, even crypto, all the information you need to excel in the markets. And I'm Alexis Christophorus.

36:05Listen to us for essential conversations with the smartest names in economics, finance, investment and international relations. That's the Bloomberg Surveillance Podcast. Subscribe today on Apple, Spotify or anywhere you listen.

36:19Caroline Hyde:Aura, the maker of the popular Aura Health and Fitness ring, is closing in on a roughly$11 billion valuation, doubling its valuation from last November. That's according to Bloomberg reporting, citing Bloomberg sources. The company is saying it sold over five and a half million fitness rings in total and is on track to double its revenue this year. Aura CEO, Tom Hale, joins us here in San Francisco. Let's get this out of the way. Bloomberg's reported a large round,$11 billion valuation, a big raise. Any comment, please? Well, you know, you read the same reports that I do. Congratulations on getting a scoop.

36:54But no, I don't have any comments on rumors as of yet. But interesting to see that that news is starting to trickle out.

37:02Caroline Hyde:And you appreciate why we have to ask. The main point is that Aura has some momentum. So you actually have shared some not just financial metrics, but operational metrics, right? I would call it the installed base of customers has grown. Just explain what that data signals to you, Tom. Yeah, well, we have shipped 5.5 million rings in the history of the company, but half of those have come in the last 12 months. So as we've doubled our business, we've doubled the number of people who have rings just in the last 12 months alone. And we think, actually, that that's showing up in our revenue. Obviously,$500 million last year was what we reported.

37:36I think this year we're going to do a billion dollars in revenue. And if we think in 2026, we're probably going to sell our 10 millionth ring. Tom, between Ed and I, we try to divide and conquer on all the wearables and use them. And I'm the Oura Ring user in the house, so full disclosure. And look, we have seen real iterations and changes to the way in which some of the data is helping. The AI agents is something that I'm really noticing. The glucose monitoring as well. How are you evolving to ensure that you get a bigger demographic? Well, you know, one of our core demographics is women. And we've been expanding the value that we deliver for women.

38:11I mean, this last year, we introduced pregnancy insights, menopause features, and we've been continuing to push on this idea of the fertile window, which is helping women or couples conceive. So that's one way. But as you think about the areas of expansion for us, we think about metabolic because the one thing that you do more often than sleep that affects your health is eat. And so if we can help you build healthy habits around eating, that's hugely powerful. In addition, we're continuing to expand in fitness. We're looking very much at the ways that sleep can be played to interact with other parts of your health to give you a holistic picture of your health.

38:44And then this fall, of course, a very exciting time of year. Lots of exciting new things will be coming down the pike. What's been so interesting is also who you've been selling to, whether it's corporates or also institutions. I'm thinking of the U.S. military or as largest business custom we understand, tens of thousands of service members using the rings. You're doing fatigue tracking. You're doing research. But you also got sort of caught in a PR firestorm, shall I say, as suddenly there was a lot of, well, people would say misinformation, fake news around how you've had to integrate within Palantir's own use of FedStart.

39:17What did you learn from that experience, Tom? You had to get on TikTok yourself. Yes. I think the truth is that when your customers are upset, you absolutely need to listen to them. So we take the concerns that were raised incredibly seriously. Privacy is a third rail, especially for women. And so we took that incredibly seriously. I took to TikTok myself to address our customers directly. But let me address the misinformation. Basically, there is no scenario under which the consumer system and the consumer data would be shared with anyone at Palantir or anyone in the government. So that's just not a thing.

39:50They are two separate systems. And, of course, the most important thing is that privacy is like the most important thing that we do. We're focused on your health, and so delivering your health means protecting the precious and private information that's so sensitive. And so that's just a core thing. It's a commitment. We will never, never sell your data, and we'll never share your data without your consent. If you want to share your data to be part of a scientific study, we will absolutely enable that, and we'll give you the tools and the power to control it.

40:17Caroline Hyde:Tom, we've done so much on this program this year on the electronics supply chain. You know, even on the innovation side, miniaturization of electronics. But I think it's fair to ask, you know, how you're exposed to a supply chain outside of the United States. Anything you've done to respond to the policies of this administration in that respect? You know, President Trump said he was going to raise the tariffs, so we took him at his word. We were well prepared and we managed that quite effectively. We don't manufacture in China. In fact, we opened up a factory in the U.S., in Mexico, to help us manufacture and meet that demand.

40:52And that turned out to be a very foresightful decision. We also manufacture in Eastern Europe. And now we'll be opening up a factory in the United States, in Fort Worth. And that actually will be there to service our customers who are in the military. There will be special securities and very stringent standards around the data that goes on to the ring itself. So it's actually quite an exciting time for us from a manufacturing standpoint because we've avoided most of the fracas around tariffs.

41:13Caroline Hyde:And I have to ask you about some of the news of the day and talent. H1B eases is what we've discussed. But with that footprint in the U.S. you're building, what's that look like for you in hiring competitively on engineering in particular? Yeah, we are investing hugely in the United States. In fact, we have about a thousand employees at Aura now, and over 60 percent of them are actually in the U.S. So we're less exposed to that kind of H1B risk. And since many of our technical talent comes from Finland as well, but they reside in Finland, it's less of a concern. That being said, I think it's really important, maybe for the entire tech industry, to really look at this and make sure that we're solving this problem.

41:49I kind of subscribe to Cathy's point. I actually think we're going to see something where this is really a negotiating standard. I'm not sure it's going to hold. Fascinating. Aura CEO, Tom Hale, come back soon. We appreciate it. It's time now for Talking Tech. And first up, Morgan Stanley upgraded ASML to an overweight rating, joining the likes of UBS and Eret Research. They're bullish on the stock. So shares of the company have rallied 33 % from a September the 2nd low. And the recent surge has propelled ASML to become the biggest listed company in Europe. A valuation of$379 billion. Plus shares of Samsung, they also jumped after reports say it has won approval from NVIDIA for the use of its advanced memory chips.

42:27Now the breakthrough by the Korean tech giant clears components for use in AI accelerators that are essential to training AI models. And would allow Samsung to compete with SK Hynix. And Alibaba is hoping to lure established brands away from Amazon to its own AliExpress e-commerce site. Now, according to sources, AliExpress is rolling out a new initiative to boost customers and sales, promising lowering shipping fees and offering to take a lower cut of sales than Amazon, Ed.

42:55Caroline Hyde:Yeah, let's stick with Amazon. Amazon and three executives face off in court today against the Federal Trade Commission. The regulator alleges Amazon makes it easy to enroll in its prime service and unduly difficult to cancel in violation of customer protection laws. Let's get to Bloomberg's Amazon reporter, Spencer Soper. You and I have discussed this issue over the last few years. What do we need to know about this case and the arguments Amazon's going to try and make to defeat it? Well, Amazon's looking at potentially fines well into the billions of dollars around this. So it has to take this seriously.

43:34You're looking at fines of$53 ,000 per violation, you know, over tens of millions of Prime subscribers. So it's a rather big deal. The Federal Trade Commission is arguing that Amazon just made it complicated and deliberately difficult for people to cancel Prime if they don't want it. And now the Amazon is trying to argue, well, you know, there's all kinds of ways that people can cancel and all kinds of different flows. And they're really trying to make it look like there's a very large number of ways people can cancel to try to minimize its exposure to any potential violations. Jury selection is supposed to start today.

44:21Trials expected to drag into October. And, you know, it is kind of a test case around subscriptions and how easy it is to sign up for things on your phone when you're on the move and how hard it is to cancel. Spencer, briefly, the FTC is also looking at search advertising practices of Amazon. More broadly, they are in the eye of the storm when it comes to regulators a bit. Yeah, it's an interesting phenomenon because a lot of this stuff is kind of holdover from the previous administration. And there's been a lot of questions about how Trump's FTC will carry on some of these things. But Amazon's still feeling the heat.

45:00It's still looking at fresh allegations on the advertising front and how it sets pricing on these automated auctions around search advertising that you see on the site. And now that also this consumer protection claim. So they're not out of the woods yet, even though the administration's changed. Bloomberg Spencer Soper setting us straight ahead of that unfolding litigation that does it in this edition of Bloomberg Tech, though. And we've got to check out the podcast.

45:25Caroline Hyde:Yeah, a big way to start the week. You check out the pod and you know where to find it on all the Bloomberg platforms and online. Apple, Spotify and iHeart. Buckle up. It's only Monday. This is Bloomberg Tech. Hi, I'm Tom Keene, inviting you to join me for the Bloomberg Surveillance Podcast. It's about making you smarter every business day. I'm Paul Sweeney. We bring you complete coverage of stocks, bonds, commodities, even crypto. All the information you need to excel in the markets. And I'm Alexis Christophorus. Listen to us for essential conversations with the smartest names in economics, finance, investment, and international relations.

46:00That's the Bloomberg Surveillance Podcast. Subscribe today on Apple, Spotify, or anywhere you listen.