SpaceX Lowers IPO Valuation Target

27:13The Sox flat on the day today. And Dow, well, look at that. Up on earnings and that outlook, a whopping 30 percent right now. And the Nasdaq 100 up three-tenths of one percent. More on Anthropic in just a minute. It is halftime, and this is Bloomberg Tech.

27:47I'm Tim Stenevec in for Caroline and Ed today. Welcome back to Bloomberg Tech. Let's check back on these markets and highlight the record highs for tech indexes such as the NASDAQ 100. That benchmark set to post another gain on the week, taking the monthly rally to more than 10%. Look at that over the last month, 11.6 % higher on the NASDAQ 100. This is the AI stock boom continues with positive earnings fueling optimism across Asian, European and U.S. equities. Well, speaking of optimism, let's get back to Anthropic. The company raised a massive$65 billion in its latest funding round, exploding its valuation to nearly a trillion dollars and eclipsing rival OpenAI for the first time.

28:28Bloomberg's Rebecca Torrance can tell us more. I have to look at these numbers twice, Rebecca, because what we're talking about is so astronomical. I mean, if a few years ago we were talking about this, nobody would believe not just these fundraising rounds, but also these valuations. Demand to get into Anthropic, even right now, at close to a trillion dollars, still massive from these venture capitalists? It's pretty remarkable. I mean, we reported just a month ago that Anthropic was fielding investor inbound at more than a$900 billion valuation and wasn't sure yet if it was going to take it.

29:02And then this round came together in a matter of weeks. The original target for the round was around$30 billion and closing at$65, including commitments from strategic investors, including hyperscalers like Google and Amazon. So it's both a mix of those previous commitments, but also a lot of excess demand from these financial firms. There are four leads in this round, typical Silicon Valley venture capital firms, but the full list is very long as people are piling into this one. Are investors in these firms piling in right now? I mean, in other cycles we've talked about in the past, let's call them Web 2.0, for example.

29:37We saw investors come in late because they wanted to be part of something that was almost at that point guaranteed to be some sort of home run. How much is new money coming in versus existing investors here? We've got new and existing investors on this cap table. I mean, this is a real mix of sort of longtime believers in Anthropik and sort of Silicon Valley heavyweights and crossovers in anticipation of a potential IPO for Anthropik later this year. And as we reported, Anthropik's IPO timeline remains unchanged by this fundraise, despite the$65 billion in new money coming in. The company is not planning to delay its IPO at all and could go public as soon as later this year.

30:20That's similar to what OpenAI is planning as well. So we could have a crop of, you know, really massive IPOs later this year, of course, following SpaceX sooner rather than later. All right. Say what you want about valuations right now. It's an exciting time to be covering venture capital for sure. Bloomberg's Rebecca Torrance. Thanks so much, Rebecca. Good to see you. The question, how much of an impact will AI have on the workforce? It's the million or maybe even trillion dollar question. And according to Muddy Waters Capital CEO Carson Block, it could affect more than one in 10 knowledge workers.

30:50Here's what he told Bloomberg's Haslinda Amin this week. Our house view is that we're going to see 15 percent displacement of knowledge workers. You know, we think it could be as soon as three years. Is it four? Is it five? at some point, and it's in the single digit number of years, this will be a factor or this will occur in our view. And yes, there will be jobs that are created by AI, but we're talking about net losses because the technology is increasing in capability faster than we humans are able to adapt to it. Muddy Waters CEO Carson Block there to his Linda on men just earlier this week.

31:34Well, AI could boost productivity at the national level, and that over the next 10 years, the trend rate of real GDP growth for the U.S. could rise to 2.4%. Goldman Sachs Managing Director Matthew Weir joins us now for more. So Matthew, where does this happen? This is what everybody's trying to figure out, including the Federal Reserve. Jay Powell was asked about this all the time, and I can imagine that Kevin Warsh, the new Fed chair, will be asked about this all the time. Where does the productivity hit in the economy and when? Sure. So we think, in contrast to the last few that was expressed, the productivity boost to the economy will come gradually over the course of the next 10 years.

32:12We do think, and these are views from our economists at Goldman Sachs, that about 25 % of tasks in the U.S. economy could potentially be automated. Now, at the headline level, that is a scary number because that would suggest, oh gosh, 25 % of jobs are going to be lost. But in reality, the vast majority of those tasks will be automated, which will free up workers to pivot to higher productive tasks. Not all of them will lead to job losses. When we think about where that's going to exist, we've done a lot of detailed work in terms of sector by sector, which sectors have the most tasks that can be automated.

32:49Some sectors are very immune. Some sectors are quite more vulnerable. But we do think over 10 years, it'll be a gradual process. there will be new jobs created as well that will also be higher productive. Well, I'm glad you brought up the nuance and sort of the distinction, Matt, between actually losing jobs and then people being freed up to do stuff that's more productive. In terms of the vulnerabilities that you and your team have identified, what are they? Are they certain jobs? Are they certain industries? What should people be prepared for in terms of disruption? Sure. Well, I think the jobs that are most client or human-facing that are probably the safest, it's the jobs, though, that have more repetitive tasks.

33:26that are probably the most vulnerable at this point. We have some colleagues at Goldman Sachs Research who have identified specific areas where there are more vulnerabilities and there are specific segments. But we do think in some cases, some of the concern with regards to job losses are well overdone. You've seen references in certain media publications referring to the jobs. Apocalypse, our chair and CEO at Goldman Sachs, David Solomon, and published an op-ed this piece, which is the view, and we very much believe it here at Goldman Sachs, that in aggregate, there will be more jobs created than jobs lost.

34:03But we shouldn't take away from the fact that this will be a painful transition at the individual level in certain sectors. Is there a certain historical corollary we can look at? I mean, in the past, we've heard this era as referred to as like a new industrial revolution. But in terms of the tech that, in your view, you believe is being deployed as a result of this investment and as a result of what's happening to infrastructure right now. What's a good historical corollary for us to think about? Well, one historical corollary that we really like to point to, and this is work by MIT, if you look at occupations that exist today, so 170 million jobs in the U.S.

34:42economy, the majority of those jobs, or occupations, I should say, didn't actually exist in 1940. The innovation, technological progress of the U.S. economy is one of the reasons the U.S. economy is so dynamic. New jobs are always created each and every year, and more jobs are created than jobs are lost. I think one other thing we should be pointing to is that there has been a deindustrialization of the U.S. economy over several decades. There are many new jobs that exist today that didn't exist before. I think we should think about over the last 25 years the digital economy, the Internet. that that's created a lot of new occupations that didn't exist before.

35:22Think of influencers. Think of gig workers. Think of the video game sector. There are millions and millions of new jobs that didn't actually exist before. These were also occupations that didn't exist. We don't think this time is any different. The U.S. economy will adapt and be creating new jobs. I hesitate to even ask this question because it's opening a real can of worms with just a minute left, Matt. But what if it doesn't? What if the promises that have been made and that investors are betting on don't actually come to fruition? Yeah, that's a very, very important question right now because one of the things we're seeing is that we need to see the enterprise users of AI generating profits on the back of the investment that they've been making.

36:04If that occurs, then you have a self-perpetuating economic ecosystem for the AI complex. Right now, all of the funding is primarily coming from external investors as well as cash flow from other businesses. Think of the hyperscalers. But right now, the only part of the stack that's generating a lot of profits on the back of AI are the semiconductor companies. So as we think about the stock prices of the semiconductor companies as well as the valuations, for example, of some of the private companies you mentioned earlier, There is some vulnerability here if we don't start to see enterprise users generate the profits that are necessary for them to continue investing, which will generate revenues for the application companies, the model companies, infrastructure, and then the semiconductor companies.

36:49Matt Weir, very thoughtful conversation. Appreciate you taking the time and joining us this morning. That's Goldman Sachs Managing Director Matt Weir joining us in San Francisco. Well, what began as a rocket startup, now a big bet on satellites, AI, and yeah, Mars, with a projected valuation close to$2 trillion, SpaceX's IPO could reshape markets. But is Wall Street rushing in too fast? Bloomberg Originals took a deep dive.

37:17SpaceX is taking off. And we're not just talking about rockets. We've never seen anything like this.

37:26SpaceX's initial public offering is expected to raise as much as$75 billion, more than double the record-setting$29.4 billion raised by Saudi Aramco in 2019. This is the biggest IPO of all time. We're looking at$2 trillion in valuation. Elon Long had said that he didn't really plan on taking SpaceX public, But that was before the merger with XAI, before he needed tens of billions of dollars to build out these ambitions. But this massive valuation is also a test. Could all this hype make it seem worth more than it is? If it's preordained, then it becomes hard to predict how much of the buyers are buying because of fundamentals or the valuation.

38:11So then that kind of distorts the market. Investors are buying the dream. Sure, we all know the dream. But what about the reality?

38:24SpaceX in the age of the giant IPO. Check out the full episode over at Bloomberg.com or on YouTube. And let's just talk about that reality. SpaceX does seem to be coming back down to Earth ever so slightly after cutting its IPO valuation goal to at least$1.8 trillion instead of above$2 trillion. That's according to sources. Let's break it down with Bloomberg Intelligence analyst George Ferguson. George, I can't help but smile when I see those numbers because, I mean, coming back down to Earth, it's all relative when we're talking about, you know, this blockbuster, what could be the biggest IPO ever.

38:55$1.8 trillion. You have spent many years valuing companies in aerospace. What is the valuation promise of a$1.8 trillion market cap when SpaceX, what, has, you know, revenue in 2024 of$14 billion? dollars? Yeah, so obviously those numbers are quite lofty. You know, we're spending some time right now doing our sort of some of the parts analysis on SpaceX's value. And my friends, Mandeep and his team in the AI side of Bloomberg Intelligence, they're sort of at a$400 billion dollars for xai and john butler who runs our telecommunications analysis he's at sort of 600 billion for uh for the communications for the satellite constellation and uh you know on the uh on the launch side we kind of we're looking at uh companies uh like rocket lab that are 90 times revenue.

40:02And when we look at what we think revenue is for SpaceX, the launch business, including their internal launch, which they don't put in the revenue numbers you cited, we think that the market says it's worth$1.2 trillion. Again, that's a multiple of revenue, which is always aggressive. It's a very high multiple of revenue that gets them to around $2 trillion and a lot of it built on the rocket launch business. So definitely some very lofty valuations. Well, it brings us to the Musk factor here, George. And I think there are a lot of people over the last decade who have said, you know, that Tesla is not valued as an auto company and you really have to divorce a traditional valuation metrics in order to get to a number that we believe is the opportunity for Tesla.

40:53I know you cover aerospace and your background is in aerospace and defense. But is that the extra$600 billion here? Is that Elon Musk? So I think you have to, in order to buy into this IPO valuation, I think you have to believe in Elon Musk and the dream, as you mentioned earlier. And look, I think there's good reasons to believe in him. You have to decide what value you're willing to pay for it. But, you know, like we saw yesterday, we saw Blue Origin had one of their engines blow up on the pad down in Cape Canaveral yesterday. You know, they're about three launches deep on New Glenn. It's not as easy as Elon Musk has made it look.

41:41Look, he shot, you know, his company shot off almost 170 rockets last year with minimal problems compared to what's going on right now at Blue Origin. So there is a track record of success from Elon Musk and his companies. I'm not saying that makes the valuation correct, but you have to buy into that. And Elon has shown a lot of success in what he's done. And maybe if it goes into the index, we'll all have to buy into it, whether we want to or not. Exactly. George Ferguson of Bloomberg Intelligence. George, thanks so much. George did mention Blue Origin. We're going to be talking about that with Lauren Grush in a few minutes.

42:18Coming up, though, before that, we're going to hear from Google DeepMind's head of robotics, Caroline Parada, on her take on the future of embodied AI. This is Bloomberg Tech.

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45:20Google DeepMind says humanoid robotics is one of the key focus areas. Carolina Parada, who leads the company's robot mobility and robot vision group, spoke with Bloomberg TechAsia's Sherry Ann at the Humanoid Summit in Tokyo about why she sees embodied AI as the next frontier. We've been working on bringing Gemini into the physical world. And what that does is that it brings all of Gemini's world understanding, multimodality in order to enable robots to understand their environment, to reason and to be able to take action to the level of precision of a human expert. I just mentioned the partnership with Boston Dynamics.

45:56So Gemini will go into Atlas. We're going to spot the little dog as well. Yeah. Tell us a little bit about what the future looks like for DeepMind and Gemini robotics. Yeah. So we're really excited about Gemini robotics, bringing all of that intelligence from Gemini into the physical world. But there's still a lot of work to do. Gemini Robotics is able to give you that reasoning. It's able to give you that interactivity. It's able to give you multimodality. But it's not yet able to, what we're pushing the boundary on is on doing highly dexterous tasks. Like, for example, folding origami or packing a lunchbox.

46:29That requires a lot of dexterity that humans have, and we don't really realize it. But it's incredibly important to make robots useful. When it comes to scalability of the industry itself and competing also with dozens of these new companies, not only in the U.S., but dozens in China as well, where is the edge? So there is a really exciting time right now for robotics all over the world. I think that the really hard problem that people don't realize is that the edge is understanding the nuance and complexity of the human world. Actually, a lot of what you see out there is predefined sequences, memorized sequences that the robots are doing.

47:08The actual intelligence needs to be there in order for robots to operate in all of our environments. Our environments are constantly changing. There's humans in them. They're all structured. That is what's needed in order to get robots to be really helpful in the physical world. That was Google DeepMind Vice President and Head of Humanoid Robotics, Carolina Parada, along with our own Sherry Ann in Tokyo. Coming up, a major setback for Jeff Bezos' space ambitions after Blue Origin's new Glenn rocket explodes during a test in Florida. Lauren Grush joins us on that next. This is Bloomberg.

47:50Let's get to Blue Origin, the company's new Glenn rocket. You see it right there exploding in a massive fireball while undergoing a test on a Florida launch pad. Blue Origin writing in a post on X, quote, we experienced an anomaly during today's hot fire test. All personnel have been accounted for. We will provide updates as we learn more. Bloomberg's Lauren Grush joins us now with more. The word anomaly can mean a lot of different things. Lauren, what do we know about what happened last night? Well, I think the details are still trickling in. We don't know a whole lot, but we do have some very vivid imagery of this event.

48:26This is probably one of the largest explosions I've ever covered on a rocket in my time being a reporter. But yes, we still don't know a lot. All we know is that they were conducting a test. They were preparing for their fourth launch of New Glenn, which was supposed to launch a batch of Amazon satellites for the Amazon Leo. Fortunately for Amazon, those satellites were not on board. And as you mentioned, you know, there were no personnel were hurt or there were no injuries. So that's all good, but this is a pretty catastrophic moment for New Glenn, for sure. Yeah, what about setback? I mean, in terms of months, years to a mission or to at least a goal for New Glenn, what does it do to the program?

49:11Sure. In terms of the timeline, obviously that's subjective. It will depend on if they are able to figure out the origin of the problem pretty quickly, how fast they can fix it. But this is very certain to have a very big impact on the schedule for Blue Origin moving forward. It's also kind of hard to understate just how important New Glenn is for everything that Blue Origin wants to do, right? It's their main orbital rocket. it's supposed to launch future satellites for the company it's you know as blue origin has touted they have a 10 billion dollar backlog on this vehicle with customer contracts it's a key rocket for launching blue origin's uh lunar lander which is a key component of nasa's artemis program to send humans back to the moon and all of that is is likely to suffer delays also damage to the launch pad will probably take that out of operation for some time too so it's not just the rocket they have to fix.

50:10It's all the infrastructure that just got exploded in the meantime as well. Yeah, at the risk of mixing metaphors, I don't want to put the cart before the horse here, Lauren, but if we consider NASA's reliance on Blue Origin for the Artemis program, as you just referenced, does NASA plan for setbacks like this, or would they have to go and say, you know, maybe we have to rely on a different partner? Certainly. Actually, NASA did kind of work this into their decision-making because Blue Origin isn't the only partner that NASA has. Obviously, when it comes to building a lunar lander, it's both Blue Origin and SpaceX that are developing landers for the Artemis program.

50:51And they do that on purpose because of unforeseen problems that might arise like this one. They like to have different options that they can turn to. And so SpaceX is that other option that they can turn to. But again, you know, it's still too early to say, you know, if they will actually use SpaceX's lander over Blue Origin, perhaps they can turn this around more quickly than we think. But, you know, it's going to be some time. Bloomberg's Lauren Brush joining us with that. Check out Lauren's reporting and the entire space team's reporting on the Bloomberg Terminal and at Bloomberg.com. That is going to do it for this edition of Bloomberg Tech.

51:25Don't forget to check out our podcast, Find It on the Terminal, Apple, Spotify and iHeart. This is Bloomberg.

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