Tech Stocks Lead Charge Toward Record

0:01Bloomberg Audio Studios Podcast Radio News.

0:11Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco.

0:23This is Bloomberg Tech. Coming up, tech helps stocks close in on record highs with Mag7 earnings imminent. Plus Bridget Mendler northward. It raises$100 million to modernize space infrastructure on Earth. And Amazon shuttering its physical stores, but doubling down on deliveries. Walmart, Uber and DoorDash all drop. Let's check out more broad moves on the market right now. And because we have a wall of, call it worry, whether you're thinking about what the MAG7 is going to report, whether you're thinking about the federal rate decision on Wednesday, a lot for the market to digest. But still, we push to near record highs in the S &P 500.

1:00We have up 9 tenths percent on the NASDAQ 100. And I know you're checking on individual movers. that have been helping some moves in the benchmark. Yeah, an interesting deal. Up to$6 billion partnership between Meta and Corning for fiber optic cabling to support Meta's data center efforts over a number of years. You know Corning, right? It's a key optics supplier to Apple, for example. But look at that stock, absolutely flying up more than 17%. There's a lot going on as well in the semiconductor space. Micron is long-term trying to triage the shortage of supply, investing a lot of money up to$24 billion over years in Singapore.

1:40That's focused on NAND. And then overnight in Korea, SK Hynix, the biggest move is the upside. Basically, there's dip buying, there's retail investors coming in, and there's a lot of focus what's happening in the context of a US-Korea trade agreement where there might be exemptions. Let's get to all of that. Bloomberg senior tech editor, Mike Shepard, joins us now. Let's start with the Micron piece, right? Like, The story is well told, if I say so myself, on this program about the memory shortage and memory pricing situation. But Micron here is looking at where it can expand supply. It's looking at Singapore.

2:13What do we need to know? Well, it's looking at Singapore, Ed, and this is over a 10-year period and$24 billion investment there. And what they're looking at specifically is so-called NAND memory. And this is something that is in demand to meet the needs of artificial intelligence chips and processors more broadly. And it's an area of focus because for AI, the memory needs are enormous and they are not fully being met. Of course, Micron competes with Samsung and SK Hynix in this memory market. And all three companies have warned of increasingly tight supplies. And the supply issue also has spillover effects.

2:54that it actually touches on smartphone makers and PC makers too, because as those companies that we just mentioned shift their efforts to meet the needs of the AI data centers, the areas for PCs and smartphones risk going wanting in the SSD type memory and flash memory that is needed for those kinds of devices. So we're seeing that expansion by Micron. This just comes at less than two weeks after Micron cut the ribbon on a$100 billion plant in upstate New York, one that's been a couple of years in coming. So we are watching to see how much more these companies are going to be investing, not only in Asia, but also in the U.S.

3:36as well. And how much more of their shares can fly? Just think SK Hynix at a new record high, even as we see the threat of, well, broader tariffs in South Korea. We know the chip makers are excluded. But SK Hynix is at a record because it's going to be benefiting from Microsoft's push into AI chips as well, Mike. Well, that's right. And I'm glad you brought that up, Carol, because we saw the news yesterday. We all followed it so closely on this plan by Microsoft to introduce a new generation of its Maya AI chip, the Maya 200. And a local business paper in South Korea, the Maile Business Newspaper, is reporting that as many as six SK Hynix HBM3E units will go into each Maya processor.

4:19We don't know how many of these Maya 200 processors Microsoft will ultimately have produced for its needs, for its data centers, and for other customers as well. But the promise is big, and it signals that there could be a lot of demand for this HBM3E processor that SK Hynix has developed to meet those AI memory needs. And it could be something else. Now, you mentioned the threat of additional tariffs. The president yesterday warned that the South Korea trade deal could be reworked to jack up the tariff rate on South Korean imports to 25 percent. For now, we're not seeing anything affecting memory, but we'll be watching that closely because there is a lot of pressure from the administration for more investment by South Korean companies here in the U.S.

5:09Mike Shepard, breaking it down so well as always. We thank you. Let's return to U.S. stocks right now because, as you said, they're near record highs. Tech shares have been leading the way again. This is as we brace for earnings season. It comes thick and fast this week. Let's discuss it all with Christina Hooper, Chief Market Strategist at Man Group. And we still have tariff anxiety. You still have the worries of what the Fed's going to do tomorrow, and yet we push higher. Is that the fundamental analysis we should have, that their numbers are going to be good? I do think the numbers will be good, but I think there could be obstacles as we move through the year.

5:42And first off, I would anticipate that if we do see a big increase, or at least a substantial increase, in yields on the long end, that could very easily exert downward pressure on tech stock prices. So I think that could be the first problem. But as we move through the year, we could see problems with financing, some issues with NIMBY. Okay, so go there. The financing you mean around AI data centers? You think about the anxiety building up around Oracle and the debt that it has to take on? Absolutely. I think that that could very well slow down the AI data center build-out. So there are a number of different things that could slow progress over the course of the year and really tamp down stock prices.

6:26Christina, so stocks are near record highs and tech is pushing the way. And the Nasdaq 100 is up for a fifth consecutive session right ahead of earnings. Explain that, that psychology of the market, why they would push the market higher ahead of what is a critical week for some of the biggest technology names in the world. Well, there is an old adage, buy on the rumor, sell on the news. and I do think there is a lot of positive sentiment right now around these companies being able to meet and potentially exceed earnings expectations. So I think that's what's happening right now. I also believe something else is occurring, and we have to recognize that the backdrop is an economy that is sputtering.

7:11I am in the minority in this view, but I do think the economy is facing some very significant headwinds right now. We just saw a consumer confidence reading that was the lowest since 2014. And I think what happens typically is in an environment like that, investors move to technology. They move to areas that are more defensive, that can perform well in a variety of different environments, the secular plays. And again, tech has been the poster child for secular plays for some time now. So in that sense, though, like nothing changes. is we write in our markets wrap on the terminal, which is like it's the first thing you read every morning, right?

7:51But it says in spite or not even a slide in consumer confidence could stop the market rally. At the end of the day, we'll go into this earnings period looking at the same things, capital expenditures and top line growth for the biggest companies. And then you'll come back or your peers will say, well, these companies have really strong balance sheets and they're quite well diversified to weather an economic slowdown. Nothing's really new. Well, I think what is becoming increasingly true is that there is a divorcing, a decoupling between Wall Street and Main Street. And that is most obvious in the tech sector.

8:26So we can see strong balance sheets. We can see companies that are performing well. But, and this is a big but, we could see external forces like yields on the long end, the 10-year Treasury yield. if it were to get to 5 % or higher. I think that would exert downward pressure, especially on tech stock prices. So, Christina, do you sell into that, or do you just load up when the prices get lower and longer term still stay committed to tech? Briefly, please. So I would say staying committed longer term to tech, but ensuring you're well diversified, you are taking some profits and moving your exposure.

9:06Because tech is not just in the United States, it's also in China, where valuations are significantly lower. So this is an opportunity, I think, to diversify portfolios. Christina Hooper, Chief Market Strategist at The Man Group. Thank you very much. Amazon is closing its Amazon-branded grocery stores and automated grab-and-go markets, eliminating two centerpieces of its push into physical retail. And Caro, very interesting here, because actually Amazon's continued to push higher since the news. The main takeaway is not that they're closing 14 go stores and 58 fresh stores. That's small footprint, but actually even more committed to delivery.

9:43You tell me about the names that dropped in reaction. I mean, isn't it interesting? Well, exactly to your point, the fact that we see DoorDash, that we see other of those delivery companies, maybe see it feeling the effects from all of this. But what's really interesting as well to sort of take on board is they're also deploying massive scale in terms of bricks and mortar in Chicago. But it's alongside the element that it's also going to be helping delivery. it's also going to be about warehouse space. So they're just rethinking the way in which they put bricks and mortar on the ground, right?

10:12But we're looking, Walmart's off, Uber's off, DoorDash is off. It really speaks to maybe Amazon investors thinking this is a sign of strength, a good pivot. Yeah, and lastly, grocery commitment, right? Like, they're not saying we're done with grocery. They're just saying we're moving it online. And that's reflected in that market reaction. I always quite like those Payless stores, though. Gotta say. Rest in peace. Coming up, autonomous trucking startup, Gatic. into a new deal. We'll discuss the self-driving company's growth with its CEO. That's next with the Brewberg Tech.

10:49Autonomous trucking company Gatic has landed a deal with a major consumer goods company. Gatic's not named the customer yet, but says the deal will double its contracted revenue to$600 million over the next five years. Joining us is Gatic's CEO and co-founder, Gautam Narang. Look, I'm going to offer you the opportunity today, the customer. I know that you're not going to. I've pushed you over a number of days. But I think the main thing our audience wants to get a sense of is this is real. You have trucks on roads with major customers that are paying you and therefore you're booking revenues on it.

11:23Take it from there and explain the reality. For sure. So as you know, Gautic is in the business of autonomous freight. And today we're announcing that we are operating fully driverless, freight-only trucks with no safety driver, no safety observer across real freight operations, multiple markets today. It is small, though, like 10 trucks right now. 10 trucks today. But by year end? Over hundreds of trucks. But very soon in the coming weeks, we'll have over 60 trucks, fully driverless, on public roads, doing daily commercial operations at scale. Talk to us how legislatively this has worked, regulatory this has worked.

12:01How have you managed to make this a reality? Well, yes, we see real impact from Waymo in cars, but in certain states and certain areas. Where are you working? So, you know, today we are live across multiple markets. This is Texas, northwest Arkansas, Phoenix. We work very closely with the regulators at the local level, state level, federal level. And from the early days, we decided to focus on automating these regional networks, which is within the States, and that's one of the fastest ways to commercialize this technology. Commercializing then to where? We've talked about 600 million, just one key customer.

12:36What do you think your revenue run rate is going to look like? So today we are working with some of the largest companies across retail, grocery, e-commerce, and distribution. So each of these customers have made multi-year commitment. What's unique about these commitments is these are non-cancellable commitments where our technology is now being absorbed across their supply chain at scale. Those are the customers that you can name. We're showing them on the screen. Kroger, Tyson, Walmart. People will say, well, if you can't name this one, how real is it? I'm going to put it out there, right? Because we're transparent on this show.

13:11The business model is interesting. You don't sell them the trucks. What is the business model? So it's an autonomous transportation as a service model. As a service. As a service, yes, where we charge a fixed fee per truck per year. And each of these commitments are multi-year long, so we have revenue certainty from each of these customers. And that's also very unique compared to some of the other models in our space. You have some peers in industry. One of them is Aurora, right? There are some similarities and differences. One is that they're public, you're private. Let's talk about that first.

13:42I mean, you know, you've been pretty open that there's a route to the public markets. What would be the motive to do that? So let me start with the fact that we have a lot of respect for all the peers in the space. But what has been our focus from day one is helping our customers move freight from their warehouses to retail stores and doing that at scale. And with this milestone, we have been able to prove that it's real, it's happening at scale. So today, truly, there is no safety driver, no observer on public roads. And in our space, no one can make that claim today. public well we are built up lives today with a very strong runway and have clear line of sight towards profitability and we're always evaluating all the options that we have and keeping a very close watch on the market conditions partners from a technology perspective obviously nvidia how much you reliant on the hardware at the moment how much is that cost based where do you look for these partnerships?

14:40So with our latest generation, Generation 3, the hardware is fully hardened, and we're working very closely with the NVIDIA, with Isuzu Motors to mass produce these trucks. And, you know, towards the end of next year, Isuzu's production plant in South Carolina will be up and running, and we expect to have these vehicles coming off the line at big volumes. We're looking at tens of thousands of vehicles annually. Caroline's already asked this, right, but we should go back to it, which is the regulatory environment. You've launched in these markets because you can. How much do you think we need this federal-level framework for you to go from very small to something more substantial?

15:21Fair. So it's very important to have a nationwide AV framework. And we don't. Well, we're working very closely with the current administration to inform them, educate them on the safe rollout of this technology. And we expect to have a nationwide framework very soon. Come back. When you've helped, work that one out. Gultum, Narang, it's great to have some time with you, Gattic CEO. Meanwhile, elsewhere in vehicles, GM CEO Mary Barra says the regulatory shift away from EVs will see slower adoption. But the company is still committed to its EV pipeline. Meg's Matt Miller sat down with the GM CEO Mary Barra.

15:57Take a listen. The whole industry, we were on a path that we were working to get to 40 to 50 percent EVs by 2030. So now that the regulatory environment has changed and the consumer incentives have gone, there is going to be slower EV adoption. We're still committed EVs, and we've got a great portfolio that we're working on taking costs out of. But in the meantime, we also have a great internal combustion engine platform. And you're right, full-size trucks are one of the strengths we have, as well as full-size SUVs, mid-size crossovers. So we really have a strong lineup across the board, and that is really what is fueling our business success.

16:32I have had, as the host of Hot Pursuit, a Bloomberg podcast about cars, the opportunity to drive a lot of your EVs from the Sierra EV to the Hummer EV to the Escalade IQ. And they're fantastic products. Are you not deterred that Americans aren't buying more of these vehicles? You know how capable they are. You know how useful they are in daily life. What needs to happen for more Americans to buy these EVs? Well, I think the consumer is very rational when they're making a decision about what car to buy. Let's remember, it's one of the most important and expensive decisions that they make. And one of the things we have to continue to work on to drive EV adoption is a more robust charging infrastructure.

17:17And that still is continuing to happen. So every quarter, more and more chargers are available. I think as people in their individual communities see that they've got a robust charging network and believe if they have to go on a road trip, there's that as well, they're going to make that choice. That was GM CEO Mary Barra speaking with Bloomberg's Matt Miller. Now, coming up, we will dive into Anthropics' new tool and how it could broadly impact jobs. Coming up next, this is Bloomberg Tech.

17:54Silicon Valley leaders are joining tech workers, decrying tensions in Minnesota after two US citizens were fatally shot by federal agents. Anthropic CEO Dario Amadei posting about the, quote, importance of preserving democratic values and rights. OpenAI CEO Sam Altman wrote in an internal memo to staff yesterday that, quote, what's happening with ICE is going too far. That's according to a Bloomberg source. The executives join the chorus of other tech leaders, including LinkedIn co-founder Reid Hoffman, Reddit co-founder Alexis Ohanian, and venture capitalist Vinod Kostler, who have spoken out.

18:32Karen? One to watch. Now, let's shift elsewhere for Anthropic right now, because it has released a new version of its Claude chatbot called Claude Cowork. They can take actions on a computer, on your computer. Bloomberg opinion columnist Parmy Olsen writes that this could have broad repercussions and potentially be painful for some white-collar workers, even as Anthropic frames itself as the most safety-conscious of the AI developers. Rami Olsen joins us now. So the redefinement of the engineering talent right now, the companies you've spoken to, how is Claude's products changing that? Yeah, I mean, first of all, Claude Cowork is the new product, and before that was Claude Code, which is an AI tool for writing software programs.

19:18And that's been around for about a year, and it's been getting rave reviews among technologists and coders who can use it to spin up a website within hours. And the people at Anthropic effectively use that tool to build this new tool. They did it in 10 days. They didn't write a single line of code or very little code. And this new version is something that it's sort of like people have been talking about the word AI agents. That was a big buzzword last year, but it sort of fell flat. there were issues with reliability. This could be perhaps the first mainstream breakout of an AI agent because it does work on your computer and accesses files and applications.

19:59And I'm not just saying that it does that. People are actually using it. I've used it. And there's been a lot of general kind of excitement and buzz about this tool that is able to just take action, not just give you research. And part of me, industry's paying attention. I think about CES. Caroline was speaking to Emantanesia from General Catalyst. I think he summed it up pretty well. Just listen to this. Cloud, it's really redefining the engineering department. And just think about the size of that market. The amount you spend on tools and engineers to be able to build products. And the amount of progress is like Silicon Valley companies now code self-rights for most of what they do.

20:43I think it's a real transformation where Cloud's really enabled. there's a there's a line in your bloomberg opinion column which by the way is one of the most read things today on bloomberg about the relevance to microsoft you know microsoft historically is very good at selling software that you could otherwise get for free just just talk a little bit more about that you kind of flicked at it i just flicked at it because i thought co-work is pretty much what co-pilot could have been and probably should have been Copilot is the AI tool that's underpinned by ChatGPT, GPT 4.5, or whatever the latest model is, and it has access to all your office tools.

21:19So it should be able to take documents from a particular folder and turn them into a spreadsheet, as Claude Cowork can do, but it doesn't have quite that same capability. So I think the speed at which Anthropic was able to do this, and using an AI tool to build the software in the first place, really speaks to how effective AI coding has become. Coders are saying, now, they don't even write code anymore. They just talk to it in plain language. And the reason I think this is kind of meaningful for other jobs is coding, AI coding, a tool that can do that, can generalize to other domains. This is what Anthropix's CEO has been saying.

21:57That's why they're moving into healthcare. And who knows what other areas they will move into. But I think because computer code is such a perfect digital representation of the behavior and the actions that you can take online, that's why it can be so good as a tool to do other things like operate a computer. Bloomberg Opinions, Parmy Olsen with today's must-read. Thank you very much. So coming up, Northwood raises$100 million in its latest funding. We speak with the CEO, Bridget Mendler. That conversation coming up next, and you don't want to miss it. This is Bloomberg Tech.

22:38Welcome back to Bloomberg Tech. A quick check on these markets. NASDAQ 100 shows big tech is back on top. We're still up almost a percentage point as we brace for mag seven earnings. Interesting move for Bitcoin. We call it digital gold. Well, it's not getting the debasement trade that real gold is at the moment. We're at 88 ,246, though, just up in the green ever so slightly. Move on to the individual movers. We want you to keep an eye on Amazon up almost one and a half percent. They're closing. Amazon Fresh, Amazon Go stores with some locations that can be converted into Whole Foods market stores.

23:08Look, they are not moving away from groceries. They're going to sell them online and offline. But really, this is about delivery once again. And you also have to look at what's happening over at Pinterest. We're going to dwell on that for a minute. We're off by almost 10%. They are letting go of people. Less than 15 % of its workforce, we understand, but they're planning to reduce office space as well. And Bloomberg Intelligence is saying it likely suggests more aggressive investments in building AI capabilities. Let's dig in with Bloomberg Equities reporter Rand Vlastelica. A company that has seen competition, Ryan, maybe as we talk more and more about agentic AI.

23:39We're just talking about it in terms of Anthropic, for example. Yes, good morning. Thanks for having me. So Pinterest is down quite significantly today. It does seem like there is a lot of concern that these workforce reductions and other steps that they're taking in terms of this restructuring, that maybe this portends some weaker growth trends at the company. As I'm sure you know, this stock has struggled for quite a bit of time as it really just has a lot of difficulty going up against the bigger players in the space, most notably meta. So the stock is quite down, and I think people are sort of like wondering what's going to be sort of a catalyst to revive growth here.

24:13Ryan, data is fun. I really hope that you agree with that. And so I'm looking at the Bloomberg terminal. The NASDAQ 100 is up for a five-day stretch the first time this year. It had a five-day stretch at the end of December, so not that long ago. we're right on the cusp of huge earnings and tech is driving this market higher why great question so going into this recent rally obviously there had been a rotation out of tech a lot of people looking elsewhere in the market especially sort of cyclical parts of the market there was some concern about tech's earnings uh is growth decelerating or is this going to be enough to justify the valuations there at the same time people continue to view tech as really a port of safety in the market.