Tech Stocks Rally on Hope US Shutdown Nears End

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1:04Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech. Coming up, talks continue to try and end the U.S. government shutdown, sending airline stocks rallying. We'll discuss how AI could play a role in the future of travel. Plus, tech and media earnings continue with CoreWeave and Paramount on the docket after the closing bell. And we'll speak with Matt Mahan, mayor of San Jose, about the city's growing AI infrastructure and its latest data center initiative. First, though, a check on the markets. Starting with the bigger picture, and look at that, we are seeing the Nasdaq 100 surge, along with other major indices.

1:49This is the U.S. Senate advances a plan to end the longest ever government shutdown. The risk on bid lifting tech shares, really driving the rally in equities after the tech sector had been hit the hardest in recent days. Also coming up, we're going to discuss what to expect from tech and media earnings throughout the hour. CoreWeave's results are expected to raise issues about AI spending. After last week's selloff, CoreWeave up 1.2 % right now, this after a week, where it was down 22%. It's also on the heels of other spending by tech companies like Meta and Microsoft. Also, Paramount Skydance down about three-tenths of one percent ahead of earnings.

2:26They're expected to report higher revenue and profit. Investors also are going to be on the watch for more details on the company's reported effort to buy Warner Brothers Discovery, spending a lot of money, too, buying up those rights to UFC and that big deal with the Duffer Brothers. Well, a group of eight Democrats on Sunday broke the rest of their party to vote with Republicans to advance a bill to reopen the government on the shutdown's 40th day. Bloomberg's Tyler Kendall joins us out of Washington, D.C. for more. Tyler, tell us where we are in the discussion. Where do you think stand with the Senate back today?

2:58Yeah, hey, Tim. So the Senate advanced this legislation on a key procedural vote, but it still has to go up to debate and then get a final floor vote on the Senate floor. And importantly, any one senator could tie up that process. We have our eyes on Senator Rand Paul, a Republican from Kentucky, who voted against this legislation and could ultimately delay it. However, the broad understanding here, we're expecting this legislation to advance out of the upper chamber and then go to the House later in the week. Once it passes the Senate, there are 36 hours for House lawmakers to get back to Washington and vote.

3:30But we have to look at what's actually in this legislation to see some of those pressure points that could be building on House Speaker Mike Johnson. This bill would fund the government through January 30th and then fund some key agencies through the rest of the fiscal year. Some hardline conservatives may not be happy with that because they didn't get the chance to negotiate those longer spending bills. This also importantly includes a reverse for mass firings of federal workers that started on October 1st and shields against future firings through at least January 30th. That, of course, goes against President Trump's key priority when it comes to reducing the federal workforce.

4:04So that also might face some pushback when House lawmakers get back to town. I'll say I'm keeping my eye on those moderate Democrats in the House, how they could come over and join Republicans, because that's what we really saw happen when it came to the Senate. They were negotiating, of course, for an extension on those Affordable Care Act premium subsidies. The Senate wasn't able to get a deal in this legislation, but they were able to secure a promise on a vote for an extension down the line. We're expecting that to happen by the second week of December. See if House Speaker Mike Johnson puts anything similar on the floor.

4:35At this point, we haven't gotten any indications, but I'd expect some House Democrats to push for it. All right, Bloomberg's Tyler Kendall keeping an eye on everything happening out of Washington, D.C. Thanks so much for that, Tyler. Well, shares of major airlines rallying as a potential end of the government shutdown nears. That's despite hundreds of canceled flights over the weekend due to weather and the lack of air traffic controllers. And President Trump just now weighing in moments ago on True Social saying, quote, All air traffic controllers must get back to work now. Anyone who doesn't will be substantially docked.

5:09Nancy Hsu leads Agent Force at Salesforce and joins us now to talk about how AI might actually help and be helping in the travel sector. Nancy, good to have you with us from our San Francisco studio. I got to tell you, a lot of my colleagues, a lot of friends had their trips canceled or disrupted over the weekend. And it doesn't seem like anything could actually help right now except actual air traffic controllers and actual TSA agents showing up to work. Tim, thanks so much for having me. We are seeing with the evolving situation right now at the FAA through our own agent platform, Agent Force, that it's really important for companies to have agentic solutions in order to serve their customers during this very critical time where we're seeing a surge in the system.

5:56As an example, at Agent Force right now, we work closely with Heathrow. Heathrow has more than 80 million passengers that walk through their airports every single year. And at Heathrow, you know, those passengers are walking at 4 a.m. in the morning. It could be at noon where they're looking for lost luggage. Regardless of the time of day, you know, we have an agent with them called Haley that's helping Heathrow passengers right now on the ground using AI agents to address their customer queries, really using that ability for AI agents to surge capacity for these companies to build more resilient solutions.

6:33And this is critical right now with the FAA situation that's breaking, enabling our customers and all the companies that are using AI agents to flex to a limited capacity and really better serve those travelers that are on the road today. Well, I mentioned the president's post on social media just in the last hour or so. The post continues to say that if you want to leave service in the near future, these are people who are not showing up to work, he says. He says you will be quickly replaced by true patriots who will do a better job on the brand new state of the art equipment, the best in the world that we are in the process of ordering.

7:05That new equipment, it's come up fairly often in recent months when talking about the challenges at air traffic control and for air traffic controllers here in the U.S. Does Salesforce have any role in the new air traffic control equipment that is being ordered, whether it's software or something else? What I can share, Tim, is that we have a brand new initiative, Mission Force, where we're working with national security, as well as the U.S. government, as well as allied governments, to best support them using technology and bringing the most modern solutions, including our AI, to help support national security today.

7:40You've got a great view on the capabilities, not just now, but in the coming years when it comes to this technology. Within our lifetimes, do you think AI could replace air traffic controllers? You know, Tim, we are very excited about the vision of enabling our customers to be successful using AgentForce, our AI agent platform, deploying agents in the travel industry, for example, with customers like Engine, Heathrow, Singapore Airlines, FinAir. For us, it's really about enabling those companies to work in a way where their employees, their humans and AI are partnering closely together to enable that to happen.

8:20I'll give you a very concrete example. Singapore Airlines works closely with Agent Force today. With Singapore Airlines, we have over 3.5 million AI workflows that are being run today. And those workflows are not actually directly with their customers, but actually servicing the humans on the Singapore Airlines team, working closely with them in cases such as when their service representative is helping a customer with a critical issue on the ground. Our AI workflows are actually summarizing those cases so that those companies and those reps can now better service their customers in real time.

8:56We think that the future is very much AI, agents, and humans working closely together. Yeah, I certainly understand that from a customer service perspective, Nancy. But from the perspective of this high-stress decision-making that takes place in a control tower, is that something that could be done by AI? And then in the future, we could sidestep issues and avoid issues such as these. AI is a critical part of building a resilient business. And I think we're seeing this right now with this FAA situation. And it's not just the FAA, right? You know, right now we're seeing volatility in every market.

9:36And this is not news to us. But what's really exciting, I think, is that AI agents are actually helping companies become more resilient in these volatile markets, markets, not only in travel with the companies that I listed earlier, but also we have companies like 1-800-Accountant, right? They see massive surges during peak tax season and the types of queries their customers are coming with help for. And we're able to, in the case of 1-800-Accountant, help them address more than 90 % of those cases autonomously, end-to-end, really serving their customers and ensuring that when you do have surges in the system like that, or these black X1 events, AI agents can help these customers be resilient and help them better serve their own customers.

10:18You mentioned partnerships with Singapore Airlines, London's Heathrow Airport, but here in the United States, do you have partnerships with airports that where this technology actually could help in terms of air traffic controllers, in terms of helping people who are stranded? I mean, we have colleagues who they were told over the weekend that they wouldn't even be able to find a flight until Wednesday. And certainly some of that is on the airline, but the core of the issue still has to do with those people not showing up to work on the airport side and the air traffic control side. Tim, we have customers that we work closely with like Engine.

10:57Engine is one of the leading platforms right now that is helping do travel management for companies. So it's across not just airlines, travel, flight bookings, but also those hotel bookings and those car rentals that are being impacted as a result downstream. With a company like Engine, they're handling a large volume of customer queries here in the U.S. today. And in those situations, we're today helping them increase or decrease their average handling time by more than 15%. And over 30 % of those complex bookings that are happening end-to-end, as well as those case resolutions for their customers are being done autonomously using AgentForce agents.

11:37And the impact of that, Tim, is really helping a company like Engine surge their capacity in this critical period so that they're able to flex up and down depending on what their customers are needing. And right now, of course, the flex is going up. Nancy Hsu, Vice President of AI Product at Salesforce. Thanks so much for joining us today on Bloomberg Tech. Do appreciate it. Well, coming up, we await earnings from CoreWeave and Paramount. Both of these companies set to report after the closing bell we got a preview what to expect next this is bloomberg tech

12:23well let's take a look at spotify shares they've turned lower amid an announcement out of tick tock the social platform, teaming up with iHeartMedia to create a new TikTok podcast network. The deal will feature up to 25 new podcasts hosted by TikTok creators. This is the company that looks to help creators beyond the TikTok platform. Spotify shares down about one-tenth of one percent. iHeartMedia shares down about 6.3 percent. Well, Paramount Skydance results do out after the closing bell, with investors heavily focused on a potential bid for Warner Brothers Discovery. Here with more is Bloomberg's Hannah Miller, who covers media.

12:57Wow, David Ellison has been very busy in his first few months over at Paramount Skydance, Hannah. I know there are a lot of questions about the UFC purchase, about the Duffer Brothers deal, about the hiring of Barry Weiss. But is the big question all about Warner Brothers Discovery and whether some or all of those assets go to Paramount Skydance? Yeah, investors want to hear any updates related to Paramount's multiple bids to acquire Warner Brothers Discovery. So far, they've been bidding too low. So we'll see what David Ellison says today, if he gives any insight into their strategy going forward.

13:30Are investors on board with him spending this much money? You know, I think investors are surprised. Some are wondering, you know, hey, why didn't you go for Warner Brothers in the first place instead of Paramount? Might have been less complicated. But, you know, they want to see what David Ellison has in store for Paramount. He has a really tech forward approach. He's willing to spend lots of money. So, you know, some in the industry are excited to see what could happen if these two companies fell under the same roof and ownership. Bloomberg's Hannah Miller. Follow those results on Bloomberg TV and radio as soon as they come out after the bell today.

14:07Well, another company that we are watching, CoreWeave, shares of the cloud computing firm fell 22 percent last week. This amid a broader pullback in the AI trade. Now, investors are watching its results closely as concerns grow over heavy spending by CoreWeave. customers. Bloomberg's Dina Bass joins us now with more. The 22 percent decline in shares last week, the concern about this idea of some circular financing, the small number of customers that CoreWeave has that really account for a majority of its revenue. What's the thing that investors are watching most closely for with today's results, Dina?

14:41As you said, it's the spending and what they say about it. It's not just spending by CoreWeave's customers. It's spending by CoreWeave itself and sort of the debt financing, the debt that they're taking on to do that. You know, across the board on some of these companies, investors are sort of betwixt in between. On the one hand, they want to see spending because it's a solid demand signal. If companies are spending to expand data centers, it means that they think that they're getting more AI business in the door. When they stop spending, investors are going to worry that that's slowing down. On the other hand, investors are also worried that all of that spending just costs a lot of money and what's the return?

15:16When do you start making that back? And so I think for Corweave, there's going to be a look at what they're saying about demand signals, what they're saying about deals that they've signed, about remaining performance obligations, so deals they've already booked and haven't been able to fulfill, as well as what's going on on the profit or in the case of Corweave, the loss side, in terms of what they're spending to get to fulfill those customer obligations. Can CoreWeave actually get everything it needs to build the capacity or invest in the capacity that it thinks its customers will need? Can it get the chips?

15:53Can it get the electricity? Can it get the infrastructure? Right now, no one is getting everything they need. And that's CoreWeave, OpenAI, Microsoft, Meta. Nobody's getting as many chips as they want. Nobody is getting as much power as they think they need. You know, it's all coming online rapidly, but not rapidly enough based on what these companies think the demand picture looks like. Bloomberg's Dina Bass joins us now. And Dina, thanks so much for that update. A reminder, we will have those numbers for you as soon as they break after the bell on Bloomberg TV and radio as well. Well, let's put all of this spending into context of the broader markets as well with Hilary Frisch, Senior Research Analyst for software and IT services at ClearBridge Investments.

16:37Hilly, good to have you on the program. Thanks for having me. The existential question that Dina was just talking about, when is this going to pay off? It's not just with CoreWeave. It's not just with Microsoft. It's not just with meta platforms. This is the existential question that every investor is asking themselves right now. When will it pay off? It's an existential question. However, there's a lot of long-range planning occurring at present. the commitments that OpenAI and these ecosystem partners are making are stretched out over a very long-term horizon. And as Dina mentioned, I thought she summarized it well, nobody can get what they need yet.

17:15So it's going to be an ongoing process of seeing allocations, seeing revenues, seeing costs drop, seeing funding, seeing improvement across the ecosystem, which will reinforce investor confidence in this. I think there's a strong belief that there is ROI, but investors are paid to evaluate risks as well as reward. And sometimes that pendulum shifts really far in one direction. And say in the case of an Oracle who, similar to CoreWeave, is supplying a lot of this capacity, that stock had gotten back on Thursday or Friday to close to where it had been before the big announcement, the big announcement with OpenAI.

17:53And I think investors are viewing what's good as bad until they get some answers to these questions. That said, I think there's more good to come and we'll get milestones along the way proving out the thesis of the ecosystem and the returns. That thesis of the ecosystem is really something that I'm having trouble visualizing right now. And no matter how much Mark Zuckerberg tries to explain superintelligence to me and to shareholders of the company, I still don't understand what that ultimate payoff looks like, not just for meta platforms, but for the industry in general? Is this something that will only pay off when there's mass unemployment?

18:31So companies don't have to actually pay for people because machines and AI are doing the work. Is it an increase in productivity? We all keep our jobs, but we have these little friends with these little helpers who help us do it better. What is it? Nobody knows. I think it's a combination of increased productivity, increased revenue, increased velocity of activity at a minimum, AI should really supercharge the individual. Today, the adoption has been very methodical among typical commercial organizations because they have to worry about security and orchestration and liability and all sorts of things, and that's going to be the case.

19:08But we are seeing the beginnings of real progress. We're seeing the technologies in the marketplace start to mature. We're seeing the very beginnings of commercial deployments and production beyond what Palantir is doing. And so I think we're seeing the beginnings of it. But as we know, technology trends are overestimated in the short term and underestimated in the long term. And things move very slowly until they start to move quickly. And that's just a phenomenon of tech. But are you using it at all with your job? Sure. How? Yeah, we're using ChatGPT Enterprise. Our developers are using Cogen tools.

19:43But those things are easier because the finished product doesn't have to be correct. I can see what works for me and what doesn't, but it's a very different phenomenon when you have something customer facing or broadly employee facing where it has to work out of the box and it can't bring your organization down in terms of liability. So it's going to be a process for sure. Yeah. I was talking about this last week with somebody on our program and they said they're basically like an intern, these, these LLMs, you know, eager to help out, but you really have to check the work to make sure that it's something that can actually go to print.

20:16That's something that is actually accurate. Finally, I just want to talk about the overall economic effects of this. A lot of what we talk about when it comes to AI, the real beneficiaries have been the major companies that we talk about every day on Bloomberg Tech. But when will we start to see these advancements actually affect the bottom lines and the productivity of companies that are not necessarily tech adjacent? So such a great question. And it's funny because people are attributing layoffs to AI. And I think in part, some of those layoffs may come from the need to fund AI, but not directly from the productivity benefits from AI yet.

20:54So in other words, companies spending money on AI rather than people, and that's why they're making investments there rather than in human capital? Well, they're spending on AI, but there are other things behind the layoffs, meaning people that overhired during the pandemic, especially in the realm of technology, Not all those hires were of the quality that they wanted. They had to pay a lot for those folks. And also, companies have been bracing for an economic downturn. My industry contacts tell me everybody's bracing for a downturn, concern over tariffs, inflation, etc. So I don't think it's directly attributable.

21:25But to answer your question directly, I think next year we start to see, we're starting to see production workloads going to production today. I think companies will have better worked out the kinks by the second half of next year. As I mentioned, the technologies are maturing, the costs are plummeting, the ROIs will rise. And I think into second half of next year are really going to be the first signposts of broader benefits from AI to the average commercial organization. Hilary Frisch, Senior Research Analyst at ClearBridge Investments. Thanks so much for joining us on Bloomberg Tech. Well, coming up, Grab takes the wheel, investing in a remote driving startup.

22:03Speaking of driving, let's take a quick look at Tesla shares. This shareholder is approving a$1 trillion pay package for Elon Musk last week on the promise that he'll transition the company to focus on AI and robotics. The company likely benefiting from the wider risk on sentiment today, too. This is Bloomberg Tech.

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23:32Time now for Talking Tech. First up, Grab investing$60 million in remote driving service VEI with the potential to reach$410 million. Check this out. VEI allows users to order a car, which is then operated remotely and delivered to the customer. The deal is expected to close in the fourth quarter. Plus, TSMC posted a 16.9 % rise in sales for the month of October. That's the slowest pace for the chip maker since February of 2024. Still, the company on track to meet average analyst estimates of 16 % sales in the current quarter. And NVIDIA's Jensen Wang remains optimistic about the AI demand, asking TSMC for more chip supplies.