Tech Stocks Under Pressure As Iran War Drags On

17:20Ed Ludlow:Well, this is the cool thing to do now if you're a software company, right? If you want to cut costs, you say it's due to AI. A couple years ago, it was that you were flattening management layers. And today, it's that AI is changing the market. And there's some truth to that, right? I mean, Atlassian stock is down 50 % some this year. And a lot of that is because investors are scared they're not adapting to AI correctly. So there is certainly some truth that AI fuels these cuts, but it's probably not quite as direct as some of these management memos make it out to be.

17:52Michael Dell:Oh, the old AI washing debate continues, Brody. And you'd just been breaking the news last week that Oracle was likely to be laying off many thousands of people, it might be understood. And after their earnings, it feels as though they've filed some formal paperwork. All of this seems to be building. Are we going to hear it from other software names? We've got more earnings coming after the bell, for example.

18:12Ed Ludlow:I think it's likely that we're going to keep hearing. I mean, this whole AI job displacement question has been going for years and I, it seems like it's only ramping up. Yeah. I mean, tonight we have Adobe. Notably they haven't done a big scale layoff and they're firmly in this bucket of a company that is kind of really facing a lot of skepticism from the market about their ability to compete in this AI era.

18:37Michael Dell:Bloomberg's Brody Ford. Thank you very much indeed on all things AI and unfortunately worker displacement, but let's talk about Netflix now, maybe shelling out up to$600 million to acquire Ben Affleck's AI startup into positive. That's according to sources familiar with the deal. Now, the move would mark one of the biggest purchases ever for the streaming giant. Here with more Bloomberg's Lucas Shaw, who covers all things media and entertainment. And, well, they couldn't get Warner Brothers Discovery, so they're going in on AI. And actually, its cash portion is less, but there's some quotas they should hit.

19:09Ed Ludlow:Yeah. I mean, the price was initially described to me as$600 million. I spoke to a nut from people where there is an earn out that would get to$600 and perhaps even more. The initial upfront money is less than that, but still a big payday for a company that nobody even knew existed really until Netflix announced this deal. Ben Affleck had been out there giving some really interesting public statements on AI, but it seemed just as sort of a curious filmmaker, not as someone who'd started his own company.

19:37Caroline Hyde:The performance triggers are interesting when you just stop and look at what Interpositive does right. The tools that it makes allows filmmakers to alter existing footage. Would you just talk a little bit about that, Lucas, and why it's useful to Netflix?

19:52Ed Ludlow:Yeah, well, it's useful on a couple of fronts. One is this is an AI company that is founded by a filmmaker. It's for filmmakers. And if you listen to Ben Affleck talk, they don't train on a bunch of existing work that's already out there. You're not going to run into copyright issues in the way that Google, Facebook, OpenAI, etc. are. You are supposed to upload your movie as you're making it or your TV show. And the model will train on what you have put into it and can then help you change your shots, adapt your shots, take things out, adjust certain backgrounds. And so it's exactly what Hollywood should want in an AI product, which I think is helpful to Netflix because most people in Hollywood are going to be very mistrustful of companies like Netflix and Amazon.

20:37Ed Ludlow:when it comes to AI, they're going to assume that they are out to do sort of what you were just talking about with Brody, right? Job displacement.

20:45Michael Dell:This is a lot of money. How large is the scale of the engineering talent, the scale of the company? How long has Ben Affleck been building this basically in stealth?

20:57Ed Ludlow:The company is only a couple years old. The staff is still quite sparse. I think the number caught a lot of people, including myself, off guard, which is one of the reasons why we ended up reporting it, right? The news that Netflix was buying this company had already been announced. What I was most interested in was when I heard how much they had paid for it. But my understanding is that, you know, the company had been out looking to raise money in the private markets and was getting a valuation north of a billion dollars. And so when they had the opportunity to sell, they didn't get a price quite that high, but it had to be pretty significant for them to consider doing it and essentially become a proprietary technology for Netflix.

21:33Ed Ludlow:It is interesting.

21:34Caroline Hyde:We started the segment by saying, for Netflix, biggest acquisitional deal ever, and sort of completely have forgotten about and looked past what happened with the Warner Brothers discovery bid. Fold that in, where we're at with it.

21:47Ed Ludlow:Waiting on what's going to happen with Warner Brothers and Paramount, right? Netflix is pretty much out. Paramount CEO David Ellison was on the Warner Brothers lot this week talking to some senior staff. They're trying to get that deal approved by the fall so that they don't have to start paying the ticking fee they have that would make their acquisition of Warner Brothers even more expensive.

22:07Caroline Hyde:Bloomberg's Lucas Shaw, who is the managing editor that leads our screen time team with the reporting. Thank you very much.

22:18Michael Dell:Apple, when it's entry into the foldable phone category, the long awaited device is set to have an iPad like feature when it's fully opened, according to sources. Let's get more on Bloomberg's Mark Gurman, who, of course, wrote the story. So what there's going to be a screen on the front, but also the internal screen is going to feel more like an iPad mini.

22:36Ed Ludlow:Yeah, this is pretty exciting. So if you've used an iPad mini, it has about an 8-inch screen. And now this foldable phone, it'll be kind of small when it's closed, but when you open it up, it'll be the size of an iPad mini. So basically an iPad mini you can fit in your pocket. And so with that, you're going to see an updated version of iOS 27 later this year. And some of the key features will be iPad-like layouts for apps that will run standard iOS. The other cool things here is that it'll be a little different from past foldables in that it'll have better durability. And then it'll also have a reduced crease.

23:10Ed Ludlow:So it'll have a market-leading crease, so to speak. Right now, most foldable phones, you see that line in the middle. On the Apple version, it'll be much less visible. So that's going to be pretty nifty. And obviously, this is going to be probably north of$2 ,000. So it's obviously a good thing that they have the technology a little superior to what's on the market today.

23:30Caroline Hyde:Mark, take us inside Apple, not just in the story you put out yesterday or overnight, but all the reporting on this product over the last few months. Does management feel like this is big for the direction that Apple wants to go, that it's going to be one of the most high volume products, things like that?

23:50Ed Ludlow:I actually think it's going to be pretty niche. you know they'll sell some maybe five to ten percent of overall iPhone units in a year will be the foldable phone but it is going to be niche from the get-go obviously because that price point which puts it at about double what you're paying for sort of the baseline pro phones and obviously some people like the current candy bar style so the slab of glass style you know they're also working on new versions of the regular Pro phones. So you'll see an 18 Pro and 18 Pro Max in the fall. Big focus there is on processor and camera. The phones will look basically the same as the current versions.

24:30Ed Ludlow:And then a year later, as early as 2027, you'll see more of an edge-to-edge phone with more curved glass in honor of the product's 20-year anniversary.

24:41Michael Dell:Bloomberg's Mark Gurman. Always with all things Apple, we thank you. Now in Washington, tech giant Dell has been holding an event with its biggest customer, the U.S. government. Earlier, Ed spoke with Dell CEO Michael Dell and Under Secretary of Science at the U.S. Department of Energy, that's Dario Gill, who spoke about using AI to advance scientific discovery. Take a listen.

25:01Caroline Hyde:A lot of the themes that you're trying to get across, and I don't know what conclusions you've reached in the last hour with your colleagues sat next to you, is that either government is getting it right in the United States or they're not, in where they're allocating resource, where they're deploying policy to build critical national AI infrastructure? What are the conclusions you've reached today?

25:23Ed Ludlow:You know, we're seeing in government a number of the projects advance from the pilot phase to production phase. And certainly, you know, Dario can speak to the ambitious initiatives, But, you know, we are, you know, we have built a platform for open, scalable systems to enable all the great sciences occurring in the national labs and beyond. Certainly, we have a fabulous example in the Doudna cluster that we're beginning to deploy. And all of this is about accelerating science, you know, scientific discovery and progress. And certainly, you know, that's a huge priority. So great to be here with our largest customer.

26:15Ed Ludlow:And, you know, we're very mission focused and making sure our solutions are enabling the mission wherever it occurs, whether that's in space, out in the field and everywhere else.

26:33Caroline Hyde:there are case studies right we could talk for example about the progress you've made with any rsc but zooming out for a moment if you will um from the doe's perspective why is ai infrastructure now such a core part of of national security and energy security implications

26:53Ed Ludlow:well because uh we're in the midst of a computing revolution and ai is at the heart of that revolution and it is going to transform how science and engineering are practiced in our nation. The Monday before Thanksgiving, President Trump signed an executive order to launch the Genesis mission. And within that mission, we seek to harness this computing revolution to double the productivity and impact of America's trillion dollar a year R &D ecosystem. And science and engineering are at the heart of our progress and capabilities in national security, in discovery science, in energy, in health. And the example of the partnership that we have with the Doudna system in NERSC, in one of our 17 national laboratories, exemplifies the power of using AI to accelerate science.

27:46Dr.

27:47Caroline Hyde:Gil, is Dell and Mr. Dell sat next to you delivering supercomputers to the timeline you'd expect? Yes.

27:55Ed Ludlow:So, for example, in that system that we're standing up, we already have an early access program where we stood up the first generation of nodes of the NVIDIA GPUs. System is going to be operational for the science community mid-2027. So, I think one of the characteristics we're seeing right now is that we used to have supercomputing projects that would take a decade to build. Now, we're building these things in two years. And that's a big, big change in terms of the velocity with which it's moving. One of the things that the government is doing is, sorry, I had to interrupt there. No, please, please carry on.

28:34Ed Ludlow:Leveraging the integrated rack scalable systems that we're building for commercial and enterprise. And obviously, there are enormous buildouts in AI data centers, as you're well aware, Ed. And so, So, you know, kind of, again, leveraging that open, scalable architecture that we built will accelerate the government's progress in all of its AI infrastructure requirements.

29:03Caroline Hyde:That was Dell CEO, Michael Dell, and Dario Gill, Undersecretary for Science at the U.S. Department of Energy. Now, coming up, Startup Sunday raised$165 million as it works toward bringing dishwashing and laundry folding robots into your home. Speak to the CEO next. This is Bloomberg Tech.

29:27Michael Dell:AI coding startup Replit has raised$400 million in a Series D round led by B2B investor Georgian, valuing the company at$9 billion. Joining us to discuss the latest funding is Replit CEO Amjad Massad. Wonderful to have you with us, Amjad. And look, what's the money going to be used for? Because you're building it up in a swift formation.

29:47Ed Ludlow:Yeah, so there's a lot of product innovation to be done. So we're hiring more people in R &D. You know, Replita is kind of expanding beyond just code. We think that code has become the universal interface for knowledge work. So we're seeing customers of ours, they're not just building apps, although that's a big use case. They're building automations, they're building slide decks, they're building marketing materials, they're doing all sorts of things with Replit. So we're expanding that, but we're also expanding internationally. We're seeing a lot of excitement around Replit in places like in Japan, South Korea, obviously the Middle East.

30:33Ed Ludlow:We have this big partnership with Saudi Arabia, and that's growing across the Middle East, but also Asia. We were just in India for the AI Summit there, and there's tremendous excitement there. We partnered with Razorpay, who's also a customer, and we're bringing kind of the replant superpowers to developers in India. So there's a lot to do.

30:54Michael Dell:I have to do the follow-up of if you are with significant exposure and growing in Saudi Arabia, how have things been in the last couple of weeks? Is that still growing as quickly as you anticipate?

31:06Ed Ludlow:It is. It is. We haven't seen any disruption to growth or day-to-day operations. Obviously, yeah, we wish the best to the people there and hope we get to peace as soon as possible.

31:22Caroline Hyde:Amjad, you may see this as not fair, but if you put Replit alongside Cursor, right, alongside Clawcode, There are different functions. There are different strengths. But the base functions are similar, right? You actually also have a lot of investors in common with Cursor. How do you manage that and just basically say, no, this is what Replit does. This is how we're different. This is our motor or what we're doing best.

31:51Ed Ludlow:Yeah, so if you look at our customers, our customers buy Cursor, buy Cloud Code, but they buy them for their core engineering teams. What are the rest of the company using? Code is democratized now. Anyone can build applications, can build software. And the most innovative companies in the world are opening their eyes to that and saying, we don't want to be left behind. We want our product managers to be able to ship software. We want our designers to prototype and get in front of customers as early as possible. And that's not just startups. This is like we're talking about 85 % of the Fortune 500 companies are using Replit.

32:36Ed Ludlow:And the primary departments is primarily outside of engineering. So we don't really compete with them head-to-head on deals.

32:48Caroline Hyde:So the benchmark right now in Silicon Valley, again, you can tell me if I'm wrong, but it's ARRs. You know, how real these businesses are coming in, how quickly. Take us inside Replit. How's things going financially?

33:03Ed Ludlow:Yeah, I mean, last year we grew 100X. We went from$2.5 million to$250 million. I said last year that it looks like we're going to be headed to a billion ARR. in 2026, and we're on track. So I think that's really exciting. But we also spend a lot of time just making sure enterprise adoption is going as planned. Because you mentioned Cursor and Cloud Code, they're going after established markets. What we're telling enterprises that now you need to decentralize innovation. We're creating a new category of anyone can code in the enterprise. So the thing we're most proud of recently is the adoption in the enterprise.

33:52Caroline Hyde:I'm Judd Massad, Replit CEO. It's great to have you back on Bloomberg Tech. Thank you very much. We have more funding news. Robotics firm Sunday has reached a nearly$1.2 billion valuation following a$165 million funding round. The startup is using AI to develop a robot that can do housework and plans to launch a testing program later this year. Sunday's co-founder and CEO, Tony Zhao, joins us now in studio. We just showed some video of Memo. You weren't able to bring Memo with you. It's quite big and quite heavy. But it's an interesting use case. What are you going to use the funding for, I guess, in the first instance, to kind of accelerate this testing program so that I can have one in my home or anyone watching Bluebird Tech right now can say, all right, I'll get one of those.

34:39Caroline Hyde:Yeah, 100%.

34:40Ed Ludlow:I think the beta program is a really great way for us to both kind of exercise our muscle of deploying these robots into real people's homes, which is the first time these general purpose robots are deployed to like real homes, as well as deepening the research focus that we have internally.

34:56Caroline Hyde:I actually have my family in town and they're here to watch the show today and they know full well that, you know, in the living room is the laundry and it's not folded because of the difficulty in training me to do it? What is the technical challenge on the hardware side, but also software side? Dexterity to get the robot to fold laundry? Yeah, yeah.

35:16Ed Ludlow:I think the breakthrough is really about the AI that is behind it. You think about Gen AI as an AI that generates images and text, but we use it to generate actions. I think one of the most important part is how we gather the data to train this really powerful AI. And what we do is we develop this glove, memory gloves, and essentially we give it to people so that they can do the laundry in their own homes. And we capture that data to train our robots to do the same thing.

35:46Michael Dell:Skill capture gloves. So basically that's giving the data, the underlying data, so that the robot can learn. This was sort of a breakthrough that you made in academia, Tony, but I'm interested as to how the beta is going and how many people actually want them in their homes.

35:59Ed Ludlow:Yeah, we have a huge wait list. We have more than 3 ,000 people who spend like 30 minutes filling up this whole sign-up form. And we're actually in the process of selecting people who will be participating in it this year.

36:12Michael Dell:It's all about getting robots in the wild. Now, I'm interested, Tony, as to we've been watching a lot of these videos basically on fast forward. They're going at four times the speed than they actually do. What do you think your biggest learning will be in the wild? Where do you think there will be issues? Where do you think they'll really overcome a lot of the concerns people have?

36:33Ed Ludlow:Yeah, I think for us, we're actually not super worried about speed because essentially if your laundry, if all your houseworks can be done by a robot, it's essentially like you go to work and you come back to work after eight hours and all the work is done. So the part that we are really distinct is we do not actually need to train on data that is collected from a robot because we have this whole fleet of memory developers. So our interests and our users' interests are almost perfectly aligned. We want feedbacks. We don't necessarily need the data from your homes.

37:07Caroline Hyde:Bloomberg Tech Executive Producer Jackie Lopez has come in with probably the most important question of the day, which is, will it come with the hat? And why does Memo have a hat? for me probably a more important question particularly because it's not bipedal right is what are you going to charge for it and how are you going to charge what's the model

37:24Ed Ludlow:yeah i think the way we think about the robot we built is almost a perfect example of mvp which is a minimum viable product that we try to simplify we try to lower the cost so in the beginning when we sell it we're going to sell it for around 10k us dollar but just like personal and computers, just like phones, it would get cheaper over time. It comes with the hat. Yes. The hat is really interesting because we essentially imagine the world that the robots are everywhere, the ubiquitous, right? And we really want to make eye contact with the robot. And instead of putting the cameras inside the eyes of the robot, we essentially hide it underneath the hat.

38:01Ed Ludlow:So it looks a lot more natural. You can make eye contact with it.

38:04Michael Dell:It's cute. Tony Zhao, thank you, CEO of Sunday. Come back, tell us how that testing in the wild continues.

38:18Michael Dell:Investors have been clamoring for early access to shares of private companies like SpaceX before their IPOs. But they're turning to the wild world of special purpose vehicles or SPVs. They act kind of as a middleman structure whose main asset is shares of other private companies. But there are some questions around who really owns the stock or if it even exists. Springberg's Bailey Lipschultz joins us some more. And you really do this wonderful deep dive. Not every SPV is born equal. Some are more questionable than others. But what's amazing is that sort of co-founders of Anderil or the hottest IPO candidates are getting sent, well, SPV terms that they know they haven't issued shares to.

38:58Ed Ludlow:They know they haven't issued shares to. They're a company that is very outspoken about pushing back against these and just kind of the potential fees. And if you go on X, Palmer and Matt are very vocal about not wanting this to be a thing. And the big question is, if there's a market, why aren't people investing in it? And it goes to the whole debate about capitalism, right? If you are willing to take on these fees and willing to take on the risk to buy Anderil at two and a half times its latest funding round and pay a fee to a manager, from the management perspective, why not? They're offering the deal.

39:31Ed Ludlow:And from the investor perspective, hopefully you did your due diligence.

39:35Caroline Hyde:Bailey to quote the great Shrek and much like Ogres SPVs can have layers that was good layers donkey and that within it buries a very complicated web of extra fees and and what Cara was talking about understanding within those layers if the stock's even there at all in the end if there is actually ownership of of real cap table position in a private company yeah and I think that

40:04Ed Ludlow:goes back to the question of if you're invested in a co-invest on the cap table at an SPV, a so-called clean SPV, congratulations, that makes all the sense in the world. If you're being pitched an email that's saying, hey, pay me two in 10 for access to this SPV, but that's on top, that SPV is investing in another SPVs that's charging another two in 10, and that's investing in another SPV that's charging two in 20, well, congratulations, even if those shares do exist, which there are questions around that. If there is a liquidity event like an IPO or a sale, you may be thinking that you're only paying the initial fees.

40:39Ed Ludlow:But in reality, what you end up getting distributed is much, much smaller because of those carry fees and the management fee.

40:46Michael Dell:Look, FOMO inspires a lot of bad behavior. And already you started to see bad behavior in this. There is fraud or at least allegations of fraud.

40:55Ed Ludlow:Yeah. And one person settled those charges, allegations of fraud that the shares never actually existed. So cold outreach, wire me your money. And even though I'm promising you not providing those documents that I actually own the shares of said private company or said fund, I'm putting it in my bank account. And we have seen settlements already. And the more people I talk to, the more this is potentially the tip of the iceberg, because you don't have these issues come to light until there is a forced event. So when there is an IPO, when people say, hey, looking for those SpaceX shares I owned, well, maybe they don't end up getting transferred to your account and that's where the issues show up bloomberg's bailey lip schultz with the big take

41:33Caroline Hyde:thank you very much that does it curry for this edition of bloomberg tech your father-in-law

41:38Michael Dell:should come in all the time on fire at ludlow today on fire don't forget to check out our podcast you can find it on the terminal so it's online on apple spotify and iheart this is bloomberg tech