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0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break.

0:37So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens. It's smart, calm and to the point. And it fits into your morning. You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris. On Apple, Spotify, YouTube or wherever you get your podcasts.

1:03Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. Welcome to Bloomberg Tech. I'm Katie Greifeld. Coming up on today's show, Intel shares fall on a report that NVIDIA halted tests to use Intel's methods in chip making. Plus, a federal judge gives the OK for the Trump administration to move ahead on a$100 ,000 fee on new H-1B visa applications. what that means for Silicon Valley hiring. And Tesla faces more regulatory scrutiny with a new federal probe over its emergency door release. All that and more coming up. Let's take a look at these markets.

1:44It is Christmas Eve. There is no trading volume to speak of, but you can see the S &P 500 up slightly on this Wednesday, higher by about two-tenths of a percent. The Nasdaq 100 underperforming. We'll tell you why in just a minute. The Philadelphia Semiconductor Index, also green, but really slight gains here. Volatility continuing to drain out of these equity markets. The VIX trading with a 13 handle on this Christmas Eve. Meanwhile, let's get to two specific names that are restraining what you're seeing when it comes to the big tech complex. Intel and NVIDIA. Intel down about one and a half percent.

2:21NVIDIA down nearly one percent. Given how big NVIDIA is, that is really acting as a weight on the overall benchmarks here. Let's bring in Bloomberg Equities reporter Ryan Vlastelica for the latest on what's going on here. The headline that I'm reading on the terminal, Intel, falling on a report that NVIDIA has halted a production test of some of its advanced chip making capacity here. Ryan, what do we know so far? Hey, good morning. Thanks for having me. So the background for this is that for several years now, Intel has really struggled against perception that it is falling behind in chip manufacturing, especially to companies like TSMC overseas.

2:59Now there was a lot of hope this year following an investment from NVIDIA, following the government taking a stake, that it would be able to better finance this ambitious turnaround program to sort of re-establish its leadership position in chip manufacturing. So this report basically says that NVIDIA tried out some of the latest chip processing out of Intel and it's pausing that. So I don't think this will come as a huge surprised because there was seen as a pretty significant gap between Intel and TSMC, you know, and the other major chip manufacturers. However, this is probably just enough of a cause for disappointment in Intel, which has really been bid up quite dramatically this year on the back of all this news that it's seen about the investments and so forth.

3:41Right. Absolutely. Just to recap, NVIDIA itself agreed to invest$5 billion into Intel in September. That followed The U.S. government announcing that it was also taking a roughly 10 % stake in the company. So there's a lot of hopes, as you say, for a potential turnaround story here for Intel. We know that they have a new CEO as well. But just give us some context here, you know, how this specific year's performance compares to the last several years of disappointment for Intel. Yeah. So one thing I would just say is that when NVIDIA announced the stake in Intel, they did make a point of saying that there wasn't any sort of agreement that it would be using the chip manufacturing here.

4:18But clearly they've been trying it out. They've been testing it. And the fact that they are pausing here is just enough of a, you know, it sort of underlines how Intel has really sort of fallen behind competitors in this pretty significant area. Now there is still a lot of interest in building out domestic chip manufacturing. Intel is building a chip here. I believe it's in Ohio. TSMC has building a chip that I think is in Arizona. There's a lot of money surrounding this, that Chipsax was involving this. There's a lot of significance here, especially when it comes to issues like national security here.

4:49So this is something people are paying a lot of attention to. And certainly if the news had been the opposite and NVIDIA had come out and said that it is going to be using Intel, I think that would be a pretty significant game changer for Intel as we go into 2026. The idea that is really reestablishing itself in manufacturing, I think would cause a lot of people to reassess the stock and its prospects. Absolutely. Intel, definitely a story to keep an eye on in 2026. Ryan, before I let you go, you had a great story out on the terminal in the past few days talking about how it's the boring bets when it comes to tech that seem to be working the best this year.

5:23Memory chips, hard disk drives come to mind. What are some of the specific names that really stood out in the tech space this year? Well, Micron especially has been a really big gainer this year. It's memory chips, the high bandwidth memory. That's a pretty significant part of overall AI infrastructure. That stock has, I think, roughly tripled or so this year. It recently had results. Results were very strong. The stock moved up even more. And if you look beyond that, the companies that are, you know, typically don't get a ton of interest. Companies like Sandisk, Western Digital, Seagate Technology, makers of hard disk drives, also a part of the AI infrastructure.

5:58This is something that people were saying wasn't fully appreciated. Hard to make that case now. Some of these stocks have doubled, tripled. They're some of the biggest gainers on the S &P 500 this year. And it is, you know, I kind of bet ironically in a part of the market that otherwise would be a little bit too dull for most people to be excited about. Absolutely, Ryan. Really appreciate your reporting this year. That is Bloomberg's Ryan Blastelica. Meanwhile, let's get a broader look at the tech markets and what investors are looking ahead to in 2026 with IPEC Oscar Deshkaya, Cisco Senior Market Analyst.

6:29Great to have you with us. So I actually want to start where we left off with Ryan. It's really interesting that you think about what really worked in 2025. It was the so-called boring parts of the AI trade. A lot of these, you know, memory disk makers, memory chip makers, that is, in the likes of Micron. I wonder, you know, whether you expect that will be the momentum heading into 2026. Well, it's pretty much explainable why these memory chips, boring pockets of the market, gain more than the other exciting parts. And one of the reasons for that is that because AI chip demand was so strong that many manufacturers actually assess more capacity in producing these chips in demand and they reduce their capacity for producing other and more boring pockets of the market.

7:14And that's one of the reasons why it's what explains actually the rally that we've seen in Sanix and Seagate and Western Digital and likes. In 2026, we think that not only that the boring, the most boring and undervalued pockets of the market will be investors radar, but we will also expect to see actually this technology and AI rally broadened toward the non-technology pockets of the market because AI productivity, AI cost efficiency also benefits to any other sector out there, including banks, health care industries. and I think that this is going to be the big story of 2026. Yeah, absolutely, and we don't have much longer to wait.

7:55I want to talk a little bit about what didn't necessarily work when it comes to the overall AI trade in 2025, and it's tempting to talk about that as a monolith, but while memory chip makers seem to have a great year, you take a look at some of these software names. Adobe comes to mind, for example, and it feels like some of these companies just can't get their footing under them. ServiceNow, Salesforce also examples there. I wonder what you make of what's going on in that sector. Well, these companies have come under the pressure of AI. You would expect that making AI tools available to investors would boost their revenue, but it actually had the exact opposite effect on these companies.

8:34They have not been able to monetize and sell these AI-boosted models to investors as much as they wanted. And actually, the fact that other models, other AI models came to the market to challenge these companies have also been a big problem for these companies. We think that in terms of AI applications, the competition is going to be quite rough in 2026 because there are a lot of AI models. Some of them are going to be winners. Some of them are going to be losers. But it's exactly the same story for the big AI applications and the likes of Adobe, for example, or Shutter Circle. These companies that just integrated AI applications on their product offering will have to face that competition.

9:19I think that that's going to be also weighing on the margins. Yeah, it's a good reminder, Bader, that there are companies that are doing the disrupting. And then there's companies that the market thinks are being disrupted right now. But I also want to talk a little bit about, you know, what we're seeing when it comes to CapEx. That has remained one of the dominant stories when it comes to, you know, every three months we get those earnings report. And we've seen it start to really get expressed in certain companies. Oracle comes to mind, both their equity and their debt. This pressure to see some sort of ROI when it comes to spending.

9:53I wonder if you see that pressure broadening out next year, IPEC. Of course. I mean, since the last three months, since the last earnings season, what we have seen is that the headline, shiny headline figures were no longer impressive for investors. They wanted to dig deeper into these reports. One, how are the revenues are being accounted? And two, what's happening with the debt? Is the debt too high or is the debt being offloaded? It was also one of the questions that investors have been asking and have been worried about. So what investors want today is to see slowing investment until we see return on investment.

10:32The problem here with the technology is that if there isn't overspending, the risk is that this technology gets outdated by the time revenues start coming in. So we really think that spending is going to be one of the major issues and major, major talking points into 2026. And one way to go around this risk is to choose companies that are able to turn this overspending into an immediate revenue opportunity, like the ones that do have data centers, the ones that are actually able to rent their chips out. And in this context, what we see is Microsoft, Amazon and Google are the three companies that could help investors reduce this risk of overspending in AI.

11:13And Ipek, I have less than a minute with you, but before I let you go, I would love to hear, heading into 2026, what is your highest conviction? Well, the highest conviction right now is rotation, again, from technology to non-technology pockets of the market. I think it is important to note that the macroeconomic backdrop remains positive for technology stocks as well. So we think that the rally could continue, but it might decelerate next year. And again, the AI enthusiasm will probably move toward the non-technology pockets of the market, toward the sectors that actually do also use technology that could be boosted by AI tools.

11:52Absolutely. That rotation, especially from growth to value, has been fascinating to watch over the past couple of weeks. Ipek, Oscar, Deshkaya of Swissquote, great to get some time with you. Now, coming up on B-Tech, a judge has ruled in President Trump's favor upholding$100 ,000 H-1B visa fees. Some of the most vulnerable companies are in the tech sector, but the legal fight isn't over. More on that next. This is Bloomberg.

12:30Well, a federal judge says that the Trump administration can move ahead with a$100 ,000 fee on new H-1B visa applications. Now, that is adding pressure on U.S. tech companies that rely on hiring foreign skilled workers. Eric Larson, he covers legal affairs and politics for Bloomberg News. Pleased to say he joins me now on set. So, Eric, give us some context here. You know, we tend to talk about tech companies when it comes to these visa fees, but just how exposed is the industry to this potential$100 ,000 fee? My understanding from these lawsuits that have been filed and from the data we've seen is that they're pretty exposed.

13:08Notably, these companies did not file lawsuits challenging the visa. It was filed by other groups. The ruling we just got was from the Chamber of Commerce. So maybe they're waiting to see where this goes. But certainly the Trump administration and other government officials say that these companies can afford them, even though they do use them quite a bit and they are pretty exposed. The government simply argues there are plenty of American workers who they could be paying to do the same job, just paying them more. Yeah. I mean, you think about some of these giant tech companies with deep pockets.

13:42Talk to us about the public sector, though, when it comes to health care and education, because, again, we talk about tech all the time, but these sectors also rely on H-1B visas. Exactly. And there is another lawsuit that was filed by 19 Democratic attorneys general. Most of the Democratic led states are part of this lawsuit. It's being led by California, which has the most of these visas are mostly in California. And these states argue that they're suing on behalf of the public sector because of health care. They say that they have to look out for the health care industry, the residents in their states.

14:15And they say that the quality of health care will simply suffer because there is a shortage of these skilled health care workers who use these visas and won't necessarily be able to afford a$100 ,000 fee from these hospitals. You know, maybe the companies can afford that, but hospitals not so much. So there's not really a carve out for them. And the hospitals could suffer, according to these states that sued earlier this month. And there's a hearing in that case in February. So it remains to be seen how a judge will rule on that aspect. Well, that's the rub, right? You think about Amazon, Microsoft, Meta, Apple, for example.

14:50If they're paying millions of dollars, potentially, for specific AI talent, a$100 ,000 fee probably doesn't seem like that much to them. But to your point, you know, if it's a hospital having to pony up that fee, it's a much different conversation. Walk us through how you might expect the legal fight to take shape next. because it seems like there's a lot of different moving parts here. Sure. So the ruling that we just got was from the lawsuit filed by the Chamber of Commerce in federal court in Washington. That case is essentially over unless there's an appeal. It was a summary judgment. The judge, who was an Obama appointee, by the way, just ruled flat out that the government was correct.

15:29The president had broad authority to issue this under the powers given to him by Congress in the Immigration and Nationality Act. But the lawsuit filed by the Democratic-led states, that is, like I said, there will be a hearing on their motion for an injunction against the visa in February. There isn't a hearing set on the third lawsuit, which is filed by unions. So this could take months to play out. And as with so many of the other legal challenges involving the president's policies and executive orders, it could end up at the Supreme Court. And that could be quite some time. The big question for employers and potential visa holders is whether or not this program, this fee, will stay in place during the entire legal challenge.

16:13Right now it is, but these other lawsuits could result in different outcomes. All right, Eric, really appreciate your reporting. Great to see someone else in the office on Christmas Eve as well. That is Bloomberg's Eric Larson. Meanwhile, another story that's tying together tech and politics is that the Trump administration has imposed visa sanctions on former European Union Commissioner Thierry Breton, along with four other activists who have pushed for regulations to online content moderation. Now, Secretary of State Marco Rubio said in a post on X, quote, for far too long, ideologues in Europe have led organized efforts to coerce American platforms to punish American viewpoints they oppose.

16:52We stand ready and willing to expand this list if others do not reverse course. For more, let's go now to Bloomberg's Laura Davison live in Washington. So, Laura, first give us the reaction that you're seeing and hearing. Was this move necessarily a surprise? This move was a surprise and really came as a shock to both the people who were the subject of these visa sanctions as well as to other European officials both at the EU level and at individual countries. There's been a really strong and forceful pushback saying that this is a move that amounts to censorship and is very inappropriate on the U.S.

17:28side. This is sort of just one prong in what has really become a multifaceted Cold War between the U.S. and the EU, particularly as it relates to tech companies and who has the power to regulate and tax them. Yeah. And, you know, we talk about, you know, this censorship potentially of American viewpoints. What specific platforms was the Trump administration holding up as an example where censorship actually did take place? Yeah, so there's a couple different here, largely the big social media platforms. So Facebook, Instagram and X in particular, Elon Musk's platform has been the subject of a rather large fine earlier this year for not allowing these content moderation to feed out hate speech from the platform.

18:12So X had to pay this fine. This has kind of become this ongoing tit-for-tat war, and you can almost see these visa sanctions coming from the U.S. as a response to that fine earlier this year. All right, Laura, really appreciate the update. That is Bloomberg's Laura Davison joining us from Washington.

18:34Well, as Warner Brothers Discovery and Paramount weigh their next moves, media dealmaking is back in focus. Joining us now is Stephen Wolf Pereira. He is CEO and founder of Alpha, an independent AI governance intelligence firm for board directors and C-suite executives. Great to have you with us, Stephen. So let's talk about Warner Brothers. You had Larry Ellison coming out with his personal guarantee of$40 billion for the Paramount Skydance, a hostile bid, that is. Do you think that that goes far enough to address some of the Warner Brothers board's concerns about financing? So it's great to be here.

19:11Happy holidays. But this is really going to be a gift for the Ellicense because if you think about what they are doing, they are truly amassing one of the biggest and most important collection of media assets in record time. And whether$30 a share is going to be enough, I think they're going to have to sweeten the deal. But I think you need to look at this from a larger vantage point because if you really look at the assets that they're starting to consolidate, it really is concerning on the one hand, exciting on the other. But when you think about Paramount combined with potentially TikTok, obviously Warner Brothers Discovery, you just look at all the different pieces of this puzzle.

19:46We're really seeing the reshaping of the American media landscape right before our eyes. Well, let's talk through some of the concerns here. As you said, it's exciting, but there's also concerns in highest order. What would you say tops the list? I mean, one is this really trying to understand what really is going to be the governance implications of this. When you think about the amount of data that they are now going to have to be able to train all their AI. Again, this is not just a media company. Obviously, Larry Ellison with Oracle, understanding the TikTok angle. This is really connecting the dots.

20:20And all these AI companies are desperate for more data to train their models. And so when you really look at this, this is a truly incredible opportunity to consolidate data all under this massive umbrella, which is really going to be Skydance, Paramount and Oracle. Interesting. So you're saying that Oracle, you know, if we actually see Paramount Skydance be able to win the Warner Brothers Discovery bidding war, that Oracle might then potentially use their content library for training for their models. I mean, again, you have 100 percent control over Paramount. You know, what's to say? What is the control going to look like, you know, for Warner Brothers Discovery once it's under that umbrella?

20:56You're just going to have a lot of ability to kind of blur the lines and just really see who is going to be able to have some type of guardrails, governance, guidelines around all of this. And I think that that's something that shareholders need to look into. Obviously, you want to have your fiduciary responsibilities as a shareholder, but certainly the board is going to have to make some really tough decisions. And I think there is a really interesting reason why the board has actually rejected the Ellison's repeatedly until they had to go public with this hostile takeover. Yeah, it is a fascinating situation where you have the Warner Brothers board saying that, you know, we've approved, we recommend the Netflix offer.

21:31At the same time, you have Paramount basically going directly to the shareholders with this tender offer. I mean, what do you make of it? How do you see the investor base actually swaying here when it comes to what the board is saying and what Paramount is saying? I mean, look, the truth of the matter is you have a very diluted shareholder base. Obviously, you're going to have the largest institutional investors, the Black Rocks, Vanguard, State Street, really controlling a lot of the shareholder count. But when you really think about where investors are going to be, they're going to really vote for what is going to be the best return for them.

22:05And so I think you really are going to see Netflix really trying to have to up the ante. They obviously have a very clean kind of approach. They have a very clean deal. Obviously, they have a better credit rating. When you think about what the levered company is going to look like, combined with Paramount as well as Warner Brothers Discovery, I think it's going to be north of maybe six, seven times, you know, debt-team-e-da. So just from a capital perspective, it's going to be an extremely levered asset. That's part of the reason why Larry Ellison is doing the personal guarantee. And Stephen, we have less than a minute here left with you.

22:36But, you know, when you look into your crystal ball, how long do you think this saga will continue? How long will it take to actually get a conclusion here? I mean, obviously, they pushed out the shareholder vote down to January 21st. And then you're going to have, obviously, all the regulatory, you know, kind of theater that you're going to have to go through. But I feel like this is just the beginning because this is now the reshaping of American media. And when you really understand what is happening, this is a data play. And when you really connect the dots, this is truly going to reshape the way that all the AI companies are going to be able to have access to data.

23:09Who is controlling that? And what are the governance guardrails around it? All right, Stephen, really appreciate your time. That is Stephen Wolf Pereira. He is the CEO and founder of Alpha.

23:25Let's take a look at these markets on this Christmas Eve. The S &P 500, a little bit of green on the screen. As I said at the top, no trading volume to speak of, but you can see we're drifting about three-tenths of a percent higher. Tech not quite outperforming today. The Nasdaq 100 higher by just about two-tenths of a percent. You can see the Philadelphia Semiconductor Index a little bit below that as well. Very quiet, though, when it comes to volatility as measured by the VIX. You can see we are down about 47 vol points and trading with a 13 handle. Let's talk about why you can see the Nasdaq 100 underperforming.