Trump Rattles Europe Defense Tech Stocks

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1:11Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco.

1:22This is Bloomberg Tech coming up. President Trump seeks, quote, immediate negotiations on acquiring Greenland for national security reasons. We'll recap his speech in Davos. Plus, Netflix shares they drop on spending to buy Warner Brothers Discovery. And Zipline CEO Keller Clifton joins us to discuss the robotics startup's new$7.6 billion valuation and expansion. At first, we return to these public markets that actually bounce back somewhat on the walking back from the edge of President Trump. The idea that Greenland will not be something that is taken by force. European stocks rally from their lows.

2:00We see, in fact, the Nasdaq 100 now up 1.4 % as the mood music changes. But there are real details in which industries benefit and which are pulling back from this significant speech over at Davos. We're looking at the S &P 500 now up a percentage point. But really, Ed, we have to get to the details of that speech we just heard. Yeah, and here to recap it all is Bloomberg Surveillance co-host Amri Hordan, who is out in Davos. The central feature of the president's speech was Greenland, not just ruling out the use of force AMH in acquiring Greenland, but the commitment to continuing on that path.

2:36What do we need to know? The president made it very clear he doesn't want to use force. He won't use force. And he talked about how he is coming here to have intense negotiations for the United States to acquire Greenland once again. So coming into this, you had the Europeans really feeling like this was an existential threat. This has really taken up all the oxygen in every single meeting room you'll attend or dinner on the sidelines of Davos, Switzerland. A lot of criticism pointed towards Washington because of the president's rhetoric regarding Greenland. But he came here with some thinking maybe was just to negotiate.

3:10And that's exactly what we did. And we've seen the president use this tactic before in the past. In the first term, there was so many leaks about maybe the United States would leave the NATO alliance. At the end of the day, NATO came to the position the president always wanted it to, which is to spend more on collective defense. Another time this happened, of course, was more recently, last year, during Liberation Day. This is what the Treasury Secretary spoke about earlier in the week here at Davos. He said the hysteria around this is like Liberation Day. Everyone needs to take a step back and take a deep breath.

3:41That was what it feels like now. Now, the president anchored this debate, negotiation, dialogue, what you may want to call it, to the extreme, and is now here for some sort of potential negotiation. Of course, we need to see how this goes. The president did say he will be having bilateral meetings with European leaders. So we'll see what comes of this. But it does seem to be like this has taken the tone of the rhetoric down a notch. And yet he chastised European leaders, particularly around energy. We think here on the technology show about the nuclear commitment. That was something he talked of, nuclear stocks react.

4:18We also hear a lot about the Golden Dome. What took your attention, Amory? Yeah, the Golden Dome has been linked with this administration to Greenland. They also spoke about the fact that Canada wants to be a part of this Golden Dome. This would be able to shield ballistic or cruise missiles into the United States before launch or during launch and be able to defend the United States, Canada. and they think Greenland is important for this. And that has been one of the issues they have been pushing. The president has talked about the fact that Greenland is just important in general for national security when it comes to Russia and China.

4:51On that front, the president did say he also will be sitting down with President Zelensky. I spoke earlier with his special envoy, Steve Wyckoff, who said he's going to Moscow tomorrow to meet with President Putin and alongside Jared Kushner. And then also he'll be having another meeting with Ukrainians this evening. So potentially we also are getting closer to some sort of peace agreement when it comes to Ukraine. And that is critically important for the Europeans. And I bring this up because the Europeans felt like Greenland has just been, besides an existential threat to them, a distraction for some of those really important negotiations taking place regarding the future of Ukraine.

5:30Runeberg's Anne-Marie Horden. Long days in Davos. We so appreciate it. Thank you. Now, let's return to tech and the earnings release of Netflix. You'll see that shares, they're sliding. They're down by the most in the month at the moment. The company delivering a disappointing profit forecast for the current quarter. And that's as spending is mounting. Let's get more on Bloomberg's entertainment editor, Felix Gillette. And look, the 76 cents a share for the fiscal quarter we're currently in, that forecast is below expectations. But it's Warner Brothers' discovery and it's programming they spend on.

6:00Yeah, I mean, I think investors have every reason to be concerned. about spending at this point. I mean, it's not just that Netflix is pursuing the biggest acquisition in the company's history, but they're also said yesterday that they're going to be spending more in 2026 than they did in 2025 on programming, whether it's TV series or movies. They spent about$18 billion last year. They're going to be up to about$20 billion this year. And yeah, they have a lot going on, whether it's live sports that they're continuing to expand in. They've got this whole podcasting thing they want to do. They've been talking for a long time about trying to ramp up their video game efforts.

6:39So, yeah, spending is a concern moving forward. Felix, you'd think that the Warner Brothers Discovery deal would be the be all and end all of that earnings call. But what executives were talking about were these attractive investment opportunities, which seem to suggest buying properties, you know, catalog. They've looked at Sony, for example, for movie rights. Did we learn any more about how aggressive Netflix is going to be in acquiring more IP? I mean, what we learned is they see the competition as being incredibly fierce out there, you know, talking about YouTube, talking about competition from, you know, other places like Instagram, TikTok.

7:16And I think from Netflix's perspective, they can't have enough library franchises content. they really become this all service for all different people in the family and to do that you know you kind of work on sports you got to work on topical programming you have to have dramas comedies boxing so they're really advanced in all fronts and yeah I think they you know are kicking the tires on every library as it comes up I think what they said is that you know with Warner Brothers Discovery once they looked under the hood a little bit they really liked what they saw. And that's when they decided to move forward aggressively.

7:52And it rather serves Netflix to be talking about competition in those fields, particularly if they want to get regulatory approval for the deal with Warner Brothers Discovery. Just remind us where we are on that deal, Felix, because the 21st of January was going to be a key date. Yeah. I mean, so Netflix came back yesterday. They amended their offer slightly. It's now an all-cash offer before it was cash and stock. And so, yeah, they're moving forward. They'll put it in front of Warner Brothers Discovery investors sometime in the spring before the annual meeting. At the same time, Paramount hasn't completely gone away.

8:31You have David Ellison still breathing down the neck with this tender offer, you know, still trying to keep them in play. I think Paramount, everyone's waiting to see if they'll raise their offer. In the meantime, Paramount seems to be saying, oh, well, you know, Netflix is going to have all these regulatory issues. To your point, that's why, you know, Netflix has had this talking point about, oh, we don't just compete with other streamers, we compete with all these tech companies and social media, all these other broader competition field. So that's been one of their big talking points. And also, of course, that, you know, they believe suddenly in theatrical releases of movies, and that they'll plan to continue to put Warner Brothers Discovery movies in theaters for the 45-day window as they are now.

9:17Bloomberg's Felix Gillette with the Netflix breakdown. Thank you very much. Let's stick with Netflix earnings. Helena Wang, research analyst at Philips Security, says the company is, quote, in an ideal position and has an accumulate call on the stock. She joins us now. Helena, why then is Netflix in an ideal position? What are the data points that you point us to from that earnings call and earnings print? Hello, thank you for having me. I guess to start off, just diving straight into their financials. They have very strong financials. So they do have a beat on both the top and bottom line. And that is not just for the fourth quarter.

9:52It is also for the entire year. So overall numbers look very solid. And that is the actual organic volume coming in. So people are actually engaging and paying for the services. Helena, like all analysts, You're trying to model for what happens next, and you put things in the pro column and the con column. Where does this situation with Warner Brothers Discovery fit into which column? Well, I guess it really depends because for Netflix right now, they're clearly in the leader position in the streaming business. So even compared to their closest robbery at Disney, they have a much bigger membership base.

10:28And they stopped reporting the numbers, but they did disclose in this earning that their membership is$325 million. and they monetize its business almost twice as better. And with less than 10 % of the total TV viewing, there's still a huge runway for growth. So this Wonder Brother deal, it really comes in. So the question for 2026 is no longer whether they're going to be able to continue their growth profitably, which they have been doing. So that's almost 100%. So the question really coming in whether they're going to be able to integrate such a big company without sacrificing in their margins.

11:08So that is the question that's coming in. Yeah, and for this fiscal quarter, it looks like margins come under pressure. So do stock buybacks. But they said, look, in the longer term, they're committed to margin increase, Helena. I'm looking, though, at the stock that's the lowest since January of last year. How confident are you and the investor base that they can not get distracted during this M &A process and indeed interweave it well if they manage to clinch it? Well, their operating margin guide seems to be a little bit light for the next quarter. They've guided 31%, while the consensus was 32 % to 33%.

11:43So there is a question of whether we will be expecting its operating expense to expand further. But I guess what my view is they might want to guide more conservatively at the start of the year, given all the uncertainty of the Waterbrother deal. and they're leaving more scope to outperform expectations as the year progresses. So I do believe there is a little bit of wiggle room in terms of margin for years to come. I mean, investors just haven't liked the idea of them making this purchase, really. Since the minute they put their hand in the ring, shares are off by about 30%. Should they be buying this asset?

12:18How integral is it that they buy this storied Hollywood asset? Well, OK, I would like to point out that financially they're very strong. So they don't necessarily need a merger to survive. So it's not necessarily a lifeline for them. So from the Netflix point of view, it's more of a power move for them to aim at total dominance. So all power moves sort of needs to come with a sacrifice. So the fact that they are making the decision to expose themselves with such risk means they are confident enough with their growth, with their financials to make such bold decisions. helena for the last few years several years caroline and i've been told constantly that in this streaming race content is king so why is netflix not getting more support particularly in the stock for just going out there and being aggressive to keep the library growing having more content well i guess right now because they already don't have a competitor in terms of streaming business they already have a very strong content slate um the 2025 we got all the squid games stringer things one wednesday so all these are very very popular and 2026 lineup is also very strong um so they have this incredible ability to have the amazing content with more to come and still have very impressive traditional financial metrics and if you realize their bottom line growth is much higher than the top line growth this is because their business itself is a very mature efficiency machine.

13:43Because if you think about it, their cost for making the content available is somewhat fixed, be it 2 million people watching or 200 million people watching it. So the more engagement they get, every new dollar that comes in flows almost straight to bottom line. So this is why they already have very outstanding profitability. So they can't afford to expand more aggressively into a bigger total dominance. Helena, which piece of this Warner Brothers Discovery proposed transaction interests you more? The studios or taking HBO Max and doing something with it? Well, I think it would still be the HBO Max because HBO Max right now is still considered the fourth biggest streaming company.

14:24So with HBO Max together, adding up together, they would essentially have more than 415 billion subscribers. So that is more than, almost more than half of the streaming industry. So that would definitely give them entire monopoly in that field. But Helena, I look at Mr. Beast, who has more than 450 million subscribers on his YouTube platform alone, let alone the dominant force of YouTube. So how do you see the market and who their competitors are? Well, I guess that is exactly why they wanted to explain more to the field, because they've already reached almost a monopoly leader position in the streaming business.

15:03So they're looking to expand into something else because the entertainment industry is always forever changing. So they're always trying to make sure that they have a foot in the ring before the environment changes. Helena Wang of Philips Security, staying up late for us in Asia. We so appreciate you having time for us on the show. Thank you. Now, let's turn our attention to NVIDIA's Jensen Huang. He plans to travel to China as he works to reopen a crucial market for his company's AI chips. We're on that next. This is Bloomberg Tech.

15:34This is Caroline Hyde. And I'm Ed Ludlow, inviting you to join us for Bloomberg Tech, a daily podcast focusing exclusively on technology, innovation and the future of business. Every weekday, we bring you the top headlines from the world's biggest tech companies. From finance to defence, AI to entertainment and from startups to the magnificent seven. We highlight the latest stories of the people and companies pushing the tech sector to new frontiers and the politics that shape global tech markets. We do this all every weekday, then bring you the most important conversations and analysis in our podcast.

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16:37We're going to be listening now a little bit more to what's been being said across in Davos. In particular, we've been hearing from the CEO of NVIDIA, Jensen Huang, who is being interviewed by Larry Fink himself, talking about the trillion dollar opportunity that continues and indeed where we might indeed see job losses or not. Let's get out to Bloomberg's Ian King, who covers all things semiconductors right now. And Ian, let's talk a little bit about what's been happening in terms of Jensen and where he sees the opportunity and scale needed for AI. You've been saying more broadly that, well, this is a no-brainer and that he's been saying this time and time again.

17:16Yeah, I mean, he's traveling around the world preaching basically to whichever audience he can get in front of and trying to convey the message. I mean, kind of last night for US time, his message was, look, hey, AI is going to change the economy. But listen, Europeans, you don't need to worry about regulating AI too much because it's actually going to help create certain jobs and make certain jobs stronger. And again, he's delivering a very nuanced message, but everything is designed to ease the passage of AI. I think it's really important to point out, despite the news headlines and articles written, none of this is new.

17:52particularly the point that the investment in AI infrastructure will generate skilled labor jobs plumbing electricians for example also there were no questions put to him in an extended on stage conversation about China but Bloomberg's reporting citing sources that he will go to China that is in and of itself quite a normal thing for him to do but what do we need to know about that yeah I mean always at this time of year as you know we have the you know the the Chinese New Year and he likes to go to Taiwan, he likes to go to Beijing to sort of look after his employees there. They have parties and things like that.

18:29Previously, when he's visited China, he has managed to have meetings with senior officials. We don't know whether he's going to do that this time, but obviously if he could, then it's really important to get Beijing to sign off on H2O. Just one quick introduction, Team, which I apologize for. Remember that he only told me two weeks ago, we don't speak directly to the Chinese government. Our communication is through the companies. But sorry, carry on, Ian. Yeah, whether he does directly or whether he does it through intermediaries, getting sign-off on those H200 chips, which the US government has said, hey, it's OK to an extent to send them to China.

19:03Getting China to accept them is going to be key. And that will be something that our audience will focus on heavily. And, of course, all of this access to China is something he's been talking about as a total addressable market of at least 50 billion in this fiscal year alone. I just want to go back to what he said at Davos yesterday. Wen being in discussion, whether we call it an interview with Larry Fink. China wasn't on the agenda, but certainly the size of the market was. Just take a listen. This is the largest infrastructure build-out in human history. That's going to create a lot of jobs.

19:35And it's wonderful that the jobs are related to tradecraft. And we're going to have plumbers and electricians and construction and steel workers and network technicians and people who install and fit out the equipment. And all of these jobs in the United States, we're seeing quite a significant boom in this area. Salaries have gone up, nearly doubled. And so we're talking about six-figure salaries for people who are building chip factories or computer factories. We've heard Palantir CEO Alex Karp talking about the death of humanities, but the study of vocations. Ian, how long do those sorts of jobs last?

20:27You're a man who knows significantly what the data said to build out looks like. Many would say electricians, well, they're going to be in the short time only. Yeah, I mean, it really depends. This is all about focus. If you're Jensen Wang, you want the focus on the economic benefits of AI. You want everybody thinking about how this is going to propel the economy forward and help everybody. You don't want people thinking about questions like the one you just gave me and also about the amount of jobs that maybe go away because of AI. So this is like a, hey, look over here type of directional kind of assertion that he wants to make.

21:03And for the foreseeable future, we are going to continue to see these massive build outs. Ian King, across all things NVIDIA, as always for us, we appreciate it.

21:17Meta. Well, it says it's looking to boost its online safety features as Europe weighs tougher rules and the possibility of restrictions on social media platforms for young adults. Rumeric's Francine Lacroix sat down with Nicola Mendelsohn, who leads Meta's global business group, to talk about new teen accounts designed to give parents more control. Take a listen. Keeping young people safe on our platform is incredibly important to us. It's an absolute priority. And we've been investing in this area for a number of years. It's why we launched Teen Account back in 2024 to keep young people safe, to give parents supervisionary controls so that they can also work with their children, their young people, in terms of keeping them safe.

21:58So what does that mean? It means restricting the amount of time that they spend on the platform. It means that they can restrict who comes on. And we place them all in that category automatically. So this is very important. But of course, we're going to work with regulators wherever they are. Do you think the ban will come through? I'm not going to speculate. I'm not going to speculate with you on that. So first off, we use AI when it comes to people on our platform to see more of the things that they want to see. So we have growth across all of our different platforms, which is fantastic to see.

22:27Then we have the advantage suite, which is very simple. I mean, some of the practices that you used to do took 150 different steps. Now you can do it in one step. We also see more and more the increase in our generative AI tools, how they can use it for for text, for translations, for even the creation of video now. We have over 2 million advertisers doing that. So all these things are combining alongside both reels as well to really give growth for our advertisers. Nigel, what do you think is still untapped in your mind? Oh, so many things. I mean, I've got a whole smorgasbord of things. So definitely messaging.

23:02We're seeing a continuous uptake in more personalized communication between businesses and people. There's now over a billion messages sent every day between people and businesses. We see 80 % of people around the world globally that are speaking with a business every single week. So this is an area both on the marketing side, but increasingly more on the utility and the authentication side. A good example is Air France. So Air France, when they switched this on, within a few days, it became their primary source of communicating with their customers. And they're doing it to deliver boarding passes, tell you about where your baggage is, also remarketing as well.