US AI Action Plan Targets Rapid Data Center Growth

25:20This is money that they would be able to make, and it would, in theory, help offset some of the different challenges that they're seeing right now around the Apple Store or lagging behind AI in certain areas against competitors, trying to drum up subscription sales in general and this is money that potentially people might not be paying but they might say you know what for $20 a month if my phone breaks if I lose it maybe this is enticing enough for me to do it. Where are the limitations though? For me I think the off-putting thing is yes I can see you wanting to opt-in if you're buying a new device but then to get the older stuff that you already have insured you kind of got to get it diagnostically tested.

25:56Yes you do so you have to go through a short sort of several minute testing to make sure that the screen is okay, the battery, they want to make sure everything is okay before your insurance, almost like health insurance, you want to make sure things are okay. But it does go back four years. So you might say, you know, I have a brand new iPhone, but I haven't bought an Apple watch in quite a while. And so this might be a way for you to say, oh, you know, maybe I can opt into something a little bit more. Bloomberg's Samantha Kelly, great analysis. We appreciate it.

26:33Welcome back to Bloomberg Tech. Let's check in on these markets because actually tech is kind of underperforming some of the other major benchmarks today. There is uplift and euphoria around Japan. U.S. trade deal. Is there more to come? But on the big tech benchmark, we're flat on the Nasdaq 100. We had some key earnings that drag us lower from a point's perspective. Let's dig into them. Texas Instruments, Ed, we talked about it at the top of the show. It is having its worst day since 2008. Clearly, global tariffs impacted the business, but the executives can't articulate how much there is a pull forward in the previous quarter.

27:03And it just didn't live up to the expectations of investors. Meanwhile, we're also down on SAP and trading in Europe. We've just closed the market. We're up by 5%. Again, tariff headwind, the dollar weakness impacting this particular software business. OK, AI leaders are gathering here in Washington. As President Trump is set to give an address on his AI roadmap for the United States, Details that it includes the rapid build-out of data centers and the removal of, quote, onerous AI regulations. Bloomberg's Michael Shepard joins us with more. We've both printed it out, all 23 pages. We haven't read the entirety of it.

27:40We've skimmed it. But we've been talking for a while about how the focus of the document, it's infrastructure-related, the American technology stack and the energies to support it. Is there a substance to it on that side? The substance will really bear out over time, Ed, as we see a lot of administrations, not only the Trump administration, but all of its predecessors, have flooded Washington with these sorts of policy directives in the past. And the catch here will be to see whether they can actually gain some traction with this document, not only with industry, but also with Congress, with the federal bureaucracy, with the agencies that they currently oversee, and then at the state and local level, too.

28:21They have to make sure that a lot of this can be done. And it's an onerous process. They talk about removing onerous regulations, but they will have a lot of digging to do on it. That is to cut some of the red tape that they talk about right in the beginning of the report, to also try to pave the way not only for the data centers but for the energy needed to power them. That's a big deal. It's a big pillar of this. And then also you talked about this, and we've talked about this on the program before too, and it was in your conversation with David Sachs just last week, building AI globally on the American tech stack.

28:55That's another pillar of this document, and it's something we'll have to watch to see how they implement. Yeah, sort of helping promote exports to an extent. Mike, dig into what they're looking at abroad right now, because, yes, there's been anxiety about states going it alone. Meanwhile, Europe's on top of AI regulation. How do they counteract that? Well, what they're trying to do first is set the tone here in the U.S. when it comes to regulation of AI by pursuing what they consider to be a lighter touch, Caro. More importantly, though, they are focusing on deployment of technology and the infrastructure that is needed to power it abroad.

29:31And that is why, in part, you saw the relaxation of the export curbs on H20 chips from NVIDIA to China. And this is a step that the administration sees, and certainly one that Jensen Wang endorses, that's needed to be able to have American companies, especially NVIDIA, competing in China so that it doesn't make it so easy for China to be able to export its own technology, perfected at home, to other markets as well. And that's a really critical step for them. They've articulated here, and President Donald Trump will be signing orders later today to implement parts of this plan. Among them, we expect to see orders instructing U.S.

30:11export agencies to take steps that would enhance deployment of American technology and export of not only just the chips themselves, but everything that goes with it for the software and everything else too, Cara. Greenberg's Mike Shepard with the latest on the report. We appreciate it. For more on the future of AI and President Trump's action plan, Navrina Singh is with us, Credo AI CEO. You really look at the way in which we can implement AI from a governance perspective, from a risk tolerance perspective, From a cultural perspective within businesses, Nafrina, when you're looking at this report, when you're thinking about AI being more hands-off, more pro-growth, is that the right way?

30:51Well, good to see you, Caroline. And today we really commend the White House on launching the AI action plan. I think if you dive a little bit deeper into the AI action plan, there's a key statement and sentiment, which is the bottleneck to harnessing AI's full potential is not necessarily the availability of models or tools and application. It is slow adoption. And central to that is lack of trust. And I think, as you know, that Credo AI has been on this journey to embed that trust in the full AI lifecycle. And I think the AI action plan is really diving deep into it with how do you standardize evaluations?

31:28How do you actually bring more transparency to AI so that you can fuel growth? But all that growth has to be grounded in trust. And that's what the action plan is focused on. Navarina, in pillar one of the document, which is titled Accelerate AI Innovation, Something very high up is the commitment to encourage open source and open weight AI. And I thought that was really interesting, the prominence of it within the document. Why is it important that this administration focuses on open source and open weight AI? Yeah, Ed, great question. I think we've seen historically that open source really contributes to more innovation.

32:09and in artificial intelligence, especially with the United States leading, we are finding a lot of great innovation is coming from our open source ecosystem. So the focus in the AI action plan on open source further strengthens the capability for everyone else to build on top of AI innovation at large scale. There is a really heavy emphasis on deregulation, cutting red tape to facilitate the infrastructure side of this. Does that concern you, that that's the plan, as opposed to, I guess, a codified or framework piece of rulemaking around AI? So, as you know, Credo AI serves some of the largest global 2000 companies in the world.

32:57And what we are finding is governance and oversight and control of AI systems is not just tied to regulation. It is really about understanding these AI systems and making sure that you have the right, you know, not only standards, but also some guardrails which are in place. So what we are going to see, I think, coming out of this AI action plan, as stated, is a focus on more contextual evaluations, which are paramount for making these systems happen. I would like to see, obviously, this AI action plan stretch a little bit further into standardizing what does good look like for AI and more to come on that soon.

33:34Navrina, let's just dig into the global perspective you have. And the fact that the context is this is a race and this is a winner takes all, US versus China. Is that what you're seeing? Absolutely. You know, what has been really important is this isn't just a policy moment. I really believe this is a moonshot moment for US. and to continue leading in artificial intelligence, U.S. will need to lead with trust. And that's how we are going to unlock the power of this technology. So this is an arms race. United States is leading. And it's going to be critical how we bring our allies and partners together on this journey by grounding them in trust, oversight, and right responsibility is going to be key.

34:21So when we go back to the open source question, that feels in reaction to what happened with DeepSeek and China. And ultimately, is that, do you think, where this sentiment is coming from? And what does that mean for the players here in the United States? Is it all in our Meta's viewpoint? You know, Caroline, that's a great question. You know, United States has been leading in artificial intelligence, and we will continue to maintain that leadership. The open source focus is a really pivotal one, because if we want to lead, especially with hard sciences, in using artificial intelligence, building on each other's work has always been foundational to how open source works.

35:01So I don't think this is in reaction, but this is a continued leadership from United States perspective in terms of how we're going to lead in artificial intelligence. Lavrina Singh of Credo AI, great to have you back on the show. Thank you very much. This is Bloomberg Tech, and you are looking at a live shot of the principal room. Check out the Bloomberg Tech podcast. Find it on the terminal, as well as online on Apple, Spotify and iHeart. This is Bloomberg.

35:35Compliance startup Vanta, well, it's raised$150 million in its Series D round, bringing its valuation to over$4 billion. Now, the eight-year-old company helps businesses stay in line with rules and regulations around managing and storing customer data. Vanta's CEO and co-founder, Cristina Cacioppo, joins us now. So the$150 million, what does that help you do? It helps us continue to help our customers build and demonstrate trust across the Internet. Okay, demonstrate trust across the Internet. I mean, it immediately makes me think of today's news flow. We're worrying about Microsoft and the hack there.

36:08I mean, is this something that you're worrying about more broadly, that security isn't strong enough, particularly when it comes to access to third parties? Yeah, I think what we've seen is security online is an increasing concern. And this has been true for years. It's been true for decades. It will continue to be true. And it's not because smart people aren't working on it. Lots of smart people are. It is just an increasingly hard cat and mouse game as adversaries get stronger and stronger now with AI as well. And so it is increasingly hard for businesses to build out trustworthy platforms, secure customer data.

36:40And we hope Banta is a part in helping them do that. 12 ,000 of them already, customers that you're helping. What has been the demand like for your own AI applications, AI agents in particular? Yeah, we launched our AI agents earlier this year. We've seen great reception from customers. I think we've had the agents kind of automate a lot of manual work our customers were doing. Customers like Duolingo and Ramp and Snowflake are all using the AI agents to automate kind of what were manual security and compliance workflows. What's interesting is the way in which you want to expand now is by looking not just at companies, but at governments and government agencies.

37:19We can show your customers. We can also show the VCs that are continuing to back you, one of whom, of course, is, well, the business of Kraft Ventures and that we associate with David Sachs. Is he going to be able to open doors for you? You know, what we've heard from David and Kraft is David is very focused on Washington, D.C. He left an incredibly strong team at Kraft, but there's kind of strong guardrails in place between those two teams. So we really enjoy working with the folks at Kraft. And separately, we're pursuing engagements in D.C., but from what I hear, David's really engaged with his work with the government.

37:56And do you think, just in the current administration and environment, that they are more willing to work up with startups such as yourself, that government now is a more accessible area for your company? I think so. We've seen this government be very receptive to software providers. They want to get more software into the government, save time, save money for taxpayers. And there's programs like FedRAMP, 20X, this pilot that is going through to help software providers prepare better and faster to serve the government. Because the U.S. government is just a different sort of customer than almost any other in the world.

38:31It is. And what I'm interested, therefore, is how you beef yourself up to meet that demand. You said that you want to continue to expand and continuing to help your own clients that you already have. Where are the bottlenecks for you? Is it about hiring more talent? Is it more about a marketing plan just getting into the the orbit of other businesses? Talent is a huge part of it and we are only as good as the people who work at Vanta at Vanta. And there's all sorts of different pieces of that. So AI talent is definitely a part of it. It's a very hot area of the market, as I'm sure you're covering.

39:05The government piece is another one. Again, that is just a specialized skill set. And so we are hiring across the board, lots of roles, lots of opportunity. And where are you hiring? I know you've been beefing up offices in London. You've been putting data centers in Australia. How global does this get? Quite global. So we've got five global offices around the world, follow the Sun coverage for our customers. We also, in the U.S., have folks spread out across the country, which we've found to be a very successful hiring strategy over the last five years. Christina and Cacioppo, we'll let you get back to that hiring strategy and running the business.

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43:04Tesla. It is set to report earnings after the bell. The quarter was a busy one. With the re-engagement of CEO Elon Musk, the launch of the company's robo-taxi service in Austin, Lumeo's Craig Trudell is here to tell us, well, whether investors are going to care about the fundamental business picture, which is an ugly one. We're expecting revenues to fall the most severely in more than a decade. Yeah, and I think, you know, we only have to go back a quarter for, you know, how Musk is likely to approach, you know, tonight's call where he said something to the effect of kind of look, don't look at what's going on now.

43:40cast your gaze on this bright, shiny object on a hill, that is likely what we're going to have a sort of repeat of here because this is a company that its fundamentals are in really rough shape. The car business, not only is it not growing anymore, but it's actually shrinking pretty substantially. And they did indicate earlier this year that the energy business, which has been a source of growth, is going to get hit hardest by tariffs. So, you know, the leaning into the robo-taxi messaging, the AI story is absolutely what we can expect to hear from us tonight. It's also not just tariffs that they're exposed to, but a pulling away of support for EV measures.

44:22Does that ultimately matter when you're thinking of a company that is valued at 142 times projected profit? Do they care about what happens from a support perspective for buying? I think that's got to come up at some point on tonight's call, right, is where are regulatory credit revenues headed? Because there's a lot of concern, particularly about the state of affairs in the U.S., where you have, as part of the big, beautiful bill, you had the zeroing out of penalties for not meeting fuel economy standards. So that sort of source of revenue where other manufacturers who are having trouble meeting those numbers, They no longer need to go to Tesla for help.

45:06You know, there's also the Trump administration going after the California ZEV mandate. And, you know, also on the EPA front, tailpipe emission standards. So really sort of across the board, there's less and less reason for Tesla's rivals to have to turn to Musk and say, hey, we need some help from a regulatory perspective. And that's been a huge source of revenue for this company over the years. And how much does that matter for plowing money into the future bets? As Nick Colas over at Datatrex puts it in our story, I think 95 % of the valuation of Tesla is basically based on its futures, which are Optimus, which are RoboTaxi.

45:45But is that at risk if we don't have the cash cow? Yeah, I mean, we're talking, when we talk about just how much revenue, you know, over the years going back to, you know, since this has been a public company, we're talking about over$12 billion. That's a substantial amount of money. And a lot of that is weighted toward just the last few years where we've seen steadily Tesla report more and more of this revenue. And so if and when you see that reverse and also this company is no longer to generate cash from its car business because that is no longer growing. and yet it has all of these operations to tend to with plants that are underutilized, this starts to become a real issue.

46:31And you do have to sort of question if these robo-taxi statements sort of don't pan out, what next? What can investors sort of count on from Tesla to sort of steady things and get back to a state where you can feel comfortable putting that sort of multiple on this stock? Can they count on Elon being focused on the business? Crow Trudell, we thank you so much for looking ahead to after the bell. And look, let's continue looking there because we've got IBM coming up as well. And it's flipping the script at the moment. This is once a relic of another era and Big Blue is back, as our Brody Ford says.

47:11Look, let's just talk about how this company has steadily convinced investors that it can grow. You put it perfectly, right? I mean, IBM has been talking about reorienting around software and services since the 90s. People didn't really believe them until a year or two ago, and you can see it in the stock price, right? That investors are really starting to buy into this idea of an IBM based around largely infrastructure software and consulting. The real star right now is that software picture led by the acquisitions of Red Hat and HashiCorp this year. And if you look at large-scale software companies, most of them are struggling to really keep growing revenue steadily.

47:55IBM is doing it, making a better profit picture, stickier business. Clearly, Wall Street is happy about it. They are setting the shares up 30 % so far this year, Brody. But the fly in the ointment has been, of course, global narrative of trade issues and a worry about people really playing money into consultancy. How much do you think the Gen. AI piece of that is going to be eroded? Because they've already done, what,$6 billion in business, but largely through consulting. It's a really good point, yeah. Consulting is the other half of the IBM empire, and that really has struggled because when the economy looks funky, what do you do?

48:32You cancel your consulting projects. And so IBM has booked a lot of business and consulting for Gen. AI products. You know, these big companies saying, hey, which tools do we use? We're confused. What is kind of an issue is that this is coming at the expense of traditional consulting. And so it may not be a net increase. But what we've seen so far is that as long as software keeps getting purchased, investors are willing to overlook the choppy consulting. Well, for now, analysts, nine of them say buy, nine hold, just four say sell. Bloomberg's Brody Ford across IBM. We're waiting for your reporting after the bell when it breaks.

49:07But meanwhile, that does it for this edition of Bloomberg Tech. Don't forget to check out our podcast. You can find it on the terminal, as well as online on Apple, Spotify and iHeart. And don't forget to tune in to Ed Ludlow as he's over in the White House, of course, listening in on the AI Summit and what that will bring in terms of the look ahead from President Trump. We've also got S &P 500 at session highs, records across the board. NASDAQ just lags a little bit, though, today. This is Bloomberg Tech.

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