Super Micro and Snap Warn of Economic Headwinds, Grab Raises Forecast
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From the heart of where innovation, money, and power collide in Silicon Valley and beyond, this is Bloomberg Technology with Caroline Hyde and Ed Ludlow. ♪♪

We are live from New York. This is Bloomberg Technology. And markets, they stumble after worst contraction in US GDP since 2022. Suggests the economy is at risk of buckling under the weight of President Trump's tariff war. This halting a week-long recovery in equities. We're down on the S&P 500.

We're down on NASDAQ 1.6% ED and you're looking at some of the individual names that drag us lower. Yeah, let's start with Supermicro. This is a severe decline. Prelim third quarter results show softness. What Supermicro is saying is that customers are delaying orders. We're showing you NVIDIA on the screen because the question the market's asking itself is how much is Supermicro a proxy for NVIDIA demand? Why? Supermicro takes NVIDIA's technology

and packages it into a server and there's evidence that customers may be holding off of obsolete chips waiting for the new stuff or we've got a bigger picture demand problem nvidia is also in the headlines of course because its ceo is on capitol hill bloomberg's ann marie horden just spoke to nvidia ceo jensen wong earlier this morning listen to this

In order to produce $500 billion worth of AI infrastructure requires enormous amounts of investment from a lot of different partners. And so we've brought on shore many partners to help us do that. And we're going to have to build our own factories in order to do that. What's your message and conversation going to be like today with the president when it comes to tariffs? Our footnote.

I'm going to count on the fact that the administration has a good plan. And from our perspective, we would like to have policies that support and help accelerate the development of artificial intelligence in this new industry. Do you think they're going to have an edit of the diffusion rule that was under the Biden administration, basically placing all these different countries in different buckets?

Well, I'm not sure what the new diffusion rule is going to be. But whatever it happens to be, it becomes, it really has to recognize that the world has changed fundamentally since the previous diffusion rule was released. We need to accelerate the diffusion of American AI technology around the world. And so the policies and the encouragement from the administration, it really needs to be behind that.

NVIDIA CEO Jensen Huang there, along with our own Anne-Marie Hordern. Look, let's stick with the AI sector. Go back to Supermicro, sinking, as we heard from Ed, after pre-announcing results that fell well short of analysts' estimates. And as the server maker said, some customers are delaying their purchasing. Bloomberg Intelligence analyst Wu Jinhou joins us now. And look, analysts seem to view this as pretty specific to the new NVIDIA Blackwell chip transition, right?

Yeah. Hey, Caroline. So it seems to be specific to the NVIDIA Blackwell. I will tell you that our customers are waiting for the latest generation chips. We saw this not only at Supermicro, but we also saw with HPE when they missed their expectations last quarter. So, you know, customers are...

essentially delaying these deals and just moving on to the black balls. I think, Jim, what we heard from the interview of Jensen Huang just then is long-term goals right for the manufacturing of accelerated computing in this country. In the short term...

Help our audience understand NVIDIA's commitment to a new generation of chip every year and annual cadence and how difficult that is for the server assemblers like Supermicro who have to be the go-to-market channel for that company.

Yeah, and that's a good question. And it is actually somewhat problematic to some of the server manufacturers. I will tell you a couple of things. The server manufacturers do have a couple of years lead time in terms of the product roadmaps. So there is some preparation in terms of preparing for those chips. Now, the issue is the customers may not have that level of visibility in terms of assembling all of these together because every generation of chips...

add on to a new level of complexity. If we think about the H100 series, the Hopper series, you didn't have to have as much cooling necessary. Now, as we move into Blackwell, you're going to have to have cooling to support 140 kilowatts per rack.

And once we get into the next generation of chips, we're just talking about 600 kilowatts per act. So it's more of an infrastructure problem, but also not only an infrastructure problem, but also an architecture problem that the customers need to deal with. The last time I spoke to Jensen last month, he said, I'm the only CEO on the planet that will tell you what I'm doing for the next five years and all my suppliers...

upstream downstream can follow suit. I think that's your point. Bloomberg intelligence analyst, Wu Jin Ho, great to have you on the program. Turning to more earnings, Microsoft reports results after the bell and investors are expected to pay close attention to the company's data center spending. For more, we're joined by Rebecca Wedeman, CEO and principal of Valwa. And that's the link, right? That Jensen Huang of Nvidia says, here's my technology for the next five years.

In the short term, we look at the capital expenditures of the hyperscalers and see if they're willing to plan to spend on that technology in advance, Rebecca. Absolutely, Ed. Great to be here. Thanks for having me. We have to look at what they're willing to spend, but also look at what customers are willing to spend to drive that AI demand so they can actually generate revenues from it.

And when they're thinking about spending, we had a commitment from Alphabet sticking to its $75 billion. Microsoft has been there saying we're spending more than $80 billion, but there have been so many reports, Rebecca, that they might be ending leases. We've had TD Cowan and others. What have you listened to? What's noise? What's reality? Well, I think...

- I think, Caroline, we have to look at the profit and margin picture, right? If customers aren't willing to spend on consumption for AI, demand is not maybe what Microsoft expected it would be. They're building out capacity in a way that's not supported by revenues. And at the same time, if we look at tariff uncertainty,

You know, there's a lot of things that go into building out data centers that are expensive beyond just NVIDIA chips. And those kind of things have got to be considerations as well as we think about the overall data center cost structure. I'm really interested in that. So we're expecting, what, 11% growth in revenue for Microsoft for this fiscal quarter, Rebecca. But where are you seeing the weakness and ultimate demand for their AI products? Where are we likely to see that they're spending a lot?

but people aren't buying a lot when it comes to the co-pilot offering and that's being offered to the enterprise. - Yeah, I know, I think if you look at co-pilot, there have been a lot of challenges with adoption and really a lot of challenges with Microsoft being able to prove the value of what they deliver with co-pilot. You know, I think they did themselves a disservice putting co-pilots out there in the beginning that weren't necessarily ready for prime time. Customers tried them once, didn't get the results they expected and they're hesitant to go back.

So now without that broader picture of enterprise data grounding Copilot, Microsoft's struggling with their own AI to get it out there and get customers paying for it. I find this fascinating. Caroline, I think we share this in common, right? I grew up using Microsoft software. It's what was available on my Dell desktop at home. And as I've got older, I have options. I'm now a Mac user and I use OS.

And the thing that I'm always reminded of is that Microsoft has spent many years selling software you can otherwise get for free somewhere else. So we're focused on their capital expenditures, but I still don't see the other side of it. The idea that you can look at Copilot and say, I'm going to pay at the enterprise level just me personally for that and get good value. Is that kind of what you're saying here, Rebecca? Yeah.

Yeah, I think we're seeing customers say, when I can go out to Chad GPT on my own, right, why am I paying Microsoft for that capability if it's not grounded in enterprise data? And if you look in contrast at some of Microsoft's competitors in the enterprise software space, you've got your Oracles, your ServiceNow, your Salesforce's, where they're saying it's not just what's on your desktop that's important for co-pilot.

or for any sort of AI agent, but what's in those enterprise data sources, helping to create more context, to give better answers, to give better recommendations, to really have more intelligent AI. - What we're forgetting about is that Azure is the number two player in cloud. And so if everyone is out there spending on AI through the application layer like Salesforce or those names, doesn't Microsoft just win anyway? - Well, absolutely. I mean, Microsoft wins when its competitors' AI win.

If you look at the folks that are running on Azure today, whether it's ServiceNow or Genesis, Dayforce, tons of folks, those spending that their customers are spending on their AI are driving up Azure credits.

Where is, therefore, the weakness that we might see in this particular quarter and the guidance going forward? Small exposure to hardware, we think about the gaming side, but ultimately tariffs. Is it going to be an economic, a macroeconomic impact that we want to hear from Satya, that we want to hear from Amy as well when we think about the CFO perspective?

I think the macro piece is going to be really big, Caroline, because as we think about overall slowing of enterprise purchases, that's already happening, right? The question is, how long is it going to last? And how much can the innovation that Microsoft is driving in AI and areas help it to catch up in terms of sort of capturing the imagination of customers? And when we're all risk averse and hesitant about making decisions, it's tough to

Spark that imagination. Okay, so spin that forward with Amazon, right? You know, it's fast and furious for 48 hours. AWS is the number one player in cloud computing. All of the logic you've just outlined, what do you expect to be your conclusion by Friday morning of this week?

Sorry, it's a difficult question, but have a go. Well, you know, if I had the perfect dancer, I wouldn't be on the show and I'd be somewhere else on a boat. Oh, you'd always be on the show, Rebecca. You'd always be coming back on, giving us your expertise, no matter how many billions you have on that boat. That's right. You know, I think we're going to see...

in general slowly grow. Amazon has some different pieces towards portfolio that are very compelling for customers that are looking at cost-cutting measures, that are looking at streamlining and rationalization right now. Amazon has a lot to offer in that area. You know, we see Microsoft Azure, I think we'll still see pretty strong growth

there, but it's going to slow over the next couple of quarters. And I think what we'll see this week is sort of the beginning of that sign of if you don't have a compelling cost-cutting rationalization proposition, like we saw, for example, from ServiceNow last week, you're going to struggle as one of the big players.

Rebecca, it's great to have you on, even if you're not on a boat. Thanks. Rebecca Wetteman, CEO and principal at Valois. We appreciate it. Now coming up, Snap, it warns of headwinds impacting its ad business. More on the details next. We're down by 15%. This is Bloomberg Technology. Possibility surrounds us in digital innovation, evolving markets and disruptive ideas. And while promises can inspire dreams, proof is the catalyst for transformation.

At EY Consulting, technology unlocks value. It's data that sharpens your competitive edge, and it's our deep sector insights that can navigate a pathway to real outcomes. This is high-value transformation that drives real change and challenges competitors to keep up. With EY Consulting, it's about proof, not promises. The world is built on code. From the apps we use every day to the systems powering industries, developers like you are the architects of tomorrow. But

But let's be real. The road to innovation can get a little tricky. You need the right tools to move fast, but you also need a community to help you go further. That's where Microsoft comes in. Microsoft has the tools to help you move at lightning speed, like GitHub Copilot, VS Code, and a ton of AI resources to keep you on the cutting edge. But here's the best part. You

You can build with confidence, knowing that Microsoft's security and compliance are already taken care of. No more worrying about vulnerabilities or threats while you focus on your craft. And with Azure AI Foundry, you can build your way. The future is yours to build, no strings attached. From ready-to-code tools to full flexibility, it's all in one place. The future's in your hands. So learn more at developer.microsoft.com.

Look, Snap's numbers, they actually narrowly beat expectations from analysts for the first quarter in terms of revenue. They declined to issue a sales forecast for the current period and they say they're navigating macroeconomic headwinds.

It's all about the ad business. We're seeing the worst drop since August 2024 on the stock. E-marketer senior analyst Minna Smiley is with us for more. And it looks like Chinese retailers, for example, are already holding back spending on Snap ads. Yes, exactly. They are already holding back spend. And I think in their earnings call, they did say that that's partly why they're delaying issuing any guidance. They are worried about that. And I think just overall,

The issue with Snap is that it's one of those businesses where when we start to see these advertiser pullbacks, you know, pullbacks and spend, pauses and spend, platforms like Snap end up taking a hit first. You know, advertisers want to put their money into Meta, into TikTok, into Google, into platforms that are just more, you know, bigger, more proven. And so I think we're already seeing Snap feel the impact, you know, pretty early on.

It's why it's in our calendar, right? Because apart from Google, we always talk about how Snap goes first and then we extrapolate out to Meta and its platforms. I haven't used Snap since high school, frankly. But Caro's intro summed it up perfectly. You don't give guidance. That's a markets thing. The platform is growing. What can you tell us about your reaction to that and where you see it doing well against those other platforms? Yeah, for sure.

All in all, Snap had a good quarter. By all of its major metrics, it saw user growth, it saw ad revenue growth, it saw revenue growth, which really speaks to the fact that it has done a good job investing in its ad platform over the past few years. Its subscription business remains small, but it's becoming a meaningful portion of revenue for the company.

So, yes, they are seeing growth, but I think we're now seeing that growth maybe kind of happen in a silo in Q1. I think for the remainder of the year, things might get shaky for them as they kind of balance, you know, all the economic uncertainty we're facing. But, you know, the actual core business does show some pretty healthy signs.

We've been asking our investor and markets guests for about a week, what happens if a technology company doesn't issue guidance? Your stock goes down 15%. What I'd love to help our audience understand is tariffs, trade uncertainty, advertising market. Why do the advertisers care?

Yeah, I mean, I think for a lot of people when they see advertisers spend becoming, you know, starting to pull back, it's a sign of bigger concerns, bigger issues to come because a lot of these marketers, you know, for a lot of these companies, one of the first things they're going to pull back is marketing when they start to see signs of a shaky economy, periods of instability. And especially, you know, when we talk about tariffs, companies that might be hit harder by tariffs, you know, maybe they have manufacturing in China or whatnot, you know, those companies, retailers, you know, that maybe rely heavily on other countries,

they're going to have an impact and ad spend always does kind of take one of the first hits when you look across the whole company. And so, yeah, these platforms, ad revenues are bread and butter. And when you talk about Snap specifically, they're lucky in that they're, you know, because they have their subscription business, they are able to diversify a little bit. But again, I think it only represents about 10% of their business right now. So, of course, they're very concerned about ad revenue. What

blows my mind is that Snap has almost a billion users. Right. But they have a first quarter net loss of $140 million. Just where is the money going? What levers do they have to pull to be a long-term competitor that actually is profitable? Yes, I mean, they definitely

They definitely are running into some issues, specifically when you talk about user growth. They are seeing user growth here every year, but when you look at their key markets, when you look at North America, they actually posted declines. I think it went from 100 million to 99. So they are seeing some concerns there around the market of North America that is their most profitable market. But it's saturated. They're really struggling to grow there. And these markets where they are seeing user growth, those are the markets where they're not monetizing as well. So they definitely

They definitely have, like I said, they had a good quarter, but they have some big long-term challenges ahead of them. - Let's say that there's still a question mark about TikTok in the United States. - Yes. - Does Snap stand to benefit from that, whatever happens with that platform?

they have, they do seem to benefit and they have benefited already. I mean, I think the uncertainty around TikTok, of course, its future is still in flux, but I think just this general uncertainty that's been happening over the past few years has benefited all these other platforms. That being said, I don't think Snap will be one of the main beneficiaries. We're going to see most of that money go to YouTube, you know, go to YouTube Shorts, go to Instagram, Instagram Reels, even Facebook. I think Snap, yes, it will benefit, but not so much that it'll really kind of, you know, save their entire business by any means.

Okay, what are you watching for with Meta? What do we need to know? Oh, wow. I mean, in some ways, Meta is actually a similar story to Snap in some ways. In that, you know, I think we're expecting a good quarter. They're going to post advertising growth. You know, they're going to kind of, by all their major metrics, we're going to see growth. But between the antitrust trial they're facing here in the U.S., between tariffs, and especially for Meta, I mean, they will be impacted by Chinese retailers like Xi and Timu pulling back on ad spend. That's going to hit them pretty hard, we expect. And so, yeah, they...

They're probably going to post a good quarter, but I think there's going to be some issues people will be paying attention to for sure in the quarters to come. E-Marketer Senior Analyst Minda Smiley, great to have you on the show. Thank you.

Ride hailing and food delivery company Grab Holdings raised its full year earnings forecast, boosting sentiment that the sector could be more resilient amid global trade wars. For more, delighted to say we're joined by Peter Uwe, Grab CFO. I'm here in the United States. Grab is Southeast Asia, and everyone that I talk to talks about your scale across those different nations and your use of AI, particularly to manage operating costs. That's the boring stuff, Peter.

What is it you're able to do in those markets and those Southeast Asian companies at scale that's helping you perform like this? Yeah, we had a very strong Q1 results, record revenues, a record number of transacting users on our platform, and also a growing profitability in our business today. And what's unique about our business is that the scale that we've built is around adoptability of our products. And it's a super app.

So what does that mean? We have multiple products that's on one single app itself, whether it's all forms of deliveries, whether it's food delivery, whether it's grocery delivery. You've got transport, two wheels, three wheels, four wheels. And that's our taxi services also on our platform. And we also have FinTech also, where there is long...

payments, business also. And that's unique in Southeast Asia where all these products are interrelated and they're all working through one ecosystem. We've seen more traction before on our platform than ever before. The other part that's

product is around affordability and we continue to push that affordability as we expand the user base okay so let's talk about affordability is that coming through the new products because actually you're trying to increase spending from your users you're doing well whether you're doing family accounts whether you're offering people to pool some of their deliveries for example peter

That's right, yes. We're actually adding more products. But those products are also catering for segments of users on our platform that might be a little bit more price sensitive. That's why we have about a third of our transactions today are coming from these more affordable suite of products in transport or in deliveries. Or we also have more of the premium side also, which are really important for those who are less price sensitive, who are less more, they want their food much quicker, for an example. And that's also...

So it's a combination of this product mix that's really important. And we need to give customers choice. And that's what we've been doing more and more over the last two years in our business. Peter, even so, we have a trade war. What are the indirect economic impacts of tariffs on those Southeast Asian markets? And on the financing side, like loans, what are you doing to insulate yourself?

Yeah, we built a business where we feel and we believe that it's counter-cyclical. What does that mean? If you look at the type of service that we do today,

People still need to eat and we have also an ability where we can bring cooked food home or we can also get grocery into their homes also at the same time at an affordable price. People still need to go to work, they still need to commute from point A to point B, then we're making services more affordable also at the same time. So we feel that whether it's an economic downturn or whether the economy is doing well, the services that we have today are relevant for these consumers

And also with fintech also, payments also is still very prevalent where there is in any economic cycles, people still need to pay for things, whether to pay their bills. So it's an important part of this ecosystem that we continue to harness. Peter, Ed mentioned there potential growth.

protection of yourself via taking out loans. Now you were taking out a loan, we understand, to the tune of about two billion to help finance a potential deal, GoTo. How is that M&A going in this current environment?

Well, I can't comment, Caroline, on the speculation of those M&A. What we are focusing where, especially Indonesia, where it's a very important market for us. It's about 300 million people and it's a very critical market. What we are seeing in Indonesia is a continuing growth. Actually, if you look at the number of users quarter on quarter, we continue to expand that business. Margin also is expanding. So we continue to do that.

on Indonesia. Now we are making selective M&A's. In the first quarter we made a number of small M&A's which are more around ecosystem and it's really important also as again as we bring more products and services more capabilities to our user base. Peter briefly, the cost control you've got how much is that because of AI?

I would say it's very hard to measure whether it's pinpointed specifically to AI. What we are measuring is more the productivity output that we can harness from using AI internally here at Grav. For an example, over half of our engineers today are using some sort of AI assist for them to be able to do their work more efficiently.

I would say that one measurement also is the number of headcount that we are increasing also in our organization, which actually have slowed down because of some of this automation and some of these AI agents that we've been able to deploy in our organization. So measure this productivity. Peter Uy of Grab. Great to have some time with you. A long day. We appreciate you coming on.

Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York. And I'm Ed Ludlow right alongside her. The market story for the technology sector is anxiety about economics, really. Data out of China on the manufacturing side, not great on U.S. levies. And you see the U.S. listed shares of Chinese tech companies lower.

Another name that I've got to point out, Tesla. Morgan Stanley is out with a note that the tie up between Waymo, the autonomous driving arm of Google, and Toyota is, quote, legit competition for Tesla. The stock under a little pressure there. And we go back.

to NVIDIA, Caro, because Jensen Huang's on Capitol Hill, but also the read-through and downward pressure that came from Supermicro, one of its key manufacturing partners in the server design space. It is, and let's just stick with all things NVIDIA, but also all things President Trump, because marking 100 days, Ed, in office as a rally in Michigan...

was taken out yesterday. He doubled down on his tough stance on immigration and the impact of tariffs on China's, quote, unfair trade. Now, moves that sent ripples through the tech industry, of course, from supply chains to AI development. Now, NVIDIA CEO Jensen Wang, as you mentioned, Ed, just joined from Washington. He sounded confident in the administration's tariff stance, but sounded the alarm when it comes to China's AI strength.

China is not behind. Are they ahead of you? China is right behind us. I mean, we're very, very close. But remember, this is a long term, this is an infinite race. There is no, you know, in the world of life, there's no, you know, there's no two minute end of the quarter. There's no such thing. And so we're going to compete for a long time. Bloomberg's Mike Shepard joins us now. A warning for the administration that China's close behind.

Well, that's right. And it's one that he'll be able to deliver to the president in person this afternoon. NVIDIA, of course, is one of the featured companies at an Investing in America meeting with the president later this afternoon. It's a part of the 100 Days in Office celebration that is really extending over a few days.

as Trump tries to look back at some of the successes he, in his view, has already had since taking office in January and looks ahead to some more of the policy areas where they would like to gain ground. AI certainly is one of them. We're awaiting this AI blueprint from David Sachs and others. And we're also looking to see how the administration will act in a key area of concern for Jensen Wang, and that is those export controls on AI chips, especially the ones that his company makes, Caro.

All right, with me is Mike Sheppard, keeping us on a side of Washington, D.C. Thank you very much. Let's get back to what is a top story, a news overnight of China's President Xi's visit to a tech incubator, which sent some robotics stocks soaring. Then there was a slump in Chinese manufacturing data in the face of U.S. tariffs. That's also putting more focus on supply chains for key domains.

like robotics. Here in North America, competition in robotics is heating up. And some of that's coming from longstanding robotics names like Boston Dynamics. I'd say the company's CEO, Robert Plater, joins us now. Robert, welcome to Bloomberg Technology. Let's actually just start with basic data and facts. Where is Boston Dynamics today in its production of robots? Where does it take place and what does the supply chain look like?

Thanks for having me, Ed. So Boston Dynamics is building three products right now and two of them are in the market. Spot was our initial product and we have about 2,000 of those robots out with customers. We've launched a second product, Stretch, which is a warehousing robot and that's having success with big players like DHL. And our third product will be humanoids. We are manufacturing all of these in the United States.

and plan to deploy them internationally as well as in the United States. Robert, I always like to go to our audience on social media and say, the following CEO is coming on the show, what would you ask them? And based on what you just said, the first customer was, if you are approaching a new customer, how would you go about a new task? What does the teaching process for the specific form factor robot look like and how long does it take to go from sort of inception to deployment in that industrial use case?

That's a great question. Thank you. I didn't think of it. It was someone else's. Go ahead. AI has definitely changed the game here, and it's accelerated the rate at which you can teach robots new tasks.

But much of the AI that you need to make humanoids successful is still to be built. What we found practically is that when you introduce a new robot-like spot, which we introduced in 2020, it took us until about 2023 before you really were starting to nail the applications that customers wanted and it generated value for them. And so it's not an overnight activity. It's really learning about the customer problem and building a solution, not just a prototype robot.

Let's talk about whether the solution of Optimus over at Tesla, is that a competitive threat for you right now? Robert, how realistic do you think the timeframes are on that from Elon?

Well, you know, Elon, I think, exaggerates often. He's got a history of doing that. But he's also proven the ability to invent the future. So we take Tesla and Optimus very seriously. They also share an advantage that Boston Dynamics has, which is we're attached to a major automotive manufacturer. And that creates a unique opportunity for us, but also for Tesla.

to not only build at scale, but deploy at scale and basically have consume your own robots. - I mean, you've got a collaboration with Hyundai, for example. You've also got partnerships longstanding with Nvidia and others. Just how resilient do those partnerships and do those end customers seem at this economic moment, Robert?

Well, I think the partnership with Hyundai is going to be really amazing because they can be both our manufacturer and largest consumer. If we need to adjust manufacturing of automotives to make robots more successful there, we can do so. And that will really be key to achieving success. So I think the whole world is seeing the opportunity for this new generation of robots to be able

expand significantly. And so I think there's just a lot of promise in this industry right now. Robert, the critical line of questioning I get for you and maybe the criticism is that Boston has been at this a long time. And the skepticism is that you haven't moved beyond prototype phase. You've just said in the opening of this interview that actually you have. Would you go as, actually, bear with us, Robert. I'm afraid to say we've got to leave it here for a second. The president is hosting a cabinet meeting in Washington, D.C.,

They're the right people working it. Congratulations, by the way, and to Tom. For two months in a row, we have set the all-time records for the lowest number of illegal border crossings ever recorded. The number of illegal border crossings released into the United States is down 99.999%. That is usually 100%.

So I think it's an amazing tribute. And Christy, congratulations. And Tom and everybody else. It's an amazing job, actually. And it was done very quickly. We officially designated TREND, the Aragua MS-13 and the Mexican drug cartels as foreign terrorist organizations. And we're expelling these monsters from our country rapidly.

and working with the Department of Justice. Pam, you're doing fantastic. Your people are amazing. We're having some judge problems. Everybody's reading. We're having some judges that don't like, you know, killers, murderers being thrown out of the country, so I don't know what their problem is, but we have...

A little difficulty. We won on the basis of a great border and of getting criminals out of our country. That was why we won every swing state. We won by millions of votes. We won everything. Every metric we won by a lot. It was a massive victory. And we won, I think, largely because of this issue. I put this issue as number one issue.

and they don't want us to do what we're supposed to do. And I don't think that can be. I hope the Supreme Court is going to fully understand what's going on. We have to get the criminals out of our country, and that's the basis under which we won the election. Core GDP, and this is, you know, you probably saw some numbers today. And I have to start off by saying that's Biden. That's not Trump, because we came in on January. This is quarterly numbers. And we came in and...

I was very against everything that Biden was doing in terms of the economy destroying our country in so many ways, not only at the border. The border was more obvious, but we took over his mess in so many different ways. Core GDP, removing distortions from imports, inventories and government spending.

was up plus 3% when you add it. We had numbers that despite what we were handed, we turned them around and we were getting them really turned around. Gross domestic investment was a whopping 22%. Now that is a number that people are coming in at numbers. For instance, I just walked in, I heard Samsung is now, because of the tariffs, they're gonna build massive facilities in the United States.

If we didn't do the tariffs, they wouldn't be doing that. So it takes a little while to get those facilities built, but they're coming in with big, big numbers. They're all coming in with big numbers. We have more monies being spent than any at any time in the history of our country. We're up to close to $8 trillion, I think I can say. And really, it's going to be a lot higher than that. Those are just the ones that we know about. $8 trillion.

I'm not going to say, but I don't think I'm not sure if Biden did a trillion for four years, one trillion. But we're at eight trillion for two months because let's give us a pass on the first month. We were sort of getting a little bit used to things. But after two months, we have eight trillion dollars. There's never been a number like that.

And that includes chip companies, car companies, every form of manufacturing, high tech companies. Nobody's ever seen anything like it. So $8 trillion. I can talk about gross domestic product, gross domestic investment. I can talk about a lot of things. But to me, the biggest numbers, the kind of numbers that are... And these people are coming in. Our Secretary of Commerce spent...

The weekend, he went down to Arizona to see what was happening with the chip, the biggest chip company in the world.

And he said, Howard, you've never seen anything like it. Can you just describe what you saw? So they're investing $165 billion in 1,100 acres in Arizona. And they're building the highest tech chip manufacturing semiconductors and 4,000 employees. You know, American trade craft, right? Technicians doing every kind of work. The classic foundation of America.

is building it, they have 14,000 people. They're expecting 40,000 people to build the rest of their plants and to employ 20,000 people for the rest of time. This is all driven. - You never saw a site like that. - And this is all driven by your tariff policies. No chance this be happening without you. - It's gonna be about 40% of the chip market from that one section. And this is the biggest chip maker. They have 99% of the market. They come from Taiwan.

And unlike the CHIP Act, which was done by Biden, where they hand everybody billions of dollars, the thing they don't need is money. They got plenty of money. What they need is an incentive to come in. And the tariffs, they're building because of the tariffs. Without the tariffs... And I like to say they're building because of November 5th, the election and the tariffs, but I'm going to be a little more blunt. They're building because of the tariffs, and November 5th gave them the tariffs. So the...

It's amazing when you look. And these are not companies that go out and say, well, we're going to build. We have to go get our financing. Let's go. Like we would in New York, everybody would look, you know, you get a building site and then you'd look around for money. You look around for financing for six months. You get your financing. You build your building. The market would be good. You'd make money. The market would be bad. It wouldn't be so pretty. You'd have to negotiate, blah, blah, blah.

This is different. These people have so much money, they don't know what to do. I asked Howard, did they finance it? No, they do it through cash. And they say that site, and they just started, you know, they just announced it like a month ago and...

They've already started. He said, I've never seen a site like it's so big. So, you know, you're talking about a 50, essentially a $50 billion building. Now, if you build a warehouse for $50 million, that's a big warehouse, Scott. But a $50 billion building, that's a lot. They're building the electric, they're building, they've become a utility. And I've given them the right to become. They're going to build their own electric. They're going to build their own electricity, which they need tremendous amounts of electricity. They're going to build it themselves.

anything they have left over, they'll hook that into the grid.

But the grid is old and they're unreliable and bad things can happen to grids. I said, if you want, you can hook into the grid, but that's a little bit risky. Or you can build your own electricity and become your own utility. And they, I think in all cases, are deciding to do that. So it's very exciting and we have a lot of things going. We took over on January 20th. These are quarterly reports. We took over on January 20th.

The tariffs haven't kicked in yet. I know that and I don't want this to happen, but I know that China is doing very poorly right now. I just saw some reports coming out and I don't want that to happen to China. I like the president a lot, President Xi. I don't want it to happen. I was actually saddened to hear it, but they are getting absolutely hammered in China.

And, you know, they're sending boats, the biggest boats in the world, carrying cargo like nobody's ever seen before. These are the biggest boats in the world, biggest cargo ships in the world. And they're coming and they're turning around in the Pacific Ocean. They're doing a big U-turn and going back because they don't want the goods because 145

But at a certain point, I hope we're going to make a deal with China. We're talking to China, but their factories are closing all over China because we're not taking their product. We don't want their product unless they're going to be fair with us. And that includes intellectual property and other things. There are a lot of things far beyond just buy-sell. So we'll see what happens. But, you know, I was not because somebody said, well, were you happy? I said, I am not happy. I want China to do well. I want every country to do well.

but they have to treat us fairly also. So with that, I think we're going to maybe go around and we have some letters where the secretaries and people around the table are making statements about how they're doing and what's happening. And I could start with Pete.

on the left because he's my least controversial person. They don't know how good he is. So we'll go around the table and you can hear it. And these are cabinet meetings where they're very open and transparent. And I can guarantee you Biden didn't do this. He didn't do this. Go ahead, Pete. Well, Mr. President, I think we're controversial because we're over the target. And

Like so many things, Mr. President, you inherited a demoralized military that couldn't recruit, that was perceived as weak after what happened in Afghanistan and elsewhere because of Joe Biden. And what we have seen since your election and the inauguration has been nothing short of a recruiting renaissance.

It hasn't been decades since we've seen this kind of recruiting in the Army, the Navy, the Marine Corps, the Air Force. The men and women of America want to join the United States military led by President Donald Trump. And the police, by the way. Absolutely. And fire.

I always mention the fire, but the police and fire, but the police and fire likewise are, I mean, they have waiting lists now. And six months ago was a disaster. Truly historic. We can barely absorb the volume and retention as well. Men and women in the military who don't want to get out now that they have a real commander in chief. We're reinforcing standards. We're going to be fit, not fat in our formations. We welcome back all the COVID, the folks that were forced out because of the COVID mandate.

We've ripped wokeness out of the military, served DEI, trans, and it's Fort Benning and Fort Bragg again at the DOD. We're rebuilding the military, sir. The Golden Dome is well underway. F-47, reassuring allies and deterring enemies. We found nearly six... President Trump in a cabinet meeting. We leave it on Pete Hegseth, of course.

talking about defense, but so much said when it comes to the GDP figure, for example, and Trump blaming perhaps the decline that we've seen, the worst since 2022, on what he inherited from the Biden administration, talking about core GDP actually being up, taking a while to get domestic facilities built. He went to Howard Lucknick, of course, the Commerce Secretary, talking about the TSMC investment in Arizona. Key in tech also is the fact that tariffs haven't yet kicked in, he says, and they know that China is currently doing very poorly, but he wants China to do well.

Let's get the analysis. Bloomberg's Kayleigh Lyons is joining us. And what's so interesting about that core GDP number that he says, I'm assuming he's trying to reflect the final sales of domestic purchases or GDP basically excluding inventory or international trade, but this is all about international trade implications.

That's exactly right, Caroline. And he referred to that surge we saw in imports, which of course detracted from GDP, as just being a distortion, kind of echoing what we heard from his trade advisor, Peter Navarro, that said this is the best negative GDP print he's ever seen because it shows that countries want to sell to the U.S. Although another way of reading the data, of course, is that U.S. companies are...

really trying to get everything they can from other countries in before the tariffs fully take effect. So clearly the White House trying to spin this as still being the Biden economy, or as President Trump said earlier, the Biden stock market, although he is now past 100 days in office. As he makes his way, though, calling on different sectors,

secretaries in the cabinet around the table. It'll be interesting to hear from the Treasury Secretary Scott Besson in particular around what we just heard from the president on China, a suggestion that he does want to make a deal and that talks are happening. The White House has repeatedly said this, even though China maintains that no negotiations

actually begun. So we'll see if we get a status update from Besson on that or on other deals, keeping in mind, of course, that the 90-day window is rapidly shrinking and they are trying to bring on short investment to the United States in that time or at least get commitments from companies. He was referring to that as domestic facilities taking a while to be built. But the TSMC call out in particular, interesting to hear from the Commerce Secretary and the President, because those are actually investment pledges that were initially made during

the Biden administration. TSMC received money from the CHIPS Act in order to build those facilities in Arizona. And yes, a new facility has just broken ground. So an expansion of what we saw during the Biden years, but it is still worth noting where that investment initially came from. And so we may hear more about that, keeping in mind as well that President Trump is expected to speak from the White House again later today, 4 p.m. Eastern time, for a speech that's being billed about investment in America.

Kayleigh Lyons, we appreciate it wrapping up for us. Meanwhile, we've got plenty more happening in Washington. And Anne-Marie Hordern has just been chatting with Palantir's CTO, Shom Sankar. Earlier today, as part of the Hill and Valley Forum. Now, it's a summit focused on how tech can bolster national security in the U.S. manufacturing. He discussed his perspective on the military-industrial complex under Trump administration. Just take a listen.

I think this is an opportunity to really fix a lot of the problems that have built up over the last 30 or so years since the end of the Cold War. If you go back to what it was like, what did the industrial base look like when we were winning in World War II and the early Cold War? It was actually a

a very different economic structure. Chrysler built cars and missiles. We had a deputy secretary of defense that was the co-founder of HP. Bill Perry was the co-founder of a Silicon Valley startup before he became secretary of defense. So it's a return to the functioning

cross-pollination of innovation that's always existed and been in the bedrock of how the American economy worked. 50% of Palantir's revenue comes from government contracts. Do you expect that level to stay the same, will accelerate under the Trump administration? I think

It's been that way for a pretty long time. Obviously, we started entirely government. The commercial sector is bigger. It's growing very, very rapidly. But I think there's something quite healthy about having this diversified R&D base where everything we're learning and inventing in the very dynamic American private sector is actually benefiting our national security and broader functioning of government. We were able to develop and deploy the Operation Warp Speed supply chain in two weeks because actually two years prior, we'd solved a very structurally similar problem for BP and oil and gas.

And you really cannot connect those dots prospectively. You can only see that retrospectively. And that's exactly what happened with SpaceX. When I was a kid growing up in the shadow of the Space Coast, it used to cost $50,000 a kilogram to get to orbit on the shuttle.

With Starship Heavy Reuse, it's now 10 to 20 bucks. I'm not missing any zeros there. It's just wild innovation that comes from that cross-pollination. This happened with Intel. In the late '60s, 96% of Intel's revenue actually came from the Apollo program. It was effectively a government contractor, but actually Bob Noyce, the inventor of the transistor, the CEO of Intel, he always had a vision that integrated circuits were going to be in every consumer device.

And he invested in that capability. And in the 70s and 80s, that enabled us to build a saltbreaker, which meant that we didn't have to match the Soviets weapon for weapon. We could actually build smarter weapons and have many fewer of them that we could afford and still have deterrence. So even if your government revenue comes down, it's because you're making money elsewhere in the private sector. Yeah. And to be clear, I don't think the revenue is going to come down. It's just that there are going to be differential growth rates here. Yeah.

That was Palantir CTO Shamsankar along with Bloomberg's Anne-Marie Horden. Carrie. Coming up, investors eye big tech earnings, Ed. We got Meta, we got Microsoft. They're reporting after the bell. Plenty more on those ahead. This is Bloomberg Technology. Possibility surrounds us in digital innovation, evolving markets and disruptive ideas. And while promises can inspire dreams, proof is the catalyst for transformation.

At EY Consulting, technology unlocks value. It's data that sharpens your competitive edge, and it's our deep sector insights that can navigate a pathway to real outcomes. This is high-value transformation that drives real change and challenges competitors to keep up. With EY Consulting, it's about proof, not promises. The world is built on code. From the apps we use every day to the systems powering industries, developers like you are the architects of tomorrow. But

But let's be real. The road to innovation can get a little tricky. You need the right tools to move fast, but you also need a community to help you go further. That's where Microsoft comes in. Microsoft has the tools to help you move at lightning speed, like GitHub Copilot, VS Code, and a ton of AI resources to keep you on the cutting edge. But here's the best part.

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Turning back to earnings, investors eagerly awaiting big tech names, Meta and Microsoft after the bell and carry light. It's really a simple equation for Microsoft. AI costs, CapEx. It's a good story to follow because that's what anyone cares about, really. And are they sticking to about 80 billion? What happens in the next year? And what's so interesting is the geopolitical implications. You just spotted a Microsoft blog today saying we're still expanding our data center footprint in Europe.

Right. They're going to add data centers across 16 countries, they said in this blog post. But the timing of it is very curious. I said to the guests earlier, we've all used Microsoft software and paid for it for a long time. And now investors may be a little bit going like, OK, investment, yeah, but show me a bit of the end result of all of this. And where have analysts and investors reorientated their numbers going into this? Of course, this quarter is not the real tell. It's going to be next quarter. But Microsoft has 65 buys on it.

Zero sales at the moment. Yeah, it's still like the darling of whatever it is that's happening in AI. Like meta, also interesting, maybe even more straightforward as a story, like Google, yeah, we track the capital expenditures. It's a big operator of data centers itself. But is its core ad business able to sustain the spending?

And what about the implications that snap the read across? Already Sheehan, already Temu bringing back their spending on ads in real time. Will Mark Zuckerberg, will Susan Lee signal that for the current quarter we're already in, not just the backward-looking quarter that they've achieved? And very quickly, then you remember that in 24 hours, time would go again with Apple and Amazon relentless. Brace yourself. And I'm so pleased that he sat right next to me here in New York. Meanwhile, that does it for this edition of Bloomberg Technology. Don't forget to check out our podcast

Find it on the terminal as well as online on Apple, Spotify and iHeart. From New York for the next couple of days, this is Bloomberg Technology.

Developers like you are building the future, but you need the right tools to move fast and go further, right? That's where Microsoft comes in. With tools like GitHub Copilot, VS Code, and Azure AI Foundry, you have everything you need to push the limits and bring your ideas to life faster. And with security, compliance, and responsible AI built in, you can focus on what matters most, building the next big thing. Learn more at developer.microsoft.com.

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