Apple's Chip Partnership, Sky High Valuation for SpaceX
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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. ♪♪

Live from New York, this is Bloomberg Technology. Coming up, Apple is developing an AI server chip, according to reports, and it's doing it with Broadcom. Details this hour. Plus, the valuation of SpaceX goes to new heights, reaching $350 billion after an insider deal. And NVIDIA, AMD and Intel invest in a startup bringing light to chips. We sit down with the CEO later this hour, but first, let's check in on these markets. And

And currently we are continuing to see some optimism around the Nasdaq 100. We're at 1.4% on the day. Crypto as well, once again above the $100,000 level. $100,532 is where we trade. So risk on across the board. We look at some of the points contributors when you look under the hood of the Nasdaq 100. It's interesting to once again just be seeing some of the key stocks being on the move of

Apple, which has continued to have a very good November and into December. We see where Apple and Broadcom trade on the back of that report that Apple is indeed looking to be creating its own AI server chips designed especially for artificial intelligence. And it's working with Broadcom. This is all on the chips networking technology. It's all being reported by the information. We'll bring you so much more on that in a moment. But

Let's get back to the context of the markets, the geopolitics after that Yellen interview by David Gurra. Anna Rathbun's with us, Chief Investment Officer at CBiz Investment Advisory Services. And look, we've got a risk on feel. We're once again seeing NVIDIA on the upside. You're seeing Apple on the green, Alphabet on a tear. Is this the way that we should be trading it?

Good morning. There's certainly a lot of excitement and AI has transformed a lot. Now the trouble with China, NVIDIA happens to be on the crosshairs. It's not about NVIDIA. It's not even about the U.S. That's all about China. It's a little bit of a noise.

But when I say that AI has transformed, we're talking about Apple and Broadcom. Amazon is also designing its own chips. There's a lot to be excited about. So the excitement over AI is no longer really a dream as it had been 2023 and 2024. Going into 2025, I think we have a lot more to look forward to.

But when you've had more than 100% gain in a name like Nvidia over the course of 2024, when you've got record highs on the likes of Google, Alphabet, the parent company today, can you really be juicing these stocks any further, Anna?

Well, you know, so some of this is about the tech names. Some of it is about relative valuation, right? So the question really in our minds as asset allocators is where would assets go? If we take a look at the global economy and other areas of the global markets, as well as some of the old economy stock names here, the

even the fundamentals don't look as exciting and they're not the ones that are driving innovation. And so it's hard to get excited about other areas. So you could see a lot of assets still driving into tech names. And the other thing, one more thing is a lot of the political changes. I mean, Lena Kahn, it looks like she is out. Coming in is Andrew Ferguson. A lot of

the hurdles that happen to be there in not only the M&A market, but tech as well in terms of antitrust, that seems to be removed. So it's not necessarily about where the valuations are just for tech, it's relative valuation as well as what will the environment be like.

Although the Trump announcement for DOJ has made many people worry for Alphabet, and yet Alphabet continues to be at a record high, are you not in any way given pause on the antitrust side of things for that particular name or others?

Yeah, that particular name, I think it's well on its way. So I don't think necessarily Alphabet will fit into that bill. But I'm talking about the general environment for M&A and as well as tech. Now, one, you know, to your point, there are it's not all, you know, roses here.

There is this aspect of freedom of speech, and I don't know how that's going to be defined in 2025 for tech, especially for social media platforms. And that remains to be seen. So it's not all roses, but certainly a lot of hurdles have been removed. What about the spreading out from the Mag7 and some of these winning Trump trades? We think of the Palantirs and the Teslas of this world. Will that broaden out? We keep hearing that it'll broaden out. Is it going into other parts of the AI ecosystem, energy, for example?

Yeah. So I think we have to see AI and other tech advancements actually make it into these old economy names or even other tech names that are a little bit not so much chip based. And I think we'll need to see more innovation on that and really where the rubber hits the road, how AI would actually impact these industries. And until then, it still feels like we're running on fumes here. And that's

probably why it hasn't broadened out yet, but we'll see in 2025 if there's a difference. Yeah, you were saying that you started this conversation by saying there's a lot to look forward to in 2025. We still wring our hands about what the killer application of generative AI is other than Gemini 2.0 on my phone or the ability to have basically an analyst next to me every time I want to research. Is that enough in terms of the return on investment?

I don't think so. You know, we got a glimpse of it in 2024 where, you know, all this hype about AI and how these big Mac 7 companies are investing in AI was simply enough to get the price up. But then we started to look for alternatives.

ROI on them. And I think the market may be looking for a little bit more in 2025. So we're going to have to see something a little bit more concrete. But that is where I think that these tech companies are running really hard because this is about market share and this is about running to see who the first mover is for capturing that first mover advantage. Because if they don't, they will lag behind. They know that. And so I'm looking forward to the innovation that is to come. Prisoner's dilemma or indeed innovation.

Focus, Anna Rathbun, we thank you. CBiz Investment Advisory Services, CIO. Let's just talk about some of those names we just referenced a little bit more. Tesla, Broadcom, but also Nintendo. These are just a few of the global stocks to watch in the coming year. It's all according to Bloomberg Businessweek. Analysts at Bloomberg Intelligence track

some 2,000 companies from a variety of industries, and they've identified 50 that are worth watching closely. Many of them, of course, are tech companies. Let's bring in Bloomberg's Max Chafkin, who's been poring over all of this. Let's start with the Trump trade. We're just mentioning Palantir there. It is up 300%.

Tesla has been phenomenal growth since Trump came into the administration. What are the analysts thinking there? Yeah, with both of those stocks, you have a Trump trade and sort of a general vibes AI thing going on. And those two things feeding into one another. So Palantir obviously has some AI connections as well as it's a defense contractor co-founded by Peter Thiel. Trump is going to be president. You know, there's a case there that maybe they'll do better.

Tesla, of course, Elon Musk having the ear of the president-elect is a good sign. But with both of those stocks, there is a sense that they are very highly valued, perhaps relative to where their actual revenue is and what their business prospects are. Palantir is not a leading AI company. It isn't as far ahead as Google or OpenAI or something like that. Tesla talks a lot about self-driving cars, but they have not sold a self-driving car. So you have some challenges there. So that's the tension there.

The interesting shift that we've seen is maybe a slight pullback on chip companies. A lot of the exuberance of 2023, 2024 has been factored in. Broadcom today gets a lift higher because we think that it's going to be working for Apple on its server AI chips according to the information.

Broadcom and Micron being referenced. Yeah, yeah. Broadcom's interesting. It's one of a handful of companies that can try to compete with NVIDIA. It is directly and has directly benefited from this extreme exuberance in AI. Now, in the chip world, of course, it has a more direct benefit to AI. I mean, they are selling chips or intellectual property that is being used, whether or not chat GPT becomes a hugely transformative thing or not. Micron's interesting because it's in the memory business, not a direct...

participant in the AI market, although it just signed this deal with the Biden administration to get a huge subsidy for a chips plant. And chip companies in general have done pretty well. So that's another one to keep an eye on. This is a global focus. And so we think of content, ITV being looked at in the United Kingdom, Nintendo as well. Where else are we looking in terms of our consumer focus? Yeah, and

Entertainment is interesting. Nintendo, the big story there is the Switch 2. That's the new version of their console, which is very popular but is getting long in the tooth. Two other names I want to flag. One is Fox. We've been reading a lot about the Murdoch drama. Fox has actually done okay considering the general declines in TV consumption, linear TV consumption, and so on.

And the other one is IMAX, the sort of large screen movie theater format. Again, that's a challenging industry. Movie theaters are going through transition. On the other hand, these James Cameron movies, the Avatar movies, are bought into IMAX and have been doing well. So that's something that could work in their favor. Max Chafkin, amazing how you've managed to pour through so many of the stocks for us. We love it on those top 50 to watch.

Apple and Broadcom stocks on the move today after we understand that Apple is working with Broadcom to develop its own server chips designed specifically for artificial intelligence. Now, the latest report is coming from the information. Bloomberg's Mark Gurman joins us on what you've been reporting this out for a long time, that Apple will be delivering.

delivering AI chips of its own. The nuance here, we're learning exactly who's doing it? Yeah, the interesting thing is this morning Apple announced that iOS 18.2, which is the latest version of iOS 18 with a lot of the new Apple intelligence features, is actually going to be available today. I would anticipate it's going to be available for download around 1:00 PM Eastern, 10:00 AM Pacific. And Apple intelligence is interesting because you have a lot of models that run on the device itself, right?

those capabilities can actually be processed on the phone the iPad the Mac independently but in some cases they need to go to the cloud things like writing tools things like summarizing text in some cases summarizing articles and for that you need your own server infrastructure and so for what Apple has done

uh... is they've created tweaked versions of the m_ two alter check they shipped a couple of years ago and the m four chip they begun shipping this year touchy cloud-based servers to do that a i processing and so what this report today is saying is that there's a new generation version of that check

uh... in development for launch about two years from now which makes sense they they are continuing that rollout of different ships they need uh... specialized ships for portraying data for inferring data for pushing data uh... broadcom is really good at is bringing that data in and out apple and brought come have been working together uh... for a number of years uh... broadcom makes the combined wife i think we choose to check inside of uh... the iphone and some of the other apple devices broadcom

is continuing to work with Apple on what are known as radio frequency filters or RF filters despite the shift away from Qualcomm modems. So this is just a continuation of the Apple modem or the Apple Broadcom partnership, I should say, in new generations of AI servers. It shows Apple's commitment.

to artificial intelligence and doing as much as possible in-house. It's also committed to ensuring that we can get connectivity wherever we might be. And you reported that out in terms of the Apple Watch, right? And how you're going to be using satellite going forward.

Yeah, this makes sense as well. Back in 2022 with the iPhone 14, Apple launched a feature called Emergency SOS over Satellite. So what that allowed you to do is the first advertisement for that so eloquently showed is if you're injured or trapped on a hike or in a remote area without cellular connectivity, you could tap into a satellite network operated by Global Star, right? You can send a text message to emergency services or file a

a sort of a radar or an SOS to emergency services and they'll come find you. They expanded that earlier this year with iOS 18 to allow text messages over satellite to any iMessage content. And so if you're a hiker, you need to sort of bring your iPhone with you. But they

But they have this $800 Apple Watch Ultra geared towards hikers, and now they're going to update it about a year from now with its own satellite connectivity, meaning you can leave the phone behind and still have that peace of mind of being able to reach emergency services and sort of stay on the grid while you're off the grid out of cellular range.

Mark Gurman, great to have some time with you. Thank you. All things Apple. Meanwhile, let's shift to SpaceX and its investors have agreed to purchase as much as $1.25 billion of insider shares, following the company at a cool $350 billion. It's according to an email seen by Bloomberg. Bloomberg's Katie Roof joins us now. You've been reporting out this valuation for a while and we get confirmation. And in fact, it seems as though a lot of people didn't really want to be selling up their shares.

That's right. Actually, Elon Musk even tweeted a confirmation of this. So we had reported last week that they were close to finalizing the $350 billion valuation, a world record for a private valuation that has now been finalized. My colleague Lauren Gresh obtained a document confirming our scoop. And yeah, it's 185 shares.

which is a significant uptick from $112 a share that you were talking about just about a month ago. All of this optimism is allowing people who've been long-term holders of SpaceX to cash out. Do we have any idea of who those people are? Because as you say, SpaceX has been buying back some of the shares, but not as many as they'd anticipated to be able to. Sure. So, you know, it's up $100 billion.

from where they were talking a month ago, there's been a surplus of demand because, first of all, Elon's ties to Trump and Trump's election are seen as valuable to some of these shareholders. And then also SpaceX had a successful launch

rocket launch last month. And so both of these things contributed to the perceived value. A lot of these private companies aren't necessarily valued based on clear-cut metrics, but just where supply meets demand. And often it's based on a vision for the future. But yes, it's apparently they had excess. They didn't have enough sellers. And so they had to raise the price to match supply and demand.

The greatest American success is what Jared Isaacman, who is, of course, the NASA name, the NASA chief pick from Trump, is calling SpaceX today. Katie Roof, we so appreciate it. Thank you so much. Coming up, GE Vinoba. CEO Scott Strachsic is going to be joining us for more on how the company is meeting the power needs required to put AI into action. This is Bloomberg Technology. ♪

89% of business leaders say AI is a top priority, according to research by Boston Consulting Group. But with AI tools popping up everywhere, how do you separate the helpful from the hype? The right choice is crucial, which is why teams at Fortune 500 companies use Grammarly.

With over 15 years of experience building responsible, secure AI, Grammarly isn't just another AI communication assistant. It's how companies like yours increase productivity while keeping data protected and private.

Designed to fit the needs of business, Grammarly is backed by a user-first privacy policy and industry-leading security credentials. This means you won't have to worry about the safety of your company information. Grammarly also emphasizes responsible AI so your company can avoid harmful bias. See why 70,000 teams and 30 million people trust Grammarly at grammarly.com slash enterprise. That's Grammarly at grammarly.com slash enterprise.

Grammarly. Enterprise-ready AI.

Bloomberg Invest returns on March 4th and 5th. This is Shanali Basick. Join me and many of the most important institutional investors and money managers for New York's top finance event. Come face to face with the leading voices in markets. Identify the next big investments, forge meaningful connections, and swap strategies. Register now at BloombergLive.com slash invest. That's BloombergLive.com slash invest.

A looming problem facing the AI boom is how the new technology will be powered and the race is on to meet that anticipated demand. One of the key players, GE Vinnova. The company is developing new technologies to provide reliable, affordable, low-carbon electricity that it hopes will produce the sort of power that can put AI in action.

Here to talk about it, GE, Vinova CEO, Scott Strezic. Thank you so much for being here with us. - Caroline, thanks for having me. - On the back of an investor event, and you are outlining really the demand that you're gonna be seeing from AI. Can you just put that into context, how much is gonna be increasing the load?

You bet. I mean, AI is one of many factors that's driving to really the first time in 25 years, certainly in the U.S., we're seeing real load growth. It's AI. It's the electrification of transportation, electrification of homes. But also U.S. manufacturing are all playing roles that are really leading to a substantial increase in load growth right now.

We're seeing it in a number of our businesses. We're seeing it in substantial increase in orders for gas power right now. We're seeing it in grid infrastructure equipment. And then working with the hyperscalers, going back to that question on how we decarbonize this increased load growth that's very clearly coming this decade.

So to decarbonize, is it all about nuclear? Is it all about innovations there? You set aside, what, $5 billion in terms of R&D? You bet. It's really going to be a little bit of all of the above. I mean, there's going to be a lot of decarbonization of gas over the course of the next decade. That's with hydrogen. That's with carbon capture. As an example, we have...

running direct air capture plant right now that will be able to parlay similar technology on our gas turbines over time. Nuclear is definitely important. We have 65 nuclear plants with our technology running today in the US. We can operate those plants

in providing more electrons this decade. We also have what will be the first small modular reactor that will get commissioned this decade in 2029. That will become a bigger part of the hyperscale or demand cycle into the 2030s, and we're excited about that. So there's a lot of plays here.

It's interesting, people have been hand-wringing about in the last decade how much China has invested in nuclear and how the US ultimately hasn't. Have you been talking about this for a while and now everyone's come to the same realization? Certainly the activities accelerated considerably in the last, call it 24 months. I mean, I remember sitting in the room at COP28 in Dubai with over 20 heads of state saying we need to triple the nuclear capacity in the world between now and 2050.

in the sentiment towards nuclear certainly coming that way, both whether it be with business or with government. It seems like this is going to be our time for nuclear and we're excited about what we can do to help make that a reality. Is there an opportunity cost? Where are people not looking? It's interesting that there's perhaps some weakness in the wind area of your business that analysts are calling out. Why that?

Well, I think the wind industry at large is one that's still going through more of a maturation process, industrializing the product at scale relative to gas, relative to nuclear, that just have longer legacies, stronger supply chains, stronger safety and quality cultures in those supply chains in totality. But the reality is when you talk about these different power generation technologies and what people are missing, frankly, it comes back to the grid.

because regardless of which technologies are going to power this load growth, we need to make a massive investment in the grid in the years to follow. And that's both the physical grid and how the grid thinks and works and grid software. And those are big parts of what we're investing into right now. Is that you? Is that alongside the government? Does this have to be public-private partnerships?

We do stand for public-private partnerships, for sure. I mean, these are big electrical equipment systems that have been built over 100 years with public-private partnerships playing important roles, and that will continue. But a lot of the innovation needs to come from us, so we can't wait for the government. So we're investing considerably in grid software, as an example. Does that

impact profitability. Long term, the investors, the analysts that you're invested in were loving the long term future for margin growth. Yes. But they were in the near term a little bit worried about the narrowing of the margin target. Is that because you are having to put money into R&D? We are investing. We're going to grow our research and development 20% in 2025. And we're doing that because the market's telling us that there's real opportunity to yield a return on that investment over time.

The amount of electricity that's going to be needed in the next two decades probably can only be compared to the period of time after World War II. It's substantial. It's important for both economic growth and, frankly, it's important for stability in the world. So, yeah, we're investing into the future, but we're doing it with high confidence that we're going to yield a return on that investment. You generate about 25% of the world's electricity. What does the U.S. look like compared to everywhere else? Where in the U.S. are you having to really focus in on?

We, it really is an all the above theme right now. I mean we're building out our manufacturing facility for gas turbines in Greenville, South Carolina. We're investing into our nuclear facility in Wilmington, North Carolina. We're also building the largest onshore wind turbine to sell in upstate New York. So really throughout the U.S. we're building stronger local manufacturing to serve a growing market, not just for the U.S., but candidly so that

as we make these innovative investments we can also export that technology for the world both for economic development there but also for peace

Wow, big thoughts, G. Evenhofer CEO Scott Straczyk. Really great to have you in. Caroline, thanks for having me. Now it's time for Talking Tech. First up, the chip that powers Huawei's latest flagship smartphone is not so different from the one that set off alarm bells in Washington a year ago, according to a device teardown done by Tech Insights. The discovery suggests Huawei is still about five years behind industry leader TSMC in terms of technology.

Plus, Swedish payments group Klarna Bank has been fined $45 million by the nation's financial watchdog for failing to follow anti-money laundering rules. And the authority found, quote, significant deficiencies at the company. But Klarna points out that this was routine review and was not related to actual cases of money laundering.

And China's top markets watchdog summoned PDD executives to order the company to fix its refunds-first policy, which actually allows customers to claim refunds without returning their goods. The decision comes as a growing number of small merchants argue the practice really hurts their bottom line.

Welcome back to Bloomberg Technology and Caroline Hyde in New York. Let's get you a quick check on these markets because the Nasdaq pushes higher, risk assets go higher as we get that inflationary pressure coming in as anticipated, 0.3% on the CPI print month over month. We are currently up 1.6% and really some of the big tech magnificent seven names lead us higher. Go into the individual movers. We have got some record highs out there across the board.

And a large part of that is on Alphabet. Once again, four straight days of gains. The biggest winning four-day streak that we've seen since back to March 2023. Enthusiasm around the quantum innovation being seen with the Willow quantum chip. To add on to that, Gemini 2.0 being released today. Innovations in AI. All of this seems very much a virtuous circle, despite those antitrust overhangs. So we're higher on Alphabet. Moving to some of the individual stories as well on the day, and we've been looking a lot at

the chip makers and the news coming out of the information, really just iterating a little bit on what Mark Gurman had already been reporting, that yes, Apple is looking at AI-focused server chips. And who do they turn to? Well, longtime partner Broadcom. We're up some 6.3% on the back of Broadcom. And lastly, I'm just looking at Supermicro. The volatility remaining around that particular name after, of course, they did get that extension to be giving their financials to the NASDAQ by February.

Let's just talk a little bit more about on the private side and the chip question a little bit more as well. IR Labs has just raised $155 million in its latest funding round.

The likes of Nvidia, AMD Ventures, Intel Capital, the three big chip companies basically, using what is their next technology, specializing in using light to transfer data between chips, reducing bottlenecks is hoped in AI chip technology. IELAB CEO Mark Waid joins us now. I just want to get the context for our viewers. What exactly is going on here? How does photons, how does ultimately light help reduce the bottlenecks in chips at the moment?

First, Caroline, thanks for having us here. I'm excited to be here and talking with you. I think the way to think about this is everyone's familiar with and have been tracking all the innovations coming out and exciting applications happening in AI.

But the AI application has really broken the back of existing computing infrastructure. And we've seen a lot of innovation happening on the compute side, so people like NVIDIA building GPUs. And we've seen how these GPUs get deployed in huge AI data center deployments, so thousands, tens of thousands of GPUs.

But you have to connect all of those GPUs together. So now we're at a point to where the bottlenecks are happening and how you connect these GPUs together and start to drive to higher performance overall systems, driving model growth, more interactive AI models. And these bottlenecks right now show up as lower performance, higher costs, and drive a lot of cost pressure in the AI application and the software level that's built on top of it.

So we're really looking to bring the optical innovation to solve that interconnect bottleneck. How quickly are we talking about hearing, in the next couple of years, mass production? Yeah, I think we're bringing a low-level innovation to the high-volume semiconductor world. And products in this space always take a few years to get to high volume, and the product cycles are a few years long. So the way to think about where we're at right now and what differentiates us is we have a chip that we ship today.

So it's an optical chip. It's got 100 million transistors on it. It's got thousands of optical devices. We've really brought a level of integration and performance that's never been seen before. But we're shipping in the tens of thousands of units, whereas the market demand is tens of millions. So the work that we still have to do over the next few years, along with our partners and our strategic investors, so NVIDIA, AMD, Intel, but also very importantly, the high-volume CMOS manufacturers, Global Foundries, TSMC, Intel,

Intel Foundry. We're working on bringing this forward and scaling it 1,000x in the next few years. So think of this as still a couple years away. - Mark, who are you currently shipping to? In what form is it already being used?

Yeah, so we're shipping across a number of the customers that we strategically work with. And how they're using it right now is, one, making sure that the core technology works. So we've invented a new technology. And so before you commit to deploying that in high volume, you have to kick the tires and say, okay, there's some new elements here. There's innovation that we've done. Does it actually work? How is it yielding? How is it behaving in terms of reliability?

And so a lot of our customers are consuming these thousands and tens of thousands of parts to really prove out that this technology is poised to scale into the millions. So that's how people are using it today. When you think about NVIDIA, AMD, Intel, all of them fierce frenemies, in some ways work with each other, but in many ways work to compete. They're willing to all work very equally to get access to your technology?

Yeah, I think the way to think about this is everyone's realizing that a transition towards a new scale of optical technologies and optical products is very important for all of their future deployments and products. So we've always viewed this and what we're doing as a broadly deployed and ubiquitous technology.

Yes, you're right. The semiconductor world is notorious for frenemy engagements. Your suppliers, your partners, sometimes you're competing. I think that's just how this world works. And ultimately, it rewards those who innovate generation after generation. And we're on the forefront of bringing optical innovation and optical products to the broad market. So that's how we view it. And we see our partners really working closely and well with us to realize that vision. You came out of academia. MIT Lab was where a lot of this was born, Mark.

What about the profitability, the business model for you? What layer are you getting paid? Yeah, that's a great question. Part of the innovation here is that we're bringing the power of fabulous semiconductor design, which is done phenomenally well in the world of CMOS and electronics and companies like NVIDIA, AMD. But we're bringing a photonic element to that.

So we get paid at the chip level. So we ship a known good optical IO chiplet. So it's a silicon chip that we ship to our customers and they integrate that chip into their multi-chip packages, GPUs, CPUs, in the future switches, memory interfaces. So this really becomes a ubiquitous, largely deployed kind of proliferation of optical technologies and we sell a chip.

And at the moment, who makes those chips is Global Foundries, Intel, and you're talking to TSMC. Will we just see all of those three be the ones that bring you to mass production by 2026?

That's right. I think the other thing to latch onto here is that the high volume leading edge foundries are getting involved. Global foundries, Intel foundries, TSMC, they've all made public statements about what they're doing in photonics and we're working closely with all of them. We're excited about how this is coming together. Yes, we need that scale of manufacturing to deliver to the tens and hundreds of millions of units

that the market is demanding a few years in the future. - iiLAB CEO, Mark Waid, really appreciate your time. - Thank you. - On the funding round. Meanwhile, let's just shift our attention to GM. Shutting down its cruise robo-taxi division, citing high development costs and reputational risks, GM will merge cruise into its operations, focusing on developing advanced safety systems and offering autonomous driving as a feature of future models. The company says the decision will save the company over a billion dollars in annual costs.

Coming up, what's in store for the IPO market heading into 2025? Wesley Chan's with us, co-founder and managing partner at FPV Ventures. This is Bloomberg Technology. 89% of business leaders say AI is a top priority, according to research by Boston Consulting Group. But with AI tools popping up everywhere, how do you separate the helpful from the hype? The right choice is crucial, which is why teams at Fortune 500 companies use Grammarly.

With over 15 years of experience building responsible, secure AI, Grammarly isn't just another AI communication assistant. It's how companies like yours increase productivity while keeping data protected and private.

Designed to fit the needs of business, Grammarly is backed by a user-first privacy policy and industry-leading security credentials. This means you won't have to worry about the safety of your company information. Grammarly also emphasizes responsible AI so your company can avoid harmful bias. See why 70,000 teams and 30 million people trust Grammarly at grammarly.com slash enterprise. That's Grammarly at grammarly.com slash enterprise.

Grammarly. Enterprise-ready AI.

Bloomberg Invest returns on March 4th and 5th. This is Shinali Basick. Join me and many of the most important institutional investors and money managers for New York's top finance event. Come face to face with the leading voices in markets. Identify the next big investments, forge meaningful connections, and swap strategies. Register now at BloombergLive.com slash invest. That's BloombergLive.com slash invest.

After potential IPO filings from companies like Klarna, like Service Titan, what's the outlook for tech IPOs heading into the next year? How long will these AI valuations remain so heady? Wesley Chan is with us, co-founder and managing partner of FPV Ventures. We've got a lot of thoughts on both sides of the equation. We are getting excited for potentially IPOs to reopen, particularly as we see a new administration. Everyone's talking about more pro-business. Is that going to happen? I think so. I mean, everybody's very excited about 2025, especially going into 2026.

If more interest rates fall, you'll see a lot of people pump more money into the markets and you might have a wonderful season of IPOs. We're still waiting it out right now. It hasn't happened. Service Titan has filed. We're hoping, and fingers crossed, that that does really well. I think that will open up the doors for more people to want to come out into the market. There's been some bitter pills to swallow on the progress. For example, Eklana in the heady days of 2021, the valuation is much different, but it has improved from recent years.

What does that speak to in terms of where the valuations will lie when we come to the public market? They'll still be down from the last couple of years. You have to remember that we had zero interest rates, so people had an outrageous amount of money in the markets. With the pandemic and the stimulus, people just pumped money in the IPOs as if everything was great. And I think what you'll see in the next couple of years is only the best companies will sort of come out at the beginning, and those best companies will get valuations that are reflective of their being unique and being exceptional.

Are those best companies always going to have to be generative AI adjacent? No, I hope not. I think there are a lot of great companies that are waiting. I've been involved with Canva for almost 11 years. And they do use some AI as part of their product offering. But Canva started out as a tool for everybody to use.

to be more productive. And nobody sees them as an AI company quite yet, and everybody's talking about their possibility of IPO-ing in the next couple of years. So you'll see a lot of great companies come out. Will they all come out in the United States if indeed they are? We're seeing Indian listings, for example, pick up for local companies, or is it all about

coming to the US? I think if you're a founder, no matter where in the world you are, a lot of them tell me it's their dream to IPO in the US. So you'll see the best ones IPO here. That's where all the capital is and where people are excited about having their listings. People are exuberant though also about M&A picking up.

I mean, many would say there's still limitations on the Magnificent Seven to really make too many acquisitions. But is that going to be a more furtive area of exit, at least? I hope so, but I'm skeptical of it. We have a couple issues with M&A, the first being that a lot of it was blocked. You saw this morning that we had another one

that was kind of blocked, this Kroger Albertsons one. We might have a new administration, we might have a new FTC that will be more lenient towards allowing some of these M&A's through. But right now, the M&A market is for the most part shut down, especially for folks in tech companies.

So where are you seeing, for example, a lot of the activity when you're trying to get into deals? Is it that you're writing still the initial checks? How much have you been tempted by some of these secondary market activities that seem to be the area of giving certainly investors and employees liquidity?

You know, there's a lot of activity happening there, but my taste has always been either first check-in or on the Series A and not doing these secondaries. That's where you spot these founders with amazing talent. And they'll probably go to IPO if they achieve what they want. Google went to IPO. I was there as a very early employee, and I watched that reopen the public markets in 2004. And, you know, you have one great or two great or three great companies IPO, and the market will start booming again. We saw it first hand with Google when things were shut down after Enron and after the first recession and the dot-com bust.

So, you know, the history doesn't quite repeat itself, but boy, does it rhyme a lot. It does rhyme. Does the never-ending wall of money going towards generative AI startups continue? We're already seeing it stop a little bit, right? You know, there were a lot of... It ebb and flows. And with a lot of generative AI startups that were doing video models or doing, you know, the first stage, a lot of them can't raise money anymore. You know, they're calling companies like Canva and saying, "Please acquire us, we're just out of cash."

So I think you're going to see that first wave start seeing their bubble pop. And then you'll see a second wave of applications, the ones that are changing how legal is done, changing how insurance is done, changing how insurance underwriting sort of occurs, start to become very popular. And I think those will have some value. We saw this in mobile firsthand. Like, you know, a lot of the companies that were doing mobile infrastructure all went kaput, you know, very, very quickly. Or they got bought as--

acquisitive M&A by Google or Apple. And what you'll see is companies like that are the incumbents in Gen AI, whether it's Google or Microsoft or OpenAI, which is entirely almost funded by Microsoft, sort of keep the lion's share because they have access to all the compute power. And SoftBank's got a lot of money coming into OpenAI, as we said. But what you'll see is a lot of the application layers, just like how Uber and Airbnb became the application companies for mobile, the application companies for Gen AI will start becoming very popular and have a lot of value. And this kaput moment,

Look, there are a lot of zombies out there who are still clinging to unicorn valuations, but no one's quite ready to rip up the script and mark it down. When did these kaput moments actually happen? When they run out of cash. We saw this first end of the dot-com bust, right? A lot of companies had these crazy unicorn valuations because the market was unlimited. And all of a sudden, in one fell swoop, after there was that big recession, the dot-com bust happened. And all these companies, almost in like a couple month period, went kaput overnight.

And I think we'll see this with some of the Gen AI companies. The market will just say, we don't have money for you for funding. They won't have a profitable business model. Just like how the e-commerce companies never made a dime. They lost money on every transaction. You'll see that business model's risks sort of play out. And then all of a sudden, with no more cash being able to be raised and the money being burned, they'll have to close their doors. Where in the generative AI stack are you talking about the application layer here rather than the foundational models?

I think it's between the foundational models. Those folks have lots of funding. They have incumbents, unlimited compute power. You have the applications that are taking advantage of some of the new features and the new launches that are happening in the foundational models. But there are a lot of companies in between that were using some of these models to do better videos or better writing tools. That's where you're going to see a lot of wreckage. AMANDA SCHADE: Wesley, it's always great to get your straight talking on the show. Wesley Chan, co-founder and managing partner at FPV Ventures, with a look ahead for 2025.

Of course, Wesley used to work at Google. Let's talk about Google for a moment because it's debuted a new version of its flagship AI model, Gemini 2.0, saying it is twice as fast as its previous version and will power virtual agents that assist users. Now, the new model can generate images and audio across languages, can assist during Google searches and coding projects.

Meanwhile, Adobe also rolling out new features. This one is AI video product, much more slowly though than OpenAI's rival Sora service. It's been fueling concerns that it's falling behind. The company announced the tool two months ago, yet it remains in limited testing, only accessible by a handful of creators. Meanwhile, Sora, made available to a wide audience just this week. We await Adobe's numbers after the bout.

We have a new intraday record being hit for Tesla. Keep an eye on the stock. We're currently up 2.77%, but at one point we were gaining 3.5% to hit the first intraday record since 2021. The enthusiasm around Tesla, of course, since the new...

President-elect Trump was announced in early November being priced in. Meanwhile, let's shift our gears to TikTok, another one to focus in on in the Trump administration. It's currently offering users hundreds of dollars to spend time in the app, invite friends to join, and purchase products on TikTok Shop. This is all part of an effort to expand the business as quickly as possible ahead of, of course, a possible ban in the United States. Bloomberg's Alexandra Levine brings us this story. Quite extraordinary, some of the ways they're enticing new users.

I haven't seen this particular one before. And I think what's so interesting is, you know, they already have 170 million Americans using the app. That is more than half the American population. It is more Americans than voted in our last election. And this shows that they are still trying to get more, as you said, to just really maximize before this potential ban goes into effect in just over a month. So what is the idea? More people, more the 170 million that already use it,

will be a bigger outcry if indeed we are going to see it banned or if they choose not to divest from ByteDance?

Absolutely. The thought is that it's best to just do as much as they can and grab as much as they can to both increase the value of the company and also to make the app more deeply entrenched in the American's everyday life and in the American economy before this potentially comes to pass. And so what you're seeing in this offer now when folks are opening up the app is that they are being offered...

up to $350 basically to spend in cash rewards on TikTok Shop, which is still one of the biggest bets for the company and one of the areas where they are trying to invest the most. And they're expanding in Europe as well, announcements in Spain and Ireland. But how well is it doing? Do we have any sense of how many people have been using TikTok Shop in the U.S.?

So we know that TikTok shop is wildly popular here. We know that TikTok or ByteDance, its parent company, had aimed to get users to spend $17.5 billion on the app this year. We know that they just had triple the Black Friday sales this year that they had last year. So we know that they're doing very well.

well. As far as outside the U.S., it just launched yesterday in Spain, so it's a little bit newer. But I think what we can say looking at the U.S. numbers is that all of the regulatory scrutiny really hasn't done much to dampen interest in the e-commerce arm of the platform. Throwing everything, trying to gain those U.S. users. Alexandra Levine, thank you so much from San Francisco. Sticking with shopping.

paid product reviews online, which merchants can use to gain a competitive edge, they're under increasing scrutiny. First, it was a government clampdown by the FTC back in August. Now, Amazon itself is asking online shoppers to provide information about product testimonials that they posted on TikTok or YouTube or Instagram. Bloomberg's Spencer Soper has done the deep dive here. And while Amazon is basically under pressure to really work out who shouldn't be paying such influence.

Yeah, the interesting thing here is that they're looking beyond Amazon. You know, Amazon for years has tried to clamp down on fake reviews. They've looked at scams where people were maybe like taking payments on PayPal in exchange for reviews on Amazon. And what's happening now is they're actually reaching out to people who've posted reviews on Amazon and asking, hey, what kind of relationship do you have with this brand or this product?

What kind of videos are you posting on other sites like TikTok and YouTube and Instagram? And that's the interesting development here is Amazon looking beyond its own platform for signs of this kind of review abuse. - And what is the comeuppance from the abuse and to whom?

That's a really good question. We know that the FTC is looking to clamp down on this and they're saying they can go pursue civil penalties. That rule just took effect earlier this year. And that's where Amazon is still unclear exactly where it fits in. If they turn a blind eye to it, that would be difficult for them. I think they have to show that they have some sort of proactive...

effective mechanisms to try to weed these things out to avoid culpability and then, you know, maybe help the FTC go to another target, which could be the actual review writer and the brand that's in collusion. But then the other aspect of this is just that it's reaching beyond its site. It's just kind of sending a message like,

Be careful about those campaigns you run on TikTok or YouTube, trying to sell your Amazon products and maybe bring some of that back to Amazon where they prefer to have it. Yeah, because advertising has been a really strong line of growth for them.

Yeah, exactly. And it's never Amazon's never been very good at discovery. So a problem for them has been that brands, if they want to be discovered, they try to get discovery discovered on TikTok and YouTube where people kind of are noodling around. Amazon's always been a place to spearfish. And so is this is this a way for Amazon to maybe send a warning sign against those kind of campaigns with influencers on other platforms?

Spencer Soper, digging in on those influences. We appreciate it. Thanks so much. Let's just check in on what has been a key story, a key move in the market today. Broadcom, from a points perspective, really adding to the S&P and the NASDAQ 100 more broadly today. It's up 5.6%. Why? Because, well, the reports coming out of the information, which basically build on the reporting from our own Mark Gurman,

Apple is all in on building its own AI-specific server chips. Who are they using to do that with? Broadcom, up 5.5%. So we see some big moves, some record highs across the board as well. Keep a close eye on the likes of Google today, Alphabet, the parent company, had a new record high. So too is Amazon, we were just discussing with Spencer Soper. That does it for this edition of Bloomberg Technology. Do not forget to check out the podcast. Find it on the terminal as well as online on Apple, Spotify and iHeart. This is Bloomberg.

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