Micron Plunges On Weakness, Musk's Political Power
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Live from New York, this is Bloomberg Technology. Coming up, Micron plummets after reporting earnings and AI just couldn't make up for the smartphone and PC chip weakness. Plus, Elon Musk wielding his political power as the US now risks a government shutdown. We discuss his impact on the next stopgap bill. And Apple halts its plans for an iPhone hardware subscription service. This and much more on Apple News later this hour. But first, we check in on one key stock.

It is down more than 17% and is having its worst day since March 2020. Micron really slumping on the back of its numbers and we get straight to it, the why, the how, as you see that it eradicates most of its gains year to date.

We go to Blue Meg intelligence analyst Jake Silverman first, whose report lays out that the outlook missed by 12% on weaker smartphone, PC and auto bit demand. This is it. We were all really excited about high bandwidth memory for AI applications, but really it comes back to you and me not buying more phones. Yeah, well look, there was definitely an inventory correction to some extent for fiscal 2Q. And this was starting to happen earlier this year actually. We're starting to see this in June, July, August.

And the reason primarily was to build inventory ahead of price increases that did occur, but now are starting to impact the company's demand. I see. So Sanjay Muratra is really trying to say and spell out that the second half is going to turn around. We're actually going to see maybe even a growth of the PC market of some 5% in 2025. But what spurs that?

Well, there's typical seasonal demand. So we would hope to see seasonal growth in the second half regardless. But there's also the opportunity where there's content expansion within AI PCs, AI smartphones. So there's an opportunity there. Whether or not that occurs, I think that still remains to be seen. But there's still optimism that there can be growth in the second half of the year versus the first half.

So look, as we try and get our head around the actual demand for AI in the consumer radiator department, in the data center, it is there. What, 400% growth in terms of their AI demand and sales? Why is that not bringing in enough revenue yet, though?

Well, so they do have a number of products that are really impacting data center demand. So high bandwidth memory is probably the most talked about, but it's actually still the most nascent for them. It's really not generating the bulk of the growth yet. So they still have other products like high capacity DRAM modules, DIMMs, LPDDR5. What do they do?

They're really for servers, both AI and traditional compute. Traditional compute was actually a bit better than had been previously anticipated. But on the other hand, there's also data center SSDs, which seem to be moderating near term, where they had been experiencing some pretty tremendous growth beforehand and had been benefiting a lot from share gains as well.

Well, Bloomberg Intelligence analyst Jake Silverman breaking down what is a pretty painful day in HQ in Boise, Idaho. But now let's go out to an investor in the scene, Kim Forrest, CIO of Boca Capital Partners, $35 million in assets under management. And Kim, your take on what is an absolute punishment on the stock today? Absolutely. Well,

I've been doing this for a number of years, since 1999. And, well, I was a sell-side analyst, then a buy-side analyst, then a PM, then chief investment officer of my own firm. That being said, this is not my first day at this rodeo. And Micron in particular, and all the memory kind of companies, seem to have this boom-bust cycle. And the boom and bust can be really close to each other, as evidenced by the price chart of Micron.

So what's an investor to do? Well, some people would like to be able to trade this, know when to go in low, you know, when the high is. God bless you on that. I think what you have to do is look at Micron and say it has terrific growth. There are very few players in this space. There's maybe six or seven companies that are competitors. And for the most part, Micron,

Sometimes bad things like this happen, but sometimes good things happen too. And to be able to trade around that, around these events where there's a sudden shortfall in demand, but it will be made up.

I think it's more of a buying opportunity than getting out. Now, the other thing is, if you look at that chart, some people bought it at much higher prices this year, and it could be tax loss selling going on that's really driving the price down today. So there's a seasonality element to all of this. It's interesting, if you go to analyst recommendations at the moment, look,

A lot of people cut their price targets, but still you've got 37 buys on this stock, you've only got one sell, and the overall consensus for price target is still at 135. You've got room to run up from an $85. But how does Sanjay Mehrotra get us there in terms of what he needs to signal now to the market? How much can he say, look, put aside China, put aside my exposure to the consumer, I'm all in on AI?

Well, I think he made the case that he's all in on AI, right? Like they have the products that AI wants and needs. AI

for many reasons has saved this market right i mean nvidia and meta certainly have driven it but the real issue here is the ai um people are buying stuff and building out their data centers and i don't know that that's going to stop in any you know definable time and i think did you sorry just to butt in there kim did you get that sort of

easing of any anxiety, whether or not it was closely held or far away, that we might be at some pivot point where the demand does start to ease up. Sure. I mean, well, here's what investors really have to understand. Micron is a

a very small world in which all of its clients are either all on or all off, or so it seems. And if you remember when we were building out regular cloud databases or cloud data centers, it's lumpy. And what I mean by that is you're either building out or you're not. And all of a sudden it can stop. And whenever several companies that have been building out data centers stopped,

you know, the providers get clobbered. That's just the nature of this. And we don't know when it's going to stop. So,

Investors have to be aware that we're not going to be spending in perpetuity to build out AI. There will be a day when people take a pause and actually have to reap the rewards of building this product and having people pay for the service. These mega clusters at the moment though that we seem to be seeing is not a signal of us pulling back anytime soon.

Does macro policy, does a new administration in any way dampen the spirits or only accelerate them, Kim?

It doesn't seem so because the companies that are building these data centers out have enough money from what they're doing now. They don't need to be able to say in the future I'll be able to, you know, in some very definable timeline, I need to get my money back. So they are going to be building these things out because they have the cash flow. And I'm talking to about Microsoft, Google and Meta.

their regular businesses are providing the capital to build out data centers. So you said this potentially could be a buying moment for Micron. What about the chip space more broadly? Because everyone's been settling in on this focus on software trade.

Right. Well, I think it's great. Like at some point, software has to come back to winning. I used to be a software engineer and I would love to be able to like buy a good software company that I think will grow again in perpetuity. I like money making machines. Microsoft has been that, although it had a lull in the, you know, 2010 to 2014 range, something like that. But yeah, software is great. But hardware is what is driving software.

me crazy right now because it seems there is no lack of demand. And I think the software will follow. Now, a lot of people are momentum investors. And I worry about NVIDIA about that because Broadcom's kind of taken a little air out of the room for NVIDIA. Kim Forrest, just dampening our animal spirits when it comes to some of the key trades that have been in this year. Kim, we so appreciate it. Okay.

Boca Capital Partners wishing you happy holidays, just CIO there. Meanwhile, look, the Biden administration has cemented a deal to give SK Hynix, of course, another high bandwidth memory maker, close to $460 million in grants and $500 million in loans. This is to support a facility in Indiana, which will focus on packaging chips sent to the U.S. from SK Hynix plants in South Korea. The deal is a key part of U.S. efforts to build a domestic semiconductor supply chain.

Now coming up, Elon Musk's influence in Washington being felt already as he helps kill a stopgap funding bill. More on that next. 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.

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Terms and points cap apply. Learn more at AmericanExpress.com slash AmexBusiness. A last-minute government funding bill has been scrapped by House Speaker Mike Johnson after Elon Musk urged lawmakers and President-elect Trump to risk a government shutdown rather than accept proposed stopgap bill. Bloomberg's Mike Shepard joins us for more. And if anyone had potentially been doubting or questioning the influence of Elon Musk, they're proved wrong here.

Those doubts were erased and in resounding form yesterday. It was almost like on cue. We saw Elon Musk use the power of his ex-social media platform to gin up opposition and amplify it very quickly and within hours.

President-elect Donald Trump and Vice President-elect J.D. Vance chimed in and said that they too oppose this spending deal which had been negotiated for weeks, if not months, to try to avert a government shutdown that will come as soon as Saturday morning if lawmakers can't go back to the drawing board and put together something on the fly which looks really unlikely right now. Republicans saying that their phone's been ringing off the hooks on the back of this call to arms to call your lawmakers and get it taken off.

He's shown his political clout, but behind the scenes he's also building a team, taking expertise from those he knows already and indeed attending every meeting that seems to be going on in Mar-a-Lago. Well, you're right, Caroline, because what we've also seen is Musk using this bully pulpit of X to also give wing to this venture that Donald Trump appointed him and Vivek Ramaswamy, one of Trump's campaign rivals, to lead. That's the Department of Government Efficiency. Now, keep in mind, it's not really a department efficiency.

It wasn't an agency created by Congress. But its goal is to do kind of what they're asking for in their social media communications yesterday, and that is cut down the size of government, reduce spending, reduce the scope of government. And this...

entity, if you will, for lack of a better word. We'll call it that. It is still taking shape, but we do know that they are hiring. Thanks to a really great scoop by our colleagues yesterday, we already know that they have hired about 10 people. And Elon Musk has turned to an executive from the Boring Company and a former Trump chief technology officer in his administration, the prior administration, to lead the hiring push. They've been talking to candidates. They're looking for software engineers.

engineers, including folks with artificial intelligence expertise. And the idea is that they would apply that to the vast reams of government data, perhaps to try to figure out what are the efficiencies that could be gained.

I wonder where that talent comes from, because of course he's been busy hiring an ex-AI in that department too. Mike Sheppard, a joy to have him here in New York. Let's just talk a little bit about the EV space more broadly as well, because Tesla is in early talks, we understand, with the city of Austin about rolling out a fleet of autonomous vehicles as early as next year. In emails acquired by Bloomberg, Tesla employees have been communicating with the Texas city since at least May to establish safety expectations for the vehicles.

The emails go on further, saying that Tesla has not yet finalized its decision for an Austin deployment. Let's stick on Tesla. Let's stick on EV landscape. Let's stick on all things Elon Musk as well, and how all of this is set to change under the 2025 President-elect Trump administration. And maybe we see some of those EV incentives wound down, even a possibility of fast-tracking autonomous driving too.

We've got a perfect person. Steve Wesley's with us. Wesley Group Managing Partner, who used to be on the board of the EV giant as well as your key player in California politics. And therefore, this is the perfect dimension to discuss this with you. How are you thinking the EV landscape changes come January 20th? Well, let's look at the big picture first. Some people are saying EV growth is slowing down. Nonsense. One out of five of all cars sold globally in 2024 will be electric or hybrid. So we're living in an EV world and it's just moving faster.

that's 25 year-over-year growth 17 million ev sold globally u.s canada solid growth about 12 china red hot at 40 percent the big stories as you talked about are kind of tesla versus byd who's going to be the global leader and then there's this other issue of u.s versus china and how are tariffs going to affect this and what people have to remember u.s has already slapped 100 tariffs

on any Chinese car sold in the US, but that's virtually none. You've got to ask the question, what happens if the Chinese slap 100% tariffs on US cars or automakers selling cars in China? Well, that happens. Do you think that's a high risk even for a Tesla? Oh, look, whenever there are...

tariffs slapped on by one country or another, you've got to expect the other country to respond. The big question is, is it cars that are already made in that country or just cars that come from the U.S. going to China? But the punchline is the same. There's a lot more U.S. automakers selling cars into China than vice versa. So the U.S. needs to be careful on this one.

And yet, we have seen vibes or whether it be real political clout driving Tesla's share price up and to the right ever since the results of the election. Has any of this China-US tension been priced in, do you think, Steve?

Well, I think people don't have their arms around it quite yet. So you've got to look at the Tesla share price, 76% growth since January 1 of this year. That's astonishing. The big question is, can Tesla keep it up? And I think it's going to be tough without getting some new products into the market. Tesla's auto growth this year, you know, after roaring sales growth in 2020,

and 2022, a 51% and 70%. This year, it's darn near flat. So, Tesla's got to get this newer, lower-cost car into the market. There are new rumors that there's going to be a new sub-$30,000 model Q coming sometime in 2025. But,

But we've got to make sure that's real. So investors have to look at it. I think 25 is going to be a make or break year. It could see new heights if you can see a lower cost car coming out and full self-driving improve. But it could also sink if they don't get a new car in the market. Sales stay flat. That's going to scare people. As an investor, though, Steve, as an investor, how hard has it been to read the tea leaves?

Because we're trying to understand as to whether they're just going to cut costs of current models on the market and get us to some sort of sense of affordability. Because Elon just signals time and time again he's more interested in the robo-taxi side and the full-size driving side. It's incredibly hard. I mean...

share price going up 75% when sales are flat. I don't think anybody's ever seen anything like that before. What's going on? Kind of a bet on full self-driving and probably a bigger bet on Musk's relationship with President Trump. What no one's talking about is very quietly the energy division looks like the saving grace for Tesla, 75% year-over-year growth. The other thing

investors have to get their arms around is auto companies aren't just auto companies anymore. They're also energy companies too. And it's a whole new world. You got to pay attention.

Got to pay attention to the politics involved in it. This week, of course, we saw that, again, California is really going to be focusing in on ensuring EV adoption, Steve, where you sit. But also, we've got a news story around the potential unionization, let's call it subtly being done over with Rivian. We understand the UAW has reached a kind of secret deal with Rivian to make unionization easier as and when it becomes a profitable company. How much do you think that's a key area, the labor side of things for the EV space?

Well, the labor side is huge because labor costs are going up. This is one of the things that's plagued GM and Ford for years. And what's interesting is Musk is great at pulling out all the stops, making things go faster than any other automaker, but he still has to deal with unions. And he may be the wealthiest guy in the world, but that's not going to impact automakers.

how well he wins union battles. German workers potentially out on strike soon, precisely when he's trying to catch up for Q4 sales. So it's going to be interesting to see, can Tesla's auto sales increase this year? He cannot show year-over-year growth. Gosh, that's going to be a tough one to sell to shareholders. We'll see. And you are a longtime shareholder and an influential one at that. Steve Wesley, we thank you of the Wesley Group.

Time now for Talking Tech. First up, Apple has halted its project building out an iPhone hardware subscription service, according to sources. The idea was to make owning an iPhone like subscribing to an app, with consumers paying monthly fees to get a new phone each year. Apple has since disbanded and reassigned the team to other projects.

Plus, the European Commission is pushing Apple to further open up its iPhone operating systems to rivals. The Commission instructed the tech giant on Wednesday to rework iOS so that devices like smartwatches, earbuds, headsets from rivals could be more compatible with the Apple ecosystem.

And Apple is close to getting Indonesia to lift its ban on iPhone 16 sales. This after the country's president gave his approval for a $1 billion investment from the tech giant. Again, according to sources, Indonesia first banned, remember, sales of the flagship device last month, saying Apple failed to comply with its domestic content requirements. Let's get stuck into all of these Apple-related stories. One and only Mark Gurman with us.

talk to us a little bit more about what's happening with Indonesia, because this is a big 180 and they played hardball and it won. Yeah, that's exactly right. So Apple and Indonesia have been going back and forth for weeks now since the launch of the iPhone 16, right? Obviously, Apple wants to get the device in as many countries as possible. Indonesia is important to Apple because that's a potential growth market for them, right? They are making a big push across Southeast Asia and not being able to get it in one of the biggest...

countries there is a really big deal for them. And so they've been making different offers. And what they finally landed on is investing $1 billion into a facility there that would produce essentially 20% of AirTags. AirTags, obviously, is that fun little device we're all gearing up to include in our luggage for the holidays, right? It's not Apple's most popular product, but it's an important one. And it sounds like it was enough to get the job done.

Apple is gearing up to release a new AirTag in the middle of next year with much better range, better privacy. So that is going to be a cool thing for Indonesia to be able to produce that product potentially or further generations of that device. Let's stay global on the Apple front when you're looking at the EU news as well because this compatibility argument has been going on for a while. Ultimately, whatever the EU forces, does it become global in nature?

The EU wants to crack open the iPhone completely. They want to essentially make it Android. They want to make it so users can be a bunch of cowboys and do whatever they want to the device, right? Apple, on the other hand, wants this closed ecosystem with a privacy-centric design and a clean user interface. They don't want people to be able to open up their device to work with third-party earbuds and watches and headsets as well as it works with Apple products. And so the

So the EU put out a list of several things it wants Apple to adopt and allow third parties to use at a deeper level, things like airdrop file sharing, things like AirPlay video beaming from the device to other products, things like opening up underlying Wi-Fi protocols.

calls. And, you know, Apple is pushing back on that by using Meta as an example and showcasing 15 data categories that Meta wants access to and positioning Meta as this anti-privacy company and trying to show consumers and the European Commission, right, the regulators in the EU, what could potentially happen to Apple device customers if these programs are opened up to the extent that they want them to be opened up.

That Apple meta rivalry really continues to play out when it comes to politics. Mark Gurman, thank you.

Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York. We also want to be going in to the story that is TikTok. Today marks exactly one month until a possible ban in the United States. But now with the Supreme Court accepting to hear TikTok's challenge to that law, well, the social media app has a glimmer of hope. Bloomberg's Alexandra Levine joins us now. It's today's Tech Daily. It's a big viewership on this story and it's a big twist.

It's a big twist. I think a lot of people are looking at this as a huge game changer in the 11th hour. And I think we need a caution to just say that this could very well just be the Supreme Court doing what the Supreme Court has always set out to do. And we need to remember that this is the first time, if the ban goes through, that a social media app will have ever been banned in this country. And so this could very well just be the Supreme Court, you know,

recognizing how important these issues are and wanting to really set the record straight before a shutdown happens and also before the administration changes hands. Because a lot of people have said, well, the Supreme Court, a large part of them have been selected by previous president and now President-elect Trump, and maybe that would bend towards whatever his views on the social media app have been. Of course, he says there's a soft place in his heart for a special place in his heart for the app. But

These are lawmakers at the end of the day and people who are going to be assessing on the merits of the law. Absolutely. You know, the justices are going to rule as they may. I think there's a lot of speculation given Trump and where Trump is seeming to come down on this now versus where he used to stand about how the justices may rule. But I think we really don't know.

And the Supreme Court, we don't know what the Supreme Court is going to do. We don't know that this actually means that TikTok is going to be able to withstand being banned. But it is a really remarkable timeline when you look at the fact that we're one month from the ban that was supposed to take effect. The argument will be January 10th. And then the law is set to take effect a mere nine days later. So if anything, it's just worth pointing out that the Supreme Court is moving exceptionally fast and unusually fast on this one issue.

So people who assess the law now have the ball. But what I'm interested in is also, we've got to remember it's not just a ban. They could divest. We kind of come off that narrative because TikTok wants us to think that this is either a ban or nothing. If we had anything about potential suitors, about whatever we would see, it spun off.

Absolutely. We know that this is sort of the next phase of the saga. So ByteDance has said they will not sell their most prized asset in the U.S. Beijing has also said that, or Beijing's export rules basically say that Chinese companies cannot sell their algorithms like the one that is central to TikTok in the U.S. and that's made it so popular here. But American, potential American bidders, people who have deep enough pockets

are already lining up. We have some reporting coming on that very soon, later today. And I think it's important to realize that people are not going to take no for an answer here when you've got

Over half of the American population at this point more people than voted than voted in the last election using the platform these these bidders are really trying to line themselves up at the front of a competitive pack for Who may be the person or the company to take over the u.s? iteration of the platform if ByteDance feels a squeeze in this sort of 11th hour with all of the the legal you know the legal the legal path coming to an end they want to be sort of the ones at the front of the pack and

Well, look out for that next story, publishing later today, Alexandra Levine, all things TikTok. Amazon, meanwhile, is delaying the return to office for thousands of employees due to lack of space. The company told some personnel working in at least seven cities, including Austin, Dallas, Phoenix, here in New York as well, that their return dates will be pushed back until March, even April, according to sources. The company's spokesperson said the vast majority of employees will have desks starting on January 2nd.

Now this week the Biden administration also announced the overhaul of H-1B visa eligibility standards. It's a move that expands who can receive the work visas and gives more flexibility and clarity. The revision though comes amid concern that the upcoming Trump administration may change course. We've got a perfect voice, Simeon Dukac, founding partner of One Way Ventures, a VC firm that backs immigrant founders in the United States and Canada. The pre-seed at the seed stage. So just

This news, this clarity on who can apply for H1B visas and ideally be fast tracked if indeed you've been allowed one in the past, does this make a difference to your companies? Yeah, I mean, I think more H1B visas and simplifying the process is certainly going to make it easier for people to hire other immigrants.

and occasionally for immigrants to start companies as well. And what was interesting is in the news on the H1B visa overhaul, some people are calling it, is that entrepreneurs in particular are going to be able to apply if you've got a majority holding in a company that you're building. How much have we seen entrepreneurs, those building within North America, dependent on these sorts of accesses to living in the United States?

Well, yeah, I mean, I think if there's more path to being able to start a company, it's going to have more companies started. In particular, I think it's relevant to students that complete their education here, and some of them may in fact be deterred from starting a company without a simplified visa process.

There was certainly clarity given for students so that they don't see a hole in their ability to be staying in the United States if they're going to be finding a job or building a business here. We're just looking at the founders that you do indeed back, most of them being immigrant founders. Why focus on that demographic?

Well, our fund, you know, we only invest in immigrants. We are immigrants. We know that collectively immigrants, if you take immigrants from any country to the U.S., they're not just like slightly better at building businesses. They are responsible for the majority of the value generated from new companies.

Most of the unicorns, the billion dollar, multi-billion dollar success stories are in fact started by immigrants, like 55% of them. People who personally themselves made the journey and came here. Why? Why is that some sort of causal link or correlation link that people who have been driven and motivated to move and to come are going to be, well, more weighted to being successful?

Well, there's a number of reasons, I think. It's not a question of the countries they're from being full of people who are better at starting things. It's the people who make the journey, right? The experience of coming to a new country, like learning a new language, it's predictive of how much grit you have, how much perseverance you have. It's almost like your own immigration is like a startup.

Because you're going into the unknown, you have to have some kind of vision, some kind of belief that you can do it, but before you have real evidence. And when you commit to doing that, you often don't really have a way back, right? Like, it's very hard to come back and admit that, like, nobody really wanted you in America and it didn't work out.

people around you don't necessarily believe that that's what you should do. You're sort of abandoning your existing network, right? And so the people who've done that and had to survive, right, had to learn a culture, the language, figure everything out from scratch, build a new network, when they've done that once, they're more likely to be able to figure out how to disturb a big business, which, you know, a big company has its own language, right, its own culture in a way, and any startup

in order to win has to be able to overcome it. So having done it once already on your own, immigration, it's more likely that you will get there. And you're not going to give up along the way. You're not going to have as many alternatives. When things get hard, it's not like so easy to get a cushy job, right? Because you don't have the network, right? What's interesting, though, is you think about the leaders of the Magnificent Seven, the CEOs, many of them immigrants. Elon Musk himself, who has got the ear of

The next elected president, most of the time it feels like himself an immigrant, didn't have to change languages but certainly came here and built a number of incredibly successful companies. But what does the next administration look like to you? Do we see a pushback against immigration in some way?

Well, you know, it's hard for me to tell. I personally believe that all immigrants, even folks without an education, should be generally welcomed. Not illegally, right? They should be passively legal, of course. And I think it just tremendously benefits the country to have these select few people who are willing and able to make the journey. You know, we want to welcome them.

Like I said, there's other reasons why they might do well. Like having another culture, another language, it makes it more likely that you'll figure out some new culture, some new thing. And of course, immigrants tend to be able to build technology offshore, often in the

There are places you can get engineers cheap or far away, when normally a startup couldn't really do that in the beginning, because you want to be close to the customers. You want to be like a real team. You don't outsource it. You want to have people on your core team from the beginning that build it. But when you are an immigrant with those connections, it's very likely you'll be able to find people somewhere else where salaries are lower and that could actually feel like they're really part of your group. You can make that connection.

And of course, but you're missing, you're all certainly missing a lot of things that it takes to be successful. And so we as a fund, we are immigrants ourselves, but we came here as kids, right? So we're kind of like a bridge. We understand a little bit more about the culture of building a business in America. And we are able to see like these,

unusual qualities that make someone potentially able to build a really big business, right? That level of ambition and vision and thoughtfulness and perseverance. And so we kind of help them unlock. We find the missing pieces. Sometimes it's a question of storytelling or just building a network, right? And so that's what we specialize in. I just want to say, people like Elon Musk or Sergey Brin who build these big businesses,

It sounds sometimes to people like it's kind of an exception, but it's not. It's truly the majority of the big businesses. Over half are started by people like that. Semyon, the catch. We leave it on a great statistic, founding partner of One Way Ventures. Thank you. Coming up, we'll hear from Salesforce CEO Mark Benioff on tech policy, on Trump, whether Time magazine is for sale. This is Blue Bag 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.

That's the powerful backing of American Express.

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Perplexity. It's an AI startup building a search product to compete with Google. It's just close to a $500 million round of funding that triples the company's valuation to $9 billion, all according to sources. The round was led by institutional venture partners and completed earlier this month. Perplexity declined to comment. Let's bring in the person who brought us the news, Bloomberg's Shirin Ghaffari, for more. And I might be numb because I look at a $157 billion valuation over an open AI, but put it in context. What does $9 billion mean?

That's still a gigantic valuation. If you think about just in June, Proplexity's valuation was one third of this. It's tripled. So, you know, I think that, sorry, it's not one third of it, but it has tripled since June. So I think that, you know, we're seeing a very strong investor demand still to get in on the AI market. I don't think that, you know, some people are wondering, will the AI bubble burst? Are we going to see investor demand cool off? I think startups like this growing this quickly show that the demand is still very, very high.

Perplexity has been well used by consumers. They've got a fair share of legal issues to be contending with at the moment. And I'm interested as to how the growth actually is looking. Did you get any hints of where the 15 million active users has gone since March?

Yeah, you know, they are saying that the number of searches that people do on Perplexity, and remember their sort of competitive edge, is that they're trying to be the best in giving people real-time information and, you know, good for kind of analysis and summaries. And they're saying that they're seeing people query a lot more. They're seeing very strong growth in the past several months. They've also been rolling out some more kind of customized search tools

options for people who want financial data or who want, let's say, sports data that's real time. So they are growing. And I think that's why we're seeing this investor demand increase.

And being led by institutional venture partners, we'll see how the growth continues. Shirin Ghaffari, thank you for the news. Meanwhile, let's talk Salesforce. CEO Mark Benioff says the company's work in AI is the most exciting technology he's ever worked on. But look, that doesn't mean he's giving up his stake in legacy media. Recently spoke with Bloomberg's Anne-Marie Hordern about the future of Time magazine, its recent decision to name President-elect Donald Trump as person of the year.

I think you know that when I bought Time Magazine, I said that I wouldn't endorse any political candidate and I stopped all funding of all political candidates. But I think you also know that this week, Time Magazine did say that President Trump is our person of the year and I couldn't be more excited about that. I mean, everything you've seen from the story, from the cover to the story itself, it's the biggest story we've ever done in the history of time.

And this really speaks to a moment, I believe, in the political landscape where we really have to have a beginner's mind that every possibility is ahead of us. And I think it's only in the expert's mind that we realize that we might have the constraints that we need to kind of put aside. So I'm excited for the future. I hope that agents and AI are a critical part of achieving the next level.

of efficiency and capability inside not only our government, but every government. And I believe very strongly that we need to use these kinds of technologies to achieve a balanced budget, which I think is a bipartisan issue that all of us can agree on.

Yes, it is. And they're looking to jojify the government, bring experienced industry people in that work with AI and crypto. Would you consider working alongside the administration if they asked you to maybe join something like a task force? Well, I don't really have the ability to answer that because nothing has been proposed to me except...

I am highly conflicted as a media owner and it makes it incredibly difficult for me to operate in an administration. Administrations change, but at Salesforce we believe strongly our values don't change and we're mostly focused on operating our business. That said, when governments and presidents ask us to help them to make their countries more effective, more efficient, and more capable, especially in regards to artificial intelligence, we will always say yes.

Well, there are reports out there, now you've led me to this, that maybe you're even looking at selling Time magazine. So say you did sell Time magazine, you can comment on whether or not those reports are true. Would you consider offering up all your expertise in efficiency to the Doge task force and to the incoming administration?

Listen, I think that every American should do whatever they can to make America successful. And every American should do whatever they can to make the press in the United States successful. This is, of course, our country and our leadership team. So if called on, I, of course, I would do whatever I can to support them. But the reality is there is no deal on the table to sell Time. And it's extremely important that we do have fair and balanced journalism. And that's why I'm very proud to be an owner of Time magazine.

Salesforce CEO Mark Benny off there speaking with Bloomberg's Anne-Marie Hauden.

Today's Big Take is heart-hitting. It's about a lawsuit arguing that Snapchat has helped dealers sell children deadly counterfeit drugs, and that lawsuit could change the internet as we know it. Bloomberg's Olivia Carvel is here with yet another groundbreaking story, and the context is always as painful. Since 2020, drug overdoses, this is what shocked me, driven by fentanyl, has become one of the leading causes of death among kids, among teenagers, killing more than 1,600 people.

All social media platforms in some way are implicated by this, but why is Snapchat singled out so much?

That's right. I mean, drug sales can be found on all social media platforms. I think what differentiates Snapchat here and why law enforcement, lawyers, even teenage users of the platform are kind of singling out Snapchat is the platform was really built on the idea of disappearing messages. It thrives on that evanescence, which means that if you send a message within 24 hours, it is gone. And unfortunately, you know, while the company wasn't designed for this,

What has happened is that teenagers like using the platform when they don't want their parents to know what they're doing and drug dealers like using the platform because evidence of their crimes is immediately deleted by default.

Very quickly in the story, the extent of use for drug sales becomes clear. We understand that Snapchat has removed 2.2 million pieces of drug-related content just since 2023. They've locked more than 700,000 dealer accounts. But we want to focus on Snapchat's response here because Jacqueline Boucher has responded to your piece in the Global Head of Platform Safety saying that we're deeply committed to fight against the fentanyl epidemic. How are they fighting against it?

They're actually doing quite a lot and the company points out that it wants to become the most hostile place on the internet for drug dealers. They have fine-tuned machine learning classifiers, so AI technology, to really detect any drug-related content as soon as it's uploaded to the platform. That's resulted in them removing 2.2 million pieces of content.

in 2023 alone that were flagged as being connected to drugs in some way. It also allows them to deactivate or lock the accounts of anyone for suspicious activity where it looks like they might be selling drugs through the platform.

They also have strengthened their safeguards, I guess you could say, their features or their recommendation engine that enables users to connect with one another. Often drug dealers have used this to try and build out their network to find more buyers. And the company really strengthens its safeguard when it comes to teenage users with that recommendation engine, trying to limit the amount of strangers that it's connecting teenagers to to combat the fentanyl crisis.

Meanwhile, Michael Brewer, whose story you talk about so eloquently in this story, is still going to court, and we understand that this could have broad reaching effects for Section 230, and we will continue to discuss it with you in the future. Once again, go and check out The Big Take. It's an emotive one with Olivia Carville. We thank her.

We're going to take it back to the markets now because there is a big sell-off underway for one particular name and many of you are exposed to it. Micron off by 16%. Chipmaker here in the United States, biggest maker of memory, currently off by 16% worst day since March 2020 as their forecast did not live up to expectations. It's about weakness in PC and in smartphone chips in particular. That does it for this edition of Bloomberg Technology. Don't forget to check out our podcast. You can find it on the terminal as well as Apple, Spotify and iHeart.

This is Bloomberg.