Tariffs Weigh on Amazon and Apple, Increasing US Energy for the AI Arms Race
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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 hit with analyst downgrades as tariff and growth worries they increase will break down the company's latest earnings. Plus, Roblox daily users jump 26% amid efforts to bring in new players. We have the CEO later this hour. And a conversation with the U.S. Energy Secretary after 100 days of Trump policies. But first, we check in on these markets. Look.

WE HAVE ANOTHER DAY OF GAINS. WE ARE BOUNCING BACK FROM THE APRIL SELLOFF. WE ARE UP 3.2% OVER THE LAST FIVE TRAINING DAYS. WE ADD A COOL ALMOST $500 BILLION IN TIMES MARKET CAP TO THIS KEY TECH BENCHMARK.

THE U.S. RATINGS ARE AROUND THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE HALF OF THE

does around the world. Amazon forecasting for the current period operating income that's billions of dollars below what the street for uncertainty and tariffs. It's a very clear story and both stocks are under pressure. They are. And we're going to have so much great analysis on both individual names as a whole. We go to Bloomberg's Ryan for Stelica and look earnings thus far. The big mega cap for we had this week. Microsoft meta managed to bounce through these trade headwinds. But Apple and Amazon with tangible goods do not.

Yeah, thanks for having me. So I'd say overall, this earnings season has been pretty positive for big tech. At least it was until yesterday afternoon. Apple in particular, people were already worried. How much is tariff going to impact them? What is this going to mean for their growth, which was already sort of stalled relative to other big tech companies?

companies. What is this going to mean for its multiple which was already elevated relative to other big tech companies. And it really I don't think this was exactly the worst case scenario but certainly it was a disappointment and it just underlines a lot of the concerns that people already had about the stock. Let's focus on Apple in the context of the stock. How has the sell side reacted. What do we see in terms of downgrades on the stock from the street.

WE HAD AT LEAST TWO DOWNGRADES THIS MORNING. ONE OF THEM WAS A CUT TO A SELL RATING WHICH IS PRETTY RARE FOR APPLE. THERE IS A LOT OF CONCERN THAT MAYBE WE HAVEN'T YET FULLY SEEN THE IMPACT OF TARIFFS. MAYBE THIS IS GOING TO BE SOMETHING THAT CONTINUES TO BUILD OVER THE REST OF THE YEAR. THAT WAS JEFFERY'S DOWNGRADING THE STOCK TO AN UNDERPERFORMED RATING. WE ALSO HAD ROSENBLATT WHICH CUT THE STOCK TO A NEUTRAL RATING. WARNING IN GENERAL ABOUT WHAT IS IT GOING TO TAKE FOR A REAL INFLECTION OF GROWTH. IT SAYS AN AI, IPHONE SORT OF SUPERCYCLE UPGRADING.

upgrade is needed. And it says that it's becoming less likely as time goes by. The best rhyme for Celica. Thank you very much. Let's stay with Apple earnings and bring in Nabila Popal, Senior Research Director at IDC.

I want to think about this in terms of all of the consumer electronics that Apple has built and moves around the world. If the company tells us that the impact of tariffs is $900 million in the current period, what does that really mean? Is that significant? Is it a small hit? And how do you model for it?

Yeah, no, that's a great question. Thanks for having me. I think, you know, if you look in for Apple, that number, the grand scheme of things isn't much, right? It's still less than 2% of their revenue, right? But I think a bigger question will be how well, because they could still cushion that in...

with other like their revenue from coming from other product lines and profitability from other places but i think the bigger question for everyone will be what will apple do with prices and that's what a question that tim cook didn't address right will they increase prices on their devices and that's traditionally something apple hasn't done historically they've never raised prices on

on their products mid-cycle. So I'm very curious and I think everyone's really looking to see how Apple does that. But the other challenge is how they are going to navigate with their supply chain. And we've already seen that, right? Apple's already demonstrated incredible flexibility

in moving their supply chain already in queue on ramping it up significantly. And they confirmed that, right? There were reports earlier last week about them ramping it up very fast from moving from India. But Tim Cook just confirmed that they moved about half of their supply

units of the U.S. market from India. Yeah, can I jump in? Because you make such a clear case in the supply chain and the way in which that is being navigated. But we're looking right now at the demand side. In China, there was weakness once again, despite some of those subsidies. How did Tim Cook manage to deflect what seems to be once again just a story they can't turn around?

China has been an area that they recently have been challenging. That's what I was saying before, even the tariff story. The weakness in China has been something that they've been dealing with and they will continue to deal with. We were already baking this in our forecast for this year. The challenge from Huawei continues to grow. But at the same time, they continue to be the leader in China in terms of the premium segment. They still have 70% share.

But the silver lining for Apple is still not maybe not be in China this year but they're still going in emerging markets. They are probably going to increasingly have more of their models

Move over to their you know in-house modem which will help their profitability so there are still some silver lining and again as as they Scale their production in India that will really help them deal with the tariff challenges right as well And hopefully once we hear it more, you know in WBC in terms of their announcements with people we hear about it WDC right like because Tim Cook did not speak about a lot of this stuff on the call you make a good point though the other news headline is

is that Apple is going to source, starting right now apparently, millions more chips from the TSMC fab in Arizona. How does that impact the cost of production of a handset? And how do you model for it being taken out of their hands that they have to raise prices or not? You know, it's just very, you know, we don't have visibility in terms of exactly how many chips are going to come from where, but we do know that they are really trying. I mean, the thing is with Apple, right, they have been so...

uh... they're really good at one that they're really a big a strength is there and how they navigate through all of these uh... the the way they negotiate with their supply chain and they have a lot of strength right in terms of where they want to move things around the are able to deal with prices with the just days and to put back on the den operations guy right and on top of the strength in terms of geopolitics he has threatened you know history with navigating and negotiating with both administrations so i do have faith that

He will be able to take, you know, whether through the storm, it will just take some time, whether it's through the supply chain or whether he does it through internal, you know, changing of going through more in-house or changing the supply chain and manufacturing, whether it's in India or through to the U.S. But it just takes some time. And we do expect this to be a challenging year for Apple. But in the long term, I do see that, you know, they will be able to come through.

Nabila Popal, it is always so great to speak with you, Senior Director at IDC. We shift from Apple to Amazon now. Shares, as we see reacting to its own report, were down about three-tenths of a percent. The company did warn of a tougher business climate, of course amid global trade tensions. Let's get more Brad Erickson, Internet Analyst for RBC Capital Markets, before I go to the AWS side of it.

come to the geopolitics of it all. How much are we able to see Amazon survive and weather this at the moment by having brought in inventory, but ultimately be able to change up their supply chain too? Yeah, so I think, you know, they're,

They're definitely working the situation. They would acknowledge that it's very uncertain. We spoke with them last night and there was definitely that was that was the message in all of this. But I think the idea is that we think about it kind of a guns for the war picks and shovels type of dynamic here.

Amazon has millions of sellers. There will absolutely be sellers that are impacted by this in terms of having supply chain exposure to China. But there are others that don't. And when you think about people, you know, looking for deals, trying to save money already, they're going to go to Amazon and they're still going to find sellers that are not exposed to those those China supply chain headwinds. And they're going to find decent prices and they're going to buy. So I think under almost any macro scenario. Right.

We're not saying we know the downside, but under any scenario, Amazon gains share. I want to go to the fundamental basics of how Amazon's business works. Half of the audience watching Blue Mode Technology know it as Amazon.com, an e-commerce business that's the vast volume of sales.

But the vast majority of operating income is AWS cloud. So when Amazon tells us that in the current period operating income will be billions of dollars below what you guys on the street had forecast, is that singularly a tariffs issue on dot com or is it also reflecting softness in cloud spending?

I don't think it's reflecting softness in cloud spending. In fact, I expect that to kind of continue. I think the issue is more just that, well, one thing I would clarify is that, yes, the midpoint of the guidance was below the street, but

But typically, Amazon hits or exceeds the high end of the guidance. And so I think really when you think about where the quarter likely ends up, it was probably closer to in line. I'm sure they're building in some risk around just the tariff situation and the impact that

have. But the ad business drives a huge portion of that. Yes that operating income as well. And that's still growing really well to that grew 18 percent in the quarter. So I think there's less sort of discounted in there less concern in there than you might think. And they're still very focused on all the innovation whether it be over a WS whether it be in space whether it be on what they're doing in terms of getting your product to you faster. All of that though

takes costs. And I'm interested that MetaSignal, look, we're sticking to, for example, our CapEx and we're raising it because of infrastructure spend is going to go up because of tariffs. Do you think that's going to affect the cost of doing business at AWS in any way, Brad?

It could. Yeah, I mean, I think the comment we made earlier in the week on Meta was that, you know, they called out infrastructure equipment and component costs are going up. Technically, what that means for the industry is that structurally return on invested capital is lower today than it was 90 days ago. So, sure, that's not great. I think in Amazon's case, you know,

Meta probably came out a little bit even more unscathed from tariffs based on what we know at this point. So I think Amazon's probably having a little bit more measured caution, i.e. they didn't take the CapEx guide up. But I think they sound every bit as bullish on the cloud business and their growths there going forward. What did Amazon do well in the quarter?

What did they do well? They grew ads 18%. They did not miss on ads, which they had been in prior quarters. So that was probably the best, one of the standouts. Can I jump in there, Brad? I'm really interested in the ad side because you said that now really clearly twice.

much of a headwind is that going forward if third party sellers become that little bit weaker, if we do see the knock on effects of tensions in trade? Yeah, for sure. So I go back. So ads basically have a one to one relationship with volume.

UNITS ESSENTIALLY. BACK TO WHAT I SAID EARLIER, THAT SELLER DENSITY, A SELLER WHO HAS CHINA SUPPLY CHAIN EXPOSURE MIGHT LOSE SOME VOLUME BUT THERE WILL BE ANOTHER SELLER THAT WILL STEP IN THERE AND PROBABLY STILL MOVE THAT UNIT. IF THEY DO, THEY WILL STILL BE SPENDING THOSE AD DOLLARS. WE THINK THAT CAN BE MORE RESILIENT HERE.

Project Kuiper has got off to a rocky start, I think it's fair to say. Do you even model that into your model for Amazon? Any meaningful contribution for a space-based internet business that takes on Starlink? Yeah, it's hard. That's what I'll say.

FOR Q2 IT IS EMBEDDED IN THE GUIDANCE. THEY LAUNCHED A ROCKET EARLIER IN APRIL. THEY WILL LAUNCH MORE IN Q2. CLEARLY THERE IS COST. WE ARE THINKING ABOUT MAYBE 100 MILLION ON AVERAGE PER ROCKET THAT GOES UP. THAT IS THE MAGNITUDE WE ARE TALKING ABOUT. THEY HAVE TALKED ABOUT SOMEWHERE IN THE RANGE OF 80 ROCKETS OR MAYBE $10 BILLION OF TOTAL OUTLAY RELATED TO THE CONSTELLATION PROJECT OVERALL.

THE GOOD NEWS IS WHAT THEY SAID LAST NIGHT WAS THEY ARE GOING TO HAVE COMMERCIAL SERVICE UP FOR THAT BY THE END OF THE YEAR. THEY ARE GOING TO BE DRIVING REVENUE. IT IS NOT JUST A COST HEADWIND. THE MATH ON IT IS VERY DIFFICULT AT THIS POINT. THANK YOU VERY MUCH. COMING UP, ADP JOINS US ON THE EFFORTS TO ADDRESS THE WIDENING SKILL GAP IN LABOR MARKETS.

Possibility surrounds us in digital innovation, evolving markets and disruptive ideas. And while promises can inspire dreams, proof is the catalyst for transformation.

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The U.S. labor market is stronger than perhaps expected for April, shrugging off those trade tensions, 177,000 jobs added.

There is still uncertainty, and it's about tariff impact. It's also perhaps about the longer-term effects of advances in technology. Here to address the skills gap in particular is Neela Richardson. She's the chief economist and ESG officer at ADP. And you've done some fascinating research, an ontology you call it, about perhaps what is facing the current labor market and the skills gap that is missing when it comes to tech. Is that in any way being reflected in jobs numbers right now? A little bit.

But if we raise up our view, if we change our aperture to the big picture, the long-term picture, what you see is an aging U.S. workforce that's being complemented by an aging Chinese and an aging European workforce. And then you see all these nascent new technologies that companies have yet to fully embrace. And so as this plays out, there's going to be a gap

between the tech and the skills. And until that chasm is closed, you're going to see a hit to productivity. So our focus is really aligning all the new jobs and the in-demand jobs with the in-demand skills so that we can bring the workforce along to all this technological change and all the promise that it holds.

The calculus for the tech industry is that the jobs numbers in aggregate show that there isn't this impact from uncertainty and tariffs overall in that market. But if there is a skills gap, you look at some of the headlines in tech, Meta laid off about 100 people in reality labs. But I know that those companies are doing that in small trims because there are places they desperately need people that aren't really available. They've got to free up the salary, the stock and the headcount.

How much do you expect that to continue in this market make little trends but overall higher. You know companies and tech companies in particular made big bets throughout this pandemic recovery and sometimes they've had to pull back on those bets and reshuffle their headcount. If you look at the April numbers that information tech sector which has a lot of people and companies that create and publish software. It was flat in April.

It was negative the month before and flat again the month before that. So there's this disconnect between the people and the tech. Where are all these people if tech is the future? And I think what you're seeing is a couple of things. First, that talent is being subsumed elsewhere. And also that talent is evolving. So at ADP, what we're trying to do is show where the talent is, how it's moving maybe from...

industries that you would expect, like the tech sector, to manufacturing, to healthcare, to these other industries where tech is becoming even more important than it has been historically. And how much are we starting to see headcount less necessary because of technological innovation? AI, for example, this week, everyone's been talking about the Duolingo announcement. AI first means

We're saying no to contractors. We're not giving you headcount unless you can automate it and show that you can't get any more automation done. Is that starting to show through? You know, at the edges, I think there is some change in how companies are hiring, knowing that they have this advanced technology. It's commonly said your job won't be replaced by tech. It will be replaced by someone who knows AI very well. I want to unpack that a little bit to show you what that means.

There are skills associated to job titles. So at ADP, we've identified 100,000 skills associated with 9,000 job titles. It doesn't mean that the jobs are changing. It means that the tasks and the skills required for those jobs are changing. So when you look at these company announcements, it's also stating that the jobs as they have been in the past have evolved.

And what does it mean for a worker? Well, it means that you may have the same job, but what you do, your skills required has changed. And companies are trying to figure that out, whether it is reducing headcount and rehiring the skills they need or, and here's where I think is really the opportunity, training the current workforce to have those skills. Nila Richardson of ADP, thank you very much.

Shares of Take-Two Interactive under pressure after the company announced its highly anticipated Grand Theft Auto 6 game is being delayed again until May of 2026. Bloomberg's Jason Schreier is here. Jason, for some people this is like the worst possible news in their personal gaming lives that could have happened. For Take-Two, the stock down 6%. What are the details? What accounts for the delay?

Ed, is this going to be a sad Christmas for you, not getting to play the new Grand Theft Auto? Definitely. And many others. Yeah, it's...

I don't think there's any sort of like crazy secret or ulterior motive behind this. I've been hearing for a little while now, people at Rockstar did not believe Fall 2025 was a real release window. There's just too much work left to do, not enough time to do it. And the company has really been trying pretty hard to avoid the kind of brutal overtime that they had traditionally put people through on their games. They've really been shaping up over the last few years as Bloomberg has been reporting.

So this was inevitable. I feel like we talked about this a little bit earlier in the year. We predicted on our game on Bloomberg newsletter that this was going to happen. To me, it always felt more like a win than an if. Yeah. Strauss Zelnick coming out saying we fully support Rockstar Games. And you've got analysts coming out, Jason, saying that this doesn't wipe away the profitability. Up to 50 percent profit is what I think Wedbush have it down as. But you just just push it back.

It is bonkers to me that their stock is taking a hit this morning. This game is still going to be the biggest thing on the planet. It is still going to make a kajillion dollars. Technical term. The last game, Grand Theft Auto V, has sold 210 million copies, which makes it the second best-selling game of all time, second to Minecraft, which is on phones. So that's apples and oranges.

To put that in perspective, Grand Theft Auto 5 alone has sold more than the entire Assassin's Creed series. An entire publicly traded publisher, Ubisoft, its flagship series has undersold GTA 5 alone. This is going to be the biggest entertainment launch ever. And the fact that investors are now spooked because it's coming a few months later, maybe it moved fiscal years, that is bonkers to me.

I think the bonkers element though is trip away. It's just once again anxiety, isn't it? The people's eyeballs go elsewhere. Where does it go, Jason? Are you still sticking with Grand Theft Auto 5 or are you playing other games? Are you getting more excited about the Switch 2? What happens?

Yeah, I mean, this game is such an anomaly. I think a lot of games have to worry about that. A lot of multiplayer games, especially that are coming out, have to worry. Oh, no, Bungie's Marathon is coming later this year. Is that going to compete with our new online game that is coming? It's a very competitive landscape. GTA is a class of its own. This is a game that everybody is going to play no matter what.

SO AGAIN, IT SEEMS A LITTLE SILLY TO ME THAT INVESTORS ARE WORRIED ABOUT A DELAY WHEN THE GAME IS STILL GOING TO BE -- WE ARE SHOWING THAT DATA RIGHT NOW, RIGHT? YOU WERE JUST TALKING ABOUT 210 ON GTA V. JUST REAL QUICK, JUST EXPLAIN THE BASICS OF WHAT THE GAME IS. YOU HAVE 30 SECONDS BECAUSE THE

Yeah, GTA. So GTA six is going to be two components. One is going to be the single player part of it, which is a big open world game where you drive around a fictional version of Miami and you do crimes and you follow a story and it's all very beautiful and cinematic and really, really the second part is an online component where you do similar sort of things, heists and crimes and online driving except with your friends.

I just I still can't get over the first that full screen. The Tetris data. The Tetris data like 500 million people. We'll pick it up another time Jason don't worry. One of our producers a keen lover of Tetris Jason Schreier we adore having you thank you. Welcome back to Bluebird Technology I'm Caroline Hyde in New York. And I'm Ed Ludlow also in the Big Apple. What is the technology sector doing?

IT IS HIGHER ON MACRO PERSPECTIVE. IF YOU LOOK AT THE NASDAQ MORE BROADLY, IF FIVE DAYS OF GAINS WERE UP MORE THAN 3.6%, THAT IS THE SECOND WEEK OF GAINS. WE ARE UP 1.3% BECAUSE THE JOBS MARKET THUS FAR NOT TOO IMPACTED BY TARIFFS. MAYBE THERE IS COOLING AND TENSIONS BETWEEN U.S. AND CHINA. WE ALSO LOOK AT SOME INDIVIDUAL MOVERS. I WANT TO GET UNDER THE HOOD AND SHOW YOU WHAT IS HAPPENING.

QUARTER JUST GONE, BUT THEY PUSH FORWARD THAT THAT'S GOING TO MODERATE THIS ECONOMIC ANXIETY. P.D.D. UP 3.4%. TIMU IS GOING TO GO LOCAL. THEY ARE NOT GOING TO BE GIVING YOU EVERYTHING FROM CHINA. THEY ARE GOING TO SOURCE IT IN THE U.S. MORE LOCALLY. AND THEN THERE IS NVIDIA, 2.7% HIGHER. INTERESTING REPORTING COMING FROM THE INFORMATION. COULD THEY BE INVENTING YET A NEW TYPE OF CHIP THAT IS TAILORMADE TO THE CHINESE?

But can they service them with something else? Its stock is higher. It is. As President Trump marked his first 100 days in office this week, the Department of Energy is also celebrating 100 days of American energy, what it's calling victories, including in manufacturing and innovation. Joining us now is U.S. Energy Secretary Chris Wright. Secretary Wright, thank you for your time and joining us here on Bloomberg Technology. There is one question that Americans that watch this show have for you, which is,

How have you changed policy in that period of time for energy in a way that supports U.S. manufacturers? Well, here I am at a plant in Griffin, Georgia, about 40 miles southeast of Atlanta, that makes low-cost, tankless, non-condensing hot water heaters. A little too technical there. These are low-cost heaters. Over a million Americans today take showers and wash their hands from water heated heaters.

from a device made in this plant just in the last three years. And of course, millions more are interested in this technology because it's very low cost. And this was going to be illegal. On December 26th, the Biden administration passed a rule through the Department of Energy, my predecessor, that would have made the manufacture of these devices illegal. Hundreds of people here in Georgia would have lost their jobs and millions of Americans wouldn't have had

THEIR HOME, THEIR APARTMENT, WHEREVER IT IS THEY WANT HOT WATER, THEIR RESTAURANT, THEIR BUSINESS. WE ARE THRILLED TO SEE THIS FACTORY HUMMING ALONG AND EXCITED WORKERS THAT THEY HAVE A FUTURE AND THEIR PRODUCTS HAVE A FUTURE. 50 MILES AWAY FROM WHERE YOU ARE STANDING, RIVIAN IS BUILDING AN ELECTRIC VEHICLE PLANT IN GEORGIA.

from the Department of Energy agreed under the prior administration. What is your assessment of that loan? Will it proceed? And are you reviewing the issuance of those funds? So we will review the issuance of all the funds, loans and grants from the Department of the Energy. To give you one reason for the serious concern we have,

About 80% of the loan money and the grant money put out by the Biden administration, 80% went out after President Trump was elected and before his inauguration day. If they had great rock-solid, make American lives better opportunities, wouldn't they have done that in the previous two and a half years? But instead, so much of the money was rushed out the door after Election Day and before inauguration.

So we've got a lot of reasons to be worried and suspicious about that. We're stewards of the American taxpayers' money, and the goal of the Department of Energy is to improve our energy system, to make energy more affordable, reliable, and secure. Everything that serves that agenda, we will carry through. So we want to carry out the president's agenda, follow the rule of law. And so some of these loans will go forward.

Some of them it's too late to change courses. A lot of them won't go forward. But that's a very careful review process that we've just put in place and just got the team to execute on. Secretary Wright, it's not just the companies manufacturing. If you think about the infrastructure,

Particularly from the utilities point of view, there is a lot of concern about storage capability. Tesla is the leader in energy storage, right? But the frank reality is that for the energy storage products, it relies on prismatic LFP cells that are 100% manufactured in China by CATL.

If there is a need to build out storage product at the commercial scale, are you evaluating any exemptions in the context of tariffs or any work with Tesla so that they can get moving on building out energy storage infrastructure in this country?

Well, look, I won't talk on specific things right here, but we are looking very careful at everything we can do to reshore the manufacturing of critical systems like the ones you've talked about here in the United States. We've just become way too dependent on China for things that are in our defense systems, that are in our electric grids, that are in our automobiles, that are in our space systems.

We need to bring that kind of manufacturing, those technologies and those materials back into the United States. It is a high priority of the Trump administration. Secretary Wright, you spend a lot of time talking to executives, as does the president. I just want you to rehear what the Nvidia CEO said on the Hill just this week. Take a listen. In order for this industry to thrive, we need to build these systems, of course, but we also need a progressive growth and industry development

oriented energy policy, which this president has really put his weight behind. I really appreciate that. Without energy, we can't possibly have new growth industries. An industry focused energy policy for AI, Secretary Wright. What does that industry policy look like?

That means getting the barriers out of the way of energy production. The Biden administration spent four years in sort of an all-of-government approach to impede the production of hydrocarbons in the United States. I'm for all energy sources, but hydrocarbons are over 80% of U.S. energy when I was born, and they are today. So if you stand in the way of our main energy system, guess what? You get higher prices. We grew our electricity production only 2%.

20% price rise. So to achieve Nvidia's and America's dream to win the AI race, we've got to produce a lot more electricity, a lot more energy of all sorts in the United States. And all the government needs to do is get out of the way. A little bit of common sense

THERE IS A BUSINESS, AMERICAN CAPITAL, AMERICAN TECHNOLOGY READY TO ROAR. PRESIDENT TRUMP'S GOAL IS TO UNLEASH AMERICAN ENERGY, CAPITAL AND LET AMERICAN ENERGY PRODUCTION GROW. IS THERE A POTENTIAL YOU ARE ACCIDENTALLY GETTING IN THE WAY BECAUSE OF GEOPOLITICS AND TRADE ISSUES?

lack of in many ways is an infrastructure and supply chain issue. You don't have the turbines to be able to bring the energy at the infrastructure rate that the CEOs want to see. There's not enough equipment. Is there enough time to pivot to make that in the US.

Oh, I've spoken to the turbine manufacturers and they are in huge demand right now. But GE Vernova made 27 of them last year. They'll make 80 of them next year. So look, Americans are ingenious and with a little bit of regulatory common sense, they can ramp up their capacity rapidly. So no, I'm quite excited about how much new energy production capacity we'll see in the United States.

under construction today and a lot more will be under construction by the end of this year. I think we will ramp it up in time, but you're right, it's going to be a race. It's going to be a race, but we must lead in AI and that means we must rapidly grow our energy production. But we're up for the job. Secretary Wright, how reliant will the AI boom in this country be on fossil fuels? And while we have you, what is the plan for the SPR, please?

Well, fossil natural gas is by far the biggest source of electricity in the United States, followed by nuclear and coal. So that's what's going to power the race. It's it's slow to build coal plants and nuclear plants are very slow. We want to change that. But in the short term, the main source of additional electricity that will power A.I. arms race is going to be expanded natural gas electricity production. That'll be the workhorse of winning the A.I. race.

but a lot of solar is getting built, transmission, energy storage, all of the above that works, that'll add to it. Your last question, sorry, repeat it again. The status of the SPR, please.

The SPR was half drained for the 2022 midterm elections. So we are filling it slowly right now. But we're going to try to get money through Congress to fill up more rapidly. But unfortunately, you can only fill it at a much slower pace than you can drain it. So it will take us years to fill it back. But we will entirely fill it because it's a strategic reserve. You've got to have that because you never know what's coming.

WE APPRECIATE YOUR TIME. OUTSIDE OF COURSE, RENI AMERICA CORPORATION, U.S. ENERGY SECRETARY CHRIS WRIGHT. WE LOVE A HIGH-VIS JACKET ON THIS SHOW. MEANWHILE, LET'S GET TO THE BREAKING NEWS FOR YOU. POTENTIAL IPO COMING AS SOON AS NEXT WEEK. ITORO IS SAID TO BE WEIGHING, ACTUALLY GOING FORWARD WITH ITS INITIAL PUBLIC OFFERING, HAVING DELAYED IT BACK IN LAST MONTH. THEY COULD BE EYING AS SOON AS NEXT WEEK. NO DECISION IS YET FINALIZED, BUT IT'S CERTAINLY BEING CONSIDERED.

much better than expected jump in active users. We'll be speaking with the CEO, Dave Bazzucchi, that's next. Stick with us, this is Bloomberg Technology. Possibility surrounds us in digital innovation, evolving markets and disruptive ideas. And while promises can inspire dreams, proof is the catalyst for transformation.

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Once again, video game platform Roblox, the shares on the up and up. Of course, the company reported a larger than expected jump in users for the first quarter with its daily active players jumping 26%, 97.8 million now. And that was for the first three months ending in March. Dave Bazzucchi, Roblox CEO, joins us. And Dave, are you economic anxiety proof? Are you recession proof?

Ed, Carolyn, thank you for having me on the program. I want to highlight significant outperformance in Q1 we just shared yesterday on our earnings call on our really mission to get 10% of the global gaming software market running on the platform. Roblox is virtual. Roblox is digital. We do not have any supply chain issues. There is no shortage of Roblox.

And we are contributing to the U.S. trade import export ratio. We're bringing cash into the U.S. And you're paying some of those content creators in particular, the developers. Dave, I'm interested in that 10 percent figure. Like what sort of time frame are we talking here? Because what you're at about 3 percent now. Am I right?

We're at about 2.5% to 3%. We have shared consistently that we believe we can grow at greater than 20% year-on-year. We highlighted in Q1 growth rates much higher than that, including revenue growth rates of 29% year-on-year, daily active user growth rates of 26% year-on-year, and a

couple really interesting highlights over 13 users on the platform DAUs grew by 36% year on year and India

Huge market grew by 77% year on year. So we really think it's attainable. Dave, I'm a passionate gamer in the over 30 category. And I'd say that the biggest headlines right now are the delay of GTA 6 high fidelity game and the delay of Switch 2 on the console side.

IS THAT WHERE YOU THINK YOU'RE GOING TO COMPETE WHEN YOU AIM 10% MARKET SHARE? HOW DO THOSE TWO HEADLINES IMPACT ROBLOX AND THE PLATFORM? WE HAVE SHARED A ROAD MAP INCLUDING HIGHLIGHTING GENRE EXPANSION INTO RPG, SPORTS AND RACING BATTLE GAMES ON THE PLATFORM. WE ARE SEEING MORE OF THIS ON THE PLATFORM. FOR EXAMPLE, WE RECENTLY NASCAR HAS TEAMED UP WITH DRIVING EMPIRE

Paramount teamed up with SpongeBob Simulator, PGA Tour has teamed up. So we're seeing more and more of this. We shared that these three genres, which will contribute to us getting to 10% of the gaming space, we believe grew over 60% year on year on the platform. Growing revenue, what role is advertising going to play?

uh we think we already have some creators on our platform who are making more money on advertising than they are with virtual currency wow we believe it's a natural compliment it's not big enough yet for us to break out the numbers

We just released a partnership with Google that will provide more video advertising for some of our developers. So it's part of building an economic ecosystem. We also shared that over 100 creators on the platform made over $1 million in the last 12 months. So there's a huge variety of creators starting to make good businesses.

And look, Wedbush, for example, the analyst there saying that payment, well, it improves the content. It draws more people there, Dave. Wedbush also say, look, when you actually tell us exactly, you break out the numbers on advertising, that's the next catalyst for Roblox shares. Any timeframe on when you will be able to break out the advertising numbers? No.

We want to break out those numbers sooner as soon as we can. They are growing. Stay tuned. We're looking forward to that. That said, we're growing at enormous rates with the core business of virtual currency, both on engagement and on users. Really significant outperformance in Q1.

I'm going to go to the delicate side because last time you joined us, Dave, it was all about parental controls. It's all about the focus on safety. Now, since we last spoke, there's been a couple more legal cases come your way. Look, these lawsuits are aimed at you and at Discord. And once again, it's about alleged grooming, sexual exploitation, using the platforms. How are you dealing and responding to those particular lawsuits? How are you feeling, Dave, as well, as I know you have your own family using it and you think seriously about this stuff?

i would say both optimistic and as well uh... humility for the responsibility we have you know any

single incident on our platform is one too many. And, you know, there's almost 100 million daily users on the platform every day. We take this as an enormous responsibility. We are taking leadership here in that all communication on our platform is filtered and goes through AI filters, which are getting enormously better, including voice.

THERE'S NO IMAGE SHARING ON OUR PLATFORM, SO THERE'S LESS RISK OF SOME OF THE THINGS THAT HAPPEN IN THAT AREA. AND MORE AND MORE WE'RE FOCUSING NOT JUST ON UNDER 13, BUT ON 13 THROUGH 17-YEAR-OLDS. THAT'S ALSO A DELICATE AGE. WE'RE STARTING TO LEAN INTO AGE VERIFICATION AROUND THIS. WE WORK VERY HEAVILY WITH LOCAL, STATE, AND FEDERAL LAW ENFORCEMENT. ROBLOX IS A DANGEROUS PLACE FOR BAD ACTORS. SO WE HAVE A BIG RESPONSIBILITY HERE.

Dave, you talked about M&A actually in the Roblox ecosystem during the call. Give me some solid numbers on what that looks like and some M&A for the company as well going forward.

We have shared that there are over, there's now three creators on a run rate of over 50 million a year. You can put some multiples on top of that and estimate what their businesses might be worth. At our developer conference last year, we shared a prediction there'll be a billion dollar valuation studio on the platform.

We think that's very, very possible. Internally, we haven't announced any M&A, but we are generating a fair amount of cash. You know, we have well north of $3 billion of cash, but no Roblox M&A plans right now. Dave Bazzucchi of Roblox, thank you very much for joining us on Bloomberg Technology.

Another social media platform or online platform we're watching is Reddit. The social media site said it expected revenue in the current quarter to be better than estimates, with Q2 sales between $410 and $430 million. I spoke with Reddit COO Jen Wong earlier today.

On the user side, Reddit is becoming more accessible outside of the US for non-English speakers. And we do that a couple ways. The first is using machine translation to take universal conversations, things like life experience, parenting, fandom, and translate that into local language so that folks in France and Germany, et cetera, can enjoy it in local language.

The second thing we're doing is recruiting moderators in those countries and developing thriving local communities because Reddit is great when it's global and it's local. And so those communities are creating a very local feel for, you know, Redditors in France and Germany and our focused countries. Right now we have eight focused markets that are getting this treatment and they're growing twofold.

two times as fast as the rest of international daily active uniques, which is great to see. And we'll be expanding that. So we have Brazil, we have parts of countries in Southeast Asia, but that treatment will expand to the rest of the year.

On the revenue side, what's interesting is I just came back from visiting our Australian and European teams, and there's really tremendous momentum there, and there's a lot of new advertisers coming on. And obviously, that's reflected in the growth that I mentioned before. Jen, the other part of the business is data licensing in the AI context, right? The pitch that you give to those developing frontier models is that

Reddit is contemporaneous. There is new and genuinely human contribution to the platform and therefore the data is valuable. We know about all the big names that are working on next gen models throughout the calendar year. How do you ensure that your data licensing deals and your targets for new deals line up with them starting the training process on their next model?

Well, I think when we talk about data licensing, what we're really talking about is the fact that Reddit data is really valuable. And it's valuable for others to build products around. And it's valuable for us to build products around. I would say we're open for conversations. And we're pleased with the partnership so far. And we're really excited about what we can build. I mean, you see this with Reddit Answers, which we released recently.

globally this week. I don't have anything new to share on this right now, but I'd say we're open for conversation. We're excited about the products that we can build. Jen Wong there, Reddit COO.

TIME FOR TALKING TECH. FIRST UP, THE EU SLAPPING A $600 MILLION FINE ON TIKTOK OWNER BYTE DANCE FOR ILLEGALLY SENDING USER DATA TO CHINA. TIKTOK SAYING IT WOULD APPEAL THE DECISION, CLAIMING IT NEVER RECEIVED A REQUEST FROM CHINESE AUTHORITIES. PLUS, TEMU SHIFTING TO A LOCAL FULFILLMENT MODEL, PLANNING TO SELL GOODS ONLY FROM LOCAL U.S. MERCHANTS TO AMERICAN CONSUMERS.

to keep prices lower. And oil's delayed IPO plans yet again, holding off until its earnings are stronger. Market turbulence is also a factor. This is the third time the company's put off its IPO.

Meanwhile, we get that news, of course, that eToro is still going ahead with it potentially next week. That does it for this edition of Bloomberg Technology. What a joy to have you here next to me, Ed. It's been an intense week of earnings. We've got a lot done. Earnings still the story in markets, right? Let's have a look at what is moving. And, you know, the names that we've covered throughout the show, they're idiosyncratic. Apple, that's a big decline for Apple, right, if you look at historic norms. And then what about take two, Cara?

Well, I'm sorry, you'll probably go shed a tear. Yeah, that's why I stopped talking. Crane Theft Auto 6, too emotional for you to talk about, off by 6.6%. Another delay, but look, profits are still coming eventually. Nvidia up 2.7%. Don't forget about the podcast. This is Bloomberg Technology.

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