Tesla’s Europe Sales Plummet, IBM and ServiceNow Beat Expectations
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Live from New York and San Francisco, this is Bloomberg Technology. Coming up, service now jumps as earnings results show resilience. Our conversation with the company's CEO. Plus Alphabet Earnings looking to set the tone for mega cap tech later today. And Tesla's sales, they slump in Europe again as it's overtaken by VW as Europe's top EV seller. More on that this hour, but first, we check in on the markets and it is hope.

that we might get some sort of reprieve from the Federal Reserve. Maybe rates could move as soon as June. It's being hinted at by some key people, the Cleveland president, for example. We're at 1.8%. Big tech manages to rally again. This is the third straight day of gains on the NASDAQ 100. We've added a trillion dollars in market capitalization to that benchmark in those three days. But I'm looking at Bitcoin. Once again, the disconnect happening in terms of stocks. We move in a different direction. Bitcoin may be a bit of profit-taking as we hit 93,000. Ed, what have you got?

Yeah, it's the companies that have reported earnings already. I think a lot of people were surprised by the strength of Texas Instruments, resilient demand. These are the analog chips that go into everything, more basic chips, and they seem to do well. Later in the hour, Blue Magazine, King will break it down for us. Then there's IBM and ServiceNow, two CEOs that you spoke to and we'll hear from. ServiceNow, resilience of demand, winning government contracts. By contrast, IBM losing government contracts, strong profit numbers, but

People are worried about how they're interpreting the economy going forward. Again, we'll hear from both those CEOs in your conversations. Then there's what's to come. Alphabet, parent of Google, is after the bell. And at the same time, there's the news flow out of the DOJ antitrust remedies trial, pushing higher, 1.6%. But this evening--

Alphabet sets the tone, as we just said, for mega caps to come. And we have a lot of questions about the Mag7. We do. We're anticipating what results of 12% increase in revenue. But the tone is going to really dictate big tech earnings more broadly. You've got so many risks, Ed. Rising tariffs, antitrust heat that you just referenced, AI uncertainty. Randall Vlastelic has been writing about all of it. And the stock, it's already been slammed so far this year. How anxious are investors?

Hey, thanks for having me. I think there is so much uncertainty surrounding Alphabet, a lot more than even some of the other MAG7 names. It's true that Alphabet has less direct exposure to tariffs, but there is still a lot of concern about the regulatory picture, about

the risk of competition within AI. All this stuff has been really impacting the stock this year. That has some people saying that it looks like an attractive bargain here, but at the same time, the number of sort of existential concerns. Is there going to be a breakup? Is it going to lose its really dominant position with its biggest market, which is internet search? All these questions really have people wondering how

they going to fare this quarter? What are they going to say about the economic backdrop and outlook? It's really going to be meaningful for, I think, the broader big tech space.

Bloomberg's Ryan for Celica. Thank you very much. Let's turn to IBM. The company beat first quarter expectations with $14.5 billion in revenue, boosted by strong software sales. But shares falling today as the company warned of delayed contracts due to economic uncertainty. IBM CEO Arvind Krishna spoke to Caroline and said, quote, it's a dynamic environment where things are changing. We want to stay focused on the business and there's still a lot of business to be had. People are going to remain invested in it.

in tech. Anurag Rana of Bloomberg Intelligence joins us with his analysis. I think about Big Blue, right, the shift to software and consultancy. There's what they said, and then there's whether what they said is reflected in the forecast. Does IBM really understand how the economy is changing right now, Anurag?

See, to be very frank, I was surprised that the stock's down because, you know, if you look at it, their consulting business is extremely susceptible to downgrades or deceleration. And it was OK. I mean, and they held up guidance. But it seems to me that maybe going into the quarter, investors were looking for maybe better commentary around software spending. Software did decelerate, which is what I mean, at least I was expecting.

But one of the comments I think that got my attention was that the company's guidance does not take into account any material deterioration in economic climate or spending climate. And I think that's probably what's causing a little bit of hiccup because

We all know that if the tariff stocks don't hold true, then some of these spendings will hit really hard break. That has an impact on second half growth, not just for IBM, but the entire services and the software sector.

Anna Raghurana, Bloomberg Intelligence, the Deep Dive on IBM. We thank you. Let's go broader with earnings and the tech market volatility more broadly. Anna Rathman is with us, CBiz Investment Advisory Services Global Market Strategist previously, and joining us as an investment strategist. Anna, I'm really interested as to what we glean from, say,

Arvind over at IBM. He's saying, look, he puts a low probability on negative global GDP and he's trying to say his business is resilient to any macro headwinds here more broadly. But he's also telling us, look, I'm worried about the implication of US, the sentiment against American businesses. How are you hearing that during this earnings season?

Yeah, I mean, I think there is a lot of uncertainty still. I mean, the tariff talk is actually causing a lot more damage in terms of relationships. And I think that's going to be the longer term uncertainty is even if we arrive at some kind of a tariff situation where everyone agrees, what happens to all of those negative feelings in terms of being able to trust each other and to be able to do business together? I think this is going to be a longer term damage, to be honest with you.

You're damned if you do and damned if you don't. If you think about what Anurag was just saying about IBM, his thesis is that they are not taking into account a deteriorating economic environment. But say they had cut guidance, I mean, then what would you do? I mean, what is it that you think the investor wants to hear from the company right now? A cut or adjustment to guidance or just hold until you've got more information?

Yeah, I'm not sure if you can give good guidance at this point because, you know, the tariffs, I mean, that's one thing. It's unilateral. We're talking about it at like a 30,000-foot level. How it actually trickles down to actual supply chains and businesses and what choices management teams make in the face of this headwind, that's the unknown. So in terms of negative GDP, maybe, perhaps,

There might be other alliances that are being made. We just don't know. But in terms of guidance, it's almost difficult to know. And even if they were to give guidance, I think we have to take with a huge grain of salt. So right now, I think investors, I think the best bet is to just hold and watch. One interesting angle out of Texas Instruments earnings was the idea that

they had a good first three months of the year, but they said that was not necessarily reflective of people front-running tariffs. How do you interpret that? We had a lot of soft data from PC shipments, for example, smartphone shipments, that very much told us in the world of technology companies were front-running tariffs in the first three months of the year.

Yeah, I mean, I think companies did that. Consumers did that. And so really, we don't have that much information because Liberation Day wasn't even a month ago, right? So, you know, time this to the Fed speak this morning about how we may have some economic numbers by June to be able to do something. I think that's too early. I think there's a lot of distortion in the data in terms of front running, as well as just holding and waiting and watching with bated breath.

I don't think there's going to be enough data for either investors or policymakers to be able to do anything definitively. So, Anna, if you're an investor and you haven't sold out prior to any of this turbulence, do you just stay the course? Do you remain long the names that you've been committed to prior to this and just hold steady until we come out the other side of what is a very much self-induced period of instability?

Yeah, I think that the self-induced is right. I think because management can't make any real decisions at the moment or give guidance, I think it's difficult for investors to say either sell or buy. I think it is very much a wait and see. Now, if you're a long-term investor, if you're short-term, I mean, the choices are to just sit and wait. If you're a long-term investor, I don't

I don't think any of the propositions that we have around AI, around tech and tech dominance is changing for you. So tech is still quality. They've got very good balance sheets. Tech is still utility in terms of the fact that modern life just doesn't work without tech. So if you're a long-term investor, taking the course is not a bad idea either. Which corner of the technology market is going to come hurtling out of whatever happens next, Anna? Give me one specific area you're most excited about.

You know, hardware has taken a lot of hit because of not only tariffs, but because of the strained relationship with China. But I think hardware is actually maybe oversold and maybe still a good bet. You're going to need hardware to develop software. That's not going away. So I don't think there's anything bad to say necessarily for the long term for hardware. I would say...

maybe the bad news wouldn't hit hardware as much as it may software, given that it has sold off so much. You're going to need hardware to develop software is the line that CEOs all over this planet are telling themselves every day at the moment. Anna Rathbun, consulting global market strategist. Thank you very much.

ServiceNow shares surging. Best day since 2013 after earnings showed that the software demand looks pretty resilient despite the economic threat of tariffs and the government's cost-cutting efforts. I spoke with the CEO, Bill McDermott, about his pretty rosy outlook. Why we're so well positioned for this moment is companies today...

You know, let's take the auto industry as an example. You know, tariffs are on the table and that industry is affected. So these companies have to think about the marketplace very, very differently. They have to reorient their supply chains in real time. And only AI can do that. And you say, well, why do they have to do that?

There's 30,000 parts that go into manufacturing a single vehicle. They may not be able to pass on the $10,000 increase to the consumer. So companies like ServiceNow can get them to tier two and three suppliers,

sign up new suppliers in real time, and position these companies to win. And this is true in every industry. It could be insurance, it could be pharma, it could be retail, manufacturing. It's all in the focus of ServiceNow to help these companies innovate. Let's go from private.

companies to the public sector. And I know that you've won a federal contract, but many had a lot of anxiety about what Doge meant for you. You said Doge loves you, but why would Doge love you at this moment? Well, we're laser focused on modernizing government and elevating how it serves the American people in the U.S. And what's really interesting about Doge, it has formed a standard that other governments around the world are following.

So our public sector business was up 30% year on year. We had six new public sector logos, including one large U.S. federal agency. We have 11 federal deals greater than a million, and two of them were greater than 5 million. And this is net new software sales. So this is kind of a big moment.

because we are the only software platform I'm personally aware of that can take out billions in cost in government around the world. And certainly the United States is looking at that very closely and we're excited. I mean, have you spoken to Elon about the work that he's doing? How did you make sure that you were protected in this moment to be able to bring the transformation, bring the efficiency?

Well, you have to remember the agencies are run by amazing public servants and great leaders. And Doge is doing the right thing. They obviously want to make good for the American people so the taxpayers get their benefits. Our platform is front and center in helping them do that. You know, there's systems like COBOL systems in there and government entities since 1959.

And then the 20th century architectures where all of these legacy systems were departmentally organized. And then there was Maverick buying over decades of different administrations. We can come in there and consolidate all of these spends onto the ServiceNow platform and replace hundreds of systems. And who wouldn't want to do that?

ServiceNow CEO Bill McDermott. Let's dig in more. Brodie Ford is with us, who's been busy covering all of these earnings. Brodie, we were all surprised by the resilience versus the public sector, but more broadly, they're just showing current remaining performance obligations are really strong.

Exactly. So, I mean, you're right. It's been a kind of funky moment for the economy. Everyone's wondered if you're a software vendor, you're not impacted by tariffs. What does this mean for you? And what ServiceNow has shown us is maybe not a whole lot.

The results were very solid. I mean, the stock was down like 20-some percent headed into the results. And so expectations were quite low. But they did surpass that, and they were able to show that, at least for the time being, not a whole lot of impact from all the economic kind of chaos and fear we've been seeing out there. Right.

What he had to say, Bill McDermott, showed confidence. But actually, we probably should focus on the full-year guidance because the full-year guidance definitely reflects the political uncertainty and perhaps some caution, Brodie. Correct. Yeah, if you factor in the currency, it was just the slightest cut from their previous guidance.

In that environment, that's pretty good. They say in their commentary that the guidance reflected some caution, that even though the trends were good, that they gave a conservative guidance because it allowed them to essentially, if things go a little wrong later in the year, they won't have to cut again. Because, yeah, it's still an open question. I mean, if we head into a true recession or if there's more aggressive federal cost cuts, ServiceNow will not be immune.

It's interesting Morgan Stanley saying that they're de-risking their forward guidance. But Brodie, they also highlight how strong they've been in terms of generative AI. Are we back to talking about some of the efficiency that we've all been promised, some of the productivity?

Yes, every company right now is singing the song of our generative AI product is driving revenue. Not a ton of them are breaking out super specifically what that means. ServiceNow has given some numbers, some guidance, but I think still the generative AI uplift, most analysts expect that to come next year, even the year after.

in a significant way. But still, that's where the big growth bet is for all these companies. In ServiceNow's case, it is a higher tier product that you would buy, you would uplift your license to be able to access the generative AI tools. And so certainly if you're a salesperson there, that is priority number one right now.

Blue most Brody Ford, terrific reporting. Thank you very much. Now coming up, Alphabet's cloud unit is expected to show growth off the back of the company's AI push. We'll discuss what's expected from the Google parents earnings. This is what financial markets look like right now in the context of technology. So at the index level, NASDAQ 100, the vast majority of names are in the green. It is the mega caps that are pushing us higher.

though it's interesting that this is kind of broad-based all corners of the tech market. You have software names, hardware names, social media names as well, continuing to push higher. There is some reverberation of feel-good, I would say, from those names that we just covered the earnings of. Bitcoin is off the gas a little bit in the moment.

93,200 US dollars per token back, you know, we're four days into a week where we talked about Bitcoin every day, having some momentum behaving like gold. There's a lot more to come in this hour. This is Bloomberg technology. Possibility surrounds us in digital innovation, evolving markets and disruptive ideas. And while promises can inspire dreams, proof is the catalyst for transformation.

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

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

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

Google parent Alphabet, well it reports its earnings after the market closed today. Let's get more on what to expect. Bluemeg Intelligence's Mandeep Singh is here. There is a whole host of headaches for Alphabet right now, but revenue is still set to grow by 12%. Yeah, and search grew double digits last quarter. So I feel the bar is high. And when I look at all the things that have transferred since the last time they reported earnings, I feel on the margin it's going to go down. And especially if they miss on search,

I mean, you know, overall print, no matter how strong cloud is or YouTube is, it's not going to matter. So from a profitability perspective, it's all about search. And I can't imagine, you know, how they beat on the search revenue, given all the stuff you have heard about Team Machine and advertisers pulling back, even though they're

Ad pricing will be better than peers, but on the margin, I think I don't see them beating consensus numbers. - You know what's interesting, Mandeep? I've spoken to several CEOs in the supply chain for data center, right? And they're so confident that capital expenditures will continue to rise on a multi-year horizon. Google told us a number

How important is it or not that Google specifically sticks with that spending plan for the rest of the seven names that are to come?

Absolutely. I think it's table stakes for someone like Google and, you know, they don't have a choice but to invest in their Gemini model because of the threat from ChatGPT and all the LLM search vendors. So right now what's insulating them is none of these guys have an ad platform. They're monetizing the engagement through subscriptions. But there is no doubt that they are taking volume of the searches. And so from that perspective,

Google will see the impact in their volume. It's just if you're an online business, you have no way out but to spend your money on Google. And even in a recessionary environment, what we have seen is Google is the most insulated. That will remain the case when it comes to the ad spend at least for now.

At least for now. At the moment there's a whole host of antitrust issues. And I'm interested as to whether you think we'll hear a lot of analyst calls and requests to know more about that, how they preserve the business model in the face of it? Oh, absolutely. The Chrome one is huge. I mean, I think what they're going to do is with the Wiz acquisition really deploy AI inside Chrome. So losing Chrome will be just catastrophic for Google. So from that perspective, that case is huge.

I mean, they may have to do some remedies. They've already talked about keeping the cookies and all that. But at the end of the day, Chrome is how they have the distribution when it comes to their Gemini 2.5 model, which is getting great reviews. So in the end, it comes down to having distribution. And Google has that with Chrome, as well as their Android ecosystem. But Chrome is very important to cut it across the iOS and all the other devices.

The DuckDuckGo CEO testified in that case, and he put a $50 billion or more value on Chrome, which I found fascinating. Same question I've asked you every year since I've lived in America. Does the stock reflect the antitrust risk that you continue to talk about?

It does. I think right now Google is at the lowest valuation when it comes to all the Mac 7 names in terms of multiples. So from that perspective, the chat GPT thread, the regulatory risks are reflected in the valuation. But like I said, you know, if something happens to that search revenue, then suddenly all the

earnings estimates are going to get revised lower. So from Google's perspective, you know, cloud is not how they make their money. It's search. And that's why it's all the more important to keep that intact, you know, when it comes to the regulatory risks that are out there. I bring it up because the DOJ is seeking divestment of Chrome, which would be a big thing. Bloomberg Intelligence's Mandeep Singh, terrific analysis. Thank you very much. Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York.

And Ahmed Ludlow in San Francisco. Let's get a check on these markets, Ed, because we are once again in rebound mode. We're up for a third straight day on the Nasdaq 100, 1.9%. Let's call it a macro picture. We're getting a few more dovish tones coming from those Fed presidents today. Could we see a move as the macro faces headwind after headwind?

amid the tariff anxiety. We're currently at 1.8% as big tech really leads the charge. Drill in, and I want to shine a light on chip stocks. You've talked about Texas Instruments so well, but the SOX is having a wonderful day, having its best day, the overall semiconductor index. Well, we're seeing every single company in the green

Notably, we're looking ahead to earnings of Intel. Is there going to be a pull forward on Intel numbers in terms of the amount of PCs that we've wanted to see in terms of inventory trying to get ahead of tariffs? But we're likely to see, of course, revenue on the downside. Texas Instruments really smashed it, though, Ed.

Yeah, let's stick with Texas Instruments and bring in Bloomberg's Ian King. This is a maker of the more simple chips, goes in everything from cars to electronics. What do we learn from their numbers? Yeah, I mean, they said everything, essentially everything is awesome. That's been the message so far for all chip companies. Demand is good. It's coming back just like we said it was across all markets, across all geographies. Everything is really good.

but with a giant but. Yeah, a giant but being tariffs and uncertain trade policy. The other one that caught the eye overnight was SK Hynix out of Korea, key memory provider to NVIDIA in the context of data center. What's the read-through to the big picture? Yeah, the same thing there. Everything is awesome, right? Everything, orders are coming in, selling a lot of chips, demand fundamentally still strong, but tariffs.

We want to thank you, Ian King, on all things chips. But meanwhile, going back to broader stories right now, there is some breaking news that the US is set to demand that Putin of Russia accepts that Ukraine has a right to continue its military force. Now, we go out to our Balance of Power co-host, Kayleigh Lyons, who can bring us some of the details here. There is an important meeting about to occur in Moscow, and this is the line when it comes to what Russia must accept in any sort of ceasefire.

Yeah, Bloomberg, according to sources familiar with the matter, Caroline, is really providing some light as to what exactly in terms of concessions the U.S. wants to ask of Russia after much reporting over all of the concessions that have been asked of Ukraine. And that does include a demand that Russia...

essentially accepts that Ukraine will have its own military force and defense industry as part of any deal. And our understanding is this is going to be presented as an issue when Steve Witkoff, the U.S. special envoy, meets with Vladimir Putin next in Moscow, which is expected to happen tomorrow.

And an additional demand here as well, according to our reporting, is that Russia returns control of the Zaporizhia nuclear power plant in Ukraine and that the U.S., in theory, would take over the operations of that. Now, it's not clear whether or not these are concessions that Vladimir Putin will be willing to accept, as at least when it comes to the Ukrainian defense industry, that would mean Putin does not achieve one of his stated war aims. When he invaded Ukraine, he said part of the objective was to achieve the demilitarization goal.

Of Ukraine. Now, of course, there are other objectives that based on our reporting on the deal that had been presented to Ukraine from the U.S. that would mean Vladimir Putin would achieve, including a commitment that Ukraine would never be able to join NATO, as well as recognition of Crimea, which Russia illegally annexed in 2014.

Russian. That is something that Ukrainian President Volodymyr Zelensky has said he could not accept in any deal because it would violate the Ukrainian Constitution and of course President Trump was upset with that statement. He said that it is a deterrent or an impediment if you will to achieving peace though he also has expressed ire with Vladimir Putin today in the aftermath of deadly strikes in Kyiv overnight which killed at least a dozen people and wounded dozens more.

He says that Vladimir Putin must stop. He says that the timing is very bad. It was not necessary. He says he is not happy with the Russian strikes on Kyiv, and it will remain to be seen if Russia is happy with this architecture of a deal that, again, based on our reporting, the U.S. is preparing to present.

Balance of Power co-host Katie Lyons, thank you very much. Let's get back to technology earnings. Driving stocks today, IBM underwhelming investors despite posting a sales beat. CEO Arvind Krishna expecting AI to continue to deliver, telling Caro, AI business is $6 billion. It's pretty big compared to most others, and we are very happy. People are using it to improve enterprise, customer service, customer experience.

For more, David Bunsen, the Bunsen Group Chief Investment Officer joins us now. His company, $7.1 billion of assets under management. You might have heard Bloomberg's Ian King a moment ago also speaking in the context of the chip names. And in summary, everything is awesome. At IBM, the market is sort of not necessarily sharing the sentiment, but let's start there, David. Is everything awesome for technology in corporate America?

Well, no, not everything is awesome in the sense of technology is not immune at all from the uncertainty generated by the tariffs and the questions as to what that will mean both to the economy, but then also to actual policy and therefore expectations for corporate profits. So that uncertainty lingers. But I think everything is certainly wonderful so far in terms of operating results that have been reported.

We are holders of both Texas Instruments, which is up a lot today, and IBM, which is down. But IBM has been an absolutely unbelievable performer. And really, the AI side was good news. The stock would be down more today if it were not for the AI boost.

It's the software growth was only 9% quarter over quarter when they had done 11% the quarter before. So some deceleration in what's been a very successful growth in that hybrid cloud, the former Red Hat business that they acquired. IBM has executed very well and we're big believers long term in what they're doing, that whole story. There's a lot of good news in the technology sector, but you just simply can't overpay for the good news.

David, what's so interesting is, yes, maybe there's some profit-taking given the run-up in IBM and its resiliency amid the tariff uncertainty, but Avinash Krishnamurthy said, look, demand signals are still unchanged. Is that likely to remain the case? How much are we already basically paying for inventory pulled forward by Texas Instruments and a resiliency to consultancy that might not withstand what could be a real slowdown in the economy?

Well, there is a very big difference in the answer to that from Texas Instruments to IBM to other companies that are part of this AI capex story, like let's say in Nvidia. Nobody's going to be immune if there's a system-wide demand slowdown and a recession that lasts more than a few minutes. But there's uncertainty as to what exactly will happen. I expect that there will be a slowdown. And again, we're not...

We don't own any company for the sake of one quarter of results. So I think you could very well see a slowdown that impacts fundamentals short term. The question is, who has the resilience? Who has the balance sheet? Who has the business model to most execute through that?

I have no doubt Texas Instruments and IBM belong at the top of those lists. They're not dependent on a somewhat unsustainable AI capex cycle, let alone are they relying on a PE ratio that has been totally unsustainable to hold the stock price up.

Okay, who is at the top of that list for you in the weeks to come? Well, NVIDIA, I should go easy on them because they've obviously had a tough time through this. But I think when NVIDIA was $150 trading 80 times forward earnings, now down here into the lower hundreds, it's certainly cheaper, but it's very much tethered to a big story around AI CapEx and suffers from law of large numbers. Just when you get to that $3 trillion market cap,

It's very difficult for people to realize that a 20% gain, which is not really what their shareholders want. They want something more than that. But the math of that requires it to add like almost a trillion dollars of market capitalization. So it's just very difficult to...

to make money out of those valuations. So NVIDIA is a good example there. Look, we're dividend growth investors. And so NVIDIA is not a name that we'd be looking at anyways. I think IBM, if you look at the dividend on cost for people that were buying IBM a number of years ago, we entered the position about seven years ago. It's been unbelievable. And everyone focuses on how well the stock price is done. And that's great. It makes us look good. But for me, it's a cash on cash story. Their dividend growth has been remarkable.

David, what about buybacks as well? Sorry to jump in there, but many are expecting companies are going to make the most of their capital haul right now.

Well, I think the stock buybacks to us are at best supplemental. Most technology companies don't use it as real capital return. They use it as executive compensation to the degree you're at least buying back the shares that you issued because of stock options and executive comp. I think that that's a very good thing. As a capital return strategy, we prefer it be second tier, not first. And IBM is a good example.

David Bunsen of the Bunsen Group. Thank you very much. I want to get to a story I broke yesterday with Bloomberg's Gillian Tan. Elon Musk's Neuralink is planning to raise around $500 million at a pre-money valuation of $8.5 billion. That's according to sources, the brain implant company in clinical trials for its chip that allows patients to control computers with their brains and a big jump in valuation it was too. Now coming up,

Ali Patovi, an early investor in names like Facebook and Qza joins us to talk about finding and cultivating tech leaders. That's next. This is Bloomberg Technology. Possibility surrounds us in digital innovation, evolving markets and disruptive ideas. And while promises can inspire dreams, proof is the catalyst for transformation.

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

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

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

Ali Partovi, an early investor in Facebook, Airbnb and Dropbox, has announced a new $320 million fund from his company, NIO, to back early tech talent through a scholars program for college students, an accelerator which would compete with the likes of Y Combinator. Ali joins us now. Welcome to the show. Welcome to the studio. That's the debate, right? Is what you do venture capital with an accelerator offering or are you an accelerator?

I define us as a mentorship community. I'm so excited to be here, Ed and Caroline. We've just raised $320 million, but what I'm most excited about is that we discover superstars earlier than anybody else. I started this company eight years ago with the vision that you can identify future billionaires when they're still in college and mentor them and help them accomplish their potential.

It's just amazing to see what neo-scholars have gone on to do. Last year, all of OpenAI's new grad hires were neo-scholars. And some of them go on to found companies like Cognition and Cursor that are worth billions and that we back. Yeah, I mean, let's look at the case study of Enisphere, which makes Cursor such a hot product. And you found, Michael, before anyone else, you were the first check-in person

The fact that you've got such prior experience and wins, is there a method? Is there something that you see in each founder?

There is. And honestly, when I started, I had a little bit of insecurity of like, is it possible to build a machine, build an institution that systematically identifies future tech leaders when they're still sophomores in college? Or do I just have a knack, or can you do it systematically? And I feel pretty confident we've now proven that you can do it institutionally. Michael

is a great example. I met him when he was a rising sophomore at MIT, and we helped mentor him, not just towards becoming a founder, but helped him get his first startup internship. His co-founder, Oman, who was also an MIT student, we helped him get his first startup internship.

And when they were starting a startup, we mentored them regularly for almost a year before they raised funding. And they're not the only case. I just mentioned Cognition, co-founder Walden Yan was a NEO scholar. That's a billion dollar company. - So here's the thing, right? All of these people and their story is just at the core of Silicon Valley law, right? They are talented.

Where we are today is a discussion around how you do not need to be a computer scientist. You don't even need to learn to code anymore. What is the talent that you actually need to identify? Is it like a business acumen more than anything? It's a really interesting question, Ed. And it's funny because I remember when I was starting Neo, one of the top VCs in Silicon Valley said to me, "Hmm, you're focusing on computer science. Is that really necessary? Is that right? Maybe that doesn't make sense."

And I was like, you know what? I'm focusing on computer science. And the names I just mentioned are all computer science students. I think computer science, it teaches you how to think. You're probably correct that you may not need to know how to code. But your question, I would say,

would you want people to know how to write? Because writing can also be done by AI, you know? But writing teaches you how to think, you know? Yeah, and computer science, I still, we focus on computer science students

because I think it does give them business acumen and just gives them strategic thinking abilities. It's why you founded Code.org with your brother all those years ago. I'm going to get personal for a minute, Ali, because you're an immigrant yourself and your family fled the Iranian regime years ago. We're at a period where immigrants perhaps don't feel quite as accepted into the United States right now. Does that impact some of the founders that you're going to find?

Honestly, I think there's an emerging question and I'm still trying to figure out, you know, both how I feel and where we're going to end up. I still believe today the United States is the best haven for smart people who want to build something out of their careers. And, um,

And even immigrants, and by the way, I was not only an immigrant, I was deported when I was very young and managed to come back. So I definitely understand the fear and there's some really terrible things about the US immigration system. But I still think that in terms of the opportunity the US offers, it's better than any other place on earth.

And I'd like to think that our immigration system will eventually get to where it makes more sense as well. - Ali, we're short on time, but I want to just end by asking you, what is the distinction or advantage you have against a Y Combinator or against what Jason Calacanis is doing, for example?

I'd say there's a lot of incredible legacy programs from the past decades that inspired us and on whose shoulders we've built, whose focus has been backing first-time founders or identifying college students and convincing them to start companies. We, today, are the best of these programs. We discover superstars earlier than anybody else.

If you look at the top AI companies, Cursor right now is basically the top of that list. And it was started by somebody who was a NIO scholar when he was a college student, and we were their first investor. Ali Partovi, CEO of NIO, thank you for joining us. Really appreciate your time. Now, some news out of China. Chinese EV maker NIO is preparing to launch lower-priced models in Europe as it expands beyond Asia. Yesterday, CEO William Li spoke with Bloomberg about recent changes to NIO's expansion strategy.

In the next three years, our focus will undoubtedly remain on the Chinese market, as China is the world's largest and fastest growing market for smart electric vehicles, which is also the most competitive.

As a company founded in China, we must secure a sufficient market share in our home market and achieve sustainable operations. This year, we have launched nine new products. Our chips, for example, can increase our gross margin by 4 to 5%. Additionally, we are making significant efforts in managing sales expenses and enhancing the efficiency of R&D costs.

Therefore, we are very confident in achieving profitability in the fourth quarter of this year. So I know your new brand, Firefly, you're going to be concentrating on Singapore and other markets, including Europe and UK. How are you going to...

change the model there because you did go into five fairly expensive, largely Nordic countries in Europe and you said you underestimated the cost structure there. So how are you going to change that cost structure at a time when there are tariffs as well?

Firstly, the tariffs will indeed impact our overall business plan. However, on the other hand, our new model Firefly is designed specifically for small car users. From a product perspective, it's very suitable for markets including Europe. The global market for small cars is approximately 20 million units. We will change our ways of cooperation.

In the past few years, we have operated directly in five European countries. However, we will now collaborate more with local partners. We will have one partner in each country for long-term cooperation, leveraging their capabilities to expand our presence.

How are you going to stand out in the domestic market? You're doing the battery swapping technology with the Firefly. Are you in active discussions with partners? I know you have talks with CATL, but others, who are going to be those who help solder the immense cost of spreading across all the provinces in China? Yeah.

We have invested in 3,275 battery swap stations in China for the past few years. This year, we have an even more ambitious plan. We aim to build battery swap stations in every county across the 27 provincial-level administrative regions in China. That means adding at least 1,000 more battery swap stations this year.

This will certainly be a significant capital expenditure. Thus, we changed our approach this year by working with local partners in China which will handle the construction of their stations. We have built partnerships with more than a dozen companies. We will then rent the battery swap stations from them, which can help reduce our capital expenditure.

That was NIO CEO William Lee. European car sales rebounded in March with electric vehicle deliveries in particular surging 24% in the region. But that did not extend to Tesla, which saw new registrations fall 28% in Europe last month. I want to bring in Kristen Hull, head of NIO Impact Capital,

uh that holds some tesla shares you sold out of client funds two years ago but you retain tesla shares for the purposes of of voting and vocalizing your your thoughts the the

Your thesis on the stock, you are not bullish here. No, we are not. No. And it's interesting because we have seen shares drop 33% so far this year. And yet there's a rally now, even though we're seeing, I believe that they are short on earnings 34%.

Let's just disentangle some of the pushes and pulls, though, Kristen, because many would say, oh, it's been production halts or it's been a stale lineup. But how much are you measuring what seems to be a brand damage story that's particularly happened in Europe?

Well, thank you, Caroline. And we have to look at everything here with this company because it's quite exceptional. There's a dream of automobiles and yet we're seeing 20% drop in sales on the automobiles at Tesla. And what isn't coming up in the earnings reports that is important to investors is what is happening both to the brand, the damage there. We've seen sales dropping in their major markets in both California and Europe.

And with the alignment of the CEO with the current administration, that doesn't bode well for a brand moving forward. I just want to jump in at this point. I'll also be honest with the audience. I don't hold any Tesla shares nor any shares of any company, but I do drive a Tesla. I have a Powerwall at home. The technology is fantastic.

But many would say, we welcome Elon Musk being a participant in the government and Doge. What's your reaction to him pledging to now come back to Tesla and dial back on the time at Doge? Does that give you some more confidence?

No, no, not in this case. Where he's there talking about Doge, which is specifically about efficiencies, we're not seeing him practice that in his own company. And so what we're talking about here with efficiencies are human capital management. And we've seen so many, particularly top executives in charge of both engineering and safety, leave the company. And they're also doing some pretty significant layoffs.

We want to see really strong human capital management to be able to move this company forward. Exactly what? Because thus far, you have been since 2019 talking about human capital management needs to change. But many investors just ultimately haven't cared, Kristen. And the stock has continued to outperform, give or take, the last six months.

That's right, Caroline. So we have been talking to Tesla and engaging since 2019 about some of the significant issues for racial discrimination. And we're talking about really top innovation, being able to attract and retain top talent. And that's an issue moving forward at Tesla. And I think we're seeing that in

both the ability to innovate, they don't have their next lower-priced automobile out yet despite promises for years at this point, so we are quite concerned. We're pleased to say that NIA has had a significant win and the board has committed to substantially what we asked for as far as oversight for human capital management and DEI programs at Tesla.

To be fair, they do remain committed to that rollout of a more affordable vehicle by the first half of this year. And indeed, we haven't reported any more recent headcount losses for the business. But Kristen Hull, it's always a joy to have you on the show. Thank you, Chief Investment Officer for Nia Impact Capital. Now, that does it for this edition of Bloomberg Technology. Ed, boy, it's been a busy one and there's more to go.

Yeah, I think let's go back to some of the top names we've been thinking about throughout the show. The NASDAQ 100 is pushing higher and it's all corners of tech, right? Other than IBM. So IBM had like strong profit in sales and investors going like, yeah, it just wasn't enough for us. There's some concern about the economy, but the big one after the bell caro is Alphabet, the parent of Google. Can they deliver that 12% increase in revenue? Don't forget to check out our podcast too. You can find it on the terminal as well as online on Apple, Spotify and iHeart. This is Bloomberg Technology.

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