Tech Selloff Deepens on Data Center Policy Fears

0:05 >> "BLOOMBERG TECH" IS LIVE FROM THE HEART OF SILICON VALLEY WITH ED LUDLOW IN SAN FRANCISCO. ED: THIS IS "BLOOMBERG TECH." I'M TIM STENOVEC IN NEW YORK IN FOR ED LUDLOW. COMING UP, IT IS A MARKET MELTDOWN. THE NASDAQ 100 SINKING 6%. NVIDIA CURRENTLY DOWN UNDER PRESSURE MORE THAN 8%. AGILITY ROBOTICS HITS THE PUBLIC MARKET. PEGGY JOHNSON JOINS US LIVE IN THE HOUR. AND POST-MIDTERM JUSTICERS TAKING FULL CONTROL OF ELON MUSK COMPANIES, BOTH SPACEX AND TESLA TUMBLING AGAIN TODAY. SHARES LOSING MORE THAN $430 BILLION FROM THEIR COMBINED MARKET VALUE.

0:47 SPACEX DOWN MORE THAN 10%. TESLA DOWN ALMOST 11%. FIRST WE GOT TO CHECK IN ON THIS MARKET. THE NASDAQ 100 DOWN RIGHT NOW 5.6%, JUST AN UGLY MORNING FOR TECH STOCKS. IT WAS DOWN EARLIER AS MUCH AS 6.2%. AT ITS LOWS, THE WORST INTRADAY GOING BACK TO MARCH OF 2020, THE DEPTHS OF THE PANDEMIC. CHIPMAKERS WEIGHING ON THE INDEX. NVIDIA, MICRON AND A.M.D. ALL WEIGHING DOWN THE NASDAQ 100. THE SOX NOW DOWN ABOUT 38% FROM THAT JUNE RECORD.

1:20 INVESTORS ARE FAILING FROM THE SECTOR ON SPECULATION THE DEMOCRATIC SWEEP IN CONGRESS WILL USHER IN A NEW ERA OF REGULATION FOR THE A.I. INDUSTRY. IN THE S&P 500, THERE ARE SOME AREAS OF GREEN. INVESTORS RUSHING FOR SAFETY IN DEFENSIVE AREAS LIKE CONSUMER STAPLES AND HEALTHCARE, WHICH ARE EVER SO SLIGHTLY HIGHER TODAY. LET'S JUMP RIGHT INTO THE CHIPMAKERS. JOINING US FROM SAN FRANCISCO IS BLOOMBERG'S IAN KING. IAN, WHAT IS TODAY, I WANT TO GET TO A.M.D. AND QUALCOMM. BUT I WANT TO START WITH WHAT'S HAPPENING WITH THE CHIP SECTOR TODAY.

1:50 WHAT IS DRIVING THE FLIGHT FROM THE SECTOR? IAN: I MEAN, THE INDUSTRY ITSELF ALREADY TOLD US, LOOK, WE ARE CONCERNED THAT WE CAN'T GET ENOUGH DATA CENTERS BUILT FAST ENOUGH TO MEET DEMAND, TO HOUSE ALL OF THESE CHIPS WE'RE MAKING. POWER IS THE ISSUE. BUILDING BUILDINGS IS THE ISSUE, GETTING LAND, GETTING APPROVAL. THIS WAS ALREADY IN PEOPLE'S MINDS. AND NOW YOU HAVE A CHANGE IN THE POLITICAL LANDSCAPE, WHICH INDICATES THAT THAT ISSUE MAY BECOME EVEN MORE DIFFICULT, THAT THINGS MAY TAKE LONGER.

2:25 SO WHAT WE'VE SEEN IS A BET THAT THINGS ARE GROWL REALLY FAST IN THE CHIP INDUSTRY, AND NOW WE'RE SEEING A PAUSE. WE'RE SEEING PEOPLE EXPRESS CONCERN THAT MAYBE THEY CAN'T GO AS FAST AS THEY WANT TO. TIM: DOES IT CHANGE YOUR VIEW OF THE CYCLE OF WHERE WE ARE IN THE BUILDOUT? IAN: I DON'T HAVE A VIEW OF THE CYCLE. YOU KNOW, WE'VE SOON THESE PATTERNS, YOU AND I HAVE SPOKEN ABOUT THESE PATTERNS EXIST. THE CHIP INDUSTRY HAS ALWAYS EXPERIENCED THIS CYCLICAL INABILITY TO MATCH SUPPLY AND DEMAND. IT'S JUST A FACTOR OF ITS EXISTENCE OVER THE LAST 50 YEARS, EVEN PEOPLE LIKE JENSEN HUANG, THE C.E.O. OF NVIDIA, AND SAY, LOOK, AT A CERTAIN POINT SUPPLY AND DEMAND IS GOING TO MOVE IN A DIFFERENT DIRECTION, AND WE'RE GOING TO GO BACK INTO THESE KIND OF SITUATIONS WE'VE BEEN IN BEFORE. THE DIFFERENCE THIS TIME HAS BEEN, WELL, THE EXTENT TO WHICH DEMAND IS STRONG AND HOW LONG THAT WOULD LAST. WE'RE NOW SEEING OTHER CONCERNS, OTHER CONCERNS THAT WOULD INDICATE THAT THE ACTUAL PROCESS OF MAKING THIS ALL REAL IS BECOMING MORE DIFFICULT.

3:30 TIM: I PROMISE WE'LL GET TO A.M.D. AND QUALCOMM. A.M.D. DOWN 15.8%. QUALCOMM DOWN 13.5%. JUST ON QUALCOMM, THE CHALLENGE THAT THE COMPANY IS FACING, IT IS I IDIOSYNCRATIC OR PART OF A BIGGER STORY? IAN: QUALCOMM HAS SUFFERED THIS YEAR, EVEN WHEN CHIP STOCKS WERE UP 60%, 70%, AND THAT'S BECAUSE IT'S IN TRANSITION. ITS SMARTPHONE MARKET THAT IT HAS DEPENDED ON FOR YEARS AND BEEN SO SUCCESSFUL IS NOT A GROWTH MARKET AT THE MOMENT.

4:01 THERE ARE OTHER ISSUES RELATE TO THE SUPPLY CHAIN THAT ARE HOLDING IT BACK, AND IT'S IN A TRANSITION. IT'S BECOMING MORE OF AN AUTOMOTIVE CHIPMAKER. IT'S BECOMING MORE OF A NETWORKING CHIPMAKER. BUT THESE THINGS TAKE TIME. AND IN THE PROCESS OF THAT TRANSITION YOU'RE GOING TO SEE MARGINS SQUEEZED, WHICH IS WHAT PEOPLE ARE REACTING TO TODAY. TIM: IAN KING OUT THERE IN SAN FRANCISCO, THANKS SO MUCH. I KNOW YOU GOT A BUSY DAY AHEAD OF YOU. APPRECIATE YOUR TIME.

4:27 I WANT TO DIVE DEEPER INTO TECH MARKETS. JOINING US IS THE FOUNDER AND C.E.O. OF GRENADILA ADVISORY. I'M WONDERING IF YOU HAVE A VIEW OF THIS AND IF THAT CHANGED GIVEN WHAT WE SAW HAPPEN ON TUESDAY. >> I THINK IT'S A HICCUP TO THE BROADER MARKET CYCLE OF BUILDING THESE A.I. INFRASTRUCTURE BUILDINGS, DATA CENTERS. AND IT'S A BIG HICCUP. IT'S PARTLY BECAUSE THE MARKETS HAVE SORT OF PRICED IN AN UNDISRUPTED BUILDOUT OF A.I. INTO THE FUTURE, AND NOW WE HAVE A DISRUPTION POTENTIALLY IN THE FORM OF, YOU KNOW, MORE LEGISLATION POTENTIALLY, A MORATORIUM, TAX BREAKS MIGHT GO AWAY.

5:10 YOU KNOW, YOU NAME IT. I THINK THIS IS JUST A MARKET READJUSTING ITSELF AND CORRECTING ITSELF FOR WHEN IT'S GOING TO GET PAID FOR A LOT OF THESE INVESTMENTS THAT WE'VE BEEN MAKING INTO THE DATA CENTERS. TIM: MAKE THE CALL FOR US. HOW BIG OF A CORRECTION IS THIS GOING TO BE? >> YOU KNOW, I THINK SOME STOCKS, TODAY, EVEN JUST TODAY, THEY'RE IN CORRECTION, IF NOT STARTING YESTERDAY. SO FROM A STOCK LEVEL, THERE ARE CORRECTIONS ALREADY HAPPENING. BUT I THINK IT'S USEFUL TO LOOK AT THIS DISRUPTION FROM TWO DIFFERENT PERSPECTIVES.

5:40 ONE, THERE ARE COMPANIES THAT ARE GOING TO GET PAID SIMPLY BECAUSE THERE'S CAP EX, RIGHT? SO HYPER SCALERS HAVE BEEN BORROWING. WE KNOW THEY'RE GOING TO CAP EX. COMPANIES LIKE NVIDIA CHIPMAKERS, CONSTRUCTION, ANYTHING THAT GOES INTO THE DATA CENTERS, THEY'RE GOING TO GET PAID EVEN AS THE DATA CENTER BUILDOUT SLOWS DOWN, IT'S STILL GOING TO GET BUILT. THE COMPANIES THAT ARE GOING TO GET PAID WHEN THE DATA CENTER IS DONE, WHEN IT COMES LIVE, THOSE ARE GOING TO BE DELAYED FOR A LONG TIME, AND THERE ISN'T GOING TO BE CASH INFLOW THAT THEY WERE EXPECTING SOONER.

6:12 NOW IT'S GOING TO BE LATER. SO IF YOU LOOK FROM THOSE TWO PERSPECTIVES, THE COMPANIES ARE GOING TO REACT DIFFERENTLY AND THE STOCK MARKET IS GOING TO ULTIMATELY, AFTER TODAY'S AND YESTERDAY'S KNEE-JERK REACTION, PRICE THOSE THINGS DIFFERENTLY. TIM: DO THE MIDTERMS CHANGE YOUR THESIS ABOUT WHERE YOU'RE PUTTING YOUR MONEY LONG TERM? >> NO. TIE THINK THAT THIS IS A MOMENTARY DISRUPTION, AND A LOT OF THIS SELLOFF MAY BE A BUYING OPPORTUNITY FOR SOME OF THE HIGH-QUALITY NAMES. BUT OVER THE LONG TERM, IT'S NOT LIKE WE'RE GOING TO BE STOPPING THE BUILDOUT OF A.I. DATA CENTERS. IT'S JUST SLOWLY DOWN.

6:47 -- SLOWING DOWN. THAT CHANGES THE PROFILE OF THE RATE OF RETURN, NOT NECESSARILY THAT THE COMPANIES ARE GOING TO GET PAID. NOW, HAVING SAID THAT, THERE ARE COMPANIES THAT ARE MUCH MORE HIGHLY LEVERED, AND THIS IS GOING TO BE A QUALITY GAME. DO YOU HAVE THE CASH TO ACTUALLY WAIT IT OUT? BECAUSE THAT'S WHAT DELAYING DOES, THAT YOU HAVE TO CONTINUE TO BE CONCERNED, AND THAT PUTS PRESSURE ON HIGHLY LEVERED COMPANIES AND NEOCLOUDS IN GENERAL ARE NOT ONLY HIGHLY LEVERED, BUT THEY GET PAID WHEN DATA CENTERS GO LIVE. THAT'S A DOUBLE WHAMMY FOR CERTAIN INDUSTRIES. TIM: I KNOW YOU HAVE SORT OF A GLASS IS HALF FULL VIEW, OR MAYBE THERE'S A SILVER LINING HERE ABOUT WHAT COULD ACTUALLY HAPPEN POLITICALLY AS A RESULT OF THIS BLUE TSUNAMI WE SAW THIS WEEK.

7:28 TALK A LITTLE BIT ABOUT THAT AND SORT OF THE DISCIPLINE ANGLE WHEN IT COMES TO CASH BURN. >> YEAH, I MEAN, WHEN THERE WAS NOTHING, NO HURDLE, WE WERE THINKING BORROW, BORROW, BORROW, BUILD AS FAST AS WE CAN, BUILD IT FASTER THAN OUR COMPETITORS, AND WE'RE GOING TO BUY CAPACITY FASTER THAN OUR COMPETITORS, AND MORE, RIGHT? SO THERE WAS NO DISCIPLINE HERE. DO IT AS FAST AS POSSIBLE. BUT THE POLITICAL PROCESS HAS TOLD US THAT THERE MAY BE SOME HURDLES HERE, AND THAT HURDLE, THERE MAY BE A POSITIVE SIDE TO THIS, WHICH IS THAT NOW IT MAY PUT SOME DISCIPLINE, FINANCIAL DISCIPLINE TO THESE COMPANIES PUTTING MONEY TO WORK AND BUILDING THESE THINGS.

8:08 THE WORRY WAS ALWAYS THAT, OK, IF YOU BUILD IT AS FAST AS YOU CAN AT SOME POINT YOU'RE GOING TO OVERBUILD, AND PERHAPS THAT WILL ACTUALLY MITIGATE SOME OF THAT RISK IN THE FUTURE. TIM: THE NASDAQ 100 IS DOWN 6.2% EARLIER IN THE SESSION. THAT WAS THE WORST DAY GOING BACK TO THE COVID DEATHS IN MARCH OF 2020. ARE YOU ACTUALLY BUYING TODAY OR WAITING TO BUY? >> YOU KNOW, I'M DIPPING IN. I'M DIPPING IN, BECAUSE SOMETIMES YOU DON'T WANT TO BE CATCHING UP ALL AT ONCE, BUT MOST OF MY CLIENTS ARE VERY LONG-TERM INVESTORS. SOME OF THE PRICES LOOK VERY, VERY CHEAP. SO IF YOU'RE THINKING LONG TERM AND THAT A.I. BUILDOUT IS GOING TO HAPPEN OVER THE LONG TERM, IT MIGHT BE POTENTIALLY A POINT TO GO IN.

8:53 TIM: ANNA RATHBUN, ALWAYS GOOD TO CATCH UP WITH YOU, ESPECIAL ON THE A DAY SUCH AS TODAY. APPRECIATE YOUR TIME. MICRON SUSPENDS PLANS FOR A MEMORY CHIP PLANT IN TAIWAN DUE TO A LABOR DISPUTE, ACCORDING TO SOURCES. THROWING INTO QUESTION THE FATE OF A MAJOR PRODUCTION BASE FOR CRUCIAL A.I. COMPONENTS. TENSION BETWEEN MICRON AND ITS WORKERS FLARED THIS YEAR AFTER EMPLOYEES DEMANDED HIGHER COMPENSATION, SEEKING MORE OF THE RECORD PROFITS GENERATED FROM THE A.I. BUILDOUT. COMING UP, MORE TROUBLE FOR TESLA. THE CARMAKER IS CONTINUING TO FALL AS INVESTORS WORRY ABOUT THE IMPACT OF THE MIDTERM ELECTIONS. SHARES OF TESLA OVER THE LAST TWO DAYS DOWN ALMOST 14%. THIS IS "BLOOMBERG TECH."

9:44 ♪ TIM: SHARES OF TESLA FALLING ON MORE WORRIES THAT DEMOCRATS TAKING CONTROL OF CONGRESS WILL STIFLE ELON MUSK'S EFFORTS TO EXPAND HIS BUSINESS EMPIRE. JOINING US IS OUR REPORTER. WE SEE TESLA DOWN ABOUT 13%. TODAY IT'S DOWN FOR A SECOND DAY IN A ROW. WHAT ELSE THE CONCERN THAT INVESTORS HAVE? >> I THINK CHIEF AMONG THEM IS PROBABLY THE DATA CENTERS THESE COMPANIES ARE TRYING TO SEND UP, MOSTLY ON THE PART OF SPACEX, BUT ALSO TESLA. YOU HAVE THE TERAFAB PROJECT THAT THEY ARE WORKING ON WITH SPACEX THAT IS AT LEAST A.I.-ADJACENT, WORKING ON DOING SEMICONDUCTORS TOGETHER.

10:21 I THINK ALSO JUST A SORT OF OVERARCHING, ELON HAS TURNED HIMSELF INTO KIND A TARGET-RICH BILLIONAIRE OVER THE LAST FEW YEARS. HE HAS SORT OF GIVEN THE DEMOCRATS ACROSS OF REASONS TO KIND OF MAKE HIM INTO THE BOOGEYMAN, AND SO THERE'S UNDERSTANDABLY A LOT OF CONSTERNATION ABOUT WITH THIS VERY SWEEPING CHANGE IN POWER, DOES THAT INCENTIVIZE THE DEMOCRATS COMING INTO OFFICE, BOTH IN WASHINGTON,&IN PLACES LIKE TEXAS, WHERE BOTH OF HIS COMPANIES ARE HEADQUARTERED. TIM: DOES THE CHANGE THE STORY OF A POTENTIAL SPACEX AND TESLA TIE-UP?

11:00 >> IT REINFORCES WHY WE'VE BEEN HEARING THERE'S A PUSH AFOOT TO GET THIS DEAL TOGETHER EARLY NEXT YEAR. THESE ARE TWO BIG COMPANIES. THERE'S REAL POTENTIAL FOR THIS TO BE A COMPLICATED TRANSACTION, EVEN THOUGH IT'S ONE HAND WORKING WITH THE OTHER. BECAUSE OF THINGS LIKE TESLA'S MAJOR PRESENCE IN CHINA AND HOW THAT CONFLICTS WITH SPACEX BEING A MAJOR U.S. CONTRACTOR, DEFENSE CONTRACTOR. AND YET, YOU KNOW, SOME SORT OF UNDERSTANDING OR VIEW THAT IF YOU SORT OF TAKE YOUR TIME WITH A DEAL LIKE THIS, IF YOU WANT TO GET IT DONE, MAYBE THAT'S NOT SUCH A SMART STRATEGY IF THIS IS A DEAL THAT'S GOING TO TAKE SOME TIME AND THERE'S SOME RISK THAT THE G.O.P. NOT ONLY GIVES UP CONGRESS, BUT ALSO THE WHITE HOUSE. TIM: I'M GLAD YOU BROUGHT IN THE SPACEX PART OF THE BUSINESS, THE DEFENSE CONTRACTING BUSINESS, BECAUSE THAT'S WHAT I'M THINKING ABOUT RIGHT NOW.

11:54 I MEAN, THIS IS A COMPANY THAT THE U.S. GOVERNMENT RELIES ON. IT'S A COMPANY THAT OTHER GOVERNMENTS RELY ON FOR STAR SHIELD. DOESN'T ELON HOLD A LOT OF CARDS HERE? >> I THINK HE ABSOLUTELY DOES, ESPECIALLY FROM A PERSPECTIVE OF SPACE LAUNCHES, BUT STARLINK AND STAR SHIELD HAS BECOME SOMETHING WHERE WE'VE SEEN A LOT OF REPORTING AROUND THE IDEA OF ATTEMPTS TO STAND UP COMPETITORS BY GOVERNMENTS TO TRY TO NOT HAVE OTHER EGGS IN ONE BASKET, AND YET WE'RE A COUPLE OF YEARS INTO ALL OF THOSE EFFORTS, AND IT'S HARD TO SORT OF FATHOM THAT ANYONE IS GOING TO BE ABLE TO STAND UP A MEANINGFUL COMPETITOR ANY TIME SOON, IN PART BECAUSE NOBODY IS GETTING TO SPACE AT THE RATE THAT SPACEX IS.

12:40 IT'S NOT JUST THAT THE SATELLITES AND THE NETWORK ITSELF IS IMPRESSIVE, IT'S ALSO THE ABILITY TO SORT OF GET THOSE UP INTO SPACE THAT NO ONE ELSE POSSESS ABILITY EITHER. TIM: TESLA DOWN 10%. SPACEX DOWN ABOUT 8.7%. BIG THANK YOU TO CRAIG OF BLOOMBERG. BACK TO ANOTHER TOP STORY. APPLE PLANNING TO RAISE ABOUT $7 BILLION FROM ITS FIRST INVESTMENT GRADE BOND OFFERING IN MORN A YEAR. TO HAVE HELP FUND SHARE BUYBACKS. ROBERT SHIP MATCH WRITES THAT APPLE'S RETURN TO THE BOND MARKET APPEARS MORE OPPORTUNISTIC THAN FUNDING DRIVEN.

13:19 HE JOINS US NOW. LET'S START THERE AND GET TO THE BIGGER CONTEXT OF WHAT'S HAPPENING IN MARKETS TODAY. WHY IS THIS OPPORTUNISTIC FOR APPLE? LISTEN, I THINK APPLE HAS TO BE IN CONSIDERATION AGAIN FOR THE TECH GOAT STATUS. IT IS AN ALL-TIME STOCK TIES WITH $5 BILLION MARKET CAP, AAA RATINGS AND ITS BOND SPREADS TIGHTER THAN ITS PEERS. IT'S CHEAP MONEY. THIS IS NOT A NEO-CLOUD AT 17%. THEY WILL BORROW 10 YEAR MONEY AT THE BELLY OF THE CURVE. THERE IS REAL OPPORTUNITY, PARTICULARLY WITH TREASURIES, TO LOWER THE WEIGHTED AVERAGE COST OF CAPITAL, BY THE START, HELP SHAREHOLDERS.

14:05 TIM: SO TIMING IS PRETTY GOOD. >> YES. CAN GET. APPLE IS PROBABLY THE NEW UNICORN. WHEN YOU LOOK AT THE NEW HYPERSCALER SPACE, EVERYBODY IS BLEEDING CASH. THEY ARE LOOKING TO RAISE MONEY BUT WE THINK APPLE WILL GENERATE $150 BILLION OF FREE CASH IN FISCAL YEAR 2027. WHAT DO THEY NEED TO DO WITH THAT? I DO NOT THINK THERE IS BIG M&A OUT THERE. THEY RECENTLY HAD A NEW CEO THAT CAME IN AND THEY GOT RID OF THEIR NET CASH NEUTRAL BALANCE SHEET TARGET.

14:40 THAT GIVES FREE WILL TO BUY A LOT MORE STOCK. >> LET'S TALK ABOUT THE EQUITY SIDE. ON THE EQUITY SIDE, APPLE IS THE BEST PERFORMER OF THE MAGNIFICENT 7 SO FAR THIS YEAR, ON A DAY WHERE THE NASDAQ COMPOSITE IS DOWN MORE THAN 4% APPLE IS DOWN 8/10 OF 1%. WHAT'S YOUR VIEW ON THE SELLOFF? WE HAVE SPOKEN TO YOU IN THE PAST ABOUT NEO-CLOUD. NEO-CLOUD IT'S UNDER PRESSURE NOW. THE STOCK IS DOWN ABOUT 30% FROM THE JUNE ALL-TIME HIGH. IT IS THE SKY FALLEN?

15:09 >> ABSOLUTELY NOT. I'M IN MARKETS OF UNCERTAINTY, A SIMPLE SELL FIRST ASK QUESTIONS LATER. PEOPLE ARE TRYING TO FIGURE OUT WHAT THE IMPACT OF A CHANGE IN CONGRESS WILL BE. IT FEELS LIKE IT WILL BE NEGATIVE. I DO NOT THINK IT WILL BE NEARLY AS BAD AS PEOPLE ARE THINKING. OUR LAST GUEST WAS ONE OF THE FEW BULLS HE OUT THERE. WE TEND TO THINK THERE MIGHT BE DELAYS IN CASH COMING IN. THAT ALSO MEANS THERE MIGHT BE DELAYS IN CASH GOING OUT. I THINK IT WILL BOOST THE BALANCE SHEETS. AT LEAST TO THE HYPERSCALERS, TRIPLE D AND UP, THOSE NAMES ARE ALL FINE.

15:52 I THINK MOST OF THE NEO-CLOUDS WILL BE ABLE TO GET FUNDED. WE ARE STILL TALKING ABOUT WORKING CAPITAL ISSUES, NOT ULTIMATE DEMAND ISSUES. THE MARKET IS FULL OF HAVE AND HAVE-NOTS. BUT TODAY, IT IS VERY EASY JUST TO GET A LITTLE BIT LIGHTER AND TRY TO FIGURE IT OUT LATER. OR THAT'S WHAT HAPPENS. LOOK AT THE CREDIT MARKETS. CREDIT SPREADS, PARTICULARLY ACROSS TECH TODAY ARE TIGHTER. WE AREN'T HAVING THE SAME SORT OF MOVES. THIS IS AN EQUITY VALUATION ISSUE ABOUT CASH FLOW.

16:24 IT'S NOT ABOUT ULTIMATELY RECEIVING THE CASH FLOW. TIM: BLOOMBERG EQUITY ANALYST ROBERT SCHIFFMAN JOINING US ON A DAY WHERE WE ARE SEEING A SEA OF RED. COMING UP, A MILESTONE FOR U.S. HUMANOID DEVELOPERS. AGILITY ROBOTICS IS GOING PUBLIC. CEO PEGGY JOHNSTON JOINS US TO DISCUSS AT THE IPO AND WHAT IS TO COME FOR THE COMPANY NEXT. FROM BLOOMBERG TECH.

16:59 AGILITY ROBOTICS IS BETTING HUMANOID ROBOTS CAN BECOME A BIG BUSINESS NOW WALL STREET GETS TO WEIGH IN PART OF THE COMPANY GOING PUBLIC BEGINS TRADING ON THE NASDAQ TODAY. JOINING US NOW IS THE AGILITY CEO PEGGY JOHNSTON. TODAY'S MARKET MOVE NOTWITHSTANDING WHAT HAPPENED IN THE ELECTION THIS WEEK, WE WILL GET TO THAT IN A SECOND. BIG PICTURE, WHY IS NOW THE RIGHT TIME TO TEST INVESTOR APPETITE FOR HUMANOID ROBOT COMPANY? PEGGY: NOW IT'S THE RIGHT TIME BECAUSE WE HAVE CUSTOMER COMMITMENT.

17:32 WE HAVE PENDING ORDERS. WE ARE SCALING UP MANUFACTURING. IT'S ALL FOCUSED ON FILLING THE LABOR GAP THAT IS GROWING BY THE DAY. IT IS VERY HARD TO FILL THESE TASKS WHICH ARE PHYSICALLY CHALLENGING, REPETITIVE, VERY INJURY PRONE, AT TIMES. AGILITY'S DIGIT ROBOT IS READY TO STEP IN AND DO THAT. TIM: THIS IS THE FIRST DEDICATED HUMANOID COMPANY TO GO PUBLIC IN THE U.S.. IT IS A MAJOR MILESTONE FOR A CATEGORY THAT A LOT OF PEOPLE, INCLUDING INVESTORS, STILL HAS A LOT TO PROVE.

18:08 ON THE TIMING OF THIS, WITH THE ROUTE WE ARE SEEING IN MARKETS TODAY AND THIS WEEK, THE CHANGING OF THE GUARD IN WASHINGTON IN THE HOUSE AND SENATE COME JANUARY, WAS THIS STILL A GOOD TIME TO DEBUT? >> YOU KNOW THE MARKET WILL MOVE BY THE MINUTE. WE ARE BUILDING A BUSINESS FOR THE NEXT DECADE. WE ARE IN IT FOR THE LONG RUN. EVEN WITH THE CHANGING OF THE GUARD, THIS IS A VERY BIPARTISAN ISSUE. BOTH SIDES RECOGNIZING THE GROWING LABOR GAP. AS WE MOVE TO RESHORE MORE MANUFACTURING INTO THE U.S., WE WILL NEED ROBOTS LIKE DIGIT TO HELP US AUGMENTED THE SCARCE HUMAN LABOR WE HAVE TO STEP INTO THESE ROLES. FOR US, IT IS THE RIGHT TIME.

18:52 WE ARE WELL CAPITALIZED. WE ARE ALREADY MAY BE IN THE EARLY INNINGS FOR THIS BUSINESS. WE ARE ALREADY ON THE FIELD AND PLAYING. TIM: DO YOU MEAN WITH GX LOGISTICS? WHERE ELSE? >> THEY ARE ONE OF OUR CUSTOMERS AND DOUBLED DOWN. THEY ARE DEPLOYING INTO TWO ADDITIONAL FACILITIES BEYOND THE GEORGIA FACILITY WE HAVE BEEN OPERATING AT. WE HAVE SCHEFFLER. THEY HAVE DEPLOYED ROBOTS IN THEIR NORTH CAROLINA PLANTS. THERE ARE A NUMBER OF CUSTOMERS WE BROUGHT ON OVER THE LAST FOUR MONTHS, ANOTHER FOUR ADDITIONAL CUSTOMERS -- AND AGRICULTURAL MANUFACTURING COMPANY THAT IS A NEW CATEGORY FOR US LOOKING TO BRING ROBOTS ONTO THEIR HESTON, KANSAS FACILITY. >> ONE THING I WORRY ABOUT WHEN IT COMES TO HUMANOID ROBOTS WORKING ALONGSIDE ACTUAL HUMAN BEINGS IS, FROM A PSYCHOLOGICAL PERSPECTIVE, FROM A SAFETY PERSPECTIVE, HOW DO YOU ENSURE IT IS DONE IN A WAY THAT ACTUALLY WORKS? PEGGY: RIGHT.

20:00 WE NEED TO AUGMENT WHAT HUMANS ARE DOING. YOU CAN THINK ABOUT A ROBOT IS HELPING THEIR BOAT HUMAN DO -- ABOUT A ROBOT HELPING THE HUMANS DO A TASK THAT IS PHYSICALLY CHALLENGING FOR THEM. THE THING WE DID WITH OUR NEXT GENERATION ROBOT IS MAKE IT SAFE. TO BE COOPERATIVELY OPERATING IN CLOSE PROXIMITY WITH HUMANS. UP UNTIL NOW, ALL HUMANOIDS HAVE BEEN LIMITED TO OPERATIONS INSIDE, IT TYPICALLY DOING A SINGLE TASK AT A TIME.

20:33 NOW, WITH DIGIT FIVE, OUR NEXT GENERATION, AVAILABLE THE FIRST HALF OF NEXT YEAR, DIGIT CAN TAKE ON A NUMBER OF DIFFERENT TASKS THROUGHOUT THE FACILITY. ALSO OPERATE THROUGH SEVERAL SHIFTS TO BECAUSE OF A FAST CHARGE BATTERY WE HAVE DEPLOYED IN DIGIT FIVE. WE HAVE REALLY STEPPED UP TO THE NEEDS OF OUR CUSTOMERS. WE ARE LISTENING TO THEM AND JOB DONE. TIM: WHY NOT STAY PRIVATE FOR LONGER? THIS IS AN EMERGENT CATEGORY.

21:07 DEPLOYMENTS ARE LIMITED. WHY NOT STAY PRIVATE AND AVOID THE SCRUTINY OF BEING PUBLICLY TRADED UNTIL YOU ARE BIGGER AND HAVE MORE CUSTOMERS? PEGGY: WE WENT FORWARD WITH CHURCHILL CAPITAL 11 YESTERDAY. WE HAVE A GROWING PIPELINE OF CUSTOMERS WE NEEDED TO ACCELERATE OUR ABILITY TO DELIVER UPON. WE ALREADY HAVE 30 CUSTOMERS IN OUR PIPELINE NOW. THAT WILL GROW TO OVER 100 BY THE END OF NEXT YEAR. THIS IS AN EXISTENTIAL PROBLEM FOR MANY COMPANIES THAT CANNOT FIND THIS LABOR.

21:42 THE TIME WAS NOW. WE HAVE $300 MILLION IN PENDING ORDERS. WE ARE RAMPING UP OUR FACTORY TO MAKE A TOTAL OF 10,000 UNITS ANNUALLY. WE DID NOT WANT TO WAIT ANY LONGER. WE WANTED TO GET THE RESOURCES WE NEED TO SCALE PROPERLY. >> PEGGY JOHNSON, CEO OF AGILITY ROBOTICS. THANK YOU FOR JOINING US. WE APPRECIATE YOUR TIME. COMING UP, THE ROTATION OUT OF TECH SLAMMING SEMICONDUCTORS AND NEIL CLOUD. LOOK AT THIS. THE STOCK IS DOWN -- NEO CLOUD. THE STOCK IS DOWN 8.3%, OFF THE WORST LEVELS OF THE SESSION DOWN MORE THAN 36% FROM THE JUNE HIGHS. NEO-CLOUDS ALSO GETTING PUNISHED. IN A FEW MINUTES WE SPEAK TO BLOOMBERG'S BRODIE FORD ABOUT WHAT IS DRIVING THE MARKETS.

22:28 THE NASDAQ 100 OFF ITS RISK LEVELS. BITCOIN DOWN AT ABOUT 76,666. MORE ON BLOOMBERG TECH NEXT. THIS IS BLOOMBERG. TIM: WELCOME BACK TO "BLOOMBERG TECH”. I'M TIM STENOVEC MANY FOR ED LUDLOW LET'S GET A CHECK ON THESE MARKETS WITH ISABELLE LEE. ISABELLE, WHAT ARE YOU WATCHING?

23:06 ISABELLE: WE'RE SEEING A TURNAROUND FROM TRADING. IT IS A MARKET MELTDOWN. YOU'RE SEEING TWO DAYS OF GAINS SNAPPED, BOTH LOWER BY NEARLY 2%. THE NASDAQ LOWER BY NEARLY 4%. AMONG THE REASONS DRIVING THOSE IS A SELLOFF IN CHIPMAKERS. YOU'VE SEEN THE PHILADELPHIA SEMICONDUCTOR INDEX SEEING ITS WORST WEEK SINCE APRIL 2025. AT LEAST THAT'S THE LAST I CHECKED. THERE ARE MANY CROSS CURRENT HERE, BUT AMONG ONE OF THE MOST DISTINGUISHABLE IS INVESTORS ARE WORRIED THAT WE'RE ENTERING A NEW ERA OF A.I. REGULATIONS, THANKS TO THE BLUE STREAK WE'RE SEEING. IT'S REALLY JITTERS ALL OVER THE SCREEN. IF YOU SLIP UP THE BOARD, YOU'RE GOING SEE INDIVIDUAL NAMES. THESE ARE THE HYPER SCALERS, ALL DEEPLY IN THE RED. ALL OF THEM WERE IN THE GREEN YESTERDAY, AND IT WAS ON THE VIEW THAT MAYBE WITH THIS NEW ADMINISTRATION OR THIS NEW CONGRESS, WE WILL SEE A SLOWER BUILDOUT AND MAYBE THAT WILL EASE CAPITAL SPENDING ON THESE COMPANIES, BUT TODAY IT'S JUST A DIFFERENT DAY, AND THAT'S WHY IT IS RED ON YOUR SCREEN. AND FINALLY, LET'S END IT, DON'T FORGET, TESLA AND SPACEX. WE HAVE TO TALK ABOUT TESLA AND SPACEX, BECAUSE THIS IS A MIDTERM STORY.

24:09 YOU'RE SEEING THE TWO STOCKS SELL OFF, AND THAT'S AFTER THE UNEXPECTED WIN OF THE DEMOCRATIC PARTY IN THE STATE OF TEXAS, WHICH IS THE HOME OF BOTH OF THESE COMPANIES. WE KNOW ELON MUSK IS ONE OF THE BIGGEST BACKERS OF THE REPUBLICAN PARTY, DONATING HALF A BILLION DOLLARS TO THAT STATE. TO THAT COST, ACTUALLY. YOU'RE SEEING BOTH OF THEM REALLY SUFFER, BECAUSE WHAT DOES IT MEAN? BACK TO YOU, TIM. TIM: ISABELLE LEE WITH AN UPDATE, THANKS SO MUCH. SEMICONDUCTOR EARNINGS, LUKE THOSE FROM QUALCOMM AND ARM, DRAGGED DOWN THES IN NATURAL AND THE SOX. WE JUST GOT AN UPDATE ABOUT THIS. NASDAQ 100 OFF THE WORST LEVELS OF THE DAY, STILL DOWN 4.6%. IT WAS DOWN 6.2% EARLIER.

24:51 THE STOCK IS DOWN 8.7%, OFF MORE THAN 35% FROM THOSE JUNE RECORDS. QUALCOMM SHARES OFF ITS WORST LEVELS, STILL DOWN 11%. ARM HOLDINGS DOWN ABOUT 11% RIGHT NOW. JOINING US NOW IS BLOOMBERG'S RYAN TO GIVE US A DEEPER UNDERSTANDING ABOUT WHAT'S HAPPENING IN THESE MARKETS. RYAN, I WANT TO PICK UP WHERE ISABELLE LEFT OFF AND A DIFFERENT STORY THAT WE'RE SEEING TODAY WITH HYPER SCALERS VERSUS WHAT WE SAW YESTERDAY. WHAT CHANGED? RYAN: THAT IS A GREAT QUESTION.

25:20 HYPER SCALERS YESTERDAY WERE VERY STRONG. A LOT OF PEOPLE I SPOKE TO SORT OF INDICATED THAT IF WE DO SEE MORE REGULATION, MORE LEGISLATION ON DATA CENTERS PROHIBITING THE BUILDOUT OR AT LEAST SLOWING IT, THAT WILL MEAN THAT THE HYPER SCALERS MAY NOT HAVE TO DO AS MUCH CAP EX AS THEY INDICATED. THAT WOULD BE A POSITIVE FOR THEIR CASH FLOW. THAT HELPED LIFT THOSE STOCKS YESTERDAY. BUT IT DOES SEEM LIKE TODAY EVERYTHING IS GETTING CAUGHT IN THE UNDERCURRENT.

25:47 WE'RE SEEING A LOT OF WEAKNESS IN CHIPS, BECAUSE IF WE SEE LESS DATA CENTER BUILDING, THAT REALLY HAS A LOT OF IMPLICATIONS FOR THEIR GROWTH OUTLOOK, FOR THEIR DEMAND OUTLOOK. IT COULD ALSO HAVE IMPLICATIONS FOR HYPER SCALER GROWTH. IN THE MOST RECENT REPORTS WE GOT, WE SAW A LOT OF STRONG GROWTH IN CLOUD COMPUTING BUSINESSES, WHICH IS VERY TIED TO A.I. DEMAND, AND THAT'S WHERE ALL THE DATA CENTERS ARE REALLY FUNCTIONING. SO THOSE ARE WHAT PEOPLE ARE WATCHING RIGHT NOW. THE REGULATORY OUTLOOK SEEMS INCREDIBLY UNCERTAIN RELATIVE TO JUST A WEEK AGO, AS ISABELLE MENTIONED, THERE WERE HUGE FLIPS IN STATES LIKE TEXAS, WHICH IS WHERE A LOT OF THESE COMPANIES HAVE A LOT OF EXPOSURE, WHERE A LOT OF DATA CENTERS WERE EXPECTED TO BE BUILT.

26:29 A LOT IS UP IN THE AIR RIGHT NOW. TIM: I THINK ONE QUESTION THAT A LOT OF PEOPLE HAVE RIGHT NOW IS ABOUT, OK, IS THIS A BUYING OPPORTUNITY? I POSE THAT QUESTION TO ANNA, AND SHE SAID IT IS A BUYING OPPORTUNITY. IN FACT, THEY'RE DOING SOME NIBBLING, BUT SHE DOESN'T WANT TO CATCH A FALLING KNIFE. WHAT ARE YOU HEARING FROM THE FOLKS YOU TALK TO? RYAN: I ACTUALLY JUST GOT OFF THE PHONE WITH SOMEONE AND I ASKED THAT SAME QUESTION. HE SAID IF YOU LOOK AT A COMPANY LIKE NVIDIA, RIGHT NOW THEY HAVE SO MANY ORDERS THAT ARE REALLY OUTSTRIPPING THE SUPPLY THAT THEY HAVE.

27:00 AND YOU WOULD NEED TO SEE BUSINESS COME DOWN A LOT BEFORE SUPPLY WAS BIGGER THAN DEMAND. WE'VE SOON A LOT OF POSITIVE EARNINGS REVISIONS FOR THEM, THE MULTIPLE IS RIGHT NOW I THINK LESS THAN 13. SO JUST INCREDIBLY CHEAP BASED ON THESE TRADITIONAL METRICS. EVEN WITH ALL OF THAT, HE SAID THERE'S STILL SO MUCH UNIS NOT THAT HE'S NOT YET WILLING TO BUY. HE WANTS TO SEE THINGS SETTLE A LITTLE BIT BEFORE HE FEELS COMFORTABLE SORT OF NIBBLING AT THE EDGES HERE. BUT CERTAINLY YOU CAN MAKE A CASE FOR THINGS BEING OVERDONE RIGHT NOW, BUT I THINK A LOT OF PEOPLE ARE STILL REALLY REASSESSING WHAT IS THIS REGULATORY OUTLOOK GOING TO LOOK LIKE, AND WHAT ARE THE GROWTH IMPLICATIONS OF THAT? RIGHT NOW THAT IS STILL A REAL QUESTION AND SOMETHING PEOPLE DON'T HAVE A LOT OF CLARITY ON.

27:46 TIM: WE'RE SEEING THAT PLAY OUT TODAY. YOU CAN SEE THE CARNAGE WE'RE SEEING WHEN IT COMES TO SOME OF THESE SECTORS. RYAN, THANKS SO MUCH FOR YOUR TIME THIS MORNING. NEOCLOUD STOCKS TODAY ALSO IN THE RED. LOOK AT THIS, COREWEAVE DOWN ALMOST 10%. NEBEUS DOWN 14%. I'VE GOT IREN DOWN 14%. THIS COMES AS MICROSOFT, WHICH STARTED THE BOOM IN NEOCLOUDS, APPEARS TO HAVE A LITTLE CASE OF SO-CALLED BUYER'S REMORSE OVER SOME OF THE TENS OF BILLIONS OF DOLLARS IN CONTRACTS IT SIGNED WITH DATA CENTER OPERATORS.

28:19 BRODY FORD JOINS US WITH MORE, FIRST ON MICROSOFT, WHAT ARE WE LEARNING? BRODY: AS YOU SAID, MICROSOFT REALLY HELPED CREATE THE NEOCLOUD BOOM, WAY BACK IN 2023. THEY SIGNED A BIG DEAL WITH COREWEAVE, AND FOR A LOT OF THESE NEOCLOUD NAMES, THEIR FIRST BIG CONTRACT WAS WITH MICROSOFT. THEY GOT IN SOONER THAN ANYBODY ELSE. AND NOW WE'RE REPORTING THAT MICROSOFT IS GETTING SICK OF THE NEOCLOUDS. THEY'RE FINDING THAT THEY CAN'T CONTROL THE DELAYS, THAT THE COSTS ARE HIGHER THAN THEIR INTERNAL PROJECTS.

28:50 SO THEY'RE STEPPING UP SCRUTINY. THEY'RE STEPPING AWAY FROM SOME PROJECTS. AND THEY'RE PRIORITIZING THEIR FIRST PARTY OVER THESE NEOCLOUD COMPANIES. TIM: THEN WHO IS THE BENEFICIARY? BECAUSE LOOK, WE ALL KNOW THE STORY, BRODY, THERE'S A SHORTAGE OF COMPUTE OUT THERE. THE NEOCLOUDS CAN'T SATISFY IT FOR A HYPER SCALER LIKE MICROSOFT, WHO DOES SATISFY IT? BRODY: IT'S A GOOD QUESTION, BECAUSE YOU CAN MAKE AN ARGUMENT THERE'S SO MUCH DEMAND OUT THERE THAT EVEN IF MICROSOFT STEPS BACK, A COMPANY LIKE META OR GOOGLE CAN STEP IN.

29:23 BUT IT COULD BE A BAD INDICATOR FOR THIS WHOLE CATEGORY OF COMPANY IF THEIR EARLIEST PATRON IS SAYING, HEY, I'M GETTING SICK OF WORKING WITH YOU GUYS. TIM: I'M A LITTLE SHOCKED TO LOOK AT COREWEAVE SHARES, NOT AT THE WORST LEVELS EVER, BUT GETTING PRETTY CLOSE TO THEM, BRODY. DOWN, OFF THE HIGHS OF LAST YEAR, MORE THAN 76%. WE DID SEE SOME ISSUES WHEN IT CAME TO COREWEAVE'S BONDS IN RECENT WEEKS. ARE PEOPLE STARTING TO WHISPER CONCERNS LIKE THAT AGAIN? BRODY: YOU HEAR A LOT OF ANXIETY ABOUT THE NEOCLOUDS OUT THERE. IT'S A BIT OF A TRENDY THING RIGHT NOW. I THINK ELON WAS SAYING THEY'RE GOING TO HAVE GUNNY-LEVEL DEBT. WE DON'T HAVE EVIDENCE FOR THAT, BUT BORROWING COSTS ARE GOING UP, AND THERE'S INCREASING QUESTIONS ABOUT THEIR ABILITY TO DELIVER.

30:11 THESE COMPANIES' WHOLE VALUE PROPOSITION IS BEING ABLE TO GET COMPUTING UP THERE QUICKLY. SO IF THEY CAN'T GET CAPITAL AND THEY CAN'T MOVE AS QUICK AS THEY WANT, IT REALLY IS A BAD INDICATOR. TIM: BRODY FORD OUT THERE ON THE WEST COAST, CHECK OUT HIS STORY ON THE BLOOMBERG TERMINAL AND AT BLOOMBERG.COM. COMING UP, DRONE DELIVERY EXPANDING ITS PARTNERSHIP WITH WAL-MART, IT REACHES A $20 BILLION VALUATION. WE'LL HEAR FROM THE COMPANY'S C.E.O. INCOMES. THIS IS "BLOOMBERG TECH."

30:50 TIM: DEFENSE TECH FIRM SHIELD A.I. IS BUYING ECHODYNE. IT'S ALSO RAISING NEW FUNDING. THE DEAL GIVING SHIELD A NEARLY $29 BILLION VALUATION. ONCE THIS IS ALL COMPLETE. THE C.E.O. OF SHIELD A.I. JOINS US NOW. GARY, WELCOME. A LOT OF NEWS TO GET TO. I WANT TO START WITH THIS ACQUISITION OF ECHODYNE. THIS IS A HUGE ACQUISITION, NOT JUST FOR A PRIVATE COMPANY, BUT NO MATTER WHICH WAY YOU SLICE IT, MORE THAN $5 BILLION IS A LOT OF MONEY Y. IS THIS THE BEST USE OF MONEY FOR YOU?

31:20 >> IT'S A GREAT SET OF CAPABILITIES AND ENTERS A VERY IMPORTANT MARKET FOR SHIELD. ECHODYNE IS AN INDUSTRY LEADER IN COUNTER DRONE TECHNOLOGY, AND WE THINK THERE'S TREMENDOUS AMOUNT OF GROWTH THERE. AND THIS WILL BE A CORE PART OF OUR OVERALL LONG-TERM STRATEGY AS ANNEX GENERATION DEFENSE COMPANY. TIM: YOU SELL SYSTEMS TO U.S. AND ALLIED MILITARIES. WE HAVE CONFLICTS BETWEEN RUSSIA AND UKRAINE RIGHT NOW, FOLLOWING RUSSIA'S INVASION OF UKRAINE, IN THE MIDDLE EAST TOO. WE SAW A BIG, I WOULD SAY A BIG CHANGE IN HOW THE AMERICAN PUBLIC VIEWS POLITICIANS THIS WEEK, WITH THE BLUE TSUNAMI THAT WE SAW.

31:58 I'M CURIOUS IF THAT CHANGES THE OUTLOOK FOR YOU AT ALL WITH AREAS OF BUSINESS GROWTH. >> YOU KNOW, IT'S INTERESTING, UNFORTUNATELY WE LIVE IN A WORLD WHERE THERE'S CONFLICTS ALL OVER THE GLOBE, AND AS A RESULT OF THAT WE'VE CONTINUED TO SEE TREMENDOUS DEMAND. CLEARLY THERE WILL BE CHANGE WITHIN THE U.S. AND DEPARTMENT OF WAR, BUT WE THINK THAT THE KINDS OF CAPABILITIES THAT WE'RE DELIVERING, THE FACT THAT WE CAN DELIVER AT A MUCH BETTER PRICE PERFORMANCE THAT IS GREAT FOR EVERY U.S. CITIZEN AND GREAT FOR INDIVIDUALS AROUND THE WORLD.

32:25 TIM: WE'VE SEEN OVER THE LAST 18 MONTHS TO TWO YEARS THIS ADMINISTRATION HAS BEEN VERY FRIENDLY, NOT JUST TO THE DEFENSE COMPANIES, BUT ALSO STARTUPS. DOES THAT CHANGE WITH THE DEMOCRATIC-CONTROLLED SENATE AND HOUSE? >> WELL, I THINK THAT OUR CORE VALUE PROPOSITION IS WE'RE DOING THINGS FUNDAMENTALLY DIFFERENTLY. WE'RE DELIVERING NEXT GENERATION TECHNOLOGY AND PUTTING THAT IN THE HANDS OF WAR FIGHTERS. AND WHETHER YOU'RE ON A ONE SIZE OF THE AISLE OR THE OTHER, I THINK THAT'S AN IMPORTANT SET OF CHARACTERISTICS THAT WE CAN CONTINUE TO DELIVER AND DELIVER GREAT VALUE AROUND.

33:00 SO I DON'T ANTICIPATE A RADICAL CHANGE TO THE THINKING. AND THE WORLD NEEDS COMPANIES LIKE SHIELD. WE NEED TO BE ABLE TO CONTINUE TO PROVIDE GREAT TECHNOLOGY, PUT IT IN THE HANDS OF WAR FIGHTERS TO KEEP EVERYONE SAFE. TIM: WILL YOU STILL HAVE PEOPLE IN CONGRESS WHO UNDERSTAND WHAT YOU'RE DOING, AND IN YOUR VIEW, UNDERSTAND THE NEED FOR YOUR TECHNOLOGY? >> ABSOLUTELY. WE'VE HAD VERY GOOD SUPPORT FROM BOTH SIDES OF THE AISLE. TIM: OK. YOU MENTIONED THAT, UNFORTUNATELY, WE DO LIVE IN A TIME WITH A LOT OF CONFLICT.

33:26 BUT THE VOTERS SPOKE THIS WEEK, AND ONE USUAL THEY WERE NOT HAPPY ABOUT WAS THE WAR IN IRAN. U.S. DOES ACTUALLY END THAT WAR ANY TIME SOON, WHAT DOES THAT ACTUALLY DO TO YOUR BUSINESS? I ALREADY UNDERSTAND YOU SAID THERE IS A LOT OF CONFLICT GOING ON, BUT YOU'RE SUPPORTING THAT WAR EFFORT RIGHT NOW. >> WE'VE BEEN ENGAGED IN A VARIETY OF CONFLICTS AROUND THE GLOBE. WE DON'T SPECIFICALLY COMMENT ON THE WORK THAT WE'RE DOING WITH RESPECT TO THE CONFLICT IN IRAN.

33:54 BUT THE REALITY IS THERE'S TREMENDOUS DEMAND TODAY ACROSS DEPARTMENT OF WAR, AS WELL AS FOREIGN MILITARIES FOR THE KINDS OF CAPABILITIES THAT WE'RE DELIVERING THAT LEVERAGE A.I. TO GET SIMPLY DIFFERENT OUTCOMES AT MUCH DIFFERENT PRICES. AND ECHODYNE REALLY DOUBLES DOWN ON THAT. THE PRICE PERFORMANCE THAT THEY DELIVER, THE KINDS OF CAPABILITIES THAT THEY DELIVER ARE CRITICAL TO FINDING DRONES, AND IT'S JUST AN OBVIOUS SEGMENT THAT WILL CONTINUE TO GROW AT A RAPID PACE. TIM: LET'S SAY WE DO, AS A WORLD, GET TO A TIME THAT MORE STABILITY AND MORE PEACE.

34:29 ARE YOU ABLE TO PIVOT YOUR BUSINESS TO BE MORE DEFENSIVE THAN OFFENSIVE? >> MUCH OF WHAT WE DO IS DEFENSIVE. AND I LOOK AT ECHODYNE AS A GOOD EXAMPLE OF THE WORK THEY'VE BEEN DOING. THEY SERVE THE NEEDS OF MILITARIES AROUND THE GLOBE, BUT THEY ALSO SERVE THE NEEDS OF CIVIL ORGANIZATIONS FOR PUBLIC SAFETY AND THOSE KINDS OF USE CASES. IF WE ARE FORTUNATE ENOUGH TO SEE A WORLD OF LESS CONFLICT, WE STILL HAVE GREAT CONFIDENCE IN OUR ABILITY TO CONTINUE TO DRIVE GREAT DEMAND FOR THE KINDS OF TECHNOLOGY THAT WE'RE BUILDING AND DELIVERING. TIM: ON THE FUNDRAISING SIDE OF THINGS, I MENTIONED YOU'RE VALUED AT MORE THAN DOUBLE THE VALUATION YOU WERE THIS YEAR WHEN YOU RAISED A $7 BILLION VALUATION. HOW DIFFICULT WAS IT TO RAISE MONEY OVER THE LAST FEW MONTHS? >> IT'S BEEN INTERESTING.

35:19 THERE'S A TREMENDOUS AMOUNT OF INTEREST IN DEFENSE TECH RIGHT NOW. I THINK THAT INTEREST REALLY REFLECTS THE BELIEF AMONGST THE INVESTOR COMMUNITY THAT THE AMOUNT OF CHANGE THAT NEEDS TO HAPPEN IN DEFENSE CREATES A GREAT INVESTMENT OPPORTUNITY. SHIELD REPRESENTS ONE OF THOSE SPIRITED OUTCOMES WE ARE DELIVERING ON THE BATTLEFIELD, AND ALSO FROM A FINANCIAL PERSPECTIVE, WE LOOK AT A VARIANT -- LIKE A VERY INTERESTING COMPANY. WE HAVE ATTRACTED A LOT OF INTEREST AS A RESULT OF THAT AND WE FEEL FORTUNATE.

35:54 TIM: THE CEO OF SHIELD AI, THANK YOU FOR JOINING US ON THE NEWS TODAY. THE DRONE DELIVERY START UP ZIP LINE HAS HIT PAY $20 BILLION VALUATION AFTER RAISING $1 BILLION. IT IS EXPANDING A COMMERCIAL PARTNERSHIP WITH WALMART. THE CEO SPOKE WITH BLOOMBERG TECH ABOUT HOW THE COMPANY GOT HERE AND WHERE IT GOES NEXT. >> THE ZIP LINE HAS BUILT OUT MANY SUPERCENTERS WITH WALMART OVER THE LAST TWO YEARS, AND THEN WE AND THEY HAVE BEEN STARTED BY AT -- STARTLED BY THE LEVEL OF CUSTOMER DEMAND.

36:31 SUPERCENTER. WE JUST ANNOUNCED A NATIONAL PARTNERSHIP BEGINNING WITH 300 SUPERCENTERS AND EXPANDING BEYOND THAT BASED ON PERFORMANCE. WORKING TOGETHER WITH WALMART WE WILL EXPAND IT TO EVERY METRO. AND EVENTUALLY EVERY HOME IN THE U.S.. ED: CAN WE TALK ABOUT MANUFACTURING? YOU HAVE MADE IT CLEAR THE DEMAND SIDE OF THE STORY. OPERATIONALIZING IT, HOW QUICKLY CAN YOU GUYS BUILD ONE UNIT, A DRONE FOR DELIVERY? WHAT DOES THAT LOOK LIKE AND WHERE DOES IT HAPPEN? >> HARDWARE IS HARD.

37:11 IT TAKES TIME. WE HAVE A BIG, COMPLICATED GLOBAL SUPPLY CHAIN. WE BUILT ALL 43 MAJOR SUBASSEMBLIES THAT WORK -- GOING TO THE AIRCRAFT AND WE ARE NOT JUST MANUFACTURING THE AIRCRAFT. WE MANUFACTURE THE SMALL DELIVERY ROBOT WE LOWER CLOSE TO PEOPLE'S HOMES CALLED THE DROID. WE ARE MANUFACTURING THE DOCS AND INFRASTRUCTURE AT CHARGING SITES ACROSS THE METRO. WE MANUFACTURE THE DROP BOXES, THE MAILBOXES WE HAVE WITH DIFFERENT BUSINESSES TO MAKE IT EASY TO PICK UP. THEN ALL OF THAT IS MANUFACTURED IN THE ZIP LINE FACTORY BEFORE SAN FRANCISCO.

37:53 THAT GOES OUT THROUGH OUR LOGISTICS STREAMS OUT TO ALL OF OUR MAINTENANCE DEPOTS AND THE METROS AND THEN WE OPERATE THE HARDWARE FOR CUSTOMERS. ALL OF THOSE THINGS COMBINED, IT'S NOT JUST REALLY COMPENSATED ENGINEERING. IT IS A HUGE AMOUNT OF MANUFACTURING, OPERATIONS, LOGISTICS, MAINTENANCE WRAPPED UP. WE THINK OF IT AS A COMPLICATED COMPANY, BUT WE WANT TO MAKE THE SERVICE SIMPLE. ANY OF OUR CUSTOMERS CAN DOWNLOAD THE APP, GET ACCESS TO ALL THE AMAZING BRANDS, AND HAVE IT DELIVERED IN 10-15 MINUTES. TIM: A COMPLICATED COMPANY.

38:31 YOU EXPLAINED THE 10 YEAR HISTORY OF THE COMPANY THAT STARTED LARGELY IN AFRICA. WHAT HAS 2026 BEEN LIKE FOR YOU, KELLER? IS THIS THE INFLECTION POINT? KELLER: IT'S INTERESTING. WHEN WE STARTED THE COMPANY IT WAS ILLEGAL. IT WAS HARD TO GET INVESTORS TO GIVE US MONEY BECAUSE WE DON'T INVEST IN ILLEGAL THINGS.

39:04 FOR THE FEAST -- FIRST FEW YEARS ZIP LINE WAS NOT EVEN AN ECONOMIC VENTURE. IT REMINDED ME THAT IF SPACEX WAS GOING TO BUY A RUSSIAN ICY -- ICM AND LAUNCH A TERRARIUM TO BELIEVED IN. AS WE EVOLVED OVER THE LAST 10 YEARS, DURING THOSE YEARS INVESTORS ONLY WANTED TO INVEST IN SOCIAL MEDIA AND SAS. THE IDEA OF ANY CAPEX WAS NOT INVESTABLE. THE LAST TWO YEARS WE HAVE SEEN INCREDIBLE ACCELERATION IN ROBOTICS, AI, AND HARDWARE.

39:40 THERE IS A NEWFOUND BELIEF THAT THE U.S. CAN BUILD INFRASTRUCTURE AND HARDWARE HERE IN A COMPETITIVE WAY. THAT IS SUPER IMPORTANT FOR THE FUTURE OF AMERICA. MORE THAN EVER, THESE OPPORTUNITIES ARE BIGGER THAN WE ORIGINALLY ANTICIPATED. TIM: LET'S LOOK AT MARKETS FOR THE NASDAQ IS SINKING AS THE CHIP SELLOFF DEEPENS. WE ARE SEEING A CONCERN WHEN IT COMES TO SOME OF THE NAMES. AFTER A LOT OF THIS YEAR AND LAST YEAR, THEY HAVE BEEN REALLY HIGH FLYING FOR THE NASDAQ 100 IS OFF ITS LOWS, STILL DOWN CLOSE TO 5%. WE WILL DIG DEEPER INTO THE MARKETS FALLOUT NEXT. THIS IS BLOOMBERG TECH.

40:37 THE NASDAQ 100 OFF ITS WORST LEVELS OF THE DAY, STILL DOWN CLOSE TO 5%. THE PHILADELPHIA SEMICONDUCTOR INDEX. MAYBE SOME PEOPLE COULD ARGUE CHIPS HAVE HAD DIFFICULTIES OVER THE LAST FEW MONTHS. THIS INDEX IS DOWN MORE THAN 35% FROM THE JUNE ALL-TIME HIGHS. JOINING US NOW TO DISCUSS THE SELLOFF IS MANDEEP SINGH OF BLOOMBERG INTELLIGENCE. I WANT TO START BIG PICTURE. WHAT SHIFTED THIS WEEK? APART FROM THE ELECTION.

41:09 IS THERE SOMETHING ELSE GOING ON HERE? MANDEEP: THERE IS. WHEN YOU LOOK AT EXPECTATIONS FOR THE REMAINDER OF 2026 AND 2027, WITH DATA CENTER BUILD OUT OF THERE IS EXPECTATIONS ARE GIGAWATTS WOULD COME ONLINE. 40% OF THAT IS IN TWO STATES THAT GOT FLIP IT OVER -- FLIPPED BUILDOUT. I THINK THE VOTERS HAD AN OPINION ON HOW THEY PERCEIVE THE AI BUILDOUT.

41:48 FROM THAT PERSPECTIVE, THE MARKET IS STILL DIGESTING. WE DID NOT SEE BIG REACTION YESTERDAY. SEE A BIG MOVE IN STOCKS. IT IS PLAYED REACTION. I WORK -- A DELAYED REACTION. I WOULD HAVE EXPECTED THAT 24 HOURS EARLIER. TIM: HYPERSCALERS UNDER PRESSURE TODAY. YOU DIDN'T SEE THAT YESTERDAY. EVERYTHING IS MOVING LOWER. MANDEEP: AI ALL TOGETHER IN TERMS OF HOW THE BUILDOUT WOULD AFFECT THEM.

42:20 I DO NOT THINK ANYBODY GETS PERFECTLY INSULATED HERE. HYPERSCALERS HAVE RELATIVELY BETTER POSITIONING COMPARED TO CHIPMAKERS. THEY HAVE LIVE CAPACITY. YOU CAN'T HAVE NEW DATA CENTERS COME ONLINE. EXISTING DATA CENTERS BECOME MORE VALUABLE. HYPERSCALERS ARE THE ONES RENTING THE CAPACITY. TIM: WHAT ABOUT NEO-CLOUDS. I WAS SHOCKED TO SEE COREWEAVE IS DOWN 75% FROM ITS HIGH OF LAST YEAR.

42:54 BRODY HAS A GREAT STORY. WHAT'S YOUR VIEW? MANDEEOP IF YOUR CUSTOMER BASE IS SO CONCENTRATED THAT TWO OR THREE CUSTOMERS DECIDE YOUR FATE AND THEY SAY WE ARE LOOKING AT DIFFERENT OPTIONS FOR WHETHER WE WANT TO LEASE OR NOT. THIS IS WHERE LONG-TERM AGREEMENTS COME INTO PLAY. THE PRICING THEY LOGGED IN AND WHAT THEY DO ABOUT LEVERAGE.

43:24 IN THE CASE OF NEO-CLOUDS IT IS THE LEVERAGE THEY HAVE AN VR LINE EMBEDDED IN THE DEBT THEY HAVE ALREADY TAKEN. TIM: THE NASDAQ 100 DOWN ABOUT 5% NOW. THAT WILL DO IT FOR THIS EDITION OF BLOOMBERG TECH. DON'T FORGET TO CHECK OUT OUR PODCAST ON THE TERMINAL AND ALL-KNOWING ON APPLE, SPOTIFY, AND IHEART. THIS IS BLOOMBERG.