OpenAI's AI Hack, AMD's Anthropic Bet & Apple's Next Macs | Bloomberg Tech 7/22/2026

[00:00:06]>> "BLOOMBERG TECH" IS LIVE FROM THE HEART OF SILICON VALLEY, WITH ED LUDLOW IN SAN FRANCISCO. ED: THIS IS "BLOOMBERG TECH." COMING UP, OPENAI SAYS ADVANCED AI MODELS UNEXPECTEDLY HACKED HUGGING FACE'S SYSTEM DURING TESTING, RAISING FRESH CONCERNS ABOUT AI SAFETY.

[00:00:30]AMD IS MAKING A MAJOR AI BET, SAYING HE WILL INVEST UP TO $5 BILLION IN ANTHROPIC. WILL IT HELP AMD COMPETE AGAINST NVIDIA? WE WILL BREAK DOWN APPLE'S LATEST OVERHAUL OF THE MAC LINEUP FOR THE AI HS SAMSUNG MAKES ITS BIGGEST HARDWARE PUSH OF THE YEAR.

[00:00:46]LET'S GET STRAIGHT TO OUR TOP STORY.

[00:00:50]OPENAI HIS DISCLOSING WHAT HE CALLS AN UNPRECEDENTED -- IT CALLS AN UNPRECEDENTED AI SECURITY INCIDENT.

[00:01:00]THE COMPANY WAS TESTING TPD 5.6 OLD AND A MORE CAPABLE BUT UNRELEASED MODEL WITH REDUCED SAFETY GUARDRAILS TO MEASURE CYBER CAPABILITIES. DURING THE EVALUATION PROCESS, OPENAI SAID THE MODELS FOUND A WAY OUT OF THE SANDBOXED TESTING ENVIRONMENT, OBTAIN INTERNET ACCESS, AND TARGETED AI PLATFORM HUGGING FACE, SEARCHING FOR SECRET INFORMATION THE MODELS COULD USE TO CHEAT THE EVALUATION.

[00:01:25]OPENAI SAYS THE MODELS REACHED HUGGING FACE'S PRODUCTION SYSTEMS. THE INVESTIGATION IS ONGOING, BUT IT IS RAISING NEW QUESTIONS ABOUT WHAT TODAY'S FRONTIER AI MODELS ARE CAPABLE OF. LET'S BRING IN RACHEL METZ, WHO BROKE THE STORY. I THINK THE BEST PLACE TO START IS HOW DID THIS HAPPEN? RACHEL: THIS HAPPENED WHILE OPENAI WAS TESTING THE CYBERSECURITY CAPABILITIES COULD IT WAS GIVING IT TEST LIKE PROBLEMS ON A TEST, LIKE A PERSON WOULD CONDUCT A TEST. IN THE PROCESS OF SEEKING ANSWERS TO THE TEST, THE MODEL, SEVERAL OF THEM, DID A SERIES OF THINGS IN ORDER TO GET ACCESS TO THE INTERNET AND GO OVER TO HUGGING FACE POSSIBLE SERVER TO FIND ANSWERS TO THE TEST. ED: WHAT HAVE OPENAI AND HUGGING FACE DONE IN RESPONSE TO THIS? THEY SAID THE INVESTIGATION IS ONGOING, BUT IF THIS IS AS SIGNIFICANT A SECURITY INCIDENT AS THE COMPANY HAS PORTRAYED AS AND AS THE INTERNET IS DISCUSSING IT AS, THEY MUST'VE TAKEN SOME ACTION IN THE INTERIM. RACHEL: THEY HAVE BEEN SEVERAL THINGS ALREADY. THERE DISH OPENAI IS IMPLEMENTING CONTROL -- OPENAI IS IN THE MANY CONTROLS THAT SAYS EVEN IF IT MIGHT SLOW THINGS DOWN WITH THEIR OWN WORK TO PATCH VULNERABILITIES, IT IS WORKING WITH HUGGING FACE TO GO THROUGH EVERYTHING THAT HAPPENED HERE.

[00:02:55]THERE WAS A THIRD-PARTY COMPANY WHOSE SOFTWARE THE AI MODELS FOUND VULNERABILITY, AND IN ORDER TO GET TAXES TO THE INTERNET, OPENAI DID WHAT U.S. WAS TO DO, LET THAT VENDOR NO SO THEY CAN PASS THEIR OWN SOFTWARE.

[00:03:11]OPENAI SEVERAL MONTHS BACK, SIMILAR TO WHAT ANTHROPIC HAS DONE WITH ITS MOST CAPABLE CYBERSECURITY MODELS, THEY HAVE A TRUSTED ACCESS PROGRAM THAT GIVES CERTAIN VENDORS AND RESEARCHERS ACCESS TO THE LAST RESTRICTIVE --LESS RESTRICTIVE SUBSEQUENT MODELS, AND THEY BROUGHT HUGGING FACE INTO THIS PROGRAM SO HUGGING FACE CAN BE MORE AWARE OF WHAT IS HAPPENING WITH THE MODELS. ED: I RAN INTO YOU ON MY WAY OUT YESTERDAY EVENING AND I THINK THE KIND OF MOMENT WAS WHAT IS HAPPENING? IT IS HARD TO UNDERSTAND IN THE MOMENT HOW SEVERE SOMETHING IS, WHAT HAPPENED.

[00:03:45]BUT DO YOU HAVE A SENSE OVERNIGHT HOW SERIOUSLY THE COMPANIES ARE TREATING THIS, WHAT THE SENTIMENT OF INDUSTRY IS TOWARDS WHAT THIS REPRESENTS? IT IS A WORRYING TO VELMA TO A LOT OF PEOPLE IN THE WORLD OF AI.

[00:03:58]--WORRYING DEVELOPMENT TO A LOT OF PEOPLE IN THE WORLD OF AI.

[00:04:00]RACHEL: I GUESS I THINK OF IT TWO WAYS.

[00:04:04]ONE, THIS IS NOT GOOD IF YOU HAVE AI MODELS BREACHING THE CONTAINMENT YOU SET FOR THEM AND GOING OFF AND DOING THINGS AND HACKING, ACCIDENTALLY HACKING INTO ANOTHER COMPANY'S SERVERS. I THINK WE CAN AGREE THAT IS PROBLEMATIC PUT ON THE OTHER HAND, THE MODEL DID, I WOULD ARGUE, ESSENTIALLY WHAT IT WAS TASKED WITH DOING, TOLD TO SOLVE A SERIES OF PROBLEMS RELATED TO AN EVALUATION PROCESS, AND THE MODEL TOOK THESE STEPS, WHICH IS WHAT IS IN THE STEPS THE RESEARCHERS WERE EXPECTING IT TO TAKE OR MIGHT HAVE WANTED IT TO TAKE. ED: I WILL GET INTO THE DETAIL OF WHY THE MODEL TOOK THOSE STEPS.

[00:04:44]RACHEL METZ, THANK YOU VERY MUCH. LET'S STAY WITH THE OPENAI STORY. JOINING US IS THE HACKER ONE CEO WHO SAYS THE LATEST INCIDENT ISN'T A SCANDAL, BUT AN EXAMPLE OF RESPONSIBLE BEHAVIOR, AS THE COMPANY STRESS TESTED CAPABLE MODELS. OF COURSE, THE LEADING CYBERSECURITY TESTING FROM THE PROBES AI MODELS AND SOFTWARE FOR REAL-WORLD VULNERABILITIES. THANK YOU FOR YOUR TIME AND WELCOME BACK TO THE SHOW. LET'S START WITH THE REACTION TO WHAT HAPPENED. YOU BELIEVE THAT HOW OPENAI AND HUGGING FACE AND HANDLED THIS IS COMPLETELY APPROPRIATE.

[00:05:21]>> WHAT WE ARE SEEING IS AN EXAMPLE OF A FRONTIER LAB THAT IS STRESS-TESTING IS MOST CAPABLE MODEL.

[00:05:26]WE WANT TO SEE THE FRONTIER LAB'S DOING THIS KIND OF SAFETY TESTING. WE ALSO WANT TO MAKE SURE THAT WHEN SOMETHING GOES WRONG THEY COME FORWARD QUICKLY AND DISCLOSE THAT, AND THAT IS WHAT HAPPENED HERE. ED: THEY ARE SAYING THAT THE INVESTIGATION IS ONGOING.

[00:05:45]A LOT OF PEOPLE PHONED ME OVERNIGHT AND SAID THIS IS A BIG MOMENT FOR AI. I THINK THE WAY THAT THE CEO OF HUGGING FACE AND SAM ALTMAN, THE CEO OF OPENAI, HAVE FRAMED IT IS THIS IS DAY ONE OF OUR EXPLORATION OF AI AND CYBER.

[00:06:02]WHAT DO YOU WANT TO SEE HAPPEN AS THE INVESTIGATION PROCEEDS AND WHAT DETERMINATIONS YOU THINK NEED TO BE MADE? KARA: WELL, I THINK AS THIS INVESTIGATION PROCEEDS, WE WANT TO MAKE SURE THAT WE ARE CONTINUING TO TEST THE SAFETY AND ALIGNMENT OF THESE CYBER CAPABLE MODELS.

[00:06:19]I WOULD FRAME THIS AS THE NEXT TURN OF THE CRANK, WHERE A MODEL NOT ONLY BROKE OUT OF ITS SANDBOXED HERE, BUT THEN IT WENT AND ACTIVELY EXPLOITED AND BROKE INTO A THIRD PARTY IN THIS -- IN THIS CASE, HUGGING FACE.

[00:06:36]THAT IS THE NEW PART IN THE STORY, THE BREAKING INTO A THIRD-PARTY. WHAT WE CAN TAKE AWAY FROM THIS INCIDENT IS IT WAS A CONTROLLED TEST. BOTH PARTIES COLLABORATED VERY QUICKLY TO COME FORWARD AND DISCLOSE IT.

[00:06:50]BOTH ARE TAKING A NUMBER OF STEPS TO ADDRESS IT.

[00:06:54]THERE IS ALSO SOME LESSONS IN HERE FOR SECURITY LEADERS AND DEFENDERS, WHICH IS THE TIME IS NOW TO REALLY RITUAL ENVIRONMENTS TO MAKE SURE THE DISCOVERY-TO-MEDIATION GAP IS CLOSED, BECAUSE ALL OF THE EXPLOITS USED IN THIS MODEL'S BEHAVIOR, THOSE WERE ISSUES THAT ARE SITTING IN SOMEONE'S BACKLOG THAT NEED TO BE ADDRESSED, FOUND, AND FIXED. ED: KARA, I HAVE BOTH A TECHNICAL AND ACADEMIC QUESTION FOR YOU FROM OUR AUDIENCE. OPENAI RELAXED THE -- LET'S CALL IT THE ATTACKING MODEL'S GUARDRAILS.

[00:07:32]THE WAY THEY DESCRIBED IT, REDUCED SEVERAL REFUSALS FOR THE EVALUATION PROCESS. IN RESPONSE, HUGGING FACE TRIED TO USE AN OPEN-SOURCE MODEL IN DEFENSE.

[00:07:41]BUT WHAT IT SAID IS THAT THAT OPEN MODEL ALSO HAD GUARDRAILSS IN PLACE THAT LIMITED ITS ABILITIES TO DEFEND.

[00:07:49]COULD YOU UNPACK THAT A LITTLE? KARA: YEAH, SO THE FIRST MODEL THAT HUGGING FACE TRIED TO USE, THE FIRST MODELS THEY TRIED TO USE IN ORDER TO ASSESS THE ATTACK, THERE WERE 17,000 ACTIONS THAT OPENAI'S MODEL TOOK OVER THE WEEKEND AS PART OF THE CYBERATTACK AGAINST HUGGING FACE. IN ORDER TO ANALYZE THAT, HUGGING FACE ATTEMPTED TO USE ANOTHER MODEL, AND THAT MODELS GUARDRAILS WERE TRIPPED, AND HUGGING FACE WAS UNABLE TO PROCEED WITH THE ANALYSIS. WHAT THEY ENDED UP DOING WAS USED AN OPEN WEIGHTS MODEL THEY HOSTED IN THEIR OWN INFRASTRUCTURE TO COMPLETE THE ANALYSIS.

[00:08:34]ON THE ONE HAND WE HAD A MODEL THAT WAS BREAKING OUT OF ITS GUARDRAILS AND SHOWING NOT ENOUGH ALIGNMENT.

[00:08:42]IN ANOTHER ONE WE HAD A MODEL THAT WAS USING ITS GUARDRAILS TO PREVENT THE DEFENDERS FROM EFFECTIVELY DOING INCIDENT RESPONSE. SO IT IS A VERY INTERESTING CASE STUDY OF BOTH SIDES OF THIS. ED: THIS WAS TO AMERICAN COMPANIES, AN AMERICAN FRONTIER LAB WITH AMERICAN MODELS. A LOT OF PEOPLE ON SOCIAL MEDIA ARE POSING THE QUESTION, WHAT IF THIS WERE AN ADVERSARY, A RANSOMWARE OPERATOR, BUT THE COMPANIES ON THE DEFENSE WERE STUNTED -- HAD STUNTED DEFENSIVE MODELS.

[00:09:18]IN OTHER WORDS, THE GUARDRAILS THAT YOU EXPLAINED TO US AND HUGGING FACE'S CASE. KARA: YEAH, I THINK IN THIS PARTICULAR INCIDENT, THE TOOL MATTERS LESS THAN THE PRINCIPAL. HUGGING FACE SHARED THEIR CONCLUSION, WHICH IS SPOT ON. DEFENDERS IN THE CASE OF INCIDENTS LIKE THIS NEED TO HAVE CAPABLE MODELS THEY CAN RUN IN THEIR OWN WILL ALSO, SO THE SECURITY WORK THEY NEED -- RUN IN THEIR OWN WALLS. SO THE SECURITY WORK THEY NEED TO DO ISN'T GOING TO BE BLOCKED AND THE DATA, WHICH IS VERY SENSITIVE DATA AROUND AN ATTACK, DOESN'T LEAVE THEIR PREMISES. ED: KARA SPRAGUE OF HACKERONE, ON THE ROAD TRAVELING RIGHT NOW, JOINED THE SHOW ON SHORT NOTICE AND STAYED UP LATE FOR US. I REALLY APPRECIATE THAT.

[00:10:06]OPENAI IS ADDING MORE WALL STREET EXPERIENCE TO ITS BOARD AS IT PREPARES FOR A POTENTIAL PUBLIC LISTING.

[00:10:12]THE CHATGPT MAKER HAS APPOINTED THE BANK OF NEW YORK MELLON CEO AND NUBANK CEO TO THE PROFIT AND NONPROFIT BOARDS, LAYING THE GROUNDWORK FOR AN IPO THAT BLOOMBERG HAS REPORTED COULD HAPPEN AS SOON AS 2027. COMING UP, WE WILL LOOK AT THE BIG NEWS ACROSS PRIVATE MARKETS, EQUITIES, AND AI.

[00:10:36]SARA ARAGHI BACK ON THE SHOW, JOINS US NEXT.

[00:10:38]THIS IS "BLOOMBERG TECH." ♪ ED: A.M.D. IS MAKING A MAJOR A.I. BET.

[00:10:54]THE CHIPMAKER SAYS IT WILL INVEST UP TO $5 BILLION IN A.I.

[00:10:57]START-UP ANTHROPIC, WHICH PLANS TO DEPLOY UP TO TWO GIGAWATTS OF A.M.D.’S NEXT GENERATION A.I. CHIPS IN THE FORM OF RACK SCALE SYSTEMS. THE FIRST GIGAWATT DEPLOYMENT EXPECTED TO BEGIN IN 2027. A.M.D. WILL USE ANTHROPIC’S CLAUDE A.I.

[00:11:14]ACROSS ITS ENGINEERING TEAMS AND TO IMPROVE ITS A.I. CHIPS.

[00:11:19]SO FAR THE DEAL HIGHLIGHTS HOW A.I.

[00:11:21]COMPETITION LOOKS ABOUT LOCKING IN CUSTOMERS, BUILDING COMPLETE A.I. ECOSYSTEMS, NOT JUST SELLING CHIPS. FOR ANTHROPIC, MORE ACCESS TO SUPPLY, MORE OPTIONS FOR COMPUTE. A.M.D. OPENED LOWER.

[00:11:31]THE STORY HAS BEEN OUT THERE FOR A FEW HOURS, BUT IT’S NOW REBOUNDED WITH THE REST OF THE CHIP SECTOR UP 2.3%.

[00:11:41]LET’S STICK WITH ANTHROPIC. TALK A BIT ABOUT OPENAI AND LOOK AHEAD TO A MONSTER TECH EARNINGS SEASON IS, JOINED BY SARA ARAGHI, SENIOR VICE PRESIDENT, FRANKLIN TEMPLETON AND A PARTNER WITH FRANKLIN VENTURE AND AN INVESTOR ALONG THE WAY WITH ANTHROPIC. WHAT DOES THAT STORY SIGNAL TO YOU? SARA: FIRST OF ALL, THANK YOU FOR HAVING ME HERE TODAY. SO LOOK, IT’S A LITTLE BIT MORE OF THE SAME HERE. WE HAVE HEARD -- WE HAVE SEEN ANTHROPIC DO DEALS WITH BROADCOM, GOOGLE.

[00:12:09]THEY NEED MORE COMPUTE. SO THIS IS JUST MORE OF THE SAME HERE. IT SHOWS THAT A.M.D. IS ALSO A KEY PLAYER IN THIS ECOSYSTEM AND I THINK PART OF THIS ANNOUNCEMENT IS AHEAD OF THEIR ADVANCING A.I. EVENT TOMORROW.

[00:12:23]THEY WANTED TO DRUM UP EXCITEMENT ABOUT THAT.

[00:12:25]SO I THINK IT’S A BIG DEAL FOR THEM. ED: I APPRECIATE THE TIMING OF IT. I REMEMBER WHEN LISA SAT WHERE YOU ARE SITTING WITH GREG AND THEY DID A SIMILAR COMPUTE DEAL WITH OPENAI. THE QUITE REASONABLE QUESTION AT THE TIME IS WHY DO YOU NEED TO MAKE EQUITY INVESTMENTS FOR THIS TO HAPPEN? RIGHT? IF YOUR COMPUTE IS COMPETITIVE, ANTHROPIC WILL JUST ACQUIRE IT FROM YOU. SARA: NO, I KNOW.

[00:12:51]OF COURSE, WE WILL DRUM UP THE CIRCULAR FINANCING TOPIC HERE.

[00:12:54]LOOK, THAT’S A PART OF THE ECOSYSTEM HERE NOW, AND THERE’S A NEED FOR THESE INVESTMENTS. AND SO HAVING A STAKE IN THIS, I THINK, MAKES SENSE FOR THESE COMPANIES, AND YOU ARE SEEING EVERY SINGLE PLAYER DO THAT, AND SO A.M.D.

[00:13:08]WANTED TO BE A PART OF THIS. I DON’T -- I THINK THIS ECOSYSTEM IS THRIVING. WE ARE SEEING ALL THE SUCCESS HERE AND STILL IN THE EARLY INGS -- INNINGS SO IT MAKES SENSE. ED: SARA, CAN I ASK YOU ABOUT THE BROADER EEK SYSTEM FOR YOU? FOR YOU, THEY’RE IMPORTANT BUT THE REST OF THE VENTURES PORTFOLIO WHAT ABOUT THE REST OF THE COMPANIES THAT YOU ARE SUPPORTING IN PRIVATE MARKETS ACCESS TO COMPUTE? LIKE IS THAT A WAR ROY -- WORRY RIGHT NOW? IS THAT SOMETHING YOU ARE FEELING CONFIDENT ABOUT? SARA: LOOK, I THINK ONE, ANTHROPIC AND OPENAI HAVE ALL THIS ACCESS TO COMPUTE.

[00:13:42]THEY’RE GETTING THIS AND THEY’RE STILL A NEED FOR SO MUCH MORE OF IT. THERE IS SO MUCH DEMAND.

[00:13:47]WE ARE JUST SCRATCHING THE SURFACE ON DEMAND FOR A.I.

[00:13:51]SO I THINK THEY’RE GETTING THAT ACCESS.

[00:13:56]YOU ARE SEEING THE VARIETY OF MAG SEVEN COMPANIES GETTING THAT ACCESS TO COMPUTE, BUT YOU ARE ALSO SEEING PROVIDERS OF THAT MONETIZE IT. YOU SAW ANNOUNCEMENTS FROM META, SPACEX PROVIDING SOME OF THAT COMPUTE.

[00:14:09]SO WE NOT THAT CONCERNED IN TERMS OF, ONE, THE DEMAND ON THAT SIDE AND SUPPLY CONTINUES TO COME.

[00:14:15]OF COURSE, THERE’S A LOT OF SUPPLY CHAIN BOTTLENECKS AND COSTS ARE GOING UP, BUT OVER TIME THAT SHOULD ALSO CORRECT ITSELF. ED: WE COVERED IN DETAIL AN EVENT OVERNIGHT OF THE OPENAI MISTAKE AND VULNERABILITY.

[00:14:32]IT’S HARD TO -- SARA: YOU DIDN’T SLEEP. ED: IT’S HARD TO PUT IT INTO ONE SENTENCE BUT YOU ARE AWARE OF THE REPORTING AND DETAILS. WHAT DO YOU THINK ABOUT THAT?

[00:14:40]SARA: LOOK, WE GET THIS NEWS -- WE WAKE UP AND THERE IS THIS NEWS AND IT’S A LITTLE BIT MORE OF THE -- IN MY OPINION, IT’S MORE OF JUST THE FEARS THAT WERE DRUMMING UP AROUND A.I. WE HAD JENSEN HUANG IN OUR OFFICE A COUPLE OF WEEKS AGO, AND HE TALKED ABOUT HOW WE ARE DOING A BAD JOB OF SOME OF THIS FEAR MONGERING AROUND OOH, A.I.

[00:15:01]IS SCARY. ED: IS IT OVERSTATED? SARA: IT’S OVERSTATED JUST JOB LOSSES RELATED TO A.I.

[00:15:08]AND WHAT KIND OF IMPACT THAT COULD HAVE AND JUST MAYBE SOME OF THE IMPACT AROUND HOW AIVMENT -- A.I. IS SCARY.

[00:15:16]I THINK ULTIMATELY WE KNOW WE WILL GET PRODUCTIVITY GAINS AROUND THIS AND AS LONG AS WE CREATE SOME OF THE GUARDRAILS AROUND THIS, I THINK WE SHOULD BE USING A.I.

[00:15:26]WE SHOULDN’T BE CREATING AN ENVIRONMENT WHERE PEOPLE ARE SQUARED ABOUT -- SCARED ABOUT A.I.

[00:15:31]THAT’S CREATING ISSUES AROUND PEOPLE NOT WANTING DATA CENTERS IN THEIR NEIGHBORHOODS. IT’S MAKING THIS MORE OF A SCARY NARRATIVE AROUND A.I. AND I THINK WE NEED IT START STAYING AWAY FROM THAT. ED: I WILL SET THE BLOOMBERG TECH AUDIENCE UP FOR WHAT IS A BIG WEDNESDAY EVENING.

[00:15:46]AFTER THE MARKET CLOSE, ALPHABET PARENT OF GOOGLE REPORTS EARNINGS. TESLA REPORTS EARNINGS. I.B.M.

[00:15:54]TECHNICALLY REPORTS EARNINGS BUT HAS PRERELEASED.

[00:15:56]WHAT DO ALL THREE OF THOUGH COMPANIES HAVE IN COMMON?

[00:15:59]SPENDING. A.I. SPENDING. THE RELATIONSHIP WITH SPENDING IS DIFFERENT IN EACH CASE. MAYBE INVESTORS ARE LIKE OK, ALPHABET WILL SPEND A LOT OF MONEY. WHAT IS RETURN HERE?

[00:16:08]IN TESLA’S CASE, EVERYTHING I READ IS THEY WANT TO SEE ELON MUSK SPEND EVEN MORE MONEY, LIKE GET GOING ON YOUR A.I.

[00:16:15]AMBITIONS FOR THE COMPANY. I.B.M.

[00:16:18]MAYBE WITHOUT TELLING THE WHOLE STORY MYSELF, I.B.M.

[00:16:21]IS LIKE IF YOU ARE SPENDING ON A.I.

[00:16:24]WHAT ARE YOU NOT SPENDING ON? IT’S MAIN FRAMES.

[00:16:25]EARNINGS ARE IMPORTANT. ARE THEY IMPORTANT?

[00:16:29]HOW WILL YOU GO INTO THIS EVENING? SARA: LOOK, IT’S DEFINITELY IMPORTANT. ALPHABET WILL SET THE TONE ON HYPERSCALER CAPEX TODAY. WE HAVE SEEN ANTHROPIC ACCELERATED EARNINGS IN Q1 AND Q2.

[00:16:44]HOW IS THAT GOING TO RESULT IN POTENTIALLY AN ACCELERATION IN HYPERSCALER REVENUE? SO WE WANT TO SEE SOME OF THAT CLOUD REVENUE ACCELERATES. ED: SORRY TO INTERRUPT, BUT THERE IS A DIFFERENCE BETWEEN THE CAPITAL EXPENDITURE DEPLOYER AND RECIPIENT. SARA: THE RECIPIENT IS SEEING THE RETURNS. THAT RECIPIENT IS SEEING IT IN CLOUD REVENUES. WE TALK ABOUT THE R.O.I. OF A.I.

[00:17:06]THE CLOUD COMPANIES ARE ALREADY SEEING THAT RIGHT AWAY.

[00:17:09]SO YOU TALKED ABOUT IT THIS MORNING.

[00:17:12]OVER 60% CLOUD REVENUE GROWTH LAST QUARTER FOR ALPHABET.

[00:17:14]WE WILL WANT TO LOOK FOR SOME OF THAT.

[00:17:17]YOU POINT OUT -- OF COURSE IT WILL BE IMPORTANT TO SEE SOME OF THE R.O.I. RELATED TO A.I. IN SOME OF THEIR CORE BUSINESSES. HOW IS IT IMPACTING ADVERTISING?

[00:17:27]OF COURSE IT’S HARD TO DISSIPATE WHETHER IT’S COMING FROM THE A.I. PIECE OR JUST THEIR REGULAR SEARCH BUSINESS. BUT OF COURSE THAT’S GOING TO BE SOMETHING WE ARE WATCHING FOR AND YOUR QUESTION ON TESLA, LOOK, TESLA IS VERY MUCH MUDDIED WITH SPACEX RIGHT NOW.

[00:17:42]SO WHERE IS THE CAPEX BEING SPENT FOR TESLA?

[00:17:47]WE JUST SAW THE CYBERCAB ANNOUNCEMENT LAST WEEK WITH STARLINK, FROM SPACEX. I AM NOT SURE WE ARE REALLY GETTING THE FULL PICTURE. YOU POINTED OUT THIS MORNING, CONTRACT E.O. OF -- C.E.O. OF TWO COMPANIES WILL BE ON TALKING ABOUT TWO COMPANIES. ED: LIKE JACK DORSEY IS A SIMILAR EXAMPLE. SARA: A LITTLE BIT OF THAT. ED: YOU TALKED TO ME ABOUT SPACEX IN THE PAST. YOUR CURRENT THESIS ON THE SPACEX-TESLA LINKUP? SARA: I THINK IT WILL TAKE SOME TIME. WE ARE WORKING THROUGH THE CAP TABLE RIGHT NOW. THE SPACEX CAP TABLE IS STILL -- WE STILL NEED LIQUIDITY EVENTS. THAT WILL TAKE TIME.

[00:18:24]THE REGULATORY ENVIRONMENT IS MORE FAVORABLE TO SOMETHING LIKE THAT BUT I THINK THAT WILL TAKE TIME.

[00:18:28]REGARDING TESLA SPENDING ON CAPEX, I THINK WE ARE GOING TO NEED PROOF POINTS ON PRO BOT IKS -- ROBOTICS TODAY, HEAR SOME ON A.V.’S AND OVER TIME WE WILL HEAR MORE ABOUT THAT LINKUP. ED: SENIOR VICE PRESIDENT, PORTFOLIO MANAGER LEADING VENTURE FUND, SARA ARAGHI.

[00:18:47]THANK YOU SO MUCH. COMING UP, OPENAI IS ALSO PLANNING A MASSIVE NEW DATA CENTER IN GEORGIA SPENDING TENS OF BILLIONS OF DOLLARS TO KEEP PACE WITH SURGING DEMAND FOR A.I. WE HAVE THAT STORY NEXT. THIS IS "BLOOMBERG TECH."

[00:19:07]YAHAIRA: TIME FOR TALKING TECH. SHARES IN HONG KONG FELL THE MOST IN OVER A YEAR TODAY SPARKING A SELL-OFF IN OTHER CHINESE GAMING STOCKS. INVESTORS CITED WORRIES THAT THE COMPANY’S MOBILE GAMING REVENUE COULD HAVE DECLINED IN THE JUNE QUARTER. THIS AS THE GLOBAL GAINS INDUSTRY IS ALREADY UNDER PRESSURE.

[00:19:28]PLUS, SAMSUNG IS IN TALKS TO JOIN THE FUNDING ROUND OF MISTRAL A.I.

[00:19:35]SOUTH KOREAN COMPANY IS IN DISCUSSIONS TO INVEST HUNDREDS OF MILLIONS IN THE FRENCH A.I. START-UP AT A VALUATION OF $22.8 BILLION. AND HERE IN NEW YORK, UBER AND LYFT HAVE WON A TEMPORARY LEGAL VICTORY.

[00:19:48]A FEDERAL JUDGE HAS PAUSED THE CITY’S NEW LAW THAT WOULD HAVE MADE IT HARDER FOR RIDE SHARE COMPANIES TO DEACTIVATE DRIVERS.

[00:19:54]THE JUDGE SAYING THE COMPANIES ARE LIKELY TO SUCCEED IN THEIR CONSTITUTIONAL CHALLENGE. ED? ED: YAHAIRA, THANK YOU.

[00:20:06]ONE OTHER STORY WE WATCHING, SUPERMICROSURGING OFFERING SIGNS THAT A.I. INFRASTRUCTURE DEMAND REMAINS STRONG. BLOOMBERG’S DINA BASK COVERS A.I. FOR US. A HA -- WHAT IS THE STORY?

[00:20:20]>> THEIR BACKLOG INDICATES THAT SUPERMICRO14 IS TAKING A GOOD AMOUNT OF IT AS THEY COMPETE WITH OTHER FOLKS LIKE DELL.

[00:20:28]GIVEN THEY HAVE HAD A BUNCH OF ISSUES AROUND INVESTIGATIONS OF ITS EMPLOYEES FOR WHETHER THEY’RE SENDING THINGS TO CHINA IN WAYS THAT MIGHT VIOLATE RULES, THERE HAS BEEN A PERSISTENT CONCERN ABOUT IS THAT GOING TO SCARE OFF CUSTOMERS OR SOMETHING LIKE THAT?

[00:20:44]BASED ON THE NUMBERS THAT THEY PREANNOUNCED YES, DOESN’T SEEM LIKE IT. ED: TODAY’S BIG NUMBER MORE THAN $30 BILLION. THAT’S HOW MUCH OPENAI IS PLANNING TO SPEND ON A BUILDOUT, THIS MASSIVE NEW DATA CENTER IN SAVANNAH, GEORGIA, A STORY YOU REPORTED THIS MORNING.

[00:20:58]LOTS OF READERSHIP HERE. WHAT DO WE NEED TO KNOW?

[00:21:02]WHERE DOES THIS FIT IN WITH THE OPENAI INFRASTRUCTURE PLAN?

[00:21:06]>> PART OF OPENAI’S INFRASTRUCTURE PLAN IS GETTING MORE AS QUICKLY AS THEY CAN. THERE’S TWO INTERESTING THINGS THAT WE SEE IN THE WAY THAT THEY’RE ANNOUNCING AND DOING THIS DATA CENTER. ONE IS THAT IN THIS CASE THEY HAVE DESIGNED AND ARE DESIGNING THE DATA CENTER AND SECURED THE POWER CONTRACT THEMSELVES. THIS IS A BIT OF A CHANGE FROM WHAT WE SAW EARLIER ON IN THEIR INFRASTRUCTURE DEALS IN THE EARLIER STARGATE THINGS WHERE THEY’RE RELYING MORE ON PARTNERS AND THEN MOVING INTO COMPUTE THAT WAS ALREADY KIND OF DEVELOPED FOR THEM. HERE THEY’RE DOING THAT DESIGN WORK AND I SPOKE TO THEIR HEAD OF COMPUTE YESTERDAY.

[00:21:44]HE SAID LOOK, WE HAVE DONE A COUPLE OF THESE NOW.

[00:21:46]WE KNOW WHAT WE WANT. WE HAVE A SPECIFIC DESIGN THAT WORKS. THE OTHER INTERESTING THING HE TOLD ME IS THAT OVER TIME THEY’RE HOPING TO HAVE A DESIGN THAT THEY CAN STANDARDIZE AND OPEN SOURCE AND SHARE WITH OTHER PEOPLE. HE MENTIONED KIND OF SIMILAR TO THE OPEN COMPUTE PROJECT THAT META DEVELOPED IN 2011, HE THINKS IT’S BETTER FOR OPENAI AND BETTER FOR THE INDUSTRY IF THERE IS STANDARDIZATION AROUND WHAT PEOPLE NEED FOR THESE A.I.

[00:22:09]DATA CENTERS. THE OTHER THING THAT WE ARE SEEING -- ED: SORRY, DINA. WE ARE HALFWAY THROUGH THE SHOW.

[00:22:21]IT’S A MUST READ ON BLOOMBERG ON TERMINAL. LEADING A.I.

[00:22:23]INFRASTRUCTURE COVERAGE. APPLE IS PLANNING NEW VERSIONS OF EVERY SINGLE MAC THAT IT SELLS INCLUDING UPDATES TO ITS DESKTOP COMPUTERS AND LAPTOPS. YES, ANOTHER BLOOMBERG MARK GERMEN SPECIAL COMING RIGHT UP. IT’S HALFTIME FROM SAN FRANCISCO. THIS IS "BLOOMBERG TECH."

[00:22:53]ED: WELCOME BACK TO "BLOOMBERG TECH."

[00:22:59]TREADING WATER ON THE NASDAQ 100, SYMBOLIC AHEAD TO ALPHABET'S EARNINGS AFTER THE BELL.

[00:23:04]SINCE WE'VE COME ON AIR, THERE HAS BEEN A CHANGE IN FORTUNES OF SEMICONDUCTORS PRODUCING A REBOUND ON THE SOCKS, IN LINE WITH AMD WHO CONTINUE TO GAIN, HAVING OPEN LOWER BUT THAT 5 MILLION DOLLARS EQUITY INVESTMENT WITH ANTHROPIC AND THE MULTIYEAR DEAL BRINGING LOTS OF COMPUTE.

[00:23:21]ANOTHER STORY BREAKING, APPLE READYING A MAJOR OVERHAUL TO ITS MAC LINEUP LATER THIS YEAR. THE COMPANY WILL BE INTRODUCING NEW COMPUTERS, INCLUDING A REFRESHED IMAC PRO, NEW IMAC WITH A TOUCHSCREEN. ACCORDING TO SOURCES.

[00:23:40]AND BLOOMBERG CONSUMER TECH AND APPLE MANAGING EDITOR MARK GURMAN BROKE THE STORY. IN THE AI AGE, WE HAVE BEEN TO THE CYCLE OF THE AI PC. THAT APPLE SIDE OF THE STORY FASCINATES ME. YOU HAVE A LOT OF DETAIL.

[00:23:55]WHAT ARE THE MAIN HIGHLIGHTS? MARK: THERE ARE SO MUCH COMING FROM APPLE OVER THE NEXT THREE AND SIX MONTHS, NINE MONTHS, NEXT TWO YEARS ARE GOING TO BE A BLOCKBUSTER TIME OF NEW PRODUCTS.

[00:24:10]WE'VE ALREADY DETAILED THE IPAD ROOM -- ROADMAP, NOW WE ARE TALKING ABOUT THE MAC ROADMAP. THERE ARE A DOZEN NEW ONES IN DEVELOPMENT.

[00:24:23]YOU HAVE THE NEW IMAC MINIS, STUDIOS, A NEO-COMING NEXT YEAR, BUT A LOT OF THE FOCUS IS GOING TO BE ON THE HIGH-END MACBOOK LIKE THE PRO. THERE ARE A FEW PROS AND DEVELOPMENT. THERE IS THE FIRST M SIX MODEL, GREAT FOR AI COMING OUT, SEPTEMBER, OCTOBER TIME FRAME.

[00:24:41]AND THEN BETWEEN THE END OF THE YEAR AND EARLY NEXT YEAR, YOU ARE GOING TO PROBABLY SEE THE BIGGEST OVERHAUL TO THE MACBOOK PRO IN THAT COMPUTER' 20 YEAR HISTORY.

[00:24:51]FOR THE FIRST TIME, APPLE WILL INTRODUCE A TOUCHSCREEN.

[00:24:56]IT WILL HAVE THE DYNAMIC ISLAND. IT WILL BE A HOT MACHINE, VERY POPULAR. THE FIRST VERSIONS WILL USE THE M FIVE PRO AND AND FIVE MAX CHIPS WHICH ARE GOOD FOR AI.

[00:25:09]THERE WILL BE A SUBSEQUENT UPDATE ONE YEAR AFTER THE FIRST COME OUT WITH M SEVEN PRO AND M SEVEN MAC TIPS WHICH ARE BUILT ENTIRELY AROUND ARTIFICIAL INTELLIGENCE ON DEVICE MODELS OR AGAINST PROCESSING OF BOTH FIRST PARTY AND THIRD-PARTY AI APPLICATION. IF YOU ARE A COMPUTER USER, A MACUSER OR APPLE INVESTOR INTERESTED IN THEIR AI STRATEGY, THERE IS A TON TO LIKE. ROMAINE: READ MARK STORY ON THE TERMINAL. THERE IS A LOT HAPPENING IN CONSUMER TECHNOLOGY. SAMSUNG HAS ITS BIG HARDWARE EVENT. LET'S START ON THE SMARTPHONE SIDE OF WHAT SAMSUNG IS ANNOUNCING.

[00:25:46]WHERE IS THEIR FOCUS? MARK: THREE NEW PHONES.

[00:25:52]THERE IS THE NEW FLIP PHONE, THE NEW ULTRA PHONE, THERE HIGH-END FOLDABLE PHONE. I WOULD LIKE TO TALK ABOUT THEIR NEW MID TIER FOLDABLE THAT REPLACES THE LARGER SIZED A PAD FOR A FEW YEARS. IT IS THE ONE ON SCREEN RIGHT NOW. IT IS INCREDIBLE, IT IS AMAZING.

[00:26:10]IT WILL SELL SUPER WELL. IT IS THE SAME FORM FACTOR APPLE RELEASED THIS FALL. IT IS AWESOME FOR GAMING.

[00:26:20]PRETTY GOOD FOR MULTITASKING. WHERE IT SHINES HIS E-BOOK READING AND WATCHING VIDEOS ON YOUTUBE AND WHAT HAVE YOU.

[00:26:26]IT IS A LITTLE SHORTER THAN YOUR TYPICAL PHONE BUT WIDER.

[00:26:30]IT IS A REALLY COOL FORMFACTOR. YOU HAVE TO GET YOUR HANDS ON IT TO UNDERSTAND IT. I'M PRETTY PUMPED FOR THE APPLE VERSION BUT THE SAMSUNG VERSION IS GOING TO DO GREAT, TOO.

[00:26:41]ROMAINE: SMART GLASSES. SAMSUNG HAS HAD A LOT TO SAY ABOUT SMART GLASSES. WHERE ARE THEY ON THE PRODUCT SIDE AND WHY ARE THEY WORRIED ABOUT PRIVACY WHEN IT COMES TO SMART GLASSES? MARK: THEY ARE LAUNCHING THEIR GLASSES IN CONCERT WITH GOOGLE AND WARBY PARKER LATER THIS YEAR. THEY HAVE ABOUT NINE HOURS OF BATTERY LIFE. STANDARD FARE. ALL THE SMART GLASSES WITHOUT DISPLAYS THAT YOU ARE SEEING FROM GOOGLE, META, APPLE NEXT YEAR. THEY ARE PRETTY MUCH THE SAME PRODUCT. CAMERAS, AUDIO, TECHNOLOGY.

[00:27:20]BUT META, AS THE LAST AS THE CATEGORY IS GROWING, IS AS FAST AS PEOPLE ARE BECOMING CONCERNED WITH PRIVACY.

[00:27:26]ROYAL CARIBBEAN HAS BANNED THEM FROM CASINOS, BATHROOMS, AND CHILDREN PLAY AREAS ON THE SHIPS.

[00:27:32]THERE HAVE BEEN COURTHOUSES IN WISCONSIN, NEW YORK AND PENNSYLVANIA THAT HAVE BANNED THESE THINGS.

[00:27:36]THERE IS CONCERN ABOUT THE PRIVACY IMPLICATIONS AND THAT IS BECAUSE OF THE META PRIVACY BAGGAGE THEY HAD FOR YEARS NOW.

[00:27:45]SO SAMSUNG, META WITH ITS OWN GLASSES, APPLE ARE REALLY GOING TO NEED TO FIGURE OUT THE PRIVACY STORY HERE TO GET PEOPLE NOT ONLY COMFORTABLE WEARING THEM BUT TO GET AROUND PEOPLE WHO ARE WEARING THEM TO BE SOMEWHAT COMFORTABLE.

[00:27:57]ROMAINE: WHEN I WOKE UP THIS MORNING -- ED: WHEN I WOKE UP THIS MORNING, NONE OF THE NEWS WAS OUT AND THE BIGGEST STORY WAS WHAT YOU HAD WRITTEN YESTERDAY ABOUT UPGRADE DEVICE PROGRAMS AND APPLE'S RELATIONSHIP WITH KLARNA. WHAT DO WE NEED TO KNOW? MARK: THIS IS A BLOCKBUSTER NEW INITIATIVE FROM APPLE CALLED APPLE UPGRADE. THEY WILL ANNOUNCE IT NEXT TUESDAY. THEY WILL ROLL IT OUT IN THEIR ONLINE STORES AND PHYSICAL RETAIL STORES.

[00:28:27]THIS IS A HARDWARE SUBSCRIPTION PROGRAM.

[00:28:31]THIS IS SOMETHING WALL STREET HAS WANTED A WHILE.

[00:28:34]AS APPLE PRODUCTS BECOME MORE EXPENSIVE, AS WALL STREET WOULD LIKE TO LOOK FOR WAYS TO GET PEOPLE TO UPGRADE MORE FREQUENTLY TO NEW APPLE DEVICES, A LEASING PROGRAM IS HOW APPLE IS ABLE TO DO THIS. YOU WILL BE ABLE TO LEASE AN IPHONE OR APPLE WATCH OVER 24 MONTHS OR AN IPAD OR MAC OVER 36 MONTHS, MAKE PAYMENTS MONTHLY.

[00:28:54]AT THE END OF THE LEASE, YOU CAN GIVE IT BACK OR BUY IT OUT WITH A FEE. THESE ARE GOING TO HAVE LESS COSTLY PAYMENTS COMPARED TO FINANCING AND IPHONE UPGRADE PROGRAMS THAT APPLE OFFERS TODAY, SO THIS WILL REPLACE THOSE.

[00:29:09]IT IS A GIGANTIC MOVE FOR APPLE TO TRY TO LOCK CONSUMERS AND LONG TERM, UPGRADES, AND TO GET PEOPLE TO BUY DEVICES THEY NORMALLY WOULD NOT BE ABLE TO AFFORD.

[00:29:19]NOW THAT YOU HAVE SEEN PRICE HIKES, THE IPHONE IS ABOUT TO GET A PRICE HIKE. OF COURSE, THE FOLDABLE IPHONE WE TALKED ABOUT A FEW MINUTES AGO, THAT IS GOING TO BE A PRETTY PENNY COMING IN NORTH OF $2000.

[00:29:31]GREAT TIMING FOR APPLE HERE. THEY HAVE BEEN WANTING TO DO THIS SINCE 2020 TWO. THEY ORIGINALLY WERE GOING TO DO AN IN-HOUSE VERSION THEY WERE GOING TO FINANCIALLY BACK IN CONCERT WITH GOLDMAN SACHS. NOW THAT THE GOLDMAN SACHS RELATIONSHIP HAS FALLEN APART, APPLE DECIDED THEY DON'T WANT TO DO AS MANY FINANCIAL SERVICES IN-HOUSE, THEY ARE PARTNERING WITH A NAME BRAND, KLARNA.

[00:29:52]YOU SAW THAT STOCK GO UP 11% WHEN WE PUT OUR STORY OUT YESTERDAY. ED: APPLE DEVICE LEAST PROGRAMS.

[00:30:01]BLOOMBERG IS REPORTING ON THE HIGH-END, SAMSUNG SMARTPHONES AND THEIR LATEST GENERATION, SAMSUNG SMART GLASSES, ALL FROM MARK GURMAN, WHO LEADS CONSUMER TECH COVERAGE. THANK YOU.

[00:30:12]AT&T REPORTED SECOND-QUARTER EARNINGS ARE GREATER THAN EXPECTED WITH MOBILE SUBSCRIBING GAINS.

[00:30:18]THEIR VALUATION WILL ULTIMATELY CORRECT ITSELF AS THE WILDEST COMPANY POSITIONS ITSELF TO BE INDISPENSABLE IN THE AI ERA.

[00:30:26]THAT IS WHAT THEY ARE SAYING. THE AT&T CEO JOINED BLOOMBERG SURVEILLANCE EARLIER TODAY.

[00:30:32]>> I THINK THERE HAS BEEN A STRATIFICATION OF PRICING FOR CUSTOMERS, DEPENDING ON WHAT SERVICES THEY WANT TO BUY.

[00:30:39]THERE IS A SEGMENT OF THE MARKET THAT LEADS HIGH-PERFORMANCE GIGABIT SERVICES, A VERY ROBUST WIRELESS PLANS.

[00:30:49]THAT SIDE OF THE MARKET IS WILLING TO PAY FOR THAT AND THEY PAY A PREMIUM TO THAT VALUE THEY GIVE BACK.

[00:30:56]WE HAVE PLAYED VERY, VERY WELL, GIVEN OUR ASSET BASE, BUT THERE IS A SEGMENT OF THE MARKET THAT IS MORE VALUE-ORIENTED.

[00:31:02]I WOULD SAY CHOICES HAVE COME INTO THE MARKET BECAUSE OF GOOD REGULATORY POSTURE THAT HAVE ALLOWED INVESTMENT THAT WERE NOT THERE BEFORE. THOSE CHOICES ARE PUTTING MORE VALUE ORIENTED PRODUCTS AND SERVICES AT MORE ATTRACTIVE PRICE POINTS BUT THE SERVICE IS MAYBE NOT AS ROBUST. AT AT&T, WE HAVE PLAYED REALLY WELL AT MARKET BUT NOT AS WELL DOWN ON THE VALUE SPACE. WE HAVE BEEN WORKING HARD TO GET OUR PRODUCT PORTFOLIO SO THAT IT MATCHES UP ACROSS THE ENTIRE CONTINUUM OF THE MARKET. YOU SAW THAT IN THE RESULTS THIS QUARTER BECAUSE OUR ACCOUNT ADDITIONS NEW ACCOUNTS FOR AT&T, IT HIT LIKE A THREE YEAR HIGH.

[00:31:38]THAT IS BECAUSE WE ARE DOING A BETTER JOB DOWN MARKET.

[00:31:42]THERE'S SOMETHING WRONG WITH HAVING A MORE AFFORDABLE PRODUCT THAT IS TUNED TO CERTAIN PARTS OF THE MARKET.

[00:31:50]I DON'T CONSIDER THAT A PRICE WAR, I CONSIDER THAT MARKET NEEDS. AS LONG AS YOU ARE DOING THE THINGS YOU CAN DO AT MARKET, WHICH WE HAVE DONE VERY WELL, AND WHEN YOU SEE MARGINS, THE WAY THEY ARE AT AT&T, THIS IS A RECORD FOR US. THAT IS A GOOD SIGN WE ARE GETTING THAT BALANCE CORRECT.

[00:32:06]>> OVER THE NEXT FIVE TO 10 YEARS, HOW DO YOU SEE THE BREAKDOWN OF THE MIX OF BROADBAND AND FIBER, ON ONE HAND, THE WIRELESS WHO ARE BUDGET SENSITIVE AREAS, AND THEN SATELLITE? FROM THE LIKES THAT YOU ARE SEEING AT STARLINK? JOHN: MY POINT OF VIEW IS THEY HAVE A FANTASTIC PRODUCT.

[00:32:25]THEY HAVE GREAT INNOVATION MOVING IN THAT SPACE.

[00:32:27]IT FITS PART OF THE MARKET THAT HAS NOT BEEN WELL SERVED, ESPECIALLY IN LESS DENSELY POPULATED AREAS.

[00:32:38]OUR INVESTMENT HAS LARGELY BEEN URBAN AND END POPULATED SUBURBAN. WE HAVE NOT PUSHED REALLY HARD INTO THE WORLD AND THE LESS DENSELY POPULATED AREAS.

[00:32:47]THAT TENDS TO BE MORE THE STRONGHOLD OF CABLE COMPANIES.

[00:32:49]I THINK THEY WILL DO PRETTY WELL IN THAT SPACE BRINGING UP AN ALTERNATIVE AND COMPETITION. IT WILL BE VERY HARD TO COME INTO THE MORE DENSELY POPULATED URBAN AREAS TO COMPETE WITH THAT BUNDLE I TALKED ABOUT EARLIER OF FIBER THAT IS THE BEST PRODUCT IN THE MARKET, BEST PERFORMING.

[00:33:10]IT IS THE LOWEST MARGINAL COST. OUR GREAT WIRELESS DENSITY THAT OUTSTRIPS WHAT YOU CAN DO FROM DIRECTOR DEVICE AND SATELLITE.

[00:33:19]YEARS OF INVESTMENT IN HARD-TO-REACH PLACES LIKE STADIUMS. EVERYBODY WHO WENT TO A WORLD CUP GAME KNOWS HOW IMPORTANT BEING TO CONNECT IN A STADIUM THIS TO EXPERIENCE WHAT GOES ON SOCIALLY AND IN THE ARENA SO YOU CAN SEE IF REPLAYS THAT THEY ARE NOT SHOWING THERE. WE HAVE BEEN DOING NOT FOR A LONG, LONG TIME, AND IT WILL BE HARD TO CATCH UP ON THE INFRASTRUCTURE. I THINK WE ARE GOING TO DO REALLY WELL COMPETING AND METRO AND SUBURBAN AREAS, WHICH IS WHERE INVESTMENTS HAVE BEEN. ED: THAT WAS THE AT&T CEO JOHN STANKEY. A GLIMMER OF GOOD NEWS FOR YOUNG WORKERS IN AI EXPOSED JOBS, MONTHS AFTER EMPLOYMENT DECLINE.

[00:33:59]NELA RICHARDSON OF ADP WILL TELL US WHY. THAT IS NEXT.

[00:34:00]THIS IS "BLOOMBERG TECH." ♪ AFTER FIVE STRAIGHT MONTHS OF DECLINE IN EARLY CAREER EMPLOYMENT, THERE IS SOME ENCOURAGING NEWS FOR YOUNGER WORKERS IN A.I. EXPOSED JOBS. NEW DATA SHOWS EMPLOYMENT FOR THAT GROUP EDGED SLIGHTLY HIGHER IN JUNE, OFFERING ONE OF THE FIRST SIGNS THE TREND MAY BE STABILIZING.

[00:34:26]JOINING US FOR MORE IS ONE OF THE RESEARCHERS INVOLVED IN THE PROJECT, NELA RICHARDSON.

[00:34:36]REALLY INTERESTING DATA WE HAVE BEEN TRACKING FOR A TIME.

[00:34:40]IT’S A SLIGHT CHANGE OF TRAJECTORY IN JUNE.

[00:34:43]BUT IT SIGNALS SOMETHING. WHAT IS IT? NELA: ED, THANK YOU.

[00:34:49]THANKS FOR HAVING ME ON TO TALK ABOUT THIS EXCITING NEW REPORT.

[00:34:54]THIS IS A COLLABORATION WITH STANFORD DIGITAL ECONOMY LAB AND WHAT IT IS SHOWING IS THAT EARLY CAREER IN A.I.

[00:35:01]EXPOSED FIELDS IS AFFECTED NEGATIVELY IN TERMS OF EMPLOYMENT WHEN IT COMES TO A.I. AND WE TRACK HAVE -- TRACKED THAT SINCE 2022. WHAT IS UNIQUE IN JUNE IS WE ARE FINALLY SEEING THAT STABILIZATION, AND WHAT IS IMPORTANT TO REMEMBER ABOUT THIS CANARY’S DASHBOARD, IT’S MORE THAN JUST AN EMPLOYMENT INDEX.

[00:35:25]IT’S A TRANSFORMATION INDEX. IT’S SHOWING IN REAL TIME HOW ACTUAL A.I. OCCUPATIONS AND HIGH EXPOSED A.I. CAREERS ARE BEING AFFECTED BY THESE NEW TOOLS. SO THAT’S WHY IT’S SO CRITICALLY IMPORTANT TO SEE AN UPTICK IN JUNE BECAUSE IF WE CAN MOVE A.I. IMPACT FROM AUTOMATION OF SKILLS TO AUGMENTATION OF SKILLS, ESPECIALLY WITH EARLY YEAR, THEN WE HAVE SOMETHING. WE HAVE THAT SECRET SAUCE THAT THE LABOR MARKET HAS BEEN WAITING FOR. ED: TAKEN IN AGGREGATE, THE LABOR MARKET DATA FOR JUNE SHOWS THE MARKET COOLING. BUT UNDERNEATH SOMETHING IS HAPPENING. I THINK THE WAY YOU PUT IT IS THAT IT’S QUIETLY RESHAPING UNDERNEATH THAT TOP LINE.

[00:36:13]IS THAT VERY SPECIFIC TO A.I. AS THE CATALYST FOR THAT? NELA: IT IS. THERE ARE TWO DRIVERS IN MY OPINION THAT ARE AFFECTING THE LABOR MARKET. IT’S A.I.

[00:36:22]AND IT’S AGING. THE DEM DEMOGRAPHICS OF THIS CHANGE IS ARE IMPORTANT. BACK WHERE I COME FROM WE SAY STILL WATERS RUN DEEP. THIS IS A LOW HIRE, LOW FIRE ENVIRONMENT. BUT THE DEPTH IS WHAT WE CAN SEE WITH THIS NEW DASHBOARD. IT’S HARD AS A YOUNG ENTRANT TO MOVE INTO A LABOR MARKET THAT’S NOT VERY DYNAMIC.

[00:36:49]AND SO IF YOU CAN SEE A.I. START TO PULL IN THAT YOUNG LABOR IN A DIFFERENT WAY AND AUGMENT THEIR SKILL BASE AND LEVEL THEM UP, THEN YOU HAVE A DIFFERENT KIND OF PRODUCTIVITY THAN WE HAVE EVER SEEN IN THE PAST. AND SO RIGHT NOW THE DRIVERS OF THE JOB MARKET ARE PRETTY A.I. AGNOSTIC.

[00:37:07]IT’S HEALTH CARE. THOSE ARE DEMOGRAPHICALLY DRIVEN BECAUSE OF THIS AGING WORK FORCE.

[00:37:13]BUT THAT DOESN’T HAVE TO STAY THAT WAY.

[00:37:16]IN FACT, SOME OF THE MOST EXCITING INNOVATIONS ABOUT A.I.

[00:37:18]ARE IN HEALTH CARE. SO IF WE CAN MATCH THE LABOR WITH THE TECH, THE TECH THAT YOU ARE SO FOCUSED ON, ED, THEN WE HAVE THE INGREDIENTS FOR HIGH SCALE GROWTH. ED: RIGHT.

[00:37:30]THAT’S WHY I WANT TO GO BACK TO YOUNGER WORKERS BECAUSE THAT IS REPRESENTATIVE OF THE "BLOOMBERG TECH" AUDIENCE AND INDUSTRY. YOU ARE FOCUSED ON AGES 22 TO 25, 26 TO 30. LET’S GO BACK OVER THOSE TRENDS QUICKLY. NELA: SINCE THE ROLLOUT OF CHATGPT IN 2022 IN THE FALL OF 2022, WE SAW A NOTICEABLE DECLINE IN EMPLOYMENT FOR THESE YOUNG WORKERS.

[00:37:54]IT’S DEEPENED EVEN FOR THAT SECOND STAGE OF EARLY CAREER, THE 26 TO 31. IF YOU JUXTAPOSE THAT WITH OLDER WORKERS, IT LOOKED LIKE A.I. ACTUALLY GAVE EMPLOYMENT A BOOST IN THOSE A.I. EXPOSED FIELDS.

[00:38:12]THIS IS WHAT WE ARE TALKING ABOUT. A.I.

[00:38:15]EXPOSED OCCUPATIONS, SOFTWARE DEVELOPERS, CUSTOMER SERVICE REPS, THAT’S WHERE WE ARE SEEING THE ACTION IN TERMS OF A.I. IMPACT AND THE NEGATIVE EMPLOYMENT TRENDS UP UNTIL RECENTLY, THIS JUNE DATA. BUT IF YOU ARE LOOKING OUTSIDE OF A.I. EXPOSED OCCUPATIONS, YOU ARE NOT SEEING THE SAME STORY AT ALL. YOU ARE SEEING EMPLOYMENT GROWTH IN THESE REALLY HIGH DEMAND, NON-A.I.

[00:38:41]EXPOSED FIELDS, TIED MORE TO DEMOGRAPHIC CHANGE. ED: NELA RICHARDSON, CHIEF ECONOMIST AT A.D.P., THANK YOU VERY MUCH. COMING UP I.B.M. SERVICE NOW AND ALPHABET ALL REPORT AFTER THE BELL. WHAT WALL STREET WILL BE WATCHING WHEN NUMBERS HIT. THAT’S NEXT.

[00:38:52]THIS IS "BLOOMBERG TECH." ♪ ED: I.B.M. AND SERVICE NOW ARE SET TO REPORT QUARTERLY EARNINGS TODAY AFTER THE MARKET CLOSED.

[00:39:08]THE NUMBERS COME AT A CRUCIAL TIME PARTICULARLY FOR SOFTWARE COMPANIES THAT ARE FACING A CRISIS AS CLIENTS SHIFT AWAY FROM TRADITIONAL SOFTWARE IN FAVOR OF A.I. PRODUCTS.

[00:39:18]JOINING US BLOOMBERG’S BRADY FORD. I.B.M.

[00:39:21]PRERELEASED AND THAT WAS A STORY WHERE NOT A.I.

[00:39:24]IS NOT IMPORTANT. THE MAIN FRAME BUSINESS IN PARTICULAR. THEY NOW DO EARNINGS THIS EVENING. WHAT DO WE NEED TO KNOW?

[00:39:30]>> THE BIG QUESTION FOR I.B.M. IS WHETHER THE FUNDING WENT FROM MAIN FRAMES TO OTHER KINDS OF A.I.

[00:39:38]HARDWARE OR WHETHER THIS IS REALLY SPREAD MORE WITHIN -- EXACTLY. IS THERE SOFTWARE BUSINESS IMPACTED? ARE FOLKS BUYING A VARIETY OF I.B.M. PRODUCTS NO LONGER BECAUSE THEY’RE TOO BUSY TRYING TO BUY MEMORY CHIPS BEFORE THE PRICES GO UP? THAT’S A BIG QUESTION FOR I.B.M. TONIGHT. ED: WHAT IS THE STORY FOR SERVICE NOW?

[00:39:58]>> THE SAME AS A LOT OF APPLICATION COMPANIES WHICH IS, IS THE A.I. MONETIZE MONETIZATION STORY REAL. ARE THE GROWTH RATES GOING TO HOLD UP? IS THE A.I. GROWTH COMING AT THE EXPENSE OF THEIR TRADITIONAL BUSINESSES OR IS IT TRULY ADDITIVE?

[00:40:12]IT’S BEEN A SIMILAR NARRATIVE FOR THREE YEARS NOW ON THE APPLICATION COMPANIES, AND THE MARKET -- ED: YOU USED TO DOMINATE REPORTING OF THIS SPACE, LIKE THERE IS A COMMON THREAD HERE ACROSS THESE DIFFERENT SOFTWARE NAMES OR IT’S MORE ID YOA SIN CARATSIC?

[00:40:33]>> IT REMAINS ACROSS THE APPLICATION LAYER BECAUSE THIS IS GETTING THE MOST COMPETITIVE PRESSURE.

[00:40:38]IT’S NOT SURE IF THEY’VE BEEN ABLE TO DIRECTLY MONETIZE A.I.

[00:40:45]LIKE MICROSOFT HAS. ED: BRADY WILL BE VERY BUSY AFTER THE CLOSING BELL. SO WILL SOME OTHER PEOPLE.

[00:40:52]ANOTHER REPORT AFTER THE BELL, ALPHABET AFTER RAMPING UP A.I.

[00:40:55]SPENDING TO RECORD LEVELS INVESTORS WANT TO SEE WHETHER THOSE INVESTMENTS ARE DRIVING GROWTH.

[00:41:00]ACROSS SEARCH, CLOUD AND A.I. SPECIFICALLY GEMINI.

[00:41:05]JOINING US NOW BLOOMBERG’S CURT WAGNER EDITOR WHO LEADS OUR COVERAGE OF BIG TECH FOR US AT BLOOMBERG.

[00:41:11]WALL STREET HAS ZEROED IN ON CAPEX SPENDING.

[00:41:15]ARE THEY WORRIED ABOUT IT?

[00:41:17]>> I THINK A LITTLE BIT. THAT’S EVIDENCED NOT JUST BY SORT OF THE FACT THAT IT’S A FOCUS FOR GOOGLE BUT IT’S BEEN A FOCUS FOR META. MICROSOFT IS AND OTHERS THAT HAVEN’T YETS REPORTED. SO I THINK -- YET REPORTED.

[00:41:29]SO I THINK THIS WILL BE AN IMPORTANT MOMENT NOT JUST FOR GOOGLE BUT FOR THE INDUSTRY AS A WHOLE TO SHOW THESE HUNDREDS OF BS OF DOLLARS THESE COMPANIES HAVE COMMITTED TO A.I.

[00:41:38]AND INFRASTRUCTURE THIS YEAR ARE ACTUALLY GOING TO HAVE A RETURN AND SO I THINK GOOGLE CLOUD IN PARTICULAR WILL BE A FIRST REAL TEST OF THAT. ED: RIGHT. SO A LOT OF PEOPLE IN THE "BLOOMBERG TECH" AUDIENCE AND AROUND THE WORLD, GOOGLE SEARCH BUT REALLY WHEN IT COMES TO GROWTH IT’S LIKE A.I. LINKED, GOOGLE CLOUD IS WHERE WE LOOK?

[00:41:57]>> THAT’S RIGHT. WE SAW A GOOD REPORT FROM GOOGLE LAST QUARTER, THE REVENUE FROM GOOGLE CLOUD WAS MORE THAN $20 BILLION FOR THE FIRST TIME, BETTER THAN EXPECTED. I THINK THE ESTIMATE NOW IS AROUND $22 BILLION, JUST NORTH OF THAT.

[00:42:11]ONE OTHER THING TO KEEP IN MINDS, ED, IS THAT BACKLOG OF POTENTIAL REVENUE FOR THEM. I THINK LAST QUARTER THEY HAD $460 BILLION OF CLOUD BACKLOG. SO THE FASTER THEY CAN FETE DATA CENTERS -- GET DATA CENTERS ONLINE, THE FASTER THAT GOES FROM A PAPER COMMITMENT TO ACTUAL REVENUE FOR THE COMPANY.

[00:42:30]SO GOING TO BE FOCUSED ON GOOGLE CLOUD REVENUE BUT ALSO WHAT IS THE BACKLOG LOOK LIKE AND HOW QUICKLY ARE THEY TURNING THOSE COMMITMENTS INTO REAL DOLLARS? ED: YOU KNOW IS REALLY EXCITING, IT’S JUST DAY ONE.

[00:42:42]GOOGLE IS THE FIRST TO REPORT AND THERE’S LOADS MORE.

[00:42:45]BUT OFTEN HOW IT WORKS IS LIKE GOOGLE SIGNALS SOMETHING TO THE OTHER HYPERSCALERS. I THINK THAT’S WHY WE TRY AND TAKE A BIGGER PICTURE THIS EVENING.

[00:42:53]>> THAT’S RIGHT. I LOVE THAT YOU AND I CAN GET EXCITED ABOUT DAY ONE OF BIG TECH EARNINGS, THIS IS GREAT FOR THAT, BUT I THINK NEXT WEEK WE HAVE META, AMAZON, MICROSOFT ALL REPORTING, AND A LOT OF THE NARRATIVES AND STORIES ARE GOING TO BE SIMILAR, EVEN WITH META WHICH HASN’T HISTORICALLY HAD A CLOUD OFFERING. AS WE HAVE TALKED ABOUT, THEY’RE NOW LOOKING LIKE THEY’RE GOING TO GET INTO THE MISSION ON THAT TOO. SO IF GOOGLE IS STARTING TO SHOW PROMISING SIGNS WITH THAT DEMAND, IF IT’S STILL HIGH, IT SHOWS A STRONG APPETITE FOR A.I. ACROSS THE BOARD.

[00:43:25]YOU CAN PROBABLY ASSUME THAT MIGHT BE REFLECTED BY SOME OF THE OTHER COMPANIES AS WELL. ED: KURT WAGNER COVERS THE BIGGEST TECHNOLOGY COMPANIES IN AMERICA. THANK YOU VERY MUCH.

[00:43:36]THAT DOES IT FOR "BLOOMBERG TECH."

[00:43:38]WE TALKED ABOUT THE CALENDAR. THIS IS WHAT IT LOOKS LIKE.

[00:43:44]ALPHABET, TESLA, SERVICE NOW, I.B.M.

[00:43:46]AFTER THE MARKET CLOSE TODAY, WEDNESDAY INTEL, MANY MORE NEXT WEEK. THE OPENAI HUG HUGGING FACE STORY SO IMPORTANT. YOU KNOW WHERE TO FIND IT ONLINE, APPLE, SPOTIFY AND ALL THE BLOOMBERG PLATFORMS. FROM SAN FRANCISCO THIS IS "BLOOMBERG TECH." ♪