Bloomberg TechnologyDavid Sacks On a US Bitcoin Reserve, HPE's Weaker Year
Bloomberg's Caroline Hyde and Jackie Davalos speak with White House AI and Crypto Czar David Sacks as President Trump signs an executive order for a Bitcoin reserve. And, Broadcom shares rise as the company shows AI spending strength. Plus, a conversation with HPE CEO Antonio Neri as the company sees weaker profits for the year.
From the heart of where innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Live from New York and Caroline Hyde and I'm Jackie Devalas in Washington.
This is Bloomberg Technology coming up.
Crypto leaders flock to DC for the White House's Crypto Summit. Missus Trump signs his Bitcoin Reserve Executive Order White House AI and cryptozar David Sachs joins us to discuss plus AI spending still going strong. Broadcom shares rise after the company gave an upbeat forecast, with AI demanding key driver in its first quarter, and Hpe also out with earnings, but they send ches tumbling as profits a road in part due to tariffs with the CEO Antonio Nary but first breaking news but moments ago. Russia is willing to discuss a potential truth with Ukraine, but it is with conditions, willing to discuss a temporary truce if those progress towards a final peace settlement. Let's get straight out to Kaylee lines, what's the nuance here?
Well, Caroline Bloomberg did just break the story, citing sources familiar with the matter, but I would point out that this is something that Russia apparently presented to the US at talks in Saudi Arabia that happened last month, a suggestion that yes, they are willing to agree to a temporary truce, provided that there is an effort toward a peace deal that Russia like. Specifically, what Russia has asked to the United States is clear guidance on what the parameters of peace would look like, specifically what a peacekeeping mission in Ukraine would constitute.
US.
Russia has rejected the presence of NATO troops on Ukrainian soil. That would be complicating for the idea that France and uk for example, would be providing troops for that peacekeeping mission, the so called Coalition of the Willing we have heard European leaders talking about in recent weeks.
Russia does not like that idea.
They would they'll be open to a country like China providing a peace keeping force. So it's unclear whether or not that is something Ukraine would agree to. We should keep in mind that this news is breaking as we are expecting next week senior US officials, including the Secretary of State Marco Rubio, the National Security Advisor Mike Waltz, as well as Special Envoy Steve Whitcoff to be meeting with There are Ukrainian counterparts in Saudi Arabia four additional talks toward pieces. The US is still continuing to push for a deal.
Kae lines with a wrap, We thank you. Let's just take a quick look at the markets and reaction to this. They do bounce off of their lows. Nevertheless, we are having a torrid time and then as that one hundred to one point heading correction territory, we're down more than ten percent from previous highs.
This is we see three straight weeks of.
Declines for the tech benchmark, the longest losing streak since August. We're off by more than four percent over the last five training days. And this is anxiety grows regarding Chinese AI models. Well, that means for compute demand, what it means overall for me selling your winners into an economy that could potentially be.
Slowing on the back of taris.
Move on to what's happening in the world of crypto, though, because so much to delve into.
When it comes to the.
Latest executive order, we're off by one point eight percent on the day. We're at eighty eight thousand, but remember we're still well higher than the sixty seven thousand dollars level we were at when the presidential election occurred.
All of this as many anticipate that.
Such regulations will become more pro crypto, and we see that executive order signed last night with a reserve for bitcoin. We're now pleased to be welcoming to our TV and radio audiences around the world, someone who can dive into this exact executive order. We bring in the White House AI and cryptos are David Sachs.
It's busy. You're about to.
Expect yet more people coming to the White House from the cryptosphere. Remind the American public and investors why you need a bitcoin reserve at all?
Well, good to be here, I mean, the reason why we need a bitcoin reserve is that the federal government already owns some. In fact, it obtained around four hundred thousand bitcoin over the past decade through criminal and civil forfeitures and seizures, and so the government has to have a strategy for how it deals with this. In the past, the strategy has been simply to sell it in an ad hoc way almost willy nilly, and that cost American taxpayer something like seventeen.
Billion dollars in lost value.
So we want to have a long term strategy to maximize the value these holdings. We've decided that that bitcoin is scarce, it's valuable, and that is strategic for the United States to hold on.
To this as a long term reserve asset.
So that's the plan with the two hundred thousand bitcoin that we believe are in the possession of the federal government. I say we believe because no one really knows for sure because we never had a proper audit. So that's one of the first things that this executive order provides that we're going to do a full government wide audit to find out what digital assets we actually have so they can be safeguarded and moved into a strategy that maximizes their long term value.
Right.
And then there's a stockpile.
Told us about the nuance there and why you need to stockpile for old coins and how you're treating them differently.
Right.
Well, the idea there is, again, we're going to figure out what we actually have on the federal ballot sheet, and we're going to move those Like you said, all coins are digital assets other than bitcoin, into a stockpile for safekeeping. The difference there is that the Secretary of the Treasury will exercise responsible stewardship over those assets, and he has the discretion to rebalance the portfolio or to sell items in that portfolio. But that's not true for bitcoin. The bitcoin we want to keep long term, So there's a difference there in objective. With the reserve, the goal is long term preservation. With the stockpile, the goal is responsible stewardship portfolio management.
In essence, David, the executive order also tasks Secretary Lutnik Investment with finding budget neutral ways that won't cost the taxpayer to add to that reserve. What call fies as budget neutral. Can you give us some examples of how that would actually work well?
Budget neutral this means it won't cost the taxpayer or anything, It won't increase the deficit, it won't increase the debt. So that's basically the constraints on what they can do. If they can figure out creative ways to add to the stock to the reserve of bitcoin, they're allowed to accumulate more bitcoin, but again it cannot impose any burden on the federal deficit, debt or the taxpayer.
So that's the rule.
Now you can ask the question, well, how are they going to do that? And I think that's sort of up to them if they can figure out creative strategies that they believe are in the long term insto of the country. They now have the authorization to develop those strategies.
Do you think using savings that come from DOZE, for example, qualify is something that would be budget neutral?
That's a good question. I don't know the answer to that question.
I think that that's something that I have to be assessed by probably the Office of Management and Budget. I think that since DOZE is cutting the deficit that and we'd want to seek a way to rescind those appropriations, it probably would not count.
But you probably have to ask the O and B that.
When you talk about the stewardship, particularly the stockpile, could you be seeing things like staking lending. Is there going to be other ways to maximize the volume there?
I mean, it's a good question.
I mean, you know, I think that the idea of this executive order is to create the mandate. Right, So first of all, we're going to move these digital assets from wherever they are all over the government. We're going to find out what they are. First of all, we're going to do the account and we're going to do the audit. Then we're going to move them into a separate account for safekeeping. And then the Sectary of the Treasury and his team will be able to exercise portfolio management and long term and responsible stewardship. And yes, that could include staking, it could include rebalancing, it could include sales. These are all options that they can pursue if the Secuary of the Treasury believes that these are in the long term interests of the American people.
Just going into what's in the holding of the US government. Going back to President Trump mentioned over the weekend talking of Ripple, Solana, other alternative coins that people are wondering whether they're going to be included in this stock pile. Will they does the US own them? Why mention them by the president?
Well, the President has mentioned the top five cryptocurrencies by market cap, So I think people are just reading into this a little bit too much. He just mentioned the top five. In terms of what we'll actually have. Again, we have to do the accounting we're not sure at sitting here today whether the federal government owns any of these alternative cryptocurrencies. We know it owns bitcoin. I believe it owns some ethereum. I'm not sure about the other ones. This is why we have to do the accounting. Is that, to be honest, no one's been able to give us a straight answer yet in terms of what the federal government owns. And this is part of the problem, is that we've never really had a digital asset strategy before, and this is why we've missed out on accumulating a lot of value for the American people.
David, you mentioned earlier that you know, you don't have any additional cryptocurrency anywhere you've divested from your interests there. However, Secretary Lutnik in July mentioned that he had quote a shedload of bitcoin. Do you think it's important for these stewards of the Reserve and the stockpile to divest from their cryptocurrency interests?
Do you know if they've done so already.
I can't speak to a situation.
You know, every member of the administration has to go through the same ethics process and the same conflict of interest process that I've gone through, so I'll let him speak to his own situation. I can to say that in my case, I divested or sold all the cryptocurrency that I own prior to the start of the administration, so there's no conflict in my case, I just want to have the right innovation policies for the United States.
Do you think it's important, though, to just not have that appearance of a conflict of interest?
Sure?
I mean, look, we're all subject to eighteen USC.
Two eight.
These are the conflict of interest provisions every remember, the administration is subject to that can to speak to anyone's situation, so we all are governed by the same conflict of interest rules. In my case, I chose to divest everything. To make it really simple, you should ask every other member of the administration what their situation is.
How about the president, because I think here in lies some of the issues for those who are on the outside of crypto looking in and suddenly feel that the US president has an exposure to mean.
Coins or solana. How do you give the confidence.
To the US investor base and indeed US population that this is totally.
Legit Well, honestly, I think you're kind of making something up there. I mean, how do you know that he has exposure to Salona? Is that's something you just came up with.
Well, ultimately, when we think about the mean coin exposure in particular, and people trying to understand for what reason we have a Trump coin or Milania coin, is there a clearer way that the US president can disassociate himself from any event upside when it comes to cryptocurrencies.
Well, I think he's already spoke to the to the Trump coin, and I think that that is a collectible. The SEC said it's a collectible. Collectibles have no intrinsic value, they're not security. Is there in a different category, And I think as long as you issue a mean coin and disclaim that there's no intrinsic value, it can just be a collectible. So that is a different category, I think than what we're talking about here with cryptocurrencies.
What do you make of some of the market reaction.
I mean, clearly Bitcoin down later earlier today on the back of just not really getting what they were hoping for. You know, if the government is not going to buy additional crypto, then what's really the benefit. But can you say for sure that the administration is not open to using taxpayer dollars in the future.
Is that completely off.
The table according to this EO?
It is.
We've said that this will not cost taxpayers a dime. So we've been very clear in this executive Order that we will not use taxpayer funds to basically accumulate more crypto unless it can be done in a completely budget neutral way. No increase the deaf sit, no increase in the debt, no use of taxpayer funds, no burden on the taxpayer. We've been very clear in this executive Order about that.
David, Let's move on to artificial intelligence, where you're also weighing in on policy there. The Biden executive Order was repealed in January. What is in the works currently that you can share about how that's looking and who's involved.
So the president is week one executive order on AI that rescinded the Biden EO. By the way, that was a very burdensome executive order that Biden had passed, those over one hundred pages of burn some regulations on AI companies.
The whole industry hated it.
He rescinded that, and he tasked three people to basically evaluate a new and create a new AI action plan, and those people are the head of the Office of Science Technology Policy, the now Security Advisor, myself, and so we're currently working on that plan and we'll have more information for you about that once we're ready to present.
How confident are you at this moment around AI leadership here in the United State? Dates that thick and fast, the news coming out of China, for example, of the latest models that are incredibly powerful with less data and ultimately more efficient. How are you exercising the view that AI can be still a leader for the United States and not losing its leadership versus China.
Well, I'm confident in American leadership, but we can't be complacent about it. I mean, it's very clear that China is going to be very very competitive. Something like roughly half of the AI researchers in the world are from China. They are very good at math and science, and you've seen with the launch of deep Seek that they're very good. They're very good AI software companies. So this is going to be a very competitive race, and we have to win that race, but we can't be complacent about that in any way.
It's going to be a very tough competition here.
There's actually reporting from other news sources that maybe deep seat would be bad from apps here in the United States.
Do you think that's appropriate.
It's pretty maature for me to comment on something like that. If the administration announces a policy on that, then I'll comment on it.
Then let's talk about some of the other voices inside the White House as of late that could potentially chime in on AI policy. Elon Musk is he involved in any capacity.
Not in what we're doing.
So you know, again, we have an office within the White House and we deal with crypto and AI policy. Elon's doing DOGE and these are two totally separate initiatives.
But let's talk a little bit more about what the contours of the AI policy could look like. I realize you can't share too much at the moment, but what will be your priority areas? A lot of the talk has been around AI competitiveness and what we've seen coming out of Trump's President Trump's comments around the Chips Act and then National Science Foundation layoffs.
There is some concern that this.
Could undermine competitiveness if there's not enough federal funding going to research.
What are your thoughts on that?
Well, I think there are some items that are policy items that are coming up very quickly. So, for example, there was this eleventh hour policy that was announced by or rule that was now called the Diffusion Rule, that was announced by the Biden administration, and that governs the sale of advanced AI chips or GPUs to countries all across the world. They're basically an international version of the export controls. There's one hundred and twenty day clock on that in order for the Trump administration to weigh in and make whatever modifications we want to make. So, for example, I think that's probably going to be one of the first policy items on our plate that we have to address because there's a clock on it. So I think that, you know, export controls are a big area, Diffusion is a big area. Just the you know, how we govern the licensing of the most sophisticated chips and semiconductor manufacturing equipment is sort of at the heart of the policy discussion right now.
Would you ultimately be supporting an end to the chipsacked.
I don't think that anyone in the administration has said we want to end it, but the President has been very critical of it, and I think with good reason. I mean, I think the intent of the Chips Act was good. We were trying to get semicon manufacturing to occur in the United.
States because's so strategic.
The problem is that the money went to, frankly, a lot of companies who are losing in that very competitive market. And some of those companies haven't even used the money they were granted because they're not doing very well. So the Chips Act had I think, mixed results at a high cost, and the question is just whether we can do something much better. And I think what the President has said is that he would like to use terrorists as an incentive to get companies to onshore their semiconductor manufacturing here. And the advantage of that approach is that the best companies have to do it too. They can't kind of drag their feet or they're going to be hit with terrorists. So I think the President has figured out a very powerful weapon, a very powerful incentive to get the best companies to want to onshore their manufacturing, including for semi conductors, and that is very strategic for the United States.
TSMC putting money where its mouth is and potentially in response to tariff concerns for you right when.
You saw that yet, sorry you mentioned t SMC. I think it's a very good point. We did a press conference with them just earlier in the week and they announced over one hundred billion dollar investment in the US and a big part of the reason why is because of the President's Tariff's policies give them a strong incentive to want to move some manufacturing here because they know that if they don't do that, they're going to be here with the tariff.
With forty five seconds.
They've got to ask you, therefore, should Intel not be getting the money? Is that the company you're hinting at.
I'm not saying they shouldn't get it, but I think that everyone knows that Intel's a very challenged company right now, and I think that it's unfortunately.
We want Intel to do well.
We want domestic chip manufacturing, and Intel is a legendary company and it is one of the few companies in the United States that's capable of doing advanced chip manufacturing. So we want them to do well, and I think we will try to do whatever we can to help them do well well.
You're going to be speaking with lots of leaders from other companies today of course over at the White House, leaders of crypto exchanges across the ball, we thank you so much. The White House AI and cryptos are David Sachs. Ahead of that one important White House crypto meeting coming up first though, Braallcom shares they jump following its earnings and not beat forecasts full by AI demand details.
Next, this is blue Meg Technology.
Let's take a look at Broadcom shares. This after the company gave an upbeat forecast driven by strong spending on AI computing, shares are down by about three percent. Joanne Feene, partner at Advisor's Capital Management, joins us.
Now for more.
What a roller coaster it's been so far for the chip makers this week other infrastructure players as well. Is the market telling us something more about the fundamentals? Is it a short term blip or a fundamentals okay at this point?
Yeah, Hey, Jackie, you know the surgeon in Broadcom shares after they reported in December, right, obviously I really boosted the stock. It's come down a year to date about twenty five or so percent. But last night's report was very impressive. Not only did the beat the numbers that came in with better guidance than expected, and more importantly not in their guidance are two new partners for the development of custom AI solutions, including chips and networking solutions. And so their sixty to ninety billion dollars outlook for fiscal twenty seven for the AI business, and by the way, it's only at a pace of about twenty million this year billions, So it's a really startling opportunity that the company has ahead of it. And remember that they see the road mass of their partners and their customers, so they have an awful lot of visibility. I think it did reassure investors somewhat and that's why the stock is up today.
Is it there, fool still enough to shake off the overall anxiety surrounding Generator AI, the opportunity that these companies have, and ultimately how profitable it will be for them.
Yeah, it's unclear what's causing the pullback here. I think there are a lot of moving parts in investors' minds right now. You know, one of them is just the general level of policy uncertainty, whether it's terrorists or government shutdown or geopolitical that is causing a little bit of a risk off trade across the board the Deep Seek Information you know announcement back at the beginning of the year. It certainly caused some to question how much we needed the most advanced chips. But what Hocktan CEO said last night was really informative. He said that customers are demanding more and more powerful solutions. They're clearly not running away from having the best hardware to run their AI models, both training, pre training, post training and inference. And again he sees the roadmaps for years out. So I think that investors are, you know, unfortunately taking the raw long idea out of the Deep Seek situation and inferring that for some reason, hyperscalers and others that want to use AM models are somehow going to say, oh, we don't need all that computing power. They clearly want that. According to what a broadcom is saying.
The twenty percent sell off that we've seen in broadcom shares since the start of the year, though ultimately what shakes that off is this the right time to be buying a broadcom if it's ultimately going to be a winner?
Yeah, Caroline, you know, a lot of times market sentiment again a risk off trade. People pull back from their winners. They diversify, and that's a good thing people. You know, investors should be diversified.
What will probably.
Turn this around is more and more of these kinds of reports, and not just from Broadcom, from other companies. You know, we've owned Broadcom for clients since it was called Avago ten years ago, and we've ridden through some of these pullbacks before. But ultimately, you know, a company like this, you want to have a long term view. You want to be able to ride it out during the times when it does pull back, because you just don't know when sentiment is going to change. To your question, we don't know when investors might decide, you know what, we want to own companies that are going to provide really long term, solid year after year growth, and those are hard to find, particularly in an environment where policy uncertainty that they affect other sectors of the economy could be so confounding. Here's one area where we think the growth is solid and will be relatively impervious to a lot of the politics that we're seeing out there.
That's incredible, you say that, Johan, because so much of the market jitters that we've seen this week have directly been correlated to some of the trade tensions that are really escalating as of late, tariffs being mentioned in HPES earnings as a potential a detractor for their outlook going forward. Why is Broadcom more insulated perhaps from that volatility and what other players in this space could perhaps kind of see themselves a little bit more protected from that volatility.
Yeah, Jackie, so they're not, you know, Broadcom certainly is vulnerable to tearffs on imports of chips. They don't, you know, manufacture many of the chips themselves, and most advanced ships are manufactured abroad, but in Taiwan. And obviously there's some question about the Taiwan situation, and so you know, any political news there, you know, could disturb the shares. It's good to see that Taiwan Semi is bringing more manufacturing here to the US. That will help buffer that kind of risk. I mean, other companies that are more reliant in their sales on just chips are going to be more impacted by the tariff talk. Notice though, that Broadcom is more diversified. They have a software business which is substantial and is improving in its reach into customers and its margins, et cetera. And they have other areas of the business. You know, Kila Packard Enterprise is being hurt particularly because they you know, they have built you know, their systems in China, so they're going to be particularly vulnerable. And also there seem to have been some execution problems over there. So you know, that's a very different, much more narrow company relative to a so an investor that owns Broadcom owns something that's diversified and that helps them write out you know, some of these other political ristic companies will be more hurt by.
It's Joey and Feenie from Advisor's Capital Management. Thanks so much for joining us.
Welcome back to Blue Med Technology. I'm Caroline Hide in New York and I'm Jack Devalas in Washington.
Quick check on these markets, because at one point we hit a technical correction.
On the Nasdaq one hundred.
We're by more than five percent as you see over the course of the five trading days, and in fact, we've had our longest weekly losing street in this particular benchmark going back to August of last year. What drags us lower anxieties around China and it performance with generator of AI anxieties around tarifs anxieties around just selling your winners because maybe we have an economic slowdown at this point. We're seeing on the higher side on a daily perspective from the points perspective is Apple and of course Broadcom with its numbers doing better than Anticipator.
But on the.
Downside, basically all the key magnificence names at the moment, Jockie, so keep an eye on what's happening, were broadly with an US DOT one hundred.
Let's talk about how those markets are reacting to this week's news. We're joined by Martin Norton, chief investment strategist for Empower. As Caroline just teed up, there there's a lot here that markets are grappling with. What would you say is truly driving this negativity we're seeing in tech stocks.
I mean, the key word that jumps out to me and Caroline's comments is just anxiety. We're seeing so much anxiety, of course around the tech narrative that began with deep Seek and has continued as we continue to see competition coming out of China. But it's also related to the tariff question, and I think when we're thinking about tariffs, we have to acknowledge the fact that This is an area, you know, AI generally where there's a lot of emphasis on US becoming a superpower, and so that should have some insulation when we think about how the Trump administration is going to approach coach the semiconductor space and the technology space broadly. At the same time, there's a lot of rumblings around the types of tariffs that we could see on semiconductor's real pressure to build here in the US. And I think when we think about all of these different anxieties, from questions on global competition to questions around tariffs, we have to remember the contexts that we're in and the valuations that we saw at the start of the year. There was just no room for disappointment or uncertainty, and I think it's that setup that creates the sell off that we're seeing today.
In many ways, investors have gotten what they wanted. Hyperscalers still plan to invest in more infrastructure. President Trump has been supportive bringing in more commitments, and you also have demand holding up. But when we respect to China as a competitor, we're not going to stop seeing new models coming out of there. What is it going to take for tech stocks to really get the boost that they were getting four or are those days pretty much over?
Well my inclination right now, you know, as we think about the CAPEC story and we think about the spending from hyperscalers, that expectation of the hyperscaler demand is in the prices right now. You know, the kind of the infrastructure build is in the prices. And I think what we'll have to see when it comes to technology and a renewed strength and performance is really that pivot from building the infrastructure to seeing the demand. And we see that dichotomy so far in market movement thus far in twenty twenty five. So for example, Meta has had a very different run than some of these other players, and one of the explanations could be the way that they've been able to integrate AI and you know, take advantage of AI on the revenue side. And so I think it's that revenue narrative that's really the act too of this AI play, and we really need to move to that act too, and my estimation for us to see prices move higher from here the act too.
We had other investors or indeed market participants come on and say act too really gets reignited as when in videos GPUs. The latest Blackwell chipsets are flying off the shelves.
We really see the proof in them being.
Sold and used and ultimately that will kickstart once again the growth in this industry. Are you anticipating it being a second half kind of a pivot point?
It seems like there's room for the narrative to shift in the second half. I think the timing, though, is particularly tricky. We have some sense of that from kind of expectations around Blackwell, but in terms of broad use case of AI, corporate spending on AI, I think that timing is especially tricky in this environment, in particular, as we think about in an environment where there may be a hesitancy on corporations to really extend into long term investment opportunities that could potentially pull back demand for some of the AI applications that we'd really like to see be part of that act to and that makes the timing maybe a little bit more in question than we would otherwise like. And perhaps it's that uncertainty that is also helping drive prices lower and is.
So unstee then should people sit on the hands.
Well, I'm looking at this, you know, as I'm looking at valuations and expecting this sell off to really show up in valuations. But if I'm looking at technology broadly, the sector still looks on a historical basis to be in one of the more expensive death styles from a price to expected earning standpoint. So though we've had this sell off, we haven't seen valuations move that much. I wouldn't consider it now to be a time to be selling technology. But to me, it's more of a hold environment if it sized appropriately in a portfolio to hang on to it, But it's not necessarily a buying opportunity now. I think we'll really have to see a little bit more froth come out of those valuations to make a really justifiable argument to move in.
Martin.
One of the other things that we're seeing now is perhaps more discernment among investors for companies that aren't as diversified. Do you see that's going to be a longer lasting trend.
That's a possibility.
I mean a related topic that is, of course, tap of mind for people is moving from the pigs and shovels to those who are putting AI to use in their businesses and softwares in the like. I think in this environment that uncertainty is going to cast kind of a shadow over that play as well. But to the extent that valuations are more approachable, I don't know if that's a bad decision to have some of that exposure in the portfolios as well.
We want to thank you as always for joining the show and Powers chief investment strategist Smart and Naughton.
Great to catch up. Happy weekend.
Let's return to the world of crypto and prices ahead of the White House Summit on digital assets.
We're currently off by.
Two point six percent on the day for bitcoin. There's a little bit of sort of buy the room of sell the news when it comes to a bitcoin reserve. Perhaps many wondering whether potentially, instead of just holding on to US assets and not selling them, it could have been more buying and that doesn't seem to be the case for now at least.
Let's stick into.
All of this what we can anticipate more broadly across the industry, and we're please we welcome Lizziang, head of Growth at a ZY and Many A Crypto Leader Thought Leader CEO is going to the White House today to talk about what regulations could look like in the future, but also a Pine on the latest executive order, what did you make of it?
So I think it's important to consider the political zeitgeist of the moment.
Crypto has come a.
Really long way, and over the last fifteen years there's been growing demand both for crypto as a digital asset and also as a technology. So it's no longer a question of is crypto something legitimate or is it something real. Crypto is definitively here to stay, and with today's White House summit, it shows that we have a voice and a seat at the table, so we're expecting big things to come from the summit.
Was the Bitcoin Reserve and the stoppoial of other alternative assets in the digital space a.
Big enough deal for you today?
So there was a lot of commentary around the Strategic Bitcoin Reserve, and I think what the White House has been able to do is come up with an equitable solution. So the way I see it personally, we already have this bitcoin, but there were no policies in place to steward it and there was no accountability within government. David Sach's earlier mentioned that there was a loss of seventeen billion dollars by not having policies on when to sell bitcoin. So if we already have this bitcoin from criminal and civil asset forfeitures, I think it's important that we have a framework in place to manage this bitcoin for the American people.
Liz, what do you want to see coming out of this crypto summit that will give the market some of that clarity that we're looking for.
I think what the United States lacks today is a clear framework around digital assets. So in this sense, we lag a lot of different regions, mainly the European Union. So what I'm hoping for personally is I hope to see us take steps to lay ground work to have regulatory clarity in the United States. And the reason why this is important is because it really that's the stage for American crypto companies to flourish, and this brings jobs that attracks entrepreneurship, attracts investment, and it ensures America's dominance on the global stage in technology.
One of the things that David Sax really emphasize is that taxpayer dollars will not be used to bolster this reserve and stockpile. How can the crypto community really gain if the government is not buying crypto?
So I think that even taking steps to establish a strategic Bitcoin reserve has already been a huge step for the industry. As for the specific details around its implementation, I think we'll have to see what comes of the working group and what comes from the Cryptosummit, But I am very optimistic on what this means for the crypto industry.
So what next? We've got the reserve that was a promise made and promise kept, as David Saxon say, an indeed just a stop pole, but now will clarity is needed ultimately still about what is a digital asset, the way in which it's viewed as regulators and indeed stable coin future, what do you want to hear out of today for future regulation?
So I think something that's interesting to consider with crypto is that a lot of the mainstream discussion centers around crypto as a digital asset with the financial use case, but it's important to remember that crypto is also an underlying technology upon which applications can be built, which span a variety of different sectors, ranging from identity solutions to life sciences, to media, entertainment and everything in between. So what I hope is for this to really lay the groundwork for crypto to flourish in the United States.
Do you think that founders are changing their mind about building in the United States.
Oh?
Absolutely, I personally know of entrepreneurs that have left the United States due to regulatory uncertainty, and I know.
That those of us who have chosen to.
Stay in the United States are feeling quite validated in that decision.
He said, Thanks Liz Young, thank you for growth at Azuki.
We appreciate it for joining us.
Quick check on some breaking news, this one regarding in video that we just told you that the NaSTA one hundred was in correction. Territory now in video has been shed one trillion dollars in market value from its record high.
Remember it was as high as more.
Than three trillion dollars and it has come down significantly from that market capitalization. We're off one point five percent on the day on Invidia.
Shares of HPE are plunging today after the company said profits in the coming year would be hurt by tariffs, week margins on server sales and execution issues. HPE also saying it will look to eliminate three thousand jobs. Antonio Nairy, HPE CEO joins us now for more Antonio. I know it's a tough day, but give us a little bit of clarity in terms of what you're seeing as the turnaround plan here.
Yes, good morning, Thanks for having me. Today obviously is a disappointed day for me and for us as a company. We had a solid quarter. We delivered in our commitments. We grow our revenue double digits, up seventeen percent. We had double digit growth in our bookings. We disappointed on one specific metric, which was the server operative margins, and that server operative margin was impacted by three specific issues. Two in the traditional server business call of the X eighty six. One was a very aggressive market, meaning a high discounting, and second was a specific issue with the evaluation of our inventory which caused us not to have the exact right cost in that pricing in the end of the quarter.
And those issues have been already fixed and we have taken very aggressive action.
On the E side, we have a higher than normal inventory related to the GPU transition from the copper of h one hundreds and two hundreds Intro Blackwell, and in the quarter we booked one point six billion dollars of new AI system orders, which was doubled the.
Orders that we had in Q four, but seventy percent.
Of that is on the blackwell side, so the working capital aspect that I had a negative impact on our operating margins.
For the servers.
The rest of the business is very, very strong.
And inclusive of the networking business, which had again another recovery on sequential revenue double digit year over the year revenue growth our hybrid cloud was up eleven percent year every year, and we had a very strong performance in our storage bookings. So it was all in the server margin. But I have to tell you because of the demand we selved, it reinforced our strategies, right, we just need to execute better than a couple of things and return to the normal operating profit, which we are committed to do in the second half. And then what we guided was inclusive of that and the net impact of tariffs, because now it's.
Available on tariff.
Antonio, how much of a pain to the bottom line and tarif's going to be do you have a clear guidance of number, Yes.
We did, Caroline.
We guided that it would be seven pennies net of the mitigation impacts that we have now put in place and will continue to execute throughout FIS career twenty twenty five.
The worst case.
Scenario do you build in there, though, Antonio, because at the moment, every day we get a different tariff headline.
Well, we decided to go all in based on the twenty five percent tariff in Mexico, the twenty five percent tartfs in Canada, which we don't produce in Canada today, and that incremental ten percent meaning the twenty percent on China. So we factor all that in and obviously we have mitigation strategy from a global supply chain and also the pricing.
So we decided to put it all in in.
A this part of time and if some of that doesn't get done then you know, obviously we'll get the benefit of it. But right now, because kind of what happened here is that because we did not guide the full year waiting for the Juniper deal to close at the end of Q one, we decided to put a flag pole out there for an investor.
So they have it all out there.
Can you give us an update there, Antonia is where the Department of Justices case stands.
Yes, of course, First of all, we are incredibly disappointed that the DOJ decided to file a lawsuit to try to block the transaction. Their market analysis completely flawed. Then nar the market to one slaver or the market called the wireless lund and they felt there would be only three vendors to play in the market.
The reality are at least the eight.
Vendors and many of them had this exact same share as Juniper today.
Addition, you know they don't.
Consider this is a great rossure for the United States to strengthen our US national security outside the country. So now the judge has been selected. The judge has established July ninth as the trial date and we will defend this in court. So we expect to prevail because we have a very compelling case and therefore we expect to close the transaction in twenty twenty five, obviously delayed from the regional time.
We have about thirty seconds left. But are you prepared for the worst case scenario.
Meaning the deal doesn't close. We always have multiple options on the table. Our feederstrem duty, together with my board, is to drive the best return for our shareholders. We felt that the Juriper transaction is the best long term return that will shift the portfolio and create more earnings and free cash flow. Because we committed at least four hundred and fifty million dollars of synergies, and so that's what we're focused. However, they are different ways to create your holder value and all those options out of the table, But right now we want to see this.
Through Antonio Nary HPCO, thanks so much for joining us today.
Jackie.
Coming up, we take a look at tech entrepreneur Peter Teel's many lengths inside the Trump's new administration.
Tech billionaire Peter tail used his Silicon pelling wealth and influence to help Donald Trump win his second presidency that could give him authority within the administration itself. For more, Bloomberg's Jamie Tarabay joins us now. Actually, the nuance to this is that he certainly leaned into Trump in the first before the first administration.
In the second administration, he.
Took a step back in terms of committing financially, we'd see, although he did say he was going to vote for Trump. And Jade Vance is a close ally. How what does this network.
Sprawl within this new administration?
Well, I mean, as you said, like pretty early on Peter thal had donated to conservative candidates. He very sort of famously surprised Silicon Valley. When he voted for and supported Donald Trump in the twenty sixteen presidential election, he spoke at the Republican National Convention and gave over a million dollars to Trump's campaigns, and when Trump won the first time around, Tiel was a member of the Executive Transition Committee, and two people who worked for him at thel Capital went on to have senior positions both at the National Security Council and also at the White House. This time around, people who are connected to Peter Theal, including Vice President J. D.
Vance, who had.
Worked at Mithril, a venture capital fund that theel co founded, have senior positions across the administration. Along with Vance, a former THEOD associate is number two at the Department of Health and Human Services. Another is Assistant to the President for Science and Technology. One is the ambassador to Denmark. And there are at least two who now hold senior positions at the Defense Department, which is a place where he and Elon Musk have several critical contracts with the government.
Let's just talk a little bit more about the going forward and whether there's going to be proof in the pudding as to whether or not he is benefiting personally because we already know a lot of the companies he helped co founder and Leeds fund have started to win some pretty big contracts.
That's right.
I mean theal is an investor in several of Musk's companies, including SpaceX, Neurlink, and Boring. And I'm going to read off my paper for a moment because once Trump was elected, Palenteer stock. Palenteer is Theel's company. The stock soared more than ninety percent in February. And Real Industries, a defense tech startup which is backed by Field's founder's fund, landed an expanded role so with the US Army that was valued at more than twenty billion. And then scale AI, another founder's funds company, just signed a major deal with the Defense Department.
Jamie Tarabey, it's an amazing read.
It's succinct to the point I urge people to go and find it on the terminal or online.
Thanks so much.
Meanwhile, we want to check it on the markets once again. Look, we've seen a sell off that's seen the NASAK one hundred in a correction, territory in videos wiped off one trillion dollars of its market cap, and now Tesla has raised all of its election rally. We're down forty eight percent from its record high, with down another four percent on the day.
Plenty to be digesting as we go into this weekend.
People again not wanting to be long tech or indeed the market more generally. But that does it for this edition of Bluebig Technology. You don't want to forget to check out our podcast. You can find it on the terminal as well as online on Apple, Spotify, and iHeart This is Blue Meg Technology.
