Bloomberg's Caroline Hyde and Ed Ludlow take a look at tech stocks bouncing back following their biggest weekly decline in nearly two years. Plus, Apple unveils the iPhone 16, and Chai Discovery bets on the potential of AI in biology.
From Mahard.
We're Innovation, Money and Power Collie in Silicon Vallet NBN.
This is Bloomberg Technology with Caroline Hyde and Ed Louvelove.
I met Ludlower Caroline Hide in New York. Welcome to a special edition of Bloomberg Technology Live from Kubertina, California. It's glow time and the emphasis Apple's most important event of the year, the tech giant. I'm veiling some major changes to its product line up, a big focus on artificial intelligence and new generation of iPhones and changes to wearables coming out throughout the hour. We're joined by key guests Carolina Milanacy of Creative Strategies, plus a conversation with Ray Wang of Constellation Research. It's Caro, what are you looking at?
Here's what else is coming up. Ed tech stocks are bouncing back following their biggest weekly decline in nearly two years last Oracle reporting earnings after the closing belt. Will ai compute demand support the stocks out performance this year, and we discuss AI's potential in biology with the found out of Chai Discovery, which just received backing from Open ai butt. First, we check in on that so called bounce back in the markets because it's dwindling ed. We are still up some four tenths of a percent, but we're not up to the extent that we were in earlier trading. We saw some dip buying most broadly. And look, this was a painful week that we come off. You remember that it was the worst week, worst day that we saw for certain numbers, like in video having its worst day since twenty twenty. Today we see just a little bit of dip by and it's only up a percentage point. Remember how much money, more than four hundred billion dollars lost on this one name alone over the course of what has been some five training days. But today it is all about Apple, and I want to look at how actually this is the worst performer on the nasac inte a points drag on the overall benchmark. We're off by one and a half percent. Looks so much to think about. You've got Webbush, You've got JP Morgan still reiterating that overweight, wanting to see dates, times, price points, but also what about Huawei's event that comes in a few hours time as well. Ed looks as though they're managing to get some pre orders locked in for their trifold phone. That's what's being reported. But get to it. What are we expecting from Apple?
Right?
Yeah, Apple session lows and it's actually closed down at twelve of the last seventeen product events. Here's what you need to know. Let's get to Bloomberg's Mark German, who's reported in detail what we expect, and Mark, I think we should start with the next generation iPhone because that's usually the point of emphasis. What have you learned our new iPhones?
The big models this year will be the Pro versions.
Not a lot of new stuff this year.
So what we're focusing on as a design that essentially looks the same as last year's model. You're getting some camera upgrades. So on the Pro models right now you have a forty eight megapixel standard camera like the y angle camera.
The other two or twelve megapixels.
Now they're moving a second camera, the ultra wide angle to a forty eight megapixel.
Right.
You're also going to get this new button, a camera button that's going to come across all four models, the Pro versions and non pro versions. It's going to be a button on the right side and it's touch sensitive. You can swipe on it to zoom in.
And out.
You can touch it hard to take a picture, or you can lightly touch it to focus in on a subject. It's sort of like a button that you've been seeing on standard bslrs for many years now.
The other changes on.
The Pro models are slightly bigger displays and slimmer bezels A eighteen processors across the four.
Models to help with Apple Intelligence. But overall, this is a very minor update year over year.
The bigger changes are going to be coming to the company's other products, including the Apple Watch and the AirPods.
We'll talk about the wearable side of the business. Apple Intelligence is really a focus as well, right, and the chronology of events is important because the new handsets will shit. What at the end of this month, This month you get iOS eighteen point one. What have you reported about the sort of staggered a rollout of Apple Intelligence.
Yeah, so Apple Intelligence is not fully baked. I would say it's half baked.
At this point, right.
So the initial version of Apple Intelligence will come with things like the ability to summarize incoming notifications, the ability to record phone calls and get transcriptions, the ability to use AI to remove people or objects from certain photos.
But over time, there's going to.
Be more functionality coming, right, So the phones will initially ship without any Apple Intelligence. You'll get a seftwarepdate in October with those first few features I mentioned. You'll get another update in December with chat GPT integration, things like gen Moji's the ability to use AI to create Emoji's image playground for generative AI for image creation. And then next year, not until about March April, is when you're going to get the bigger enhancements to the theory that Apple talked about in June at their developer conference. Right, So this is a very staggered rollout. Now, let's be clear this is not by intention. This is because this was something that was mostly rushed together to get out for this year in response to the big AI praise you've seen from Globle, Meta and others.
This is a global product, mark how much will this steady nerves of a sales decline in places such as China.
Well, it is a global product, but they're banking heavily on Apple Intelligence to sell its global products. But Apple Intelligence is not going to be available in the nearly thirty countries that make up the European Union and It's also not going to be available in China, which is obviously one of their biggest markets and a big sales driver.
Right.
I've seen some analysts reports over the last twenty four hours indicating that you're going to see an iPhone supercycle, particularly due to strong sales in China due to Apple Intelligence. Well, Apple Intelligence has not coming to China at least for the foreseeable future, and there's going to be no iPhone supercycle, right. The things that sell iPhones in big quantities or bigger quantities than usual are major design changes.
You're not seeing major design changes this year.
Right.
You're also not seeing as much tent of demand as you may have seen one or two years ago. You're seeing people hold onto their cash longer. So if you're anticipating an iPhone supercycle, I think you should rethink your expectations at least for this year. Where I think you will probably see an iPhone supercycle is maybe next year with the iPhone seventeen, which is going to have bigger design changes, and it's going to launch by the time that Apple Intelligence is fully rolled out and maybe even available on you in China.
Bloomberg's Mark Gunman with the reporting of what we expect. Thank you very much. Let's get the analysis with Carolina Milianac creative strategies, principle and list, and let's just pick up where Mark left off. Do we expect a supercycle driven by the sixteen generation and Apple Intelligence?
We do not, Okay, and exactly love Mark said. There are a couple of reasons. One is that normally you see a supercycle where there are great design changes that how do we're still drive sales of smartphones? The first thing that you see soft story, something that you discover afterwards, but what gets you into the store is the redesign. And the second part is the fact that right now Apple Intelligence is only available in English, and so that limits the amount of people that can take advantage of it.
I find that a really interesting point because, for example, I look at IDC data, an IDC Data forecast that for four year twenty four iPhones basically flat, but next year looks a lot better. Is that just because the expectation is the consumer waits and sees how the rollout of Apple Intelligence goes before getting themselves a new iPhone.
I think it's a bit of a delayed gratification as far as the psychle right the idea of that. In my opinion, there's going to be a long tail of sales that Apple Intelligence actually enables, but because of a rollout from a country perspective, the culture or part of Apple Intelligence. It's not just about being half baked or rushed. Is the fact that it takes a lot to actually make Apple Intelligence relevant at a country, language, and cultural level. Is not just a software feature. It takes up so much more that is really linked to the individual user, and so it's going to take longer.
What about the good old other devices, what about the air pods? We are expecting a lot from the watches in terms of new innovation. There will that be enough to kick off a new buying cycle.
I do think that other devices, there are rumors around the watch and also the AirPods will definitely contribute to Apple really pushing higher sale and revenue. Apple watches become so important to so many people, and not just the basic model that we respect redesigned with Apple Watch ten, but also with the Ultra that obviously has a much higher price point. I do think that that is going to get some excitement and maybe steal the show from a hardware design perspective today.
I still want to understand the simple story. How does the consumer and every day technology user actually use Apple Intelligence? Do you know have the answer to that?
For me, generally, AI is about taking more out of your device, whether it is you know, your iPhone or your Mac or something else. So from a user perspective, it's making your workload easier. Everything that you're doing should be streamlined because of intelligence. And then the other part with Apple is the fact that Apple knows me very well as a user. You know, they have a lot of information about me. So everything that Apple Intelligence is going to be able to give me is very contenstualized and personal. And I think that's how you get that emotional connection from the user to Apple Intelligence versus you know, we hear a lot from other vendors how you can plan your next vacation or you plan the next party. And I was jokingly saying I need to upgrade my life in order to take advantage of Apple Intelligence or any else, right, But no, it is really that is making using a phone that has become much more complex easier.
To that point, Krolina, Apple uses are loyal. It is what makes the company the most valuable in the world from a public perspective. But there is Samsung that already has AI integrated. There is Huawei that's likely to follow in a few hours time with its trifold innovations and already pre selling. Are we ever going to be tempted elsewhere by AI innovations from other places other sources?
I think the more you're going to get value from your data and your day to day experience, the harder is going to be for you to move. And we know, of course that Apple Intelligence is one part of the AI that gets delivered through Apple products. GBT is going to be another one, and going forward, I'm expecting to see Gemini as well on Apple products. So the user options to use avers, but then when it comes to the most personal experiences, the trust on the brand is what is going to keep them with.
Our bare Krolyne a Milanacy, Prince blandalists that create a strategy, someone that looks at the market, but you're so hands on with all of the available technology as well. Thank you.
Tech talks. Can They rebound from their worst weekly performance in nearly two years, and the recent declines have been led by the likes of Nvidia, shedding more than four hundred billion dollars in market cap last week alone. Alex Simonova is here to really talk through the pain trade of last week and spin it forward. We are raising our gains on the day. Why did we see such losses last week and Friday?
Yeah, so, last week's so off really highlighted the perils of the high tech concentration that so many people have been worried about for much of this year. When you have one group comprising s big share of the broader market, the so called Magnificent seven stocks making up more than a third of the S and P five hundred index. When the momentum is going in the right direction, you know, it lifts all boats.
Things are good.
But when you have any kind of growth fears emerge, any kind of disappointing earnings, you know the growth hears that we saw from last week's payrolls data, the momentum goes pretty rapidly to the downside. You have the systemic funds that have been piling into tech, They begin to sell and that accentuates the moves to the downside. And then you have a lot of investors this year, we're chasing the rally, which means that they bought tech stocks at very expensive prices, and so when it's time to de risk, those losses become pretty extreme. Of course, we saw the S and P five hundred post a weekly decline of four percent, its worst week since the SEVB collapse in March twenty twenty three, and then tech stocks their worst week.
In two years. Bespoke saying as well, Ultimately stocks are off to their worst September in sixty years. We'll SEEPI will inflation data set us in a better fundamental picture or not? Do you think?
Yeah?
You know, it seems to be the case. As you mentioned, seasonality is playing a big factor here, going back to nineteen fifty, September is the worst month of the year for stocks, and we're seeing that really play out. But the fundamental picture hasn't changed much. Yes, that Job's data was disappointing, but we aren't seeing pronounced layoffs at this point. If you look at the earnings picture, things are still looking good. Companies are delivering on earnings. We're supposed to see them expand beyond the magnificent seven stocks. We're expecting a rate cut, so things should still farewell.
For the rest of the year. Just need Apple to deliver today as well. The worst points drag on the NASDAC Alex sim and Eva, we love having her. Thank you more markets now, Semasha Prinstical Asset Management joins us. We're hearing about the momentum trade that pulls back last week. What about this week? Sema, Hey, thanks for having me on.
I think it's a tough environment, to be honest, it seems that tech has become a bit of a barometer for investor sentiment. As we know, there's a lot of question marks a moment around the state of the economy where the FED is going to be quick enough to move so until maybe you get either sufficient evaluation correction improvement fundamentals or you get some really interesting news from one of these companies. I think tech is unfortunately going to have as somewhat challenging couple of months.
Seema, good morning is ed here at Apple Park in Cupertino. I think trying to tie today's event to that economic picture you outlined the question around. For example, a super psychle also is dependent on the economic health of the consumer of the buyer. And one place that I'm looking at the moment is the spending power, health of the middle and higher income earners. What does that data set tell you at the moment?
Yeah, and I think that's so true. I mean, when we look at the consumer data as you took, as you're looking at a broad perspective, it looks fairly weak. There's a slowing process taking place. But then again, if you look towards the actual income levels, you can see that most of the strains are really limited to the lower income side. The medium to high income simply fairly strong. That they have not been as impacted by high interest rates. So you continue to see that purchasing power. But the problem is is that a lot of the gains, the real wealth gains have been driven by the equity market strengthen the acuity market. So if you get any further concerns about that, you could see that feeding through to middle income hire income households really on to requestion the kind of purchases that they want to make. Apple, of course, folds right in those crosshairs.
Sima. We talk a lot to not only institutional investors on the show, but retail investors who have been so excited, enamored, hyped around certain names like in nvidio, double leveraging double two x some of these ETF exposures. Are they right to at the moment? Should we be still focused so much on mag seven?
But I think you're right that the retail investor base has been driven a lot.
By FOMO for what of a better word.
I think FOMA has been a real driver for the continued interest in those MAGA seven on the big brand names. Unfortunately, at the moment that investor's sentiment has deteriorated so that Pomo no longer exists at this point in time.
So I think the.
Retail investor is taking a look back, say, look, if we're worried about the economy, there has to be some kind of impact on these big brands, and we need to see a point where it starts to look more interesting. From an institutional base, I think the general thesis around tech and THEAI and the impact of Magnificent seven still exists. We're still looking at the companies and saying they will deliver over a five seven year perspective, So it still makes sense to have exposure. But your marginal buyer is probably questioning at the moment these valuations and whether this is the right time to have exposure.
That's exactly what we hear. People are trading these names at the moment, and that's what we see the individual volatility on how do you keep the diversification mindset in this market? How are you seeing an opportunity?
So episode, when we look at the large tech space, we have maintained our exposure, we have pulled back a little bit, We're still quite overweight, and the reason is that we're still looking at it as a little bit of a defensive play. So these companies they have the quality, they've got the large balance sheets, the cash flow, which means that they shouldn't continue to do well even if there isn't a macdanton and we will be looking for opportunities to increase exposure. But at this point in time, a lot of it is around diversifications, so not just having exposure to tech, but other parts of the market which are a little bit more defensive, so your typical defensive place such as utilities, some of those consumer staples as well.
Sam.
I've asked you on Bloomberg Technology before how you use generative AI in your professional and daily life, and I think the next extension of that you're seeing any evidence whatsoever, that all the investment and capital expenditure into capacity to build generative AI tool is translating into productivity gains in any of the economies with which you're concerned more response.
So you are hearing news, corporate news really specifically of companies saying that they have seen a productivity gain or that they're envisaging that if they were to invest further into AI, there will be some significant productivity gains. Even if you look at the UK government, it's something that they talk about repeatedly that if they were to invest in those areas that they could see further government savings over the coming years.
In terms of if it's.
Coming to fruition, I'm not necessarily seeing so much of that news, but there is still that expectation that ALI will deliver and it still sits at the frontier of all productivity gains and even growth gains over thecoming future.
Seema, we were discussing but a week or so ago, if in Video or the FED were more important, what is it for you now?
So I think that you know they still they both have a very significant impact on the market, if anything, on a day by day basis of to actually argue that in Vidia does. But as I said, I think these companies are almost a barometer of investor sentiment, and at the moment, investor sentiment is being driven by what the market thinks the FED is going to do. So if we were to see the FED coming in with a sizeable interest rate cut next week and also downplaying the concerns of recession, then I think investor sentiment would improve and you could see an and them plicit bounced back in a lot of these Max seven. So much of it is tied together at this point.
Seema very quickly. What's the biggest headwind that we're not talking about the technology investors might face.
I do think that the China story, we all know that it's there. I don't think Whate's ignoring it. But I think we have got growing concerns about the strength of the consumer in China, where the economy is going, and of course, given the tech cycle, how much that feeds into tech demand I think is probably one of the areas that we're going to be watching most closely over the coming months.
Smasha, Principal Asset Management are joined to have you thank you coming up, We're talking tech. The headlines you need to know plus much more from Coopertino, counting you down to Apple's big launch event one pm Eastern, telling M local this a blueberg technology time now talking tech first up in video backed Skana AI sees potential for more strategic partnerships in Japan. This is as rising US China tensions spur the country to boost its own AI ecosystem. Sacana CEO David has spoke with Bloomberg saying his recent funding round of over one hundred million dollars was more than enough ammunition to develop its tech plus. Japanese chip startup Rapidness is seeking to raise nearly seven hundred million dollars from a new and existing investors. Now, the company plans to issue new shares to finance its chip development efforts and the construction of its foundry in Hokkaido. Rapidus aims to challenge industry leader t SMC and initially planned to seek a loan before opting for investments. Meanwhile, Google heads back to court. The search engine giant is set to face allegations from the US Justice Department. Then it manipulates that six are seventy seven billion dollar display advertising market violating and trust laws. This comes just one month after it lost the landmark ruling that illegally dominated online search. Now coming up, we're going to be tall king not only about Apple, but Huawei too, and also Apple within China. Ray Wang from Constellation Research to discuss the big event in Kupatino and then the big Huaweih showdown from New York. From Kubatino, this is Bloomberg Technology.
Welcome back to a special edition of Bloomberg Technology.
I'm Ed Ludlow.
Caroline hides out in New York. But right now we're live from Apple Park in Cupertino, California, and it's glow time. The emphasis on a new generation of iPhone, a refreshed wearables offering, and the future of AI. Our live coverage continues in just a few moments time a conversation with Ray Wang of Consolation Research. But Caro, we got to check in on these markets.
We do because last week was brutal and we know that we gave up what was more than four one hundred billion and one name alone over the course of five trading days. We had the worst week for the NASACK six two thousand, well twenty twenty two. Now NASDAK now up six tens percent, not managing to hold on to previous gains. The stock six hundred is up three quarters percent, So actually we are seeing a risk on sentiment worldwide, although we are fading some of those gains. Bitcoin up one and a half percent. Fifty five thousand eight straight days of net outflows from those Bitcoin ETFs. Are we going to start to see people treading back into putting money in these ets exposed to spot Bitcoin move on? Have a look at some of the individual names. Actually, on Friday, amid the turbulence, we saw Roadblocks give some big announcements, the CEO saying their new goal is for ten percent of the global video game content revenue. They were hire earlier on training We're now falling some eight tens percent for that particular name. Armou holds on to its gains, up almost four percent. Why well, it's all around those reports that its own technology, its own chip designs. Will We're powering Apple's iPhone sixteen. The Apple will will reveal the A eighteen ship we understand on Monday with the company embracing Arm's newest V nine chip design. We'll see whether that comes to fruition. Meanwhile, Apple off by three quarters of percent, and that is the biggest points drag across the indexes today. And we want to talk more about Apple. Turned to today's big take. It focuses on Apple's transition from tech rebel to tech overlord. Liume Meg's Max Chafkin Crow wrote this piece which is getting a lot of traction on the terminal and online. Max, this is a company that back in the day was the rebel and now it's the most valuable company in the world.
Yeah.
Absolutely, and I mean just in that stark way. Of course, it's been a reversal, but in the same way that you know, back forty years ago, Apple was arguing that there were these larger competitors IBM, you know, sort of most prominently, that we're dominating unfairly. You have, you know, sort of a swirl of critics, including regulators around the world, the DOJ, as well as you know, some of Apple's biggest partners starting to sort of loudly say that, you know, something needs to be done. And when you even when you look at the kind of like the body language, the language around these launches, you really see just how you know, there is a gravity around Cooper, Tino not just today, not just on an announcement day, but in the tech industry in general and really in the global economy more broadly.
What about Apple's defense? They just say that better Apple's defense.
And you know this starts to parallel other sort of conversations around other large technology companies. Is essentially that customers love us. That like you're the Department of Justice, which dropped a big lawsuit back in March, you know, alleging customer harm. Apple says, this thing that you're attacking, which is the fact that our stuff works better together than it does with anything else, is exactly the thing that customers care about.
It.
It's the thing that has differentiated us, and it's the thing that will you know, make our products continue to sell well. So that's where the debate really.
Is, Max, what a p to drop on iPhone day of all days? I mean, the work counts what four thousand words? But I got through it. And what you do is you document the history of this company and then pose the question, for all the regulatory pressure, the strategy, the competition, will it matter. And I think in the short term the answer is no.
Yeah, I mean the answer for sure and the short term is no, you know, the Department of Justice is saying, hey, it's really bad that you dominate all these markets that you have, all the profits that like there are no competitors here, and you know, those are exactly the sorts of things that Wall Street investors tend to like. You know, It's why Apple is the most valuable company in the world. I think when you start to ask, Okay, what is the long term what's going to be the long term consequence here, that's where the hard questions start.
I mean, you.
Do have a sense and this is this is a conversation that's been going on probably for a decade, but has gotten louder that Apple, you know, for all it's reputation for innovation and so on, has has maybe you know, maybe lost a step, as critics would say. And then you do have these sort of very slow moving regulatory actions. But we're regulatory actions that of course can have consequences. You know, we're seeing this Department of Justice, second Department of Justice case against Google, Department of Justice seeking to break up Apple. You know that those are the kinds of things that Apple is going to have to contend with and perhaps contemplate in the years.
To come Bloomberg's Max Chafkin with that big take, just incredible and detailed writing on an important day. But there's one area where perhaps Apple isn't as dominant, an area where it's still proving the work that it's done, and that is in the domain of artificial intelligence or Apple intelligence. Let's get some analysis with Constellation Research. Is Ray Wang, who's in his hometown right next to me. I mean, we can get to the discussion about a super cycle about year on year generations of iPhone, But for me, the simple question is does the consumer or iOS user understand how they're going to use it hospicial intelligence through Apple Intelligence in their daily lives, you.
Know, And I think what's been happening all the time is the fact that you know they have it in the background. It's ambient the ability to write better, the ability to take an image and have it actually transform into a picture, the ability to actually suggest make suggestions for you grammatically. That's all been happening in the background. And Apple's view on AI is very different than everyone else's. It's mass personalization at scale, it's privacy, and more important, it's the ability to actually do that in the background. As an ambient experience. That's what makes it so special, and people trust them much more than other AIS.
I find the chronology and timeline of what's to happen interesting. I have an iPhone fifteen pro. When we were here one year ago, I went out and upgrade. Did will I upgrade in the sixteen? I don't know? But Apple Intelligence will be available to me. Nonetheless, how do you interpret that?
Yeah, I think it's really important. A mass majority of subscribers are basically on a subscription model, and so they're just going to renew on that cycle. So every three years, every four years, that's going to be the area that you see that. So the move to FI G that was actually one of the moves. The move to AI is going to be the next set of moves, and that's causing the refresh cycle. There's one point three four billion iPhones out there, and of course it's going to be a two hundred and forty million recycle refresh cycle, the two hundred fifty million refresh cycle that's going to happen every three to four years, and especially if you've got to carry a contract where you're paying monthly fee and subscription.
Revenue ray that cycle, you talk of those numbers that need updating and upgrading. They're not just in America, they're in China and they're in the EU. We've just heard about the limitations of Apple Intelligence there and also the market that's being hoovered up by Huawei. What do you make of that competition.
Yeah, so Huawei's competition is going to be limited. They won't be able to actually sell in the US. So even if they have three million orders as they mentioned already in v mall, that's going to change the market just in the outside markets outside of the US. But you also see Apple pushing hard into India and that growing market. I mean, it's a status symbol, it's a luxury device, it's not just a functional utility. So that's a very very different market, and they're pricing it different. They're coming at it from different price points and market points.
There is something fascinating happening in China, which is very simple. Apple Intelligence will not be available there, but they're cited nonetheless, So even if they can't access it now, they might upgrade because of the promise that it will come eventually. What does your research tell you about that phenomenon?
I guess no, we see that happening everywhere. People are looking forward to some of those features. I think at the end of the day, Apple's going to have to comply to country regulations. They're going to have to do it for the EU, They're going to have to do it for China. EI regulations are going to be very regional. You might see that emerge as well in the Middle East. I'm headed out to the Middle East for the Global AI Summit and we're going to be talking about and hearing some of those things as well.
Where are you worried? It doesn't sound like you are. It sounds like even with market no longer being the top five player in China for Apple, and indeed some of these limitations in the EU, it sort of doesn't matter. You think there will be a super cycle no matter of what.
I definitely believe in that super cycle because all the forces of subscription, all the forces in terms of you know, status symbol, and of course the features that are going they might be they might be spec bumps, but the bottom line is consumers are going to stick with what they have given their ecosystem, given the access to Apple services and more importantly the fact that you know that is their only access point right now in terms of privacy and AI.
Very real quick wearables refresh how important?
Oh I think the world are important because that's the entry point for a lot of folks. So watch refresh. It's going to be important and maybe we'll see something for AirPods, ray.
Rang Constellation research always on it, always star at Caroline, what you.
Got and bullish ed bullish coming up AI startup Chi Discovery receiving backing from investors including open Ai. We're discussed with the found in next. This is brttly big technology. Eil Musk is reportedly working on a deal that would leverage his XAI startups data in exchange for some of Tesla's revenue. Nam most Kurt Wagner joins us some more and what is a Wall Street journal piece again about the intertwine of his companies. Can you tell us what is being reported on? What would get in exchange? What would XAI give to Tesla?
So in this you know proposed deal, Xai would help Tesla with some of their full self driving technology, other AI projects including you know, the humanoid robot project that Tesla is working on, and exchange for a share of revenue that's driven by these projects, right, and Caroline, as you mentioned, we were just talking about this last week, Right, this idea of all of the different companies in Elon's universe working together and the pros and cons of those. I think in this case, you know, if you're an ex Ai investor, this sounds like a great deal.
Right.
Suddenly you have a huge you know, potential revenue stream, a huge potential client in Tesla. I imagine Tesla investors may feel slightly different, But I think this is yet another example of the Elon world starting to collide with all of his various businesses.
That has been pushed back from certain Tesla investors about the sharing of chips, for example, and video chips. Now Elon's own response to this very story has been pushed back, and indeed he was saying previously, well, the chips sort of laying around in a warehouse unless I put them to work for Xai. Will we hear more investor pushback?
I think you might, because there is this feeling that Elon right now is using Tesla sort of the crown jewel of this empire. He has to elevate or boost his other businesses, right, Xai being one of them. Now again, I think those two companies probably share a lot of investors, So maybe there are some folks who are invested in Xai who would say, hey, this is a.
Great opportunity for us.
But if you are just invested in Tesla's you'd be asking yourself, well, why are we giving business to Elon's other company that I have nothing to do with? Right, So I do imagine there will be some invests here are who are at least scratching their heads saying, is this really the best option or the best opportunity for us, or is this just the best opportunity for Elon and his other businesses.
When he responded to that Wall Street Journal report, he said he hadn't read it, but that it wasn't accurate, But he did concede that at a basic level, XAI engineers speak to Tesla engineers. And I remember the week that Elon Musk walked into what was Twitter headquarters. Now x you and I reported. The first thing we reported is that Elon brought in Tesla engineers to basically cod assess the staff. And this is kind of normal right in Elon inc That there's a sort of more casual relationship between the companies and its stuff.
One hundred percent normal. This is exactly what Elon you know, has done, has shown to do. He shares employees, he shares resources among companies. You know, if you work for Elon at one company, you kind of work for the Elon universe of companies.
So I think we have seen this happen.
You know, as you mentioned, Edgie's pushing back on the story, but oftentimes you push us back on things that end up.
Being true or at least mostly true.
So it's hard to take that, you know, to me and this is not going to happen. And as you point out, I do think that there's a relationship here. It's just, you know, a matter depends what it's going to ultimately look like.
Kurt Wagner, we thank you so much. Let's stick with artificial intelligence now, but from a biology perspective. A startup Chai Discovery, which founded just six months ago and already it has raised thirteen million dollars from AI heavyweights Thrive Capital, Open ai Amy to bring artificial intelligence to drug discovery. Josh Meyer is the founder of Chi Discovery, joining us now. Congratulations on the round. I am so interested in chai on and this open source model compared to others. When we're thinking of Alpha fold, when you're thinking of evolutionary scales model, you say it's better. How on what measurements?
Well, first of all, thanks so much for having me here. We're really excited to be putting out this model for the community. You're asking a great question, and you know one of the properties about this field right now. It's actually almost challenging to evaluate these models. Now I cam here to one another. A lot of these models are available only under non commercial settings, which means it's hard for a company like us to actually benchmark against them. But we find on one of the benchmarks, for example, a benchmark called Postbusters, we find our models about seventy seven percent versus the seventy six percent from Alpha fold three. The models are really neck and neck, and we're really excited to put out a model and make it available for everyone, including for companies that want to engage in drug discovery.
Josh, Alpha fold has the juggernauts of Google Alphabet behind it. Behind you sit some empty chairs, and we understand, just a team of ten, what will about thirty million go towards? Is it about the talent? Is it about the compute, where do you want to build?
Well, we're going into really exciting times. Drug discovery is an extremely hard process. The fact that drug discovery works at all with the tools that are available today is nothing short of miraculous. So we're really excited to kind of participate in this market and build tools that we hope will make a difference in the process.
I think the results speak for themselves.
This is why we were excited, even just a couple of months of work to put that out for the community, for folks to evaluate themselves and to hopefully find find it useful. But there's so much work ahead of us, and I'm really just grateful for the incredible team we have behind us, my co founders, for example, Matt mcparltlan and Jack denn and Jacques but Trum among others. It's just such a great team to be working with, and I think we're just inspired by the possibilities that are ahead of us.
There's been a lot of hope and enthusiasm for the impact that AI will have on drug discovery for a while. But you are showing improvement to success rates. When does that sort of manifest itself in the real world. Pushes forward the field that one day a consumer or a patient gets access to this work.
We're in the really early innings of AI and drug discovery. We're seeing those first signs of life in CHAI one. For example, we've shown that you can integrate starting constraints into the model, the kinds of things that you might derive from white lab experiments, and use those in order to get significantly better improvements on understanding how molecules interact with one another. Those molecules are the basis of life as we know it, so we think with these kinds of new capabilities, we can use them to better understand how molecules interact and then use that understanding to reprogram them and then hopefully come up with better medicines and just increase make humanity better for all of us.
Keep coming back when those discoveries are occurring via your model, we appreciate it. Try Discovery founder Josh Meyer, Oracle just erasing its earlier gains on the day that's ahead of the company reporting earnings today, with investors hopeful that there is a continued momentum in this name the cloud business fueled by AI demand. Bloomberg's Brodie Ford covers Oracle and it's training high. We're now off. There is a lot of hope that we can vindicate the thirty percent run up this year in this stock totally.
This is one of those funny cases where you have a mature company that's known for something, but now a business line that's what ten percent of total revenue is all folks care about oci Oracle cloud infrastructure. A lot of folks didn't take it seriously three years ago, but now it's had a lot of wins with companies doing generative AI. Elon's Xai is famously a customer, and so we're seeing a lot of immense month Oracle's cloud infrastructure and as you see, yeah, one of the best performing software companies of the year. Investors are hopefully it'll continue.
Some analysts are a little bit nervous. One putting it that they wanted to know if Oracle is an AI faker that coming from Jordan klin Over at Mazuho, why would it be deemed a faker.
It reminds me of the debate around the AI server companies. The question is is this just something that's needed now because the traditional giants like Azure aws don't have the capacity or is there really something different about Oracle's cloud that all means it will continue lasting. I mean, there's spending eight billion dollars a year on Capex building out new data centers, so I'm sure they seem pretty confident that this will continue and demand.
They being Larry Ellison and team. Absolutely, he's a busy guy. It seems late like what he's also technically the controller of Paramount. That must have given you a chuckle.
Yeah, I'm expecting some call the question on the earnings call tonight about that, because I think Paramount and the Ellison team has made some comments about like, oh, we'll use Oracle technology to help us make movies. No one's clear if that means they don't have filmmaking technology. But I imagine we'll see some interesting press releases about how, you know, Paramounts using Oracle cloud infrastructure or AI script writing. There's gonna be some interesting coll mingling here. I imagine.
Let us know what goes on on that call. He always does, Bradie Ford, we appreciate it. Meanwhile, Ed, we are counting down just over one hour from glow time. What's some on my view?
Yes, yeah, look, I think We know what the basics are, right, iPhone sixteen generation four variants Base and then the two PC Pro and Pro Max. But it's still the same question, which is about Apple Intelligence. How do I use it in the course of my daily life? How do I use it at work? And, as Mark German has reported in detail, this kind of staggered roll out where the new generation hands set will ship next month, but iOS eighteen point one will be in at the end of this month. iOS eighteen point one will be next month. How does that go down with consumers? And it's not available in China in the EU? Refresh Apple Watch Refresh on the wearable side of things as well, but it's often in the story, right Carol on stage, help me understand how I'll be doing this in my daily life.
We've only got a minute. But the stock is lower it usually is on these days though, right we watch?
True?
Yeah, I mean I just love history and Apple stocks closed down and twelve of the last seventeen iPhone events sell the news kind of event. But there is a feeling this time might be different because if there's not a substantive hardware update fifteen to sixteen generation, it is the software side that might drive us forward if we are to have a so called super cycle.
It is still a three point three trillion dollar company, World's most valuable. We thank you Ed Ludlow for everything you're doing right now, everything you're going to do for the rest of the day as glow time kicks off. That does it for this addition of Blue mag Technology. Do not forget to check out our podcast as well. You can find it on the terminal as well as on Apple, on Spotify, and iHeart so much more to come from Ed in Kupertino. This is bloomg Technology.