Meta, Big Tech Make Political Shifts | Bloomberg Technology

Market Overview

• The Nasdaq 100 is up 1% with 86 stocks higher, led by NVIDIA and Microsoft, while Apple is lower again, marking its longest losing streak since November, down from its post-Christmas all-time high (1m15s).
• Bitcoin is rising for a fourth day in a row, with investors pulling $330 million from the ETF, according to yesterday's data, which is considered a record outflow for a $50 billion fund (1m51s).
• NVIDIA shares are driving the indexes higher, up 3.5%, making it the biggest points contributor to the S&P 500, and a similar story is seen with the Nasdaq (2m17s).
• Apple's five-day chart shows a 6% decline, its longest such streak since April, due to fears about China, where the company is offering discounted smartphones (2m32s).

Apple's Performance and Outlook

• China is a major market for Apple, and the latest data on monthly sales and shipments of iPhones in the country have been muted, causing concern given the size of the market and the importance of the iPhone 16 (3m13s).
• Despite concerns, there are reasons for people to be optimistic about Apple, including the release of more applications with AI features on the iPhone, which could lead to higher service growth with cloud growth and other tailwinds (4m13s).
• The valuation of Apple is being questioned, with people wondering about its overall growth rate and whether it will be as strong as other big tech names, leading to a cautious start to the year (4m49s).

Tech Market Trends and Predictions

• The NASDAQ 100 was up by 25% in 2023 and more than 50% in 2024, and there is still room for tech stocks to run higher in 2025, but the setup is different now that the market is 2.5 years into a major bull market that started in mid-2022 (5m22s).
• The dramatic ramp-up in interest rates in 2022 led to a significant increase in tech stocks, but this outperformance is expected to fade in 2025 (5m42s).
• Growth rates in online retail, online travel, cloud computing, and advertising are relatively sustainable, and the sector as a whole is being more judicious than in the past (6m0s).
• The emergence of generative AI (GenAI) is expected to lead to more efficient processes and better revenue streams, making it a positive factor for the tech sector (6m19s).

Uber and Alphabet Analysis

• Uber is a stock that is liked due to its dominant position in the market, and despite concerns over robotaxis, it is expected that they will find a place in the Uber network (6m37s).
• Uber has partnered with Waymo to offer robotaxis in two cities, Austin and Atlanta, and this is expected to increase competition in the space (7m40s).
• Alphabet (Google) is also a stock that is liked, but its price is highly dependent on regulatory factors, including the DOJ antitrust case against Google (8m18s).
• The outcome of the DOJ antitrust case against Google is uncertain, but a settlement is possible, and this could impact the stock price (8m40s).

Potential TikTok Ban and its Impact

• The TikTok ban is also a regulatory factor that could impact the stock price of Alphabet (Google), as well as other companies such as Meta, and a ban could benefit these companies (9m3s).
• If a TikTok ban is implemented, Meta is expected to be the bigger beneficiary, as users will look for alternative short-form video platforms such as YouTube Shorts and Reels (9m35s).
• Advertisers have already adapted to these alternative formats, and a TikTok ban could lead to increased advertising revenue for companies such as Meta and Alphabet (Google) (9m59s).
• The potential ban of TikTok in the US could have a positive impact on Google and Meta, as creators would need to find alternative platforms to build their audiences (10m8s).
• The likelihood of the ban going through is considered low, with some investors believing it has a single-digit chance of happening (10m28s).

Meta's Strategy and Leadership Change

• The ban is based on a bipartisan congressional law that was voted on by both Democrats and Republicans, and it has First Amendment aspects, but it is not solely a First Amendment issue (10m30s).
• Meta's goal is to attract more short-form video content and talent to their network, and they have been successful in doing so in various areas (11m51s).
• The urgency for Meta to attract creators onto their own platform is critical, regardless of whether a TikTok ban happens or not (11m22s).
• Nick Clegg is stepping down as President of Global Affairs at Meta and will be replaced by Joel Kaplan, a longtime executive with Republican ties (12m47s).
• The shift in leadership at Meta is seen as a big change for the tech giant, and Kaplan's appointment may signal that Meta sees their most important relationships as domestic rather than European (12m57s).
• Kaplan's Republican ties may help Meta navigate relationships with the Republican Party, but there may be tension between Kaplan's more traditional views and the current Trump-led Republican Party (13m59s).
• The key to Kaplan's success in his new role may be his ability to work with Mark Zuckerberg, and his appointment may help Meta align with the emerging MAGA Trump candidate party (14m43s).
• Mark Zuckerberg has shifted his stance on being hands-off with policy, as he was recently at Mar-a-Lago and called Trump personally, indicating he will likely handle the relationship with Trump himself, while Kaplan deals with Capitol Hill matters (15m1s).

Big Tech and the Incoming Trump Administration

• Other big tech leaders have also met with the President-elect ahead of his return to the White House, preparing for the second Trump administration (15m26s).
• The relationship between Silicon Valley and the incoming Trump administration has changed, with more pro-Trump rhetoric from the tech industry, partly due to frustration with the Biden administration's approach to tech (15m49s).
• Many in Silicon Valley are frustrated that the Biden administration hasn't championed the country's biggest export, leading to a shift in support towards the Trump administration (16m21s).
• Tech CEOs are looking to Tim Cook as an example of how to deal with Trump, as Cook managed the first Trump administration well through direct contact with the President (16m44s).
• Trump values meeting with CEOs and often responds positively to direct contact, which is a strategy many companies are adopting (16m56s).
• Trump has expressed concerns about big tech stifling competition and using market power to crack down on Americans' rights, indicating that antitrust pressure on big tech names will continue (17m15s).
• The Trump administration is likely to continue antitrust lawsuits against big tech companies, not because of a genuine concern for antitrust issues, but as leverage over the companies regarding content operation and speech (17m59s).
• The Trump administration's approach to tech mergers and acquisitions will be a test, as little tech companies benefit from big tech companies being able to acquire them, and many startups want the ability to be acquired as an exit path (18m35s).
• There is optimism that the Trump administration will reverse the hostility towards the crypto industry brought by the Biden administration, and overturn the Artificial Intelligence executive order to focus on beating China and other countries in technology (19m28s).
• The Trump administration's stance on H-1B visas and other elements of the Republican coalition are still up for debate (19m46s).

Turo Security Concerns and Business Model

• Turo, a car rental platform, has been in the news after attackers used the platform to procure vehicles, with some comparing it to Airbnb due to its peer-to-peer rental model (20m46s).
• Turo's business model is different from traditional car rental services, as it does not own the vehicles, which may lead to a different level of liability (21m2s).
• The company had noted in its public paperwork that theft, vehicle damage, and other safety and security issues could harm its reputation (21m15s).
• Questions are being raised about Turo's background check process, as the attackers did not have records that would show up in the checks, and the company's algorithm for approving users is not well understood (22m10s).
• The company's algorithm uses dozens of data points to quickly approve most users within seconds, but the exact criteria are unclear (22m28s).

Market Update and Rivian Production

• The state of immigration and H-1B visas under the new administration is still to be determined, with the Erickson Group to provide more information (22m46s).
• The markets are currently showing a turnaround, with the Nasdaq 100 up by 1.2% and gains led by Nvidia, and Bitcoin is also showing increased risk appetite (23m26s).
• Rivian has reported strong fourth-quarter production numbers, beating estimates with a production of 12,700 vehicles (23m57s).
• Tesla's shares are up 4.6% after a disappointing fourth-quarter delivery report, with other tech companies like Rivian also seeing gains, trading at $16 (24m27s).

China's Tech Export Scrutiny and Global Trade Tensions

• China is planning to increase scrutiny on exports of technology to make battery materials, aiming to protect its grip on the crucial supply chain, according to a notice from the Ministry of Commerce (24m41s).
• The move is part of rising global trade tensions, with China having developed a strong advantage in the field of electric vehicle battery technology, particularly in refining chemicals used in car batteries (25m32s).
• The US has imposed tariffs on imports of Chinese electric vehicles, including those from BYD, a global leader in the industry, in an effort to protect domestic carmakers and avoid undercutting their efforts to develop electric vehicles (26m13s).
• The Biden administration has been imposing restrictions on sensitive technology, including exports of advanced semiconductor making equipment and high-bandwidth memory chips, to undercut China's ability to develop a semiconductor manufacturing base (27m7s).
• The Trump administration is expected to continue and expand these export controls, as well as look for ways to retaliate and foster domestic investment in these areas (27m46s).

H-1B Visa Debate and Tech Industry's Stance

• The future of H-1B visas under the new administration is also being closely watched, with former Representative Denver Riggleman weighing in on the Elon Musk influence on the matter (28m18s).
• The discussion revolves around Donald Trump's stance on H-1B visas, with him seemingly supporting the initiative despite his previous actions during his first term in office (29m17s).
• H-1B visas play a critical role in allowing American companies to hire and retain the best and brightest talent from around the world, helping them remain competitive and global leaders in various industries (29m34s).
• During Trump's first administration, the denial rate for H-1B visas increased to an all-time high of 24% in 2018, before dropping down to 6% in the Biden administration (30m22s).
• It remains to be seen whether Trump's second administration will be different in its approach to H-1B visas, with industry leaders watching to see how immigration restriction leaders and the Trump administration reconcile their views (30m47s).
• The H-1B visa program contains protections designed to ensure that hiring foreign workers does not harm U.S. workers, including fees paid to the government to fund the training of American workers (31m45s).
• The investment in training the U.S. workforce is ongoing, with the H-1B visa petition playing a role in funding this training (32m4s).
• Big tech leaders, including Elon Musk, are supportive of the H-1B visa process and have been meeting with Trump, who seems to be supporting the initiative for now (32m21s).
• The outlook for whether Trump's support for H-1B visas remains the case is uncertain, with industry leaders preparing for a potential repeat of the first Trump administration's actions (32m44s).
• The tech industry's stance on immigration may cause tension among leaders with differing views, but it is an economic win-win for companies to hire globally, and the relevant visa is crucial for this process (33m4s).

AI Predictions and Trends for 2025

• The coming year will see AI companies focusing on developing software that can accomplish tasks with minimal human help, particularly with AI agents that can perform tasks autonomously (34m1s).
• AI agents are expected to become more prominent, allowing for the automation of entire workflows and freeing up human capacity for more creative and strategic work (36m7s).
• However, widespread adoption of AI agents will face challenges such as governance, privacy, and protections, which need to be addressed (36m49s).
• AI-generated video is expected to improve, with more multimodal models being developed, featuring more video and voice, and becoming increasingly lifelike (37m25s).
• The development of AI-generated video is rapid, with recent examples showing reduced latency and more realistic results (37m37s).
• Kathy Cao from Sapphire Ventures predicts that AI agents will begin to deliver on their promise, but acknowledges that there are still challenges to be overcome (35m51s).
• The use of synthetic data, generated by AI systems themselves, may become more prevalent as companies seek new sources of data to train more powerful systems (35m16s).
• GenAI has been a dominant force in 2024, and Sapphire Ventures expects this trend to continue (35m31s).
• Multimodal applications combining voice, text, video, and images are expected to see widespread adoption, with companies potentially using them to boost productivity in the year ahead (37m40s).
• In 2024, AI went mainstream, with 92% of Fortune 500 companies adopting GenAI solutions internally and spending around $14 billion on these solutions (38m36s).
• Major companies such as Walmart, JPMorgan Chase, Microsoft, and Google announced significant success and measurable ROI using GenAI projects internally, giving hope for continued expansion in 2025 (38m57s).
• For the hype around AI to turn into actual proof in 2025, more adoption amongst employees at companies and clearer guidelines on measuring ROI will be necessary (39m14s).

Paramount-Skydance Merger and Media Landscape

• Paramount and Cy Vance responded to critics of their pending merger, arguing that the critical filings are defective and lack merit, and that some proposed measures are unconstitutional (40m10s).
• Paramount agreed to merge with Sky Dance in July, which would make David Ellison the controlling shareholder and CEO of Paramount (40m27s).
• Critics of the Paramount-Sky Dance merger, including partisan political groups, have expressed concerns about media bias and the need for CBS News to speak to everybody in the country (41m0s).
• The FCC, under incoming chairman Brendan McCarty, will likely play a role in the final hurdle for Paramount's merger (41m33s).
• Paramount shares fell 29% last year and haven't posted a positive year since 2016, making good news necessary for the company (41m49s).
• The box office in 2025 is expected to see a mix of sequels, such as Mission Impossible and Captain America, and original movies from new directors (42m20s).
• The box office is having a potentially good year since the pandemic, but it's still not back to pre-pandemic levels (42m45s).
• Actual attendance numbers are significantly down, with half the number of people going to theaters as they used to (43m6s).
• Ticket prices are up, which helps the overall box office number, with more people opting for big screens and higher-priced ticket formats (43m12s).
• Americans are not going to the movies as frequently as they used to, due to the abundance of alternative online options and the quick release of movies online (43m23s).

Podcast Outro and Promotion

• The discussion is concluded, and the hosts mention their upcoming coverage of the Consumer Electronics Show (CES) in Las Vegas, featuring conversations with prominent figures in AI, chips, and more (43m55s).
• The hosts promote their podcast, "The Terminal," available on Apple, Spotify, and iHeart Radio (44m8s).