Tesla's Disappointing Results and Google's Shares Dip | Bloomberg Technology

Tesla's Stock Performance and Future Plans

• Tesla's stock price dropped significantly after the company reported disappointing second-quarter results.
• The stock experienced its biggest drop since January 25th, falling by 12.5%.
• This decline was attributed to Tesla missing earnings estimates for the fourth consecutive quarter, despite achieving record revenue.
• The delay in the launch of Tesla's robotaxi, which Elon Musk has positioned as a key driver for the company's future, was a major concern for investors.
• The delay, while only a couple of months, was seen as significant because Musk has heavily promoted the robotaxi as a key investment factor.
• The delay also raised concerns about Tesla's deteriorating earnings and the company's ability to reinvigorate sales.
• Tesla's recent price cuts have not resulted in increased sales, leading to concerns about the company's ability to maintain profitability.
• Despite the challenges, Tesla has consistently cut costs, but it needs new products to boost sales.
• Ed, the Global Auto Editor in London, expressed concern about Tesla's lack of a more affordable electric vehicle, despite the importance of such a model for wider adoption.
• Alexandra, a retail investor and Tesla shareholder since 2020, believes that Tesla is moving into a new phase of growth and that the company's long-term goals remain on track.
• Alexandra sees the recent dip in Tesla's share price as a buying opportunity, as the company's delivery and production numbers remain strong.
• Alexandra acknowledges that the delay of the Robotaxi event by two months is not a significant setback and believes that Tesla is taking the time to ensure a successful demonstration of its autonomous driving technology.
• Alexandra emphasizes that the October 10th event will be crucial for Tesla to showcase its full self-driving capabilities and convince investors about the potential of its Robotaxi fleet.
• The speaker believes Tesla will have a threefold business model for its robotaxi service:
  • One part will involve Tesla's own fleet of cars operating autonomously in strategic locations.
  • The second part will allow Tesla owners to enroll their cars in the robotaxi service.
  • The third part will involve purpose-built robotaxis.
• Pete, a Tesla bull, has downgraded Tesla to neutral, citing limited and unreliable valuation upside.
• Alexandra, a retail shareholder, disagrees with Pete's assessment, highlighting upcoming events that could drive the stock higher.
  • These events include Tesla's Robotaxi Day, Q3 2023 earnings, and the launch of the Model 2 in early 2025.
• Alexandra also points out that Tesla's energy business has a higher margin than Pete acknowledges, with significant waiting revenues and profits.
• Tesla announced it will double down on its Dojo supercomputer project, aiming to compete with NVIDIA.
• This decision comes after years of uncertainty about Dojo's development.
• Alexandra, a Bloomberg Technology analyst, believes Dojo is a good investment for Tesla, as it will improve the company's infrastructure and profitability.
• Alexandra also supports Tesla's investment in xAI, but emphasizes the need for thorough analysis of AI companies, citing OpenAI's projected $5 billion loss this year.

Market Uncertainty and AI Investments

• The NASDAQ is down 2.6%, reaching its lowest point since June 11th.
• This decline is attributed to concerns about the lack of immediate returns from AI investments.
• Alphabet's shares fell after the company announced increased spending on AI, exceeding analyst expectations.
• The CFO reassured investors that the AI investments are generating revenue for cloud customers.
• Despite strong revenue and earnings growth, investors are concerned about the significant investment in AI, which is currently not generating substantial revenue.
• The portfolio manager believes the spending is warranted, given the need for infrastructure to support cloud growth and the fact that other hyperscalers are also investing heavily in AI.
• Investors are seeking clarity on the return on investment for these AI investments.
• The portfolio manager believes that the stock sell-off is due to concerns about the impact of increased spending on free cash flow and shareholder returns.
• Despite the sell-off, the portfolio manager believes that Alphabet remains a quality company with a strong business model and is attractive at current levels.
• The discussion highlights the market's uncertainty about the profitability of AI investments and the patience required for these investments to pay off.
• The speaker believes that the broadening of markets is a positive development, with areas like AI and autonomous driving picking up the slack from other sectors.
• While AI is expected to be a long-term growth driver, it will take time to see significant results, similar to the growth of cloud computing.
• The speaker sees autonomous driving as another long-term growth driver for companies like Google, Tesla, and Nvidia, despite the potential for investor impatience.
• Alphabet's investment of $5 billion in Waymo, which provides 50,000 paid rides per week, is seen as a sign of the company's commitment to this technology.

AI Startups and the Future of Cybersecurity

• Stainless, a company building a platform for high-quality, easy-to-use APIs, recently closed a $3.5 million seed round.
• The CEO of Stainless explains that while there are similarities between building APIs for AI companies and fintech companies like Stripe, AI APIs require a broader range of support and deeper expertise due to their advanced nature.
• Stainless is working with companies like OpenAI, Anthropic, and Cloudflare, as well as smaller companies, to help them build strong developer experiences.
• Bloomberg Technology has released its second annual leaderboard of AI startups, highlighting the booming AI innovation and the billions of dollars invested in AI companies.
• The list, which is not ranked, includes companies like OpenAI and Sue Know, chosen based on their valuation, funding, and buzz.
• Sue Know, a Massachusetts-based company with a $500 million valuation, has gained attention for its AI-powered music generation capabilities, which have drawn the ire of the music industry.
• The list features mostly U.S.-based companies, but also includes one Canadian and one French startup, reflecting the growing global interest in AI.
• Bloomberg Technology reporters around the world helped identify the most important AI companies in their respective regions.
• Rachel, a Bloomberg Technology reporter, discusses the criteria used to select the top 10 AI companies, including OpenAI, which was chosen due to its brand recognition, corporate and consumer interest, and significant funding.
• Rachel acknowledges that it can be difficult to assess companies that are primarily focused on enterprise solutions, as their customer base and usage patterns may not be publicly known.
• The discussion focuses on the recent earnings reports of Alphabet (Google's parent company) and Tesla, as well as the impact of a major IT outage on CrowdStrike.
• Texas Instruments' stock is up, suggesting a potential end to the chip glut and a revival in the market.
• IBM is expected to report lower earnings, with revenue growth anticipated to be around 1%.
• The market is showing an appetite for artificial intelligence (AI), particularly generative AI, which is helping to buoy some software companies despite tight spending.
• CrowdStrike's stock has dropped by 25% in the last five trading days due to a bug in a quality assurance tool that allowed flawed data to be sent to customers, causing the IT outage.
• A preliminary incident report from CrowdStrike indicates that a bug in the content validator allowed problematic data to pass through, and the testing process failed to flag the error.
• Cybersecurity experts are praising the detailed and transparent report from CrowdStrike, but the root cause analysis is still ongoing.
• A recent software bug in CrowdStrike, a cybersecurity company, affected millions of computers, including those in hospitals, airports, and airlines.
• The bug caused a "blue screen of death" error, disrupting operations and forcing companies to implement automated fixes.
• The incident highlights the vulnerability of relying on a single point of failure for critical systems, as CrowdStrike's software is widely used for endpoint detection and response.
• Gil Shwed, founder and CEO of Check Point Software Technologies, acknowledges the importance of quick software updates to address vulnerabilities but emphasizes the need for a balance between speed and security.
• Shwed believes the industry is learning from this incident and will work to prevent similar situations in the future.
• Gil Shwed, CEO of Check Point Software Technologies, discusses the future of cybersecurity, emphasizing the need for both network and endpoint security. He believes that both are essential and complement each other, despite the emergence of agentless delivery of security.
• Shwed also expresses his desire to increase the number and size of acquisitions made by Check Point, citing the example of Google's potential acquisition of Wiz. He admires Wiz's rapid growth and leadership in cloud security, acknowledging the time it takes to achieve similar financial success.

Other News and Developments

• The news segment also reports on a data leak from Leidos Holdings, a company that provides services to the Pentagon and NASA. A spokesperson for Leidos stated that the leak stemmed from a previously disclosed breach and did not affect their network or sensitive customer data.
• Meta has removed over 63,000 accounts in Nigeria linked to scammers who used Facebook to blackmail and sexually extort users. This action was taken six weeks after a Bloomberg article detailed the issue.
• Shares of NetEase are rising due to the upcoming launch of its mobile game. Goldman Sachs predicts that the game will generate $880 million in sales over its first year.

Gen Z and Social Media in Politics

• Caroline, another Bloomberg Technology reporter, transitions the discussion to the impact of Gen Z and social media on politics, specifically focusing on Vice President Kamala Harris's recent campaign rally and the viral memes and video edits that have emerged on platforms like TikTok and Instagram.
• A representative from the CEO Future Caucus, a nonpartisan organization for young policymakers, attributes the success of Harris's campaign to the dynamism and joy it has injected into a previously stagnant political landscape.
• The conversation discusses the use of social media by politicians, particularly Gen Z slang and memes, to connect with younger voters.
• Caroline explains that "Brat" is a new song by Charli XCX that embodies the "Brat Summer" vibe, representing a carefree, fun-loving, yet deep and engaging personality.
• Layla argues that the use of Gen Z slang and memes can be effective in reaching younger voters, citing President Biden's use of "Dark Brandon" as an example.
• Ed raises concerns about the potential for memes to be used for ridicule and misinformation, highlighting the competitive nature of online content in support of different candidates.
• Layla acknowledges the potential for social media to amplify negative content and contribute to political polarization, but also points out its ability to reclaim negative terms and perceptions.
• Caroline emphasizes the current focus on the positive and humorous aspects of "Brat Summer" on social media.
• The segment discusses the pros and cons of embracing social media.
• The segment encourages viewers to listen to the podcast on the Terminal, Apple, Spotify, and iHeart.
• The segment concludes with the Bloomberg Technology team's names: Ed and Chelsea Wrexham.