Big Tech in Wait-and-See Mode | Bloomberg Technology

Market Overview and Tech Company Performance

• The week ended in the red, with the Nasdaq experiencing its worst week since the beginning of September, due to the Trump trade and Fed reality, with bets for a 50% cut to 3% (1m21s).
• Alibaba reported growth in its international and cloud units, offsetting weak sales in the China e-commerce business, with the stock seeing anemic growth in e-commerce in China, its domestic core business (2m11s).
• Applied Materials, the biggest U.S. maker of chip equipment, gave a weak outlook, causing its stock to decline (1m51s).
• Nvidia is set to report earnings on November 20 after the market, with all eyes on the company (2m21s).
• Tech companies are in a wait-and-see mode, struggling to parse out what a second Trump administration will do, with Trump personally disliking Meta and Alphabet (2m44s).
• Bitcoin has seen a 30% increase since Trump declared victory, with Warren Buffett's Berkshire Hathaway and MicroStrategy tracking bitcoin, and a record $6 billion flow into crypto funds (3m8s).
• Alibaba's cloud division and international business reported solid growth, offsetting the drag from the anemic Chinese e-commerce business (3m54s).
• Consumer sentiment in China is weak, with revenues from third-party merchants growing only 2% for the quarter, and direct sales from the platform declining (4m33s).
• Alibaba's international growth has been resilient in the face of geopolitical headwinds, with dominant growth in the U.S. and other Asian markets, such as Malaysia and Indonesia (5m26s).
• Alibaba is still burning cash in these markets but is narrowing losses and improving margins, although it is still some distance away from breakeven (6m12s).

SpaceX Valuation and Developments

• SpaceX is preparing a tender offer in December, with a $250 billion valuation, which will sell existing shares at $135 each, allowing early investors to sell shares without raising new capital (7m6s).
• SpaceX's valuation has increased to $250 billion, a significant jump from its previous valuation of $210 billion, with some speculating it could go even higher due to Elon Musk's potential influence on the next administration (7m37s).
• The record for a startup valuation is held by Bytedance, the Chinese parent of TikTok, at $268 billion, while SpaceX's valuation is expected to continue growing (7m55s).
• SpaceX's Starlink has 6000 satellites in operation and has launched 7000 satellites, making it the dominant player in low-earth orbit satellite communication (8m52s).
• The company is focusing on reusability, with its Falcon rocket able to go up and come back down and be used again, and is planning another test of its Starship soon (9m21s).
• SpaceX expects to launch direct-to-cell service by the end of the year, which would put it out front in another business, offering satellite-based communication that can go directly to phones without any satellite dish or equipment (10m2s).
• The company plans to launch 400 Starship launches as possible in the next four years, an extraordinary valuation and amount of launches (10m20s).

Impact of Potential EV Tax Credit Removal

• Tesla and other EV makers are seeing a reaction to a report that Donald Trump is set to end some tax credits, which could potentially wipe out a nice juicy credit that consumers can get when buying an EV (10m38s).
• The tax credit is integral to demand, with consumers and manufacturers relying on it, and its removal could affect EV jobs and manufacturing in the US (11m7s).
• The current incentive is available to American-made vehicles, and its removal could be a surprise, especially since it had a lot of support in Congress from states manufacturing components for EVs (11m23s).
• The removal of the tax credit could set back adoption long-term and make companies readjust their strategy, relying on demand from consumers and businesses (12m20s).
• Elon Musk has been talking about scrapping subsidies for years and has been close to Trump throughout the election process, so the removal of the tax credit is not entirely surprising (12m48s).
• EV sales growth has been decelerating anyway, and the law of numbers does not allow for double-digit growth forever, but the removal of the tax credit is still a surprise, especially since it is not a significant tax credit (13m12s).

EV Industry Growth and Regulations

• The discussion revolves around the electric vehicle (EV) industry and its growth in North America, with the goal of accelerating sales growth (14m11s).
• California has the right to regulate tailpipe emissions, which has led to a dozen other states signing on and implementing regulations that affect fleets, requiring them to switch to EVs (14m24s).
• The EV industry was created due to California's right to regulate tailpipe emissions, and manufacturers believe they can compete with gas and diesel on equal footing, with customers like Pepsi, FedEx, and UPS saving money by switching to electric (14m56s).
• Regulations are essential to help the EV industry scale, as they provide guardrails for investment and create jobs, rather than favoring one industry over another (15m56s).
• The Trump administration's stance on EVs is not anti-EV, but rather about giving consumers choice, and the administration is looking for ways to create a level playing field (16m26s).

Government Efficiency and DOGE

• The Department of Government Efficiency (DOGE) has been established to cut excess regulation and expenses, with Elon Musk and others co-leading the effort (17m51s).
• The goal of DOGE is to make the government more efficient, but there are concerns about the approach, with some questioning whether using a "chainsaw" to cut bureaucracy is the right method (18m19s).
• There are also questions about the effectiveness of DOGE and whether it will rely on executive action or work with Congress (19m0s).
• The discussion highlights the need for a more nuanced approach to making government efficient, rather than simply cutting regulations and expenses with a "chainsaw" (19m16s).
• The analogy of brush fires is used to describe the need for a more targeted approach to making government efficient, rather than using a broad and sweeping method (19m50s).
• A high fire risk area in California has seen a significant increase in tree density, from 15 trees per acre when natives owned the land to 1500 trees per acre now, leading to bigger fires, but with modern fire management, the worst damage can be mitigated (19m53s).
• Public servants are nervous about the situation, and some burning is inevitable, but it can be healthy in the long run (20m35s).
• Ramaswamy's idea of canceling long-term government contracts and reducing headcount at government agencies could cause damage to the country's ability to protect its nuclear arsenal and chill the bones (21m37s).
• Changes are needed, but they should be thoughtful and preserve the foundations the country is built on, rather than addressing the core principles of an independent civil service (22m9s).

Market Sentiment and Company Earnings

• TSMC will receive $6 billion in grants from the Biden administration to bring production to the US, which has been signed and delivered (22m39s).
• The market is experiencing a risk-off sentiment, with fundamentals easing and the euphoria wearing off, leading to a 3% decline and the worst week for the Nasdaq 100 since September (23m13s).
• Individual movers, such as Tesla, are experiencing a relief rally after yesterday's selloff, while Applied Materials, a chip equipment maker, is down, signaling that everything may not be rosy in the chip industry (23m55s).
• Applied Materials' earnings are consistent with ASML's big themes about AI investment and cutting-edge machines, but investors are worried about the company's performance (25m0s).
• The CEO of Applied Materials is optimistic about the company's long-term prospects, but investors are concerned about the short-term fluctuations (25m9s).
• The read across is important for Nvidia, which is set to report earnings next week, and the availability of supply is the only thing that could hold the company back (25m52s).
• TSMC is finalizing awards from the U.S. government through the CHIPS Act, making it a contract between the U.S. and TSMC, which makes going back harder, and they've already achieved things they were supposed to do, with $1 billion federal money this year (26m27s).
• Samsung is rising in the South Korean trade due to a surprising $7 billion buyback of its own stock in the next year, despite the lackluster growth in the memory chip business (27m3s).

Tech News and Partnerships

• Elon Musk is wrapping up his feud with Sam Altman, alleging OpenAI is trying to corner the market and sacrificing safety, but OpenAI didn't immediately respond (27m21s).
• The Ultimate Fighting Championship (UFC) will be looking for a decade-long partnership when it shops media rights next year, according to Dana White, who also spoke about his relationship with President-elect Trump (27m45s).
• Netflix is presenting the big fight between Jake Paul and Mike Tyson, streamed exclusively on Netflix, which is an interesting moment for the platform (28m27s).
• The APEX CEO Summit is underway in Lima, where global business leaders are gathered to discuss the latest, including Google's VP of Affairs, who met with foreign officials to discuss how they can get the benefits of the new tech revolution happening around AI (29m20s).
• Google's VP of Affairs emphasized the importance of being heavily invested in areas like Latin America and Southeast Asia, as it aligns with Google's mission to organize the world's information and make it universally accessible and useful (30m21s).
• Big Tech companies were notably present at the APEX CEO Summit in Peru, while many U.S. companies were absent, and Chinese companies were also present, as Big Tech wants to make sure they get their footprint in the AI bedrock (31m40s).
• The presence of Big Tech at the summit raises questions about how they can establish themselves in the next generation of business when regulatory regimes are not set, and how they will deal with the potential changes in policies under President-elect Trump (32m13s).

Global Investment and Economic Outlook

• Companies are investing carefully in the current global economy, looking for countries with energy infrastructure, such as those with copper, lithium, and natural renewable energy sources, which is appealing to Big Tech (33m5s).
• There is hesitance to invest in certain sectors, which may be why consumer-facing sectors like retail are not investing as much, resulting in a paralysis as people try to figure out what is next (33m21s).
• The future of U.S.-China relations and U.S.-global relations is uncertain, with a focus on AI-driven tech and venture activities, and the way data is trained for large models is not completely separated between the two countries (34m39s).
• The U.S. has a huge advantage in time, having prepared systems over the past decade to organize data and make computers feel like humans, but there are concerns about the supply chain and potential tariffs affecting efficiency (35m34s).
• The supply chain is not what it used to be before COVID, and the U.S. is still behind and dependent on Taiwan, but there is hope for progress and codependency between countries (36m31s).

Data Bricks and Venture Capital Landscape

• Data Bricks is doing a tender for employee liquidity, and there are signs of activity in the IPO market and different exits through M&A, but the impact of a Trump administration on portfolio companies and VC's looking for an exit is uncertain (36m56s).
• Data Bricks is a unique and exciting company that has chosen not to go to the public markets, and the decision to fundraise is their choice, reflecting the current sentiment of founders in the Valley who are going through a reboot (37m33s).
• The new administration may bring changes to regulations and policies, including those related to AI, crypto, and other areas, which could enable more innovation and venture activity, with optimism for the future (38m47s).

Plantable and the Future of Food Tech

• Alfred believes the next area of growth is in enabling enterprise applications, aiming for 100% efficiency in individual enterprise computing use (39m10s).
• Plantable, a plant protein manufacturer, has harnessed plants to manufacture the Ruby protein from duckweed, also known as water lentils, and is now looking to grow the product's popularity (40m0s).
• Tony, from Plantable, explains that they work backwards from the food industry's needs, looking for natural successors to unhealthy ingredients, and found an enzyme abundant in leafy greens (40m32s).
• Plantable uses an aquatic plant, water lentils, as the most cost-efficient and environmentally friendly way of scaling their product (41m7s).
• The company has built its first commercial manufacturing module in West Texas but needs $30 million to expand and fulfill market demand (41m18s).
• Products containing Plantable's Ruby protein are already available on the market (41m41s).
• Plantable is currently self-affirmed and working with the FDA to get a final letter of no questions, and hopes to get formal approval from the European Food Safety Authority by 2026 (41m59s).
• Tony describes the world of raising capital for food tech as misogynistic, requiring the company to show proof of market fit and technology while discovering new market opportunities (42m18s).
• Investors in Plantable are interested due to the de-risking of the technology and market risk, and the company is now focused on solving operational risk as it moves to full-fledged manufacturing (43m2s).
• Plantable works with companies like Chipotle, allowing them to unlock or improve recipes without introducing new allergens or risk ingredients (43m21s).