Bloomberg Audio Studios. Podcasts, radio, news 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 San Francisco, this is Bloomberg Technology. Coming up, US President Trump accuses China of violating an agreement with the US to ease tariffs, escalating tensions between the two countries. Plus, sales of Apple's iPhone are set to take a big hit from Trump's new tariff policy. We get into the numbers and we speak with the CEO of AWS as the leading hyperscaler runs faster on AI. What a week it has been in the world of technology. I'm looking at the NASDAQ 100. It is a mega cap and technology-heavy index. And over the course of the week, we're up a percentage point. We're actually lower in Friday's session, but this is a rebound from last week where earnings and that tariff story have been the driver of the markets and the headlines. There are two names in particular that we have been so focused on. Those names are Nvidia. Of course, we had earnings 24 hours ago, 38 hours ago, 48 hours ago. And then we spoke to Jensen Huang. It's giving some of the gains that it has seen back. But there is a big question still about China and cross-border trade of the lead edge technology. And then Apple again softer 4/10 of 1%. Just 24 hours ago, Nvidia was the world's most valuable company. Apple had regained some status as a $3 trillion club. We're under pressure now. Here's the top story. China's planning to allocate $70 billion of capital in a new effort to fast-track new infrastructure projects and shore up its own economy from ongoing US tariffs. That's according to sources. Meanwhile, President Trump reigniting those tariff war concerns, posting on Truth Social that China has quote totally violated its agreement with US or US, offering no details of what agreements China could have violated. Let's get more from Bloomberg's Mike Shepard. Do we know what the president is talking about here?
Well, we haven't gotten a clear signal from him directly about what had set him off this morning, but we have seen Ed over the past few weeks since that sit-down in Geneva between Treasury Secretary Scott Bessent and his Chinese counterparts sign that that little agreement that that day that they had forged there in Switzerland was starting to come apart. The Chinese government had objected to some export controls that the US has increasingly been applying to China keeping advanced technology from getting in there and of course this has been a sore spot for Beijing for years with limits on exports of semiconductors but they have been escalating and in more recent weeks we even saw the US go after makers of chip design software saying telling them essentially you can't sell to China without violating our export restrictions so that is something that already Beijing was seeing as a violation of the spirit of those conversations. We had heard that a week ago, but now today we hear from the top US trade negotiator Jamieson Greer talking about rare earths and critical minerals. And during that discussion in Geneva, the two sides had agreed that Beijing might lift some of the barriers that it had placed in retaliation for US export curbs on exports to the US of critical minerals. So there is a bit of tit for tat that we are seeing here and it may be bubbling over in the form of Donald Trump's Truth Social feed here today.
Ed, you know, I'm reading the news on the Bloomberg terminal and I go back to what Michael Kratsios, who runs the White House office of science and technology, right, told us the policy from this administration is promote and protect. Protect is the tariff bit, right? Promote is onshoring and stimulus for the tech industry. China is doing the same thing, right? It's trying to drum up some money, $70 billion we're reporting, for its own industries in China. What do we know about that?
Well, and that's a good question. And I'm glad you brought that up because it's unclear whether the administration here is responding to that report of additional Chinese stimulus toward artificial intelligence and other high-tech projects that they have planned as a way to spark their economy and make sure that they have some domestic demand to satisfy the industry it is trying to cultivate. But nonetheless, it would not sit well with the US administration here because they are trying to bring some of that manufacturing to American shores to try to build up the American tech manufacturing base. And we've seen so much of it, especially in semiconductors over decades, move to Asia. And Donald Trump has been applying pressure to none other than Tim Cook, the Apple CEO, to try to get the iPhone production moved here. Of course, in our conversations with Mark Gurman and so many others, we know that that is a bit of a pipe dream, but nonetheless, it is a priority for the administration. And so, you do see, as you said from your interview with Michael Kratsios, this desire to promote American tech here at home, but also protect it against the challenge it sees coming from China.
Bloomberg's Mike Shepard, do not go far. However, sense more news is coming on those topics. Meanwhile, sales of Apple's iPhone and those of its rivals are set to take a significant blow from President Trump's tariffs. IDC research showing smartphone growth of just 0.6% post tariffs. For more, Nabila Popal, IDC senior research director joins us. I always track your data, not just the backward-looking data, but extrapolating out and looking forward. You've kind of now got the post tariff scenario. Just explain what you published overnight and how this impacts in particular Apple.
Hi, thank you Ed. Nice to be here as always. Yeah, so exactly and we whenever we publish our forecast we always like to show what was the scenario before, right? So in our latest forecast which we just published, we're showing a flat growth and it's really important to see how that's changed, right? Because 24 was the year of we had like 23 was we basically we've been in few years of decline and then 24 exactly thank you for showing that up was a big year of growth and then 25 was supposed to continue this growth but and we were supposed to have about 2% 2.3% continued recovery but since February when was our last forecast was published we've been going through such tumultuous times right there's has been a whirlwind of uncertainty. You've seen that word thrown around many times. We've had to pull down the forecast because of obviously high uncertainty, so much tariff, supply chain turmoil and there's a lot of just soft demand across the board in large global markets.
I'm trying to understand policy and how you factor policy into that model. Right. So the situation was that smartphones were given a tariff exemption. That was mid-April. Then President Donald Trump just this month, May, said that for smartphones made outside of America, there should be a well, let's be honest, not just smartphones, the iPhone made outside of America, there should be a levy of 25%. How have you factored that in?
So you know that came out right actually after we had finalized our forecast. So we you know but we had taken into consideration right because we knew that even when the exemptions were announced or whatever wherever the tariffs stood that it was all temporary that things could always change. So we had to draw a line in the sand at some point but there was you know we had we did bake in that there is things could always change. So there the what what we're you know saying to our clients or anyone that you know essentially asks us this question is that that there is a huge downside risk to the US forecast and the tariffs the 25% essentially brings you know would impose the US market right it would impact increased prices it would change the demand right to the US market right now we're expecting the US market to grow about 1.9% and what which is actually US and China are what are holding up that even that flat 0.6% growth that we're seeing globally, but it was pulled down. Both those large markets were previously expected to grow higher. And if this 25% were to go into effect, you know, US market would potentially even go into decline.
We should say that this data from you and the news flow, it doesn't just apply to the iPhone, right? It also applies to other smartphone makers like on Android OS as well. But this has been our focus which is Apple and the pressure that Tim Cook has been under from this administration. The supply chain is a question mark but right now do you envisage any impact to pricing of iPhone or any giant shift to where that company manufactures that handset?
So I'll address the second part first. Right. Even when President Trump announced this potential 25% for anywhere he even said that it's not just Apple it would be to any brand that as long as phones coming into the US were not made in the US it would they would face potentially 25% or anything wherever they land right we do think that despite wherever whatever if you wherever the tariffs happen to land eventually if they do regardless of that we Smartphone OEMs will continue to diversify outside of China and Vietnam and India, we said this in our press release, will continue to be the two primary global hubs for smartphone manufacturing for reasons with that everyone on your show that has come on to say, right, because of the supply chain ecosystem that has already been established there prior to all this tariffs madness that began earlier this year, right? It's really hard. I think anyone that says smartphone manufacturing I mean understand that I understand the ideal ideology behind bringing manufacturing to the US and that question has also been asked it's a dream but I you know I don't see any reality where that is possible so it's just yeah so that's the reason why we do feel that it's continue those two regions are going to continue to be the focus of OEM's diversification plans.
IDC senior research director Nabila Popal, it's great to have you on the show. Thank you so much. Now, coming up, UiPath raised its outlook, but competition in Agentic Workflow solutions, it's intensifying. We'll talk to CEO Daniel Dines about what that means for his company. That's next. This is Bloomberg Technology.
Automation software company UiPath raised its full-year sales outlook yesterday when it released its earnings. The company also stressed that its public sector clients renewed contracts. Let's get more on this with UiPath CEO Daniel Dines. Daniel, it's great to have you back here on Bloomberg Technology. You know, a point of discussion for most of the year so far has been the impact of DOGE on companies just like yours that have government federal level contracts. I'm trying to read between the lines in the transcript of the earnings call. Was there any impact to you, positive or negative, from that DOGE activity?
Thank you for having me. Look, we had a great event in DC a month ago and we talked with a lot of agency. There is a renewed interest in agentic automation as a space and we basically renewed our contract. We have a great deal with the air force. they are coming with a great initiative called airmen which is aiming at a very transformative of their business processes. So all in one I think it's a more positive environment in DC but still there is a lot of moving pieces in transition there. So from our perspective and our guidance it's not a big difference.
Many point to net new ARR additions and them being low. What then accounts for that?
Well, we continue to execute well. We just finished a big transition. We had an entire year of changes in the company. We accommodate everything to go really big in agentic automation.
Basically, what is the growth picture? Our analysts right that growth indicators are mixed for UiPath. Would you agree with that analysis of it being mixed and if you do see growth where's it coming from?
Well, I think that agentic automation is a tremendous opportunity and it's I think everybody agrees that this is going to be very transformative on the business landscape. We believe this is going to be a bigger opportunity than RPA and we are really well positioned to capture a significant share of it. So all in once I think this is really our biggest opportunity for growth.
I'm looking at the cost of inference right now you know particularly in the context of companies just like yours trickling down. A lot of companies are talking about the momentum that Agentic AI is giving them. What's your point of difference? What is it that you're able to offer that others are not?
I think a lot of agents that we are seeing today are conversational agents but customers would like agents that are deployed in the context of their existing business processes and how can you trust the agents? It's the main point of the conversations and we offer a technology to orchestrate between RPA bots and agents and humans that really enhance the reliability of agents and the trust of customers right now.
What is the biggest cost consideration for you? I talked about inference costs coming down even so investors in particular love to see a commitment to access to compute and also just some like long-term commitment that the investment is worthwhile.
Yeah, I would not say that in our business the infra cost is significant. The real cost comes with implementing of the agents. Still the capabilities required to create really good agents that mimic the capabilities of humans are kind of rare and we are working a lot to build technology that help to democratize the ability to build agents. To me, this is going to be the real cost of deploying agentic automation at scale.
Daniel Dines, UiPath CEO, thank you so much for joining us here on Bloomberg Technology. Now, coming up, Microsoft's push to get corporate customers on board with Copilot seems to be taking off. We've got the details on its AI sales coming up next. This is Bloomberg Technology.
A growing push for sovereign AI has led to a wave of data center announcements, including one this week from Bell Canada. It plans to invest hundreds of millions of dollars to build AI data centers across the country. And it has named chip startup Groq as the project's exclusive inference partner. Groq CEO Jonathan Ross spoke with Caroline Hyde about sovereign AI, but also US chip curbs on China.
From Groq's beginning, we have done no business in China. And this is not a geopolitical thing. This is just a shrewd business thing. We saw all of these very large tech companies go into China and lose over and over again. And there's just a thumb on the scale for any Western company. I hope that someday China allows real competition because real competition makes people stronger. and I want to compete against those Chinese companies. But until they allow real competition, we can't do that. So, we've blocked all Chinese companies from having access to our API. We will not sell chips in China because they're just going to reverse engineer them and try and build them themselves and they're not going to compete fairly. As a result, when we do these deals, we're not allowing Chinese companies to run on them. And we do build, operate, transfer. In these sovereign cases, we're doing build operate. So, we're the ones operating that. And that actually gives commerce and others a lot of comfort that Chinese companies aren't going to be getting access.
But does the restrictions on say Nvidia selling H20s as Jensen would say mean that China just gets better at doing it themselves and a Huawei will be able to compete with Groq in the future?
Potentially. However, the reality is if you enable people now, then they're going to be able to use that advantage to keep growing quicker. We're going to be using AI to design our chips. We're going to be using AI to design our software. So why would you give that advantage? I think it's different in going back to information age technology. It's about replicating and distributing. Compute is about doing something specific. If you don't have the compute, you can't do it. Whereas information knowledge sort of diffuses and you'll catch up. With generative age technology, you can pull ahead.
You talk about wanting competition and to be competitive in China, for example. What about the competition with Nvidia? How do you stand compared to AMD and the other offerings here in the United States?
We actually think we're one of the best things that's ever happened to Nvidia shareholders. So, Nvidia sells a product that is a premium product. It's a luxury good. It's for training the models. When you train a model, you're willing to spend more money because you get to amortize that across an enormous number of users. If Nvidia continues focusing on inference, which they have to do right now because there isn't enough inference capacity, they're going to have to bring their margins down. they're going to have to sell their chips for a lot less. Remember, our cost is much less than Nvidia's cost. On top of that, higher volume, lower margin, and so the more inference compute we deploy, the more demand there is for training compute. The more demand for training compute, the more GPUs Nvidia sells. And the one thing that's really important here, Nvidia wants to do between 3 and 5 million GPUs for AI this year. But that's based on what's called HBM, high bandwidth memory. It's this very scarce component. They can make as many GPU chips as they want. They can't make as much of the memory as they want. Those chips are going to be built and sold. And the only question is what are they going to be sold to do. When we come in and we sell inference chips, then what we're doing is we're allowing those GPUs to be sold into training, which is a higher margin business. Nvidia is going to make more profit thanks to us.
All right, we have some breaking news crossing the Bloomberg terminal. Eutelsat satellite-based internet provider is in talks to raise €1.5 billion euros. This is interesting because in Europe the continent's hoping that Eutelsat will be able to displace and compete against the likes of Elon Musk's Starlink in Europe. But that's the red headline. Eutelsat in talks to raise 1.5 billion euros with a doubling of the stake from French entities. We'll get more on that story as we get more on it. All right, let's get back to what's happening in the world of AI. Microsoft is focused in driving adoption of its AI tool Copilot and at a town hall this week, it touted its progress. Who broke the story? Bloomberg's Brody Ford.
I think this is really interesting, right? Because it's quick on the heels of this deep dive we did in Businessweek about Copilot, how it happened, how it launched, and what Microsoft's hopes are for it. what you reported are names across various industries, big corporate names that are doing deals, right?
The background here is that Microsoft, Salesforce, companies like them, they have these AI tools, right? I mean, in the consumer space, ChatGPT and tools like it have ramped incredibly. In the enterprise, it hasn't been quite as easy of an adoption path. And so with tools like Copilot, Microsoft's AI assistance suite, we don't have great intel over how many folks are really using it, how many folks are really paying for it. What we learned from the meeting yesterday, which sources were telling us about, is that, you know, there are dozens of customers who are having over 100,000 paid users. That's a pretty significant amount. I mean, of course, you know, there's some discounting and that, but this is a sign that adoption is ramping. maybe more than investors had been appreciating.
As part of your reporting, we note that Microsoft CEO Satya Nadella is very closely tracking all kinds of data including who is using Copilot and how they're using it. Why is that important?
Right? I mean, what's really important is that you don't have shelfware that you don't buy 100,000 licenses but you know 50 people use it in finance, right? I mean, this is the classic problem with software where maybe you can sell a lot of things, but you have to really make sure they're using it.
Bloomberg's Brody Ford, another excellent piece of reporting. Thank you very much. Okay, coming up, Patrick McGoldrick from JP Morgan Private Capital joins us to talk about its approach to AI investment opportunities. That conversation's next. This is Bloomberg Technology.
Welcome back to Bloomberg Technology. I'm Ed Ludlow in San Francisco. It's kind of like the last day of technology earning season and we're seeing movers in the market on some numbers that got posted last night. Those of Dell and Marvell. In Dell's case, it was all about the profit outlook. It topped estimates. There is clearly a backlog for AI server demand, but shares are a little bit softer. Marvell a slightly different story. They kind of have like strong sales targets. They've won some business and they were pretty clear with the market, but investors still tepid on that chip name. Stock down 5%. That's having an impact at the index level as well. Let's go from public markets now to private markets. JP Morgan Private Capital's growth equity partners. It's a $1 billion fund focusing on series B right through to pre-IPO startups. managing partner Patrick McGoldrick joins us. The focus right now, the AI opportunity. I find this so interesting and it's part of today's VC spotlight. In my world, when I break a story about an AI startup or a new round, it's so interesting to look at the cap table, traditional venture capital, traditional, but also people like you coming in more in the private growth equity space. Would you just talk a bit about that business model and what you try to do?
Sure and thanks for having me on today, Ed. Appreciate the opportunity. So the way we position our strategy is to operate like a traditional venture and growth equity investor. So we start investing at the earlier stages of a company's formation series B through pre-IPO on the technology and consumer side all the way through that last inflection point before going public. I think for us we seek to leverage the whole firm to deliver value to companies and in a world where capital is just that but value ad in changing the inflection curve of a company's growth derisking we think JP Morgan is well suited to be that partner of choice.
So interesting you're talking about leveraging the full scale of JP Morgan right as your pitch. The traditional VC would say, 'Don't just take our check, take our operators, our knowledge.' Many of us are entrepreneurs or startup founders. Your pitch is we're JP Morgan.
