About this transcript: This is a full AI-generated transcript of Markets Await CPI as AI Trade Faces Another Test — The Close 8/11/2026 from Bloomberg Television, published August 12, 2026. The transcript contains 17,993 words with timestamps and was generated using Whisper AI.
"The countdown is on. Everything you need to get the edge at the end of the market day. This is the close. Another test for the AI trade and another bite of that macro risk. Live from studio two here at Bloomberg headquarters in New York. I'm Romaine Bostic. And I'm Isabelle Lee. We're kicking you..."
[00:00:00] Speaker 1: The countdown is on. Everything you need to get the edge at the end of the market day. This is the close. Another test for the AI trade and another bite of that macro risk. Live from studio two here at Bloomberg headquarters in New York. I'm Romaine Bostic. And I'm Isabelle Lee. We're kicking you off to the closing bell here in the U.S. And this is where we stand. You're looking at an S&P that started the day in the green room and it just faded and faded. It's now down by 410. Of one percent. Same story with the Nasdaq. It's down worse by five tenths of one percent. Traders are really refraining from making big bets ahead of the CPI print tomorrow which will likely show a cooling in inflation pressure. You're looking at oil which is resuming its upward climb now higher by nearly one and a half percent. Brent crude now at around eighty eight dollars per barrel and tenure yield at around four point six. You talk about that CPI report. It is expected to continue to moderate though of course after last Friday's big surprise on that jobs report. Anything out there is fair game.
[00:00:59] Speaker 2: While stocks are sort of quietly trading water if you want the activity in bonds is actually somewhat feverish right now. Commodity trading advisors had already tripled their underweight for their treasury positions at the end of July. Those wagers have actually remained steady in a couple of weeks since leaving that crowded CTA trade at risk of any spike in prices and drop in yields. But before we get to that data tomorrow morning this market is going to have to contend with another read on the AI trade tonight. Embattled AI server suppliers Supermicro and Neocloud CoreWeave putting their quarterly cards on the table. For Supermicro which pre-announced three weeks ago the concern is less about sales and backlog more about margins and credibility. As for CoreWeave the signal that will purely be on the demand side. And whether Nvidia's splashy announcement to create a financing pool for AI server clients whether that gives investors some confidence in the CoreWeave story. Now all this comes at a time when Citadel is actually saying systematic buyers out there are getting ready to load up on stocks again and leverage too. After that big massive unwind in July that stronger than expected earnings season and more favorable economic conditions potentially spurring a chase higher in stocks and that shift toward bullish positioning is lowering the cost of downside protection at least relative to the macro risk and options market signaling once again
[00:02:22] Speaker 3: that the fear of losses is less of an issue than the fear of missing out. Volatility is relatively muted right now. So when we look at the level of the VIX if you are someone who is worried about some short-term impact you can certainly go to the options market and use different strategies to just buy some downside protection and get through if there is a big catalyst event that you're concerned about.
[00:02:45] Speaker 2: And Kristen Bitterly on Bloomberg Surveillance this morning here on the close this afternoon. Amy Wu Silverman head of derivative strategy at RBC Capital Markets to kick us off to the close. And I do want to start off with that read that you have Amy you and your folks over at RBC about what activity we are
[00:03:02] Speaker 4: seeing in the options market and what it actually signals. Well look Romain it's still about that FOMO and YOLO. We definitely had a shakeout obviously in a lot of the leverage positions. We had a kind of a deep positioning. But now when you look at options skew so that demand for hedging that demand for downside it's very very low skew has flattened. And it does look like people are positioning more to those calls again trying to
[00:03:28] Speaker 2: get more leveraged upside and caring less about that leverage downside. We talk about an earning season. We always forget it's not over. And at this stage in our history and video is kind of the book end. We're still a couple of weeks away from that. But we get core weave and supermicro tonight. Another read on the AI trade. And I am curious when you go back Amy and look at what we learned out of the hyperscalers and some of the neoclouds that have already reported. What was the market signal. How did it actually take what we learned. And are we going to see a repeat of that
[00:03:57] Speaker 4: tonight. You know I think the biggest key takeaway particularly for the hyperscalers this earning season is that these aren't the hyperscalers you got married to. You know they're they're a different animal. They're a different beast. We came in with fairly sanguine implied moves on earnings day and the hyperscalers on just a magnitude basis beat all of them. But in particular the upside beats were substantial. You think back to Microsoft. You know you think back to Amazon. Those are I think on history the largest single quarterly beats up 15 16 percent. And one of the reasons why is one these these guys are more rate sensitive because of the debt issuance. And two because of the capex spend. They're not these big free cash flow bulwarks that we used to imagine. So the sensitivity to volatility I think means the magnitude of moves going forward. Romaine is going to be bigger and bigger. And Amy as you look beyond earnings you're
[00:04:54] Speaker 1: hearing about an anti-ai trade leading into the midterm elections. How big of a risk are those. And our investors may be getting ahead of
[00:05:01] Speaker 4: themselves when it comes to that. So look we've we've been marketing with clients these past few weeks. And one sentiment that keeps getting echoed over and over is we'll see sort of this anti-ai sentiment potentially in midterms be more than just a political story be something that transfers into a market story. You think about that in the context of very low correlation. You think about the kind of anti-ai data center builds the sort of local nimby as of versus what we need to do on a federal level. And it's interesting because I think you'll start to see that priced into options term structure as we get out of the summer months. You know September October November come more into focus. That's something I think that can pick up correlation something that we haven't seen yet. And I would keep an eye out for that because often we think of politics as something that you price out similar to geopolitics. But it could become more of a market story as we head into the fall
[00:05:59] Speaker 1: month. And you also track skew inversions as a measure of market for us. And you say that we're only around average right now. Has the momentum shakeout actually reset positioning or do you think there's still too much optimism maybe under the surface. Yeah it's interesting because one
[00:06:14] Speaker 4: thing that we do to look at AI froth is just the simple idea of skew inversion. So if you take the S&P 500 or you take all the stocks in the Russell 2000 and you just say look where is call implied volatility physically outweighing put implied volatility. That gives you you know we call that the FOMO the Momo and the YOLO where there's really upside demand and outweighing downside demand. That can peak in S&P 500 anywhere around 80 to 85 stocks. That got as low as 40 to 50 when we had that shakeout. We're starting to see that number climb again. But I would say in a percentile basis we're still only in 75th percentile and we've seen that really peak when you start getting momentum to get momentum. And that's what I would say that starts to signal that you're at peak froth in the market.
[00:07:01] Speaker 2: What about the macro risk gamey. This seems to kind of change every day or every week depending on you know let's just say whatever's coming out of Washington. But do people still position around that in any sort of meaningful way.
[00:07:14] Speaker 4: You know it's interesting because I was thinking about the clip that you played at the beginning from Kristen. Essentially you know she makes an excellent point which is look downside demand downside protection. It's pretty cheap you know. But we have to contend with this issue of the paddling duck. It's still going quack quack. What do I mean by that. There's this continued suppression of index volatility because you can have semis going one way. You can have software going another way. The zigging and the zagging sort of cancels each other out. And so it makes hedging on an index level difficult. I think most investors actually do know that the index volatility is fairly attractive that you're really getting good bang for your buck in terms of those tails. But you need that pickup in correlation. And so the big question we have is an overhang is what picks up that correlation. It could be something like an overall growing anti AI sentiment during midterms as opposed to something that's more fundamental nature.
[00:08:08] Speaker 2: Amy always a pleasure. Amy will Silverman head of derivative strategy over at RBC capital markets kicking us off to the close here on this Tuesday afternoon. When we come back a look at AIG. Peter Sofino spent the past five and a half years trying to get this company back on track. And now he passes the baton just 10 weeks ago to Eric Anderson the new CEO now inheriting a healthy company and a lot of questions about where he wants to take this insurer this underwriter and what the role of AI will be a conversation up ahead with Eric Anderson when we come back after the break. This is the close on Bloomberg. Insurance underwriter AIG starting a new chapter under new CEO Eric Anderson fresh off of earnings beat last Friday. AIG actually wants to capitalize on opportunity around AI in an evolving risk landscape. Anderson told me in our interview today he's got a lot cooking. Here's what he had to say.
[00:09:05] Speaker 5: I've come into the company at a really privileged time. It's building on some great momentum that the company has been building over the last several years. Great balance sheet great opportunity to help clients. It's such an interesting time in our industry in terms of our relevance. And you know one of the things we tried to say to the investors and the analysts that we're covering us was if you think about what's going on in the world today you find insurance in almost every aspect of it. Whether it's what's going on in the Middle East. What's going on with the data center build out with AI around it is insurance. And so our opportunity to help clients and work with clients and build on our underwriting capabilities and skill sets. I think gives us a great opportunity going forward on the underwriting thing. I mean you came from a on a broker.
[00:09:52] Speaker 2: You're now running an underwriter in AIG. I mean did that skill set match up. Yeah.
[00:09:59] Speaker 5: Listen I think ultimately the first of all there's a lot to learn. And I really enjoy digging into it and getting to learn a new organization. And it's a great culture and it's a great team. But in the end we're all trying to help clients manage their risk whether you're consulting as a broker would do or whether you're actually providing the capital. So ultimately dealing with the understanding what the clients are working on or what they're worried about. That is the same. How you bring product and service is a little bit different. But honestly it's been a it's been a great experience so far. Talk to me a little bit about first about the
[00:10:31] Speaker 2: business coming out of this most recent quarter. I mean premium growth is up. I average it out over the first half. So the last two quarters you run in at about 13 percent. What is your expectation for the full year. I know there was some discussion as to why you didn't sort of
[00:10:46] Speaker 5: reaffirm the low end of that previous forecast. Why not listen. I think the marketplace is coming off of a five to six year positive pricing cycle all around the world which is unusual. It's one of the longest I've seen in my career. And so but today it's becoming more of a product line by product line market where there's more capital that's come in in certain classes like property where the prices have come down in key areas. But liability still still still a positive pricing environment. And then some specialty products whether it's energy or whether it's shipping or political violence based on the risk dynamics. And it's kind of a global comment. So overall we're coming off of this massive cycle. And so we're just trying to be more more protective of our shareholders equity to make sure that we're only deploying capital where we're actually going to get a good
[00:11:30] Speaker 2: return for them. Is there something that you're seeing up ahead that's maybe causing you to be a little bit more cautious. No.
[00:11:37] Speaker 5: Some of it. Yes. Where the pricing is under pressure. We certainly don't want to chase growth just for growth sake without the right margin. But at the same time there's great opportunities out there as the world has gotten more risky. Our ability to help clients navigate that volatility provides I think for an AIG in particular a great opportunity. Well talk about the political risk.
[00:11:58] Speaker 2: I should say the geopolitical risk right now. Obviously the strait of Hormuz you took some losses on that in the most recent quarter. Give me a sense here as to how you're approaching ensuring what is or is not maybe going in and out of the strait of
[00:12:10] Speaker 5: Hormuz. Certainly from a shipping standpoint which is where everybody tends to focus on. We're staying really close in touch with governments with the ship owners themselves trying to understand what's happening. But ultimately we're trying to provide capacity for them as they you know try and transit the strait. At the same time we also have insurance in Dubai and around the around the Middle East. So it's more than just shipping. That's where the political violence piece is becoming a product that is in big demand at the moment as you might expect. And we're trying to lean in to help our clients that are there on the ground trying to manage it.
[00:12:42] Speaker 2: I know there's still a lot of moving parts as to what's transpiring with the potential Iran deal. But if we do get into a situation where there is some sort of toll or fee either controlled by Iran or Oman is that something is that a scenario where AIG would
[00:12:57] Speaker 5: still be at the capacity to actually ensure. Yeah listen we've never really stopped. And so it's not been an insurance problem. It's been a safety problem. And so the shipbuilders or ship owners don't want to put their ships in harm's way so to speak. But our ability to price the risk and allow them to at least quantify what it would cost if they decide they want to go through the strait is something we feel pretty strongly we need to continue to keep doing. And so ultimately if and when peace ultimately comes in that area you know we'll continue to provide capital to our clients. One of the other big lines of business out there for
[00:13:27] Speaker 2: insurance these days is in the AI space and the build out there. Kind of quantify it. Exactly kind of what the business opportunity is there. And what is it exactly that people would be looking to ensure.
[00:13:39] Speaker 5: Sure. So if you think about these data centers there's eight hundred and fifty active ones going. They need everything from project finance all the way through to operations. So that's construction. That's cyber. That's property. That's liability. You go through the whole list. I think one of the advantages for us as AIG is we do the full suite of products. And so our ability to talk holistically to a hyperscaler about what they need and our ability to help participate in all the different areas. I think is a competitive advantage for us and something we're leaning heavy on. But it is absolutely maxing out the PNC insurance industry in terms of the limits that are required. The cat areas where they're being based provide some some risk to us. So I think overall for the industry in total it's a great opportunity. I think for AIG in specific it lets us use all the capabilities and all the different product expertise because they're all needed to do a real data center.
[00:14:31] Speaker 2: We've talked a lot on the show about this idea of the mismatch right now between the build out in AI and the power needed to actually do it. Does AIG and your ability to cover it. Is that sort of part of the insurance offering that you have.
[00:14:46] Speaker 5: Certainly dealing with the power providers. Ultimately you know the regulators have their say as to whether you can build it what the framework is and have you have to bring your own power and the like. But we're dealing with the power providers to make sure we're providing the right level of insurance for them as they as they build out as part of the data center construction process. What about your own use of AI internally within the company. Yeah it's pretty exciting. We kind of look at it in two ways. If you look at it from as a helping our clients right all and it's being used across industry in so many different ways. So we're really pushing ourselves to understand how a client is using AI in their role whether it's construction whether it's professions medical just understanding it because it is becoming embedded in all these industries. And I think for us it's the same. We look at it. We've decided to go kind of right into the heart of our business. Look at it from an underwriting standpoint. Can we make our underwriter smarter. Can we get to things faster. Can we make it an easier process for us to conduct business with our partners. And then on the claim side. So you know when it when a claim comes in and we get two million of them a year how you actually read the complaint. Look at the policy language. Put them together. Get it into the hands of an adjuster who can then get to a client. That can take time. The ability to shorten that get it into the hands of an adjuster who's experienced on the topic. I think gives us a better client experience which is what really what we're pushing for on that side.
[00:16:08] Speaker 2: There's been a lot of changes over the last few years to get AIG on the right track. You've gotten out of the life insurance business. Your pure PNC. I was interested in the convex business. Two point one billion dollar deal to buy a stake I should say. Any plans to increase that stake. No plans at all.
[00:16:23] Speaker 5: We feel pretty pretty confident that where we are with them is the right spot which is about a third. We also provide some reinsurance on the back. So we share in a little bit of their underwriting which was also something we were after. And so we're opportunistically looking for ways to deploy capital where we think we can get
[00:16:38] Speaker 2: a good return for the shareholders. Well when we talk about deploying capital I assume that means more M&A. Are these going to be deals potentially larger than the two point one billion dollar deal for that.
[00:16:48] Speaker 5: That's not on our horizon at the moment because ultimately where we are in the insurance cycle we do think there will be opportunities for M&A down the road. But we like what we're doing with our team right now and trying to grow the business on an organic basis. But we're going to be nimble. And when we see opportunities we'll
[00:17:02] Speaker 2: move on. An exclusive interview with the CEO and president of AIG Eric Anderson. Now speaking of the risk landscape we had a chance to catch up with the VC firm Coastal Adventures. It's funding its next big bet. And this time it's actually in the world of politics believe it or not. State affairs. It aims as it says to revolutionize access to political news and policy developments. It's raised 70 million dollars with help from Coastal Adventures and help from one of its managing partners Keith Raboi. I had a chance to catch up with Keith as well as the CEO of state affairs Evan Burns. Take a listen.
[00:17:36] Speaker 6: The thing about state affairs that we have such conviction about is that policy markets have as much or more impact on most companies P&L's than financial markets do. Yet these executives or people in legal or government affairs don't have the ability to keep track of the movement of policy and regulation on a day to day basis like they can financial markets. So we have about a third of elected officials state and federal in the country who pay attention to us and use us as well as some great fortune 1000 brands companies like Walmart and Mastercard and McDonald's and McDonald's. And they trust us really for two reasons. One if you can make policy real time like financial markets in real time for decades you can navigate your organization through it well. And the second reason they trust us is they can really come to us and say look here's a mandate we have. Our customers want this. Our board believes in this. And so they can come in the state affairs and say we want to be involved in this type of policy and we can integrate that throughout their whole organization so they can have a proactive strategy instead of just waiting to see what happens. You often see people say what happened. Yeah. Well I do have to
[00:18:35] Speaker 2: ask you Evan. I mean right now everyone knows right now sort of what's driving Wall Street what's driving business overall is largely emanating out of Washington. But are you worried at all that that might change when we get another administration and maybe there's a little bit less emphasis from Washington on the policies that affect business. Yeah. 250 years of American democracy. I think it showed there's been a
[00:18:55] Speaker 6: there's been seasons of federal and seasons of state. I think we're going to continue to see state become more and more important in state affairs. We're building this for really all Western democracy. Can you build a real time knowledge graph around all policy regulations. So that applies to federal state municipal. But look states have a lot of impact right now. Okay. I'm going to get your
[00:19:13] Speaker 2: perspective because when I think about Coastal Ventures I think sort of deep tech technology type of bets. And obviously there's technology involved in this. But to a certain extent this is this is reporting. This is information. Give me a sense as to what you
[00:19:26] Speaker 7: actually were investing in. So as you know Coastal Ventures is the leading investor in AI and we've been investing in AI since we were the first institutional investor in open AI. We believe though that every industry will be transformed by AI including politics policy whether at the state and federal level state affairs is the only investment in that area. It's the only company that's succeeding. So it's a no brainer investment. We've invested four times or I've invested four times. There's only a one other company in my career that I've invested four times. It's called ramp. So we're equally optimistic about state affairs. So give me a sense
[00:19:59] Speaker 2: here. Evan how many like pain like enterprise type customers do you have so far across the whole country. We have over 30,000
[00:20:06] Speaker 6: customers. Now some people subscribe to one state. Other people enterprise subscribe to the whole country federal and state data and really the ones that are subscribing to federal and state data are saying we want to understand the real time movement of things that I can't just scrape off the Internet. When we think about AI. So there's an AI company. One of the things that we think is important in the supply chain of AI is what's proprietary data that I can't get elsewhere. And we've been building the machinery to capture that out of these state houses in these government places.
[00:20:31] Speaker 2: Forgive me if I'm wrong though. I feel like there's already a lot of competition in this space. You have you know political pro and fiscal note and quorum. You know we must sort of also not to Bloomberg government which also competes in this space. I mean what are you doing different that they are.
[00:20:44] Speaker 6: That's a great question. Yeah. So there's obviously reporting that you have journalists out there doing a great job asking original questions getting original information. But what we spent a lot of time on is building this knowledge graph of getting information you can't get online. So sending people into the room gathering those really important data points that matter. It's we call it available but not accessible data and putting that into our knowledge graph that ontology matters. What are the relationships. How can I query when I have a question of how do I help make K-12 education better and ask who are the folks that actually have power and have momentum and I can engage with across the country around this. When we get to this idea as to how much this can scale.
[00:21:20] Speaker 2: You know I mean Washington is a small place. I know there's a lot of policies that come out of there. But again to this question of how much can this business grow is the idea for this to be a Washington centric meaning in the U.S. government centric type of platform or is this going to expand to maybe other countries.
[00:21:36] Speaker 7: I think it applies to any Western democracy. Obviously there's a difference with our federal system. It's more complicated because you have to track the federal level and the state level and the local level and the municipal level. Other governments may be more you know like top down. But I think every democracy you know business is business is multinational. And so McDonald's does business in whatever number of countries. They have the same challenges in every country.
[00:21:59] Speaker 2: But with regards to just the editorial independence but also the idea of sort of nonpartisanship to this information. Is that something that you can guarantee to your customers to your users and your subscribers.
[00:22:12] Speaker 6: Being nonpartisan is what we get paid for. I mean this is a much like Bloomberg it is an expensive professional tool. They're not going to pay us for opinions. Opinions are great. We have Twitter for opinions but their pain is because we can go get information that is absolutely vital for the decisions they make to run their business. It has to be accurate.
[00:22:27] Speaker 2: Nobody would pay for it. I am curious when we talk about the longer term for this business. I mean I understand you mentioned the companies the large companies that you have. Is that where this stays or does this become something that you might see more folks on Wall Street like you know like hedge funds and investment
[00:22:42] Speaker 6: funds start to use as well. But the big vision for this business is we want to change the relationship of the public. Their relationship to policy because right now we think about voting as our democratic process. But the reality is these policies are debated every day across the country like should kids have access to cell phones in schools. That came up years ago. That debate in the policy market has been changing over and over and over again. So we want people to be the plug into that. Yes it starts with elected officials agencies not for profits companies who need to know this. But at some point we want to make it available to the public on a much larger scale for engaged citizens. The biggest vision is every American has topics that they're
[00:23:20] Speaker 7: interested in. They may say I'm not interested in politics called politics but they care about whether their kids are using a cell phone in class or whether their kids are reading these books or not or what etc. So if you can provide every normal American access to the information they care about and give them tools to influence the outcome. Every American adult should eventually be using state
[00:23:41] Speaker 2: affairs. Keith for boy formerly of the Founders Fund now MD over at Coastal Adventures alongside Evan Burns his latest investment the CEO there of state affairs. And Isabel we talk about this idea of sort of the big market movers out there. But I just want to take a closer look. This is a small cap company Aurora cannabis. The shares are halted. They had been up about 20 percent before being halted. There was some speculation that cure relief had actually made a bid for the company. And now Aurora basically confirming that saying that it has responded to an offer from cure relief on an attention to launch a bid and says that it has been in correspondence with the lead director with the CEO of cure relief. It's lead director at Aurora has been in contact with the lead
[00:24:23] Speaker 1: director of cure relief. And we have Bloomberg intelligence saying that Aurora cannabis is now in play and they said it intends to launch a takeover bid. But we'll see what happens next. But definitely a stop to watch. You see the stock they're popping
[00:24:34] Speaker 2: Roman up 20 percent. All right. We'll be back in a moment with a broader look at the broader markets and another conversation about AI. This is Bloomberg. 3:30 p.m. here in New York. This is the countdown to the close. I'm Romaine Bostic. And I'm Isabelle Lee. It's kind of interesting, Isabelle. We're keeping an eye on the market. It's a bit of a holding pattern today. But we're going to get a couple of interesting earnings reports tonight from core weave, kind of one of the OG neoclouds and then Supermicro, which basically just sells the service, AI
[00:25:07] Speaker 1: service directly. I feel like there's an intense focus on AI. But we have Wells Fargo saying that the big holdout is really the CPI report. In fact, Osung Kwon, who we will have later, says he sees it as a bigger deal rather than big semis. And he says
[00:25:21] Speaker 2: CPI is a bigger deal. Well, with regards to AI, of course, a big part of the question right now when it comes to the neoclouds like core weave or the server companies like Supermicro, it isn't so much as to whether you can sell that. It's whether there's actually going to be enough power to power these data centers. Our next guest, he actually sits at the heart of the AI infrastructure industry facing some supply chain pressures of his own, particularly coming out of his most recent earnings report. Joining us right now is the CEO of Vertiv. Gio Abratazzi joining us right now to talk a little bit more about that. Gio, great to have you here on the program. I do want to start off with your earnings report last week because whenever we talk about these AI companies, the story has always been they have these big beats on revenue, yet they miss on profitability or they miss on margins. You had that kind of the opposite story. You beat on margins, you beat on profitability, but you missed on revenue. And you said it was kind of just a timing issue. Explain exactly what the issue is.
[00:26:16] Speaker 8: Yeah, absolutely. Well, there's certainly a series of very, very strong earnings and end quarters. And the second quarter was no exception in that respect. We were our EPS were up 60 percent here and here. Very strong cash. Sales were slightly down on the midpoint of our guidance, still within guidance. And we attribute that to a timing factor on some complex projects. And let's say the complex supply chain, very much internal supply chain to really the deliver, deliver part of it. But again, it was a small percent. It is certainly true that with a strong second quarter, we took the opportunity and very convincingly so and very convinced for taking up our revenues for the year and pretty much raise across the board all our
[00:27:14] Speaker 2: financials. Well, give me a sense here. I mean, I mean, I mean, you are kind of a critical piece of the data center build out power and cooling, probably to some extent, some people would say more important than the servers themselves. You had a backlog of $15 billion at year end. You stopped providing that figure on a quarterly basis, at least publicly. Has the backlog changed in any sort of material way since then? Well, again, we
[00:27:42] Speaker 8: decided to give backlog information only at the end of the year. And with that all this information, we talk in terms of direction of the demand of the pipeline. And we have been very vocal about the strength of our pipeline and the trajectory of that pipeline. Growth year year and year, quarter on quarter. What we define as the velocity of the pipeline. So the speed at which opportunities turn into orders that has been, that has improved further. So we are in a very, in a very strong position. So we feel good about the future and certainly feel very good about our second half, as we explained about two weeks ago in our news call.
[00:28:29] Speaker 1: And you're talking about building multiple compute generations ahead. How do you make investments and infrastructure investments today when the chips are changing ever so quickly?
[00:28:38] Speaker 8: Yeah, we, we clearly invest in the technology that then will power and cool and create the infrastructure for data centers for the AI fact that is key is absolutely being very close to those who design the technology of the future. So very strong partnership with the NVIDIA example, but also working very closely with many of the hyperscalers and a lot of the other players in the industry. That gives us the opportunity to align our roadmaps, technology roadmaps, to the future roadmaps of silicon and IT infrastructure so that we can make available our technology for those who build data centers, our cooling, thermal, converged solutions and modular solutions so that when the new chips, the next generation, next to next generation land, because we know what the roadmaps are, we ensure that our infrastructure is ready for those new generations.
[00:29:47] Speaker 2: Well, on that road map, I mean, particularly when we talk about sort of the agreement with NVIDIA, the idea of re-architect, re-architecting, if you will, these data centers around these higher volt DCs. Give me a sense here as to how much of your road map is dependent on basically NVIDIA's road map for its Reuben chips. And if NVIDIA's rollout slips, what does that mean for Verti?
[00:30:10] Speaker 8: Well, we have our portfolio. We've been in the in this space for 60 years, just just to start a little bit with a with a legacy. So we have a technology to serve all the technology today and the technology of the future. So I would say that we are not new technology sensitive. We are very much new technology ready and we are rating our customers for the new technologies. So I'll give you an example of something that has already happening, happened or is happening. The transition from air cooling to liquid cooling. That was kind of a gradual evolution. And we were very ready for the new liquid cooling higher density technology. But that never negated the the strength of the air cooling part of the of the market and we continue to serve. So as density continues to increase as that type of evolution I describe for the cooling part applies also to to the power. So going from architectures like the one that like the architectures today. AC power based all the way to multiple layers of different architectures at the same time. 800 volt DC. We have the entire portfolio. So the speed at which that deployment will have that change will happen. Yeah. Something that we will accompany enable but not something that should change. We don't believe it will change. But should it change that will would impact in any way.
[00:31:47] Speaker 1: Thank you for the insights. That was Gio Albertazzi CEO of Vertiv. Coming up we'll dig into what's behind side times big move in 2026 when the CEO joins us in today's talk of the hour. This is the close on Bloomberg. Our stock of the hour is sidetime. The company's position timing tools are becoming a crucial piece in keeping other data center components synchronize as the AI build out continues. Shares up more than 90 percent so far in 2026 boosted by last week's earnings beat. Joining us live is Rajesh Bashish chairman and CEO of sidetime. Thank you so much for joining us in studio. Thank you so much. So your revenue was up triple digits year over year. What drove that acceleration and how much of that is directly tied to AI. Yeah.
[00:32:35] Speaker 9: AI is a big driver. Data center is a big driver. But actually all of our sections are growing. But back to data center. You know we are in every aspect of it. We're in the TPU GPU. We're in the switches. We're in the accelerator cards. We're in the optical modules. We're in the cables. Yeah. So we have a pretty good position. And timing has become even more important.
[00:32:59] Speaker 1: So what happens then to your business if AI spending slows. Like how much of this growth is sustainable beyond the current AI craze and all the spending that we're seeing. Yeah. I think that to some extent nobody is fully immune.
[00:33:12] Speaker 9: But we're somewhat immune to capex because we also offer a retrofit opportunity. So people don't have to build new data centers. They can make existing data centers at faster speeds. And that's where we come in.
[00:33:24] Speaker 2: So we have that opportunity. Well give me a sense here for those that are familiar with your company. I mean so we talk about the timing. The idea that there's all this data or whatever. Forgive my layman's terms sort of moves around. The idea is that you notice sort of need some I ask a traffic cop if you will. And you sort of keep everything running on time so to speak. I understand the importance of that. Why is what you do what what side time does unique as opposed to what some of the your competitors are working on. More importantly what some of the other chip makers out there are also working on to sort of get themselves up to speed. Yeah. So it turns out that the reason for the tremendous growth is because the performance levels in data center are so enormous.
[00:34:04] Speaker 9: And the cost of not sending enough data so high because chips are forty thousand sixty thousand hundred thousand dollars and every token is so valuable that every little bit of timing synchronization every little bit of timing accuracy every little bit of timing under tough environmental conditions matters. That's why AI data centers and later AI for example personally I whether we have glasses or pin or we have automotive driving or humanoid robotics. I think all of those will also use it. So in a sense we're not just about the data center. Well I am curious and you're in cars and robotics a lot of other things as well. But I am curious just about this idea of your own cost because we talk a lot about the build out. Forgive me for going back to data centers. But the idea that there are a lot of bottlenecks in getting these things up and running. That's getting the components or getting them at a cost that's actually favorable. Are you facing any of those issues right now. No because most of our technology is built on old nodes 180 nanometers 150 65 nanometers which are relatively easily available rather than two and three nanometers. We also have fairly small chips. Some of our big chips are you know five meter by seven millimeter by seven millimeter and the smallest one is point four. So when you go in with the design to do whatever fab you're using there's no issues there. It's not like you're having to wait in the queue for everyone else. Yeah. There's always some issues because TSMC is trapped. Yeah. We also use Bosch in Germany. We also use some of the fabs and but in general we're not constrained where we are constrained in this acquisition that we did where I think there's greater benefit to come in revenue. But so far because it's a carve out of renaissance. They have some challenges because they're seeing growth in their other businesses.
[00:35:56] Speaker 1: So we're serving that too. So your gross margin was up. Your rest results were well ahead of expectations. It seems like everything is rosy for now. But talk to us about the risks ahead. Like what could maybe propel your growth to the downside.
[00:36:09] Speaker 9: Yeah. People always ask about that. But the thing you have to learn about us is that we are super diversified. We are in phones. We are in watches. We are in even electronic cigarettes. We are in industrial. We're in automotive. We're in aerospace defense. We are in communications and data center. We talked. We talked about robots. So we are very very very very broad. Yeah. And we have very relatively little concentration. So we do have three or four rather large customers. But other than that it's a very well spread out business. And even our slowest business is growing at 50 percent a year which has nothing to do with data center. Yeah. There's a big non AI story. That's right. It gets buried. Rajesh I have to leave it there. Really great to have you. Hope to have you back. Rajesh Vashit the chairman and CEO over at side time.
[00:37:01] Speaker 2: As you count you down to the closing bells. We are just about 14 minutes away. We're going to catch up with Oshun Kwan chief equity strategist over at Wells Fargo. We're going to set you up for those earnings coming after the bell tonight and set you up of course for that big data print here in the U.S. tomorrow morning. That's up next right here on the close right here on Bloomberg. Welcome back to the close. And there are just 10 minutes until the close. I'm Romaine Bostic. And I'm Esa
[00:37:31] Speaker 1: Romaine. It's kind of a sluggish Tuesday. I think we're looking at an S&P that's still in the red also with bonds. There you go. S&P and Nasdaq down by nearly four tenths of one percent. Oil is climbing as investors really tried to parse what's happening in the Middle East. And you see 10 year yields there at 4.69. I feel like no one is really making big moves because they're waiting for CPI tomorrow. Yeah. We kind of saw this pattern play out last week leading up to that jobs report where people kind of took a step back. And then you had that big shocker of a number. Actually somewhat of a upside
[00:38:01] Speaker 2: surprise for markets as in you know sometimes bad things are good things. But it'll be interesting. CPI will be a cleaner a little bit of a cleaner read. But remember the last last month you had that CPI reading that really shocked a lot of people to the downside. And some people said that was just a one off. But based on the Bloomberg estimates for this one you're still expected to see some moderation over that long term trend. Definitely some moderation.
[00:38:21] Speaker 1: Yeah. Yeah. Yeah. Yeah. Cooling of energy related pressures and we have PPI also on Thursdays. Lots of data to digest for this week. We're also still going to get some earnings reports including from the tech space with super micro
[00:38:30] Speaker 2: Rancor. We've after the bell tonight here to help break it all down is also one chief equity strategist over at Wells Fargo. All right. So let's start with the macro the economic here because I think about when we got that jobs report leading up to that everybody thought it was so critical. We got it. We got it. Yeah. Yeah. The big moves and then everything just kind of subsided. Now we're kind of back to that again. Do you have high expectations for high volatility around these couple of prints we're going to get off the CPI.
[00:38:57] Speaker 10: Yeah. So I think CPI and PPI are going to be both very important. CPI matters more because it's tomorrow versus you on Thursday. It's really the last hurdle before NVIDIA earnings and Jackson Hall later this month. And this is August. So I think after CPI a lot of people are just going to close their books and go on vacation. So you know I think I think CPI is going to matter a lot. Especially given that we saw the negative jobs report on Friday that if it comes out hotter comes in hotter than I think the narrative could potentially shift to more of a stagflation narrative which is obviously bearish for equities. So I think it makes a lot of sense to heads into CPI print tomorrow. There are.
[00:39:40] Speaker 2: Yeah. Essentially you are seeing some of that in the bond market not necessarily seeing that hedging in the equity market. And it gets to this idea though too. When we talk about the direction of rates. Now there seems to be this consensus brain that maybe there is no direction for rates right now. Because it seems like every report we get it's kind of like a Rorschach test. You can look at these economic reports and make a case for why rates should be higher. You can also make a case for why rates should be lower. And then some people say well OK that's exactly why Kevin Walsh and the Fed shouldn't do anything at all. Yeah.
[00:40:07] Speaker 10: Yeah. So I think I think rates are probably stuck at these range unless you know we see a dramatic change in oil prices or the fast reaction function. So I think Jackson Hole is going to be a very important event because of that too. And what what could potentially change that is CPI and the inflation expectation as well as the core trend there.
[00:40:29] Speaker 1: And looking beyond CPI you also flag data center politics as key medium risk. Talk to us about that and why that is really the thing that you're looking at. I actually wouldn't have thought of that myself.
[00:40:39] Speaker 10: Yeah. So heading into midterms we typically see more volatility in the equity market. But especially this year I think there's going to be a lot of noise around data center politics. I mean people pay data centers. And the the NIMBYism that we are hearing is is adding to that political risk. Yeah. The reality is that we've done some analysis on the analysis on how data centers are actually boosting significant economic benefits to local communities where data centers are actually operating not not under construction but actually up and running. So we looked at 11 local counties where data centers are currently up and running and they have seen you know a lot more job creation housing construction soar 50 percent over the past two years lower unemployment rates. So they are seeing significant economic benefits. So there's that that gap between reality and the rhetoric that we're here. That's an interesting point because there is backlash when it comes to the political angle of the AI infrastructure. I mean a lot of local communities are not so thrilled. I mean of course it depends on who you're talking to. Could this be a bigger problem than the AI trade itself. So yeah I mean if we start to see the regulatory rhetoric getting more hawkish around data centers. I mean data centers. I mean data center bill that the AI CapEx cycle is really what's fueling economic growth in the U.S. right now. So over the past two past year about 30 percent of GDP growth came from really AI CapEx. And a lot of earnings obviously and the market too has been really fueled by AI CapEx cycle. So if you start to see you know political pushbacks on on data centers and AI overall I think that's pretty negative for the overall market.
[00:42:27] Speaker 2: I'm curious about that CapEx spending though. I mean yesterday of course all the talk was about this NVIDIA funding financing pool I guess we'll term it at that. And that's nothing to sneeze at. And it doesn't appear that there was any sort of visceral negative market reaction to that. It seems like most people have accepted the fact that if Johnson Wong wants to see $500 billion in financing greasing the wheels that one way or another he's probably going to get it.
[00:42:50] Speaker 10: Yeah. I mean you know don't get me wrong. I am I am bullish. I think that's going to continue. It's just that we're pointing out potential risk into midterms that if we see more rhetoric coming out from you know these states where you know there's you know there's gubernatorial races or Senate races. Yeah. We could potentially see more volatility going. Yeah.
[00:43:11] Speaker 2: And do you think though that that would be kind of a pause the idea that I mean not to get too deep into politics but you know politicians. They might say OK we'll put this on pause. I think New York has already said it plans to pause and another state also said the same thing. But then maybe when the election is over and people don't have to you know answer directly to voters in that way then everything will be back on. Yeah.
[00:43:29] Speaker 10: Yeah. I mean you can actually see that. Yeah. And and the economic benefits that we just talked about. I mean that's pretty significant. And you know there are really what that shows is a cap X really trickling down into the broader economy. And these are basically new communities that are being built around data centers. So a lot of people think that data centers when it's under construction you know they hire a lot of construction workers and they go away once it's up and running. But that's actually not the case. So we estimate about little less than one worker per megawatt that's going to be who are going to be working at these data centers. And these data centers are 500 megawatt plus. So we're talking about like 500 workers plus permanent jobs and high paying jobs to it which is usually in the middle of nowhere too. Yeah. So you need to build all these communities around it. And they that's why we're seeing those benefits economic benefits in those area. And I think we're very early in that trend. So we looked at 11 local counties. There are 40 data centers that are under construction today. And there's 100 plus that are being planned. So I think we're still very very early in this in this trend. All right. Ocean great to have you here.
[00:44:40] Speaker 2: Ocean quan chief equity strategist over at Wells Fargo. And you know while he was speaking Isabel there was a headline on quantity on which is actually expected to report after the bell in a partnership with Oracle on a hybrid quantum computing project. Of course we've already moved on from AI. We're now talking about quantum here. But it gets to this idea of the AI spend and the CapEx spend and the idea there's still
[00:45:00] Speaker 1: appetite out there for it. There was a stat that I read that without all of this AI build out the economy would be in a recession. I don't
[00:45:06] Speaker 2: know how true but it's believable to me. Well it's been a big contributor certainly in that last GDP report. We saw close to two thirds of that increase coming from AI. We get more AI earnings after the bell. A full breakdown starts now. The closing bell Bloomberg's comprehensive cross-platform coverage of the U.S. market close starts right now. And right now we are two minutes away from the end of the trading day. Romain Bostic here with Isabel Lee taking you through to that closing bell. It's a global simulcast. Tim Senevic joins us from the radio booth. Christine Aquino in today for Carol Masser. Welcome to our audiences across all of our social moments of the day. Tim a bit of a holding pattern for stocks. A mixed day here with the S&P and the Nasdaq in the red. The
[00:45:53] Speaker 11: Russell 2000 in the green. Yeah we'll see what happens tomorrow when we get CPI and Thursday when we get PPI. But I think you're right a little bit of a holding pattern. It's a Tuesday in August. So maybe we're the only ones at the office today and everybody's at the beach. But we are still seeing at least oil make moves today. WTI futures up about 1.6 percent as are Brent futures. just shy of 90 dollars a barrel at 89.16. I do wish that I was on the beach myself. But I'm here in the freezing
[00:46:22] Speaker 1: studio beside Romain. But we did. Romain takes no offense to that comment. I'm so happy to be here. Chopped liver here. We did talk to Wells Fargo who said that CPI is the last hurdle before big semis. Big semis meaning Nvidia and Broadcom. So he is really looking out for that. I mean CPI will really shed light on whether we're seeing
[00:46:42] Speaker 12: energy related inflation pressures cool. Well speaking of inflation pressures Isabel I mean I was keeping an eye on a bond market today. A yields lower across the board by about one to two basis points across a major tenors. But you know remember there are still rate hikes very much priced into the curve including for the September meeting. There's about over 50 percent chance that we're going to get a rate hike in September at least according to market pricing. But if it's up to Kevin Warsh it's a little bit more up in the air. And we're also going to get earnings here a big focus on earnings with
[00:47:11] Speaker 2: Quantinium Firefly Kava Coreweave Supermicro and momentum set across the wire momentarily with red across the screen here on this Tuesday afternoon. The Dow and the S&P each down about three tenths of a percent on the day. The Nasdaq composite losing about six tenths of a percent on the day. While the Russell 2000 that's the flip side here in the green up ten points or three tenths of one percent. In the S&P 500 peeling back the
[00:47:34] Speaker 11: layer there. We did see even though the S&P moved ever so slightly lower today we did see more stocks move higher in the index 277 to the upside. 225 stocks in the S&P decline today. And now we're taking a look at I'm up and it's more mostly right on the screen which
[00:47:50] Speaker 1: isn't a surprise as markets ended lower. You have tech down by nearly. Oh actually tech is just flat. It's financials that sound by three tenths of one percent. Materials lower communication services lower and maybe energy is one of the two bright spots. They're up by
[00:48:03] Speaker 11: seven tenths of one percent. Well as the way as we wait some of these earnings let's take a look at some of the stocks that move to higher today. I want to start with a couple alternative asset managers. K.K.R. and Apollo. Those both moving higher. K.K.R. to the tune of seven percent today. Apollo up 6.3 percent. These were among the firms that outperformed financial peers after NVIDIA tapped some Wall Street investment firms for that 500 billion dollar funding commitment. Apollo Blackstone Blackrock Brookfield Asset Management partnering with NVIDIA to source 500 billion dollar in financing for AI infrastructure. The coalition also includes Goldman Sachs and K.K.R. Also I'm watching what's going on with riot platforms. Speaking of AI infrastructure. Shares were up as much as 22 percent. Wow. What happened. I don't know what happened. I mean maybe a little bit of the air came out of this balloon but it was still higher by 4.3 percent today. This was a Bitcoin mining company that now has pivoted to AI infrastructure.
[00:49:00] Speaker 2: Bitcoin mining companies. Sorry. Were we all once. We were all. And maybe once we will all be AI infrastructure
[00:49:07] Speaker 11: companies. That's that's the question. A nine point one billion dollar deal with anthropic. That first for 191 megawatts of computing in riots Rockdale Texas campus. It's expected to generate nine point one billion dollars in revenue. But it goes through June of 2048. That is a commitment. What are you guys going to be doing in June of 2048. Yeah.
[00:49:29] Speaker 2: OK. Yeah. I can't do the math that quick. But you average out that nine billion dollars. I know the next 20 years. Yeah.
[00:49:36] Speaker 11: I guess that's what that's what the calculator says. OK. Oh yeah. Maybe that's why the stock went from up 20 percent to only up four. Maybe people people saw the fine print. Yeah. OK. So speaking of maybe looking backward a little bit. We are talking about bending spoons. The stock was up 4 percent today. Also up higher earlier in the. Well this is this is this is this is Romain. This is all the stuff you and I used to use. Yes. You stack. Yeah. Back in the day. Yes. Yes. You know. Vimeo. Well. AOL. Evernote. Those sorts of. My space in there somewhere. They're kind of creating this private. I think my style. What's that out there. Nothing. OK. OK. Carol. OK. OK. The zero hiked its price target ahead of the company's first earnings report. This was a second consecutive session for the company of the stock moving higher today. It hit an all time high earlier. We'll see what earnings say. But this has performed pretty well since that IPO. I do have a source who
[00:50:32] Speaker 1: had an AOL email. And that was. Yeah. Shocking to me and gave me a heart attack. We have any decliner say.
[00:50:38] Speaker 12: Well. Yeah. Let's take a look at what is down today. Let's start with beyond me. I mean a big declines. Their stocks on more than 20 percent. That is the biggest decline since October. We know of course that the board has elected for a one for 30 reverse stock split of its common stock. That's probably what's pressuring those shares as well. And remember we saw a second quarter decline in their net revenue. And analysts are recognizing they is slowly improving its business. It's just proving to be slower than expected here. So a lot of red on the screen for beyond me today.
[00:51:10] Speaker 2: A little bit of red on the screen right now for Lumentum. Actually the shares oscillating between gains and losses. The maker of optical equipment used in a lot of this technology build out. Providing its quarterly update here. Revenue in the most recent quarter does look like it came in above average. Adjusted EPS also beating the average of street estimates. $3.23. That's your bottom line number. The street was looking for $2.97. But here's the guidance for the current quarter. This is the fiscal first quarter. The company says net revenue will be in a range of 1.23 to 1.28 billion. The street was looking for 1.15 billion. So it looks like for the most recent quarter it did beat on most of the key metrics. And at least right now on the revenue guidance. So going forward it also does appear to be coming in above what the street was looking for.
[00:51:55] Speaker 11: I'm going right to that press release for any commentary we can get around these numbers. The company's president CEO Michael Hurston saying that Lumentum is positioned at the heart of a secular industry shift. Talks about AI compute workloads increasing in both speed and bandwidth. Data center architects are turning to optical links as a primary means of connectivity. The company also says increasing demand for ultra high power CPO lasers. An initial order for ELS modules as well as our breadth of NPO engagements are the first signs that optics are starting to penetrate in rack connectivity. Romain.
[00:52:27] Speaker 2: All right. There's a lot of words there. I'm not sure I understand most of them. Dr. Romain. Well let's take a look at Supermicro. Of course this company builds all builds and sells all these AI servers out there. A company of course that has gone through some fits and starts. The shares up about 8% in the after hour trade. The gross margin coming in above estimates 17.6%. EPS above estimates $1.70 versus $1.59 that the street was looking for. Net sales 11.12 billion. That's a slight miss. The street was looking for $11.26 billion. Still digging around here for any sort of forecast. But it does appear at least on the bottom line it beats. And that was a key metric here. People were really looking more towards profitability. Remember this is a company that provided us with a pre-announcement about three weeks ago saying that its revenue would be at the lower end of its previous range here. So all around here it looks like they're relatively coming in with what the street was looking for.
[00:53:18] Speaker 11: Yeah shares of Supermicro up about 7% in the after hours looking for some commentary. The company's founder president and CEO says as demand accelerates we are improving profitability through a richer enterprise customer mix and broader adoption of our optimized data center building block solutions architecture combined with continued investment in tech leadership manufacturing scale and global compliance. That's key there global compliance. We are enabling customers to deploy AI infrastructure faster and more efficiently. Shares of Supermicro up 9% in the after hours. This has been a volatile stock.
[00:53:51] Speaker 2: You see that net sales forecast for the first quarter guys 14.5 to 15.5 billion. The street on average was looking for 12 billion. So guiding well above street estimates.
[00:54:02] Speaker 1: Maybe what's helping also is the new orders climbing to more than $60 billion. And that comes amid a backlog of demand for its service outfitted with NVIDIA chips. Every time I think of an AI story NVIDIA always finds its way there. It really is at the epicenter of this whole AI craze. Yeah I mean very interesting.
[00:54:18] Speaker 12: Isabel that that was definitely a strong point that a lot of analysts were anticipating right that backlog. Very much an indicator of just the sheer demand for anything air related or anything involved in this AI supply chain. I mean before when we got their preliminary guidance you know analysts were viewing it as positive. And clearly today's beat really just affirming the story here for Supermicro and its role in the AI trade and build out moving forward.
[00:54:45] Speaker 2: Well speaking of the AI trade have you ever heard of a company called EROC ticker EROC. The shares up about 15% in the after hours trade distributed power systems is its game and now a partnership when it comes to anthropic. This is according to a report from Barron saying that anthropic will buy about 470 megawatts of power equipment from EROC. I don't necessarily have the terms of that but obviously anything that you see anthropic open AI NVIDIA touching or investing in of course gets a pretty strong bid.
[00:55:15] Speaker 11: All right. We got numbers from Lumentum Supermicro and a couple others. We're still waiting on core weave kava firefly aerospace and some more at least for now that is going to do it for our cross platform coverage of the market close. We'll be back tomorrow. Same time same place.
[00:55:35] Speaker 2: And our coverage continues here on Bloomberg television still awaiting those results out of kava still awaiting those results out of core weave. We'll have that breakdown when we come back after the break right here on Bloomberg. Core weave shares oscillating right now between gains and losses out with its earnings for the second quarter operating income did beat at $128 million but it still posted a net loss for the quarter of $626 million which was less than what the street was looking for. Revenue in the most recent quarter in line with estimates at about $2.58 billion. The street was looking for $2.56. The revenue forecast the revenue backlog excuse me as of June 30th $104 billion. Not quite sure of the comparison on that but obviously a number that everyone is taking a closer look at as we continue to see whether this neocloud continues to hold up in the face of so much renewed scrutiny about the durability of its business model. Meanwhile let's take a look at shares of kava that company out with its reports comp sales in the most recent quarter were up about 9 percent. The street was looking for 7.4 percent. So a beat on the comp sales numbers a beat on even in the most recent quarter. And the company saying that going forward looking forward at the full year it is standing by its comp sales forecast of about 4.5 to 6.5 percent for the full year. And that brings us to our top story. It is the guac signal. I guess it's sort of like the bat signal but for Chipotle and its managers to detect issues in their food supply. It's a lesson that Chipotle learned the hard way about a decade ago when a series of bruising customer illnesses from faulty food handling practices led to a plunge in sales and profitability. A 70 percent drawdown in the stock and the departure of the company's founder and then CEO Steve Ells. Now in the midst of a cyclospora outbreak linked to tainted produce combined with an outbreak of salmonella linked to jalapenos. Investors their laser focus on the ability of companies like Chipotle, Sweetgreen, Cava to move faster to detect, trace and correct anomalies in their food supply. Now maybe even more important than in years past given departments at the CDC and FDA that would normally be on the case have been gutted or at least realigned. For investors the math though is simple. Watch foot traffic. We've already heard from Yum and Wendy's and Chipotle and others already that traffic is holding up. For salad chain sweet green not so much. But for Cava another fast casual chain that traffics in fresh raw ingredients. Those earnings just right now and it does look like on the surface that their foot traffic held up up 9 percent in the most recent quarter in the company guiding for the full year of a range of about four and a half to six and a half percent. Pretty much where it's already been guiding already joining us right now to talk a little bit more about this is Daniela Sertori who covers the major restaurant chains for us. And I do want to talk about this sort of uneven response that we've been seeing by investors to the cyclospora outbreak. Sweetgreen really seemed to take the brunt of it. Obviously a company that relies heavily on fresh lettuces and fresh vegetables. Of course we now know based on what Sweetgreen has told us they don't necessarily rely on Taylor farms. When you take a look at a company like Cava which also traffics in a lot of the same sort of fresh products here. Why are we seeing their foot traffic hold up when a company like Sweetgreen just last week told us their foot traffic would actually contract.
[00:58:59] Speaker 13: It's pretty interesting to see. I think one of the big things is just the menu like Sweetgreen is known as the salad chain. Cava is not necessarily known as that. You know they have this Mediterranean menu and sure they have greens but you kind of have other options. So I think that's the first thing just people equated a little bit differently in terms of how heavy the leafy green usage is. The other thing is of course Sweetgreen basically got kicked when it was already down. The company was already struggling with a lot of issues including high prices that had driven customers away. And Cava has really been the opposite story. Cava as we see today has been actually been able to grow traffic bring more people in. And so we just see that the backdrops the places where the companies were starting from were just much much different.
[00:59:41] Speaker 2: One thing I was really struck by you wrote a great story about the block signal which I love. But give me a sense here about this idea of how important it is for the companies themselves to be proactive in this. And obviously you singled out Chipotle because they were kind of the poster child back in 2015 2016 2017 for not necessarily reacting in the appropriate way to stem a foodborne illness outbreak or at least to come clean with customers about it. And that really just dog that stock and dog their earnings for four quarters several quarters.
[01:00:12] Speaker 13: It's huge. I mean once there's a an outbreak the impact can be long lasting companies open themselves to litigation because it might sound surprising but companies can be held liable. Restaurant companies can be held liable for faulty products in their supply chain even if the problem is not that they you know mishandled the approaches in the restaurants. And so companies like Chipotle have really invested millions of dollars to make sure that they have the types of systems that when the health authorities called calling you know the Minnesota Health Department reach out to Chipotle and told them like hey people are getting sick. We think it's something in your walk then Chipotle can go in and actually look at the pattern of where the illnesses are cropping up and then they can find for example in this case it was a common grower for jalapenos. And so Chipotle was able to find the actual ingredient first you know based on signals from public health authorities. But you know the ramifications of not doing that can be extremely costly. And as I put in the story based on a former FDA official Chipotle really learned from the school of hard knocks there.
[01:01:12] Speaker 2: Yeah. Are there other companies though. I mean I would think that you know I mean Chipotle is obviously a giant. But when I think about the other either fast food or fast casual change I would assume they would have something similar in place do they.
[01:01:24] Speaker 13: Yeah. Based on my understanding basically all the large you know publicly traded chains have the ability to do something like that. But that ability really has changed in the past like decade or so. The problem really comes when you know the restaurant industry we think a lot about the large chains but truly in the U.S. most restaurants are independent like you know like maybe mom and pop shops. And so the question is if you're talking about public health you know whether those smaller ones can do it. But you know there's companies like Chipotle that they've been bruised so hard in the past that basically they've really really built up that ability to know exactly where the ingredients in their supply chain have been so that when issues arise they can basically trace it back pretty quickly.
[01:02:07] Speaker 2: All right. Daniela Sertori some great reporting earlier today. If you haven't seen the story check it out on the Bloomberg Terminal as we keep an eye on shares of Kava. A beat and I'll stand by their forecast coming out of that company. And it doesn't appear that the cyclospora outbreak has affected them. We're going to catch up with the CEO of Kava tomorrow. Brett Shulman. That's at 3 p.m. Eastern right here on the close. Meanwhile when we come back after the break here in the now we're going to talk a little bit more about the cyclospora outbreak from the perspective of the government response or maybe lack thereof. What do we know and well what can we know. Is it getting better. Is it not. Steve Ostrov he's a former acting commissioner of the FDA. He's going to join us after the break right here on Bloomberg. We were just talking about Kava the fast casual chain reporting earnings and there was a big focus on whether the cyclospora outbreak in the U.S. would affect foot traffic. The answer is no. Foot traffic was up above what the analysts were looking for on the street and the company's guidance going forward seem to suggest this isn't a concern. But it's still a concern for the broader restaurant space and it has put the sector under a microscope. You have not only the cyclospora outbreak but also a salmonella outbreak apparently involving jalapenos. It's raising a lot of questions just exactly about the safety of our food safety system. Joining us right now is a former acting commissioner of the FDA and also former deputy director of the national center for infectious diseases at the CDC which focuses on food safety as well. Well Steve Ostrov. Dr. Ostrov thank you for being here. I just want to go back to when the public sort of became aware of the cyclospora outbreak and I say became aware because it was really kind of early to mid-July when this really started to get out there in the news. And yet reporting seemed to suggest that the government itself knew about this weeks before it was actually disclosed or at least articulated out to the public.
[01:04:03] Speaker 14: Is that normal. Well it depends on the pathogen. But very often with cyclospora sometimes it can be really difficult to try to figure out when there's something unusual going on. And also to figure out what the source and the cause of that is. And so it usually is typical that they'll say we're investigating something. But to actually have actionable information for the public to actually do something to avoid becoming sick sometimes it takes a little bit longer to accumulate that evidence. And it's especially true with cyclospora because cyclospora you have a long incubation period. It can be up to a couple of weeks. And usually by the time somebody becomes ill they go and they see a health care provider. They have a specimen taken. They have it collected. They have it tested. You're talking three to four weeks out. And for public health authorities to have to then go and talk to that person. And try to figure out what it was that may have made them sick can be very very difficult. So our experience is that sometimes it's really hard to nail down what's causing an outbreak. And I think in this situation given the enormity. The number of cases of cyclospora in this outbreak they actually seem to me to have jumped on it fairly quickly especially the most impacted states like Michigan and Ohio and came up with the source and the likely ingredient in that source relatively quickly in comparison to what I've seen with other cyclospora outbreaks. Unfortunately by the time all of that happened given how ubiquitous the product was and how many different stores it was the number of cases were already really massive.
[01:05:51] Speaker 2: And that's something that we just don't want to see happen again. Well that's what I'm curious about with regards to sort of when you make a decision to pull something from shelves. And in the case let's just take Taylor Farms based on what we know on the reporting. This was a very prolific supplier. They were not only selling under their own brand but obviously supplying to a lot of other brand names. And it was sort of unclear at least to the public as to what was safe and what wasn't. And why some of this was pulled off the shelves and some wasn't.
[01:06:23] Speaker 14: Yeah it's a very good question. And so I would use the analogy is sometimes you can think of these investigations as being like a jigsaw puzzle. There can be a lot of different pieces of that jigsaw puzzle in trying to figure out exactly how they all fit together and which ones are part of the same problem and which ones may not necessarily be part of the problem but may have a different cause. Sometimes piecing that all together takes some time and it doesn't all happen at once. And so as new information becomes available and you finally figure out how does that piece of the jigsaw puzzle actually fit in to everything else. And so you may see what we refer to as rolling recommendations or rolling recalls or rolling pieces of information that are out there that lead us to have to continuously warn the public as we become aware of new problems associated with any individual outbreak. This one I think for the most part looking now at where we stand today which is that we seem to be on the downslope of the problem things are slowing down considerably. It makes sense to me that that would be the pattern that you would see if the majority of the problem was indeed related to the shredded lettuce that was served at many of the taco bell outbreak outlets. That came from Taylor farms from that one supplier in Mexico because you would anticipate it would take about three to four weeks after a decision was made to issue the recall and to remove the product from restaurants that you would see the reports from these cases start to slow down. And that's exactly what we're seeing especially in the upper Midwest. And so it looks to me like the major risk was actually addressed back in last July. Time will tell if that turns out to be the case. Yeah. Or if we're going to see other problems bubbling up from cyclospora related to other types of ingredients that may not necessarily have been originally recognized. So I will tell.
[01:08:29] Speaker 2: So with regards to though I mean we mentioned that that some of this we've seen this originated in Mexico. So what is our foreign inspection process look like for for produce coming into the U.S.
[01:08:41] Speaker 14: Well unfortunately it's nowhere where we need to be. And and that's pretty apparent from the very stark numbers. FDA in recent years and setting aside the pandemic which was a special circumstance which really made it difficult to do inspections especially outside of the United States. But if you look in most recent years they've only been able to do about 900 to a thousand inspections of foreign food facilities that are sending product into the United States per year. The number of registered foreign food facilities that are registered that indicate that they want to export food to the United States is over 120,000. And so you can just do the math and say a thousand a year is nowhere near where we ought to be given the enormity of the food supply that comes in from outside the country. And that's especially true with certain commodities. The lion's share of the seafood supply comes from outside the United States. Increasingly fresh fruits and vegetables come from outside the United States. Yeah. And the biggest exporter is Mexico. And so given that we know that there are continuous problems with produce coming from Mexico. One would think that that would be a priority area for FDA to do overseas food. Plus it's easier to get there because it's right next door to us.
[01:10:14] Speaker 2: All right. Dr. Ostrov have to leave it there. Really appreciate you joining us. Steve Ostrov there former acting commissioner of the FDA and former CDC official as well. When we come back we're going to catch up with the online recruitment company Upwork cutting its full year forecast. The CEO Hayden Brown. She joins us next. This is the close on Bloomberg. All right. One of the biggest decline today in the Russell 2000 was Upwork. The shares down about 15 percent its worst day since early May. This after the online recruitment company slashed its full year revenue and earnings forecast. There was a lot of talk here about the pressure from AI automation weaker new client additions and well just maybe a slightly softer labor market. The CEO though Hayden Brown said on the conference call that the near term AI and macro headwinds we identified last quarter. They persisted into Q2. Big questions now about Q3 and beyond. The CEO joins us right now. Hayden Brown of Upwork Hayden. Let's get right to it here. I mean I understand where the pressures are coming from. I think the street understands as well. The great question is I guess how do you compensate for that. How do you adapt to that. Is this just a future of dwindling growth or can you sort of turn this around.
[01:11:28] Speaker 15: This is a moment where the entire labor market is going through a transition with AI and we are really in a good position to navigate that from a position of strength due to the strong economics in the business and the fact that we have been building for this AI future. In fact just this week we launched the Upwork MCP server which is really a major milestone for us in bringing AI agents into our marketplace on both the buy side and the sell side and enabling both clients and talent to really amplify the work they do on Upwork through AI. And this is the type of strategy that really speaks to where the future of work is going and starts to show us what Upwork will look like on the other side of the significant transition around AI coming into work.
[01:12:10] Speaker 2: So kind of explain exactly the MCP server. Give me a sense here of exactly how that works and why that technology is unique to Upwork.
[01:12:20] Speaker 15: We started seeing something really interesting in the last few quarters remain where clients are increasingly having their own agents come to Upwork and those agents are trying to find and hire human talent on their behalf. We also are seeing more and more clients come to Upwork with these unfinished work products that they started with an AI tool and then realized they really need a human expert to get finished. This really enables agents on both sides of our marketplace to connect in to take the steps in the recruiting and hiring process to help with management of work and really pushes Upwork capabilities out into the ecosystem of AI endpoints whether it's Claude or ChatGPT where both clients and talent are working. And this is particularly important because we are seeing major shifts not just in what work is required and the integration of humans and AI agents but also major shifts and where work is originating. And the places where a company like ours can go to acquire those next customers who will be part of our future. And that this MCP really puts us into the environments where those customers are already working.
[01:13:29] Speaker 2: Give me a sense as to what prompted this specifically because I was speaking to another company that the traffic's in the same area you are and they raised some concerns. This was a few weeks ago basically about all the AI bots kind of you know coming onto their site and scraping things basically you know taking your business without really providing anything in return. Was that kind of what prompted this or was this where was this something a little bit more holistic that was in development.
[01:13:53] Speaker 15: It was something different. We absolutely have seen AI agents and bots come to our website trying to initiate activity. But we actually have the controls and protections that present prevent them from doing that historically. However as we've been seeing this increased demand and we've been seeing this pattern of clients and talent trying to use their own AI tools to take more of the steps and engage with up work clients and talent. We realize that through the MCP layer we could offer a safe a trusted a secure way to authenticate the right agent actors on behalf of clients and talent and make sure that we are extending the value of up work in giving folks the trust the security the guarantees the payments around both human and agentic work through this new capability.
[01:14:38] Speaker 2: And that is really the reason why we built this out. So just with the quarter and with some of the softness there this wasn't all because of AI you specifically reference a soft labor market. And obviously here at Bloomberg we can see that in the data. There's just not the same amount of hiring activity that we maybe saw in the past. I assume that's the same for full time employees as it is for part time or contract type of employees. Is this just sort of an across the board softness that we're seeing out there.
[01:15:06] Speaker 15: There's definitely a broad based weakness in the labor market. You know we saw this in Q1. The market continued to be very subdued in Q2. When we talk to clients they tell us they have pulled back hiring not just on our platform but broadly across all of their channels because of what's impacting them and their businesses and their budgets right now. So you know we are viewing this as kind of the status quo and we factored into our revised outlook basically no improvement in the labor market. Our expectation in our guidance is that this soft labor market will continue through the remainder of the year.
[01:15:38] Speaker 2: So when we talk about the long term story for up working and I mean obviously you know labor markets are cyclical to a certain extent. So that will resolve itself in its own. You know you have the empty MCP. It seems like that's addressing the AI issue. The longer term growth story here isn't just about AI jobs and whether it's you know the impact on you or the people coming to look for them or the people providing them. I assume at some point we'll be in a different world. Maybe it will all be AI. But I assume maybe we'll get a little bit more right sizing of what's going on in the labor market.
[01:16:11] Speaker 15: Where does up work fit into that. Or you know we can already see that all of these jobs your job my job all of our jobs are changing with AI. But they're not going away. It is really just a new set of work that's emerging. And from our vantage point today we can already see what up work will look like on the other side of this transition. That includes much bigger projects. We're seeing peak sizes of client projects both in terms of spend and hours per project on the site just in the last quarter alone because humans are moving up the value chain and doing more complex work. We also are seeing these new skills coming into the picture. More and more AI jobs. We saw 22 percent in the quarter growth of AI work on our platform and that's now at a $330 million run rate. And then the final piece of the puzzle is really for up work. We've been tailoring our solutions for both SMBs and enterprise. And those parts of our business actually are performing at or above of our prior expectations even in this software environment. Our business plus product was growing 174 percent year over year in the quarter. Our lifted product for enterprises is on track to hit its annual growth goals as well. So this is really a picture of strength from these new customer segments including SMB and enterprise strength of AI work and the expansion to cover both the AI agents and the channels where people are now working.
[01:17:28] Speaker 2: All right. I really appreciate it. Hayden Brown there. She is the CEO over at Upwork. All right. We take a look at the after-hours trade here. And obviously core we have one of the biggest gainers to the upside coming off of that earnings report up about 9.4 percent. Also seen a little bit of strength out there in super micro as well. But the star of the show is well decidedly a non-AI company. That's Kava Group. Their expectations I think were coming in a little bit light into this quarter primarily because people were expecting some impact from the cyclospora outbreak. But the company beat and the company stood by its long-term forecast. The shares up about 15 percent. Meanwhile the momentum slightly lower on the day and firefly. We'll just call it on change. That is the setup heading into tomorrow where we are going to get a big inflation report. This is the close on Bloomberg. All right. Shares of court we've hired in the after-hours trade. The company's second quarter sales topping estimates signing up more customers in a booming market. Sales more than doubling to about two and a half billion dollars. Neoclub provider of course was in the spotlight. A lot of concerns about his durability. Thank you. Well for a while I never really seem to have much concern. He's head of technology research over at D.A. Davidson. He's got a neutral rating on the shares with a price target of 100. All right Gil you know every time we talk I mean I'm always curious about these kind of you know these neoclouds and whether kind of these sort of ancillary players in the hyperscaler space are actually legit. When you look at these numbers today does it give you a little bit more sense of proof of life or what.
[01:19:03] Speaker 16: It's incrementally positive. There is still a really big question about whether we even need neoclouds whether they're a good business. At the base of it is are they getting a good enough return on investment to pay for the very expensive capital that they have to borrow. And I think that what investors are seeing today they took a small step in the right direction. The operating margins which were only one percent last quarter out now five percent. So that's not a lot. That still means a one percent return on invested capital. But it's a
[01:19:36] Speaker 2: step in the right direction. So a step in the right direction. Is it a durable step a long term step Gil or is this just you know they're taking advantage of what right now is just kind of a crazy market. Let's put it in perspective. So if I'm saying they're getting about a one percent return
[01:19:51] Speaker 16: on assets their borrowing cost has actually just gone up. It was closer to eight percent and now it's it's close to 10 percent. So you're borrowing at 10 percent to get a one percent return. That's not good news. So again they have to improve the returns very significantly. And have to reduce the cost of capital which recently has actually gone the wrong way. That's why we're questioning the whole category is that this is like borrowing on margin to buy treasuries borrowing a 10 percent to buy a five percent return isn't a good idea. And for these guys again they're still getting a one percent return. So until and they're at a 10 billion revenue run rate scale. So it's not like there's a tiny upstart and they're still generating pretty low returns on that slightly better than the four but still not good
[01:20:41] Speaker 2: enough to justify their existence. Well what do you make of kind of the splashy announcement that Jensen Wong made yesterday. The idea of trying to raise what is effectively a 500 billion dollar financing pool if you will for presumably those folks who are going to be buying its chips. But the idea is that some of these companies that are dealing with a higher cost of capital or maybe no access at all would potentially have access. Does that not help core weave or is this just basically you're still paying the same cost of capital just maybe to a different set of separate set of lenders. That is exactly what Jensen's trying to do. He's seeing core we've
[01:21:17] Speaker 16: have to borrow a 10 percent. He said I need to do something about this. And so if I guarantee some of these loans I can reduce the cost of capital for companies like core we've so he is trying to help them. The prices of course that you can only buy Nvidia chips. So he's not doing it out of the generosity of his heart. No. He's doing it so he can see the whole ecosystem with capital that's tied to buying Nvidia chips. Not broadcom chips. Not AMD chips. Not ones made by Intel. But Nvidia chips. And so that he's getting something for that backstop. That backstop though is a financial commitment. If these data centers fail the loan goes back to Nvidia. So there is a cost at least down the line for them making this type of guarantee. But for now they have 60 billion dollars of net cash. They're going to generate 200 billion in the next 12 months. He needs to do something with that cash and guaranteeing his customers loan seems to be a good way for him to make sure that they keep buying
[01:22:18] Speaker 2: Nvidia and don't buy anything else. So with core we've I mean one of the big questions and that you and a lot of other analysts raise was also this idea of of who their customers are and whether it would be able to diversify. Obviously at least in the most recent quarter still heavily dependent on Microsoft. And it's honestly a couple of the hyperscale is. And I guess my question to you is why does a Microsoft need a core we. Why does a meta need a core we. Why does alphabet need a core we've or any of
[01:22:48] Speaker 16: its or any of those other neocloud competitors. So the reason Microsoft is has a three part strategy is that they don't want to build it all themselves. If they build it all themselves they're taking a risk that they overbuilt. So they're building some infrastructure. They're leasing other infrastructure and then they're leasing compute from companies like core we've and reselling it to their customers. They're the ones that have the customers. And that's why they want to make sure they can meet demand without over investing. And core we've is a tool to do that. The problem with being a tool is that once you use the tool for let's say the next three to five years by then Microsoft believes they will have enough capacity to serve all their customers. Are they going to need core we've is meta going to need core we've when they're done building out their own infrastructure. So this is great for Microsoft and meta for core we've shareholders. There may be a ticking time clock. All
[01:23:42] Speaker 2: right Gil always a pleasure. Gil Luria head of technology research over at D.A. Davidson. And while core we might be a tool. Let's look at the other side of the the coin. And that's with Supermicro. Those shares are higher in the after hours trade up about 10 percent. I'm not renting the servers. They're actually just selling them. And maybe that ends up becoming their remote. Erica Brescia joins us right now here in studio to managing director over at Red Point Ventures. Great to see you here. Great to see you. Let's talk about Supermicro because I mean this is also one of these companies kind of got batted around for a lot of different reasons as well. But it's also decidedly more in the I guess the picks and shuffles. We're selling the thing so to speak although they're still kind of collecting their own chips and service and then trying to to resell them here. Is that a more durable business model in your view. I mean I don't see any signs of it slowing down anytime
[01:24:26] Speaker 17: soon. And they have a huge amount of pricing power right now. It's fascinating to see what's happening in the market. We have portfolio companies who are raising capital earlier just to be able to go and secure their Supermicro supply chain. And part of their calculus is when they issue a P.O. for hardware they actually don't know what they're going to pay for it. The price isn't fixed until delivery. And so we're assuming prices are going to go up 25 percent between when we issue a P.O. and when we take receipt of the goods. And so Supermicro is in a really really healthy position right now. And that's what we're seeing in the margins.
[01:25:04] Speaker 2: Well I'm curious. So you're putting in purchase orders without really knowing what you're what the end price is going to be.
[01:25:10] Speaker 17: Exactly. At least if you're a company spending tens of millions perhaps it's different at hundreds of millions or larger scale. But still this is significant spend. And it's so hard to get access to all the materials you need to rack your own servers that Supermicro is in a really powerful
[01:25:26] Speaker 2: position. So is that for those companies that are entering into those agreements. So I mean that that's worth it to take that risk of saying I'm going to I might be paying 25 percent more than what I thought I would. What other choice do you have. You have to keep up with demand.
[01:25:38] Speaker 17: You need the servers. The last thing you want to do is not be able to deliver your service to customers because you can't get your access to enough hardware. And we're seeing these companies grow at astronomical rates. Railway is one of them that's exactly in this position. And if they can't keep up with racking new systems they can't serve this explosion they're seeing in demand
[01:25:58] Speaker 2: thanks to AI. Well then you have to have a lot of confidence that that demand is going to be there. I assume these companies have that. In the case of these companies we certainly do. Well is this. Are we at the stage though in this sort of cycle where if enough people are confident that that demand is going to be there. And we kind of referenced the Jensen Wong in this financing pool. And a lot of people are like that. Yeah. Yeah. First of all like OK. It's crazy from the other perspective. Obviously great for Jensen Wong. But he also has to have some confidence that you know that 500 billion dollars to a certain
[01:26:26] Speaker 17: extent probably will be tapped. Well of course it will be tapped. And not only that there's a couple of things going on. First of all when it comes to financing chips right now most companies that are doing very large purchases are having to get like they call it a wrap from a Google or another credit worthy lender in order to be able to get financing to go and get these chips. And you know there's some scarcity and how many of those agreements can be signed. And so it's really smart from Nvidia to to enable these companies to actually get access to the chips they need. And not only that but there's a huge amount of innovation happening at the chip player. We are spending a lot of our time in semis as are many other vendors. And so I think as we see totally new chip architectures coming out that may challenge Nvidia. What's smarter thing for them to do with their excess capital than lock people into Nvidia chips. We'll talk about what you are
[01:27:20] Speaker 2: seeing with regards to that development. We had the CEO of side time on a little bit earlier. And it was kind of interesting to hear him talk about kind of how he's trying to structure what he has to offer. And we've heard from some other companies on their show too. Obviously no one's quite there to completely challenge Nvidia. But there are enough around the edges where they can say hey we have a product that at least for certain tasks can be useful and you don't necessarily need to go out and buy you know expensive Rubin or whatever the
[01:27:45] Speaker 17: Nvidia chip has. Yeah. I think what we're seeing is everybody right now at least in the early stage private markets is attacking the memory problem in a bunch of different with a bunch of different modalities and it's happening at both the chip layer and the model layer. There's a lot changing in model architectures and novel techniques that will allow us to get a lot more utility out of the chips that people are using. So I think we're going to see a huge amount of efficiency to come at the chip level at the model model level. And then when companies go to actually put AI into production they're learning how to use AI much more efficiently. They're making much better use of open weight models and not tossing everyone to very expensive frontier models that are very very you know token hungry. And so we're going to see this efficiency come in across the
[01:28:34] Speaker 2: entire stack in the coming years. What does that mean though when I hear more about the shift towards the open weight models and more towards this idea of being a little bit more limiting and how much your employees are spending and not just token maxing as you know every CEO is pushing to do. When you look at the large LLM companies I mean who benefits most from that that shift. Well look I think
[01:28:55] Speaker 17: obviously it's great for us to have more than two major players in terms of frontier labs and having more open weight models come onto the scene in particular from American companies you know meta just had their announcement our company poolside just released some open weight models that are very powerful. It's great for society for humanity. We're democratizing AI and I think that is what will propel AI to benefiting more people in terms of the major labs. I don't think anything is going away there either. There are so many different applications and there's so much innovation to come. Some of those applications need frontier power models. All the advances that I think we're going to see in health care and science material science incredibly exciting what the next decade holds and we need frontier models for a lot of that work. But if you're just automating business
[01:29:45] Speaker 2: automating business processes you don't need a Ferrari like a Ford is going to be just great. I like that analogy. Did you read Zuckerberg's AI manifesto as we seem to be calling it. I mean I read the AI summary of it of course. Erica Brescia great to have you back here managing director over at Red Point Ventures. We'll set you up for it to watch when we come back after the break. This is Bloomberg. As we push ahead to what the markets will have their eyes on over the next 24 hours. All eyes will be on Washington at 830 a.m. Eastern time where we get that U.S. CPI report for the month of July. While we had that surprise contraction on a month to month basis last quarter we are going to see a slight reacceleration but it's going to be a well below the trend line 0.1 percent on a month to month basis. Core CPI 0.2 percent and year over year a moderation to 3.4 from 3.5. After the market closes we are going to get some more tech earnings from coherent from Cerebris and well from Cisco. All three should provide a little bit more clarity on the AI build down. And then there's still a lot of concern here about what's going on in the macro space. The I.E.A. and OPEC are set to publish their monthly oil market reports. And well these reports are getting a lot more interesting given the fluctuations we continue to see in the spot market as well the futures market. And of course the on again off again talks with regards to the U.S. and Iran. Back in the tech space keep an eye on alphabet. They have a made by Google product launch event. It's going to be held right here in New York. And the company is expected to unveil its pixel 11 lineup. It'll be interesting to see if they have anything to say about some of the underpinnings of that particularly when it comes to the software and more importantly to the AI. But of course something that could potentially move the market. As for what's moving the market right now as we move to the end of the show we take a look at the big movers in the aftermarket. And well you've got some nice surprises. Core Weave up about 12 percent. Super Micro up about nine. And Kava Group up about 7 percent. We'll have an interview tomorrow on the close with the CEO of Kava Group Brett Shulman. Thank you for joining us here today on the close. I'll be back tomorrow. Meanwhile for all your political coverage stick around. Balance of Power is up next at the top of the hour on Bloomberg.