Chapter 1: What is the main topic discussed in this episode?
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Chapter 2: What impact does tariff uncertainty have on tech shares?
So what the tech industry is looking for going forward is a lot more certainty. I just think of how NVIDIA is part of your Information Technology Industry Council and how they have earnings and how they need foreign investment to come in and help build the data centers where their GPUs are going in the United States. Jason, do you think ultimately We will come to some sort of agreement.
How long can CEOs navigate in this era of uncertainty? Well, we do have to come to some level of certainty. And as you noted, foreign investment in the United States is a significant part of the manufacturing story. We've seen investment not only in semiconductor infrastructure announced here in the U.S.
from companies around the world, Taiwan, Korea, and elsewhere, but we've also seen investments in large data center projects, hundreds of billions of dollars of investment coming from outside the United States. That's very important. But equally important to that is that tariffs can be a deterrent to the necessary inputs into that infrastructure.
Whether we're talking about the construction of data centers and the inputs that are necessary for the construction there, or what goes into the data centers, the semiconductors and other components, or we're talking about the energy infrastructure, including upgrades that are necessary to the transmission grid and the equipment that comes from around the world for that, that's important to make sure that tariffs don't interfere with those kind of investments.
And then the flip side, of course, is anything that's made in the United States, 95% of the world's consumers don't live in the United States. It needs to be exported to the rest of the world. I just came back from India yesterday from the AI Impact Summit, and there's a lot of conversation there about how AI from the United States can be exported to the rest of the world.
Tariff infrastructure can interfere with that as well. We want to make sure that works. Jason, one big piece of news this morning is the European Union basically freezing the ratification process on a deal it already reached with the United States. Just in the context of imports, the EU is 20% of US imports.
The collective wisdom of your counsel, how long do you expect this uncertainty and this kind of halt to things that already were in play? Yeah, I think that's a great point, Ed, and we saw it in India as well. They had a delegation scheduled to come this week to the United States, and India and the U.S. had a great onstage moment in Delhi this week talking about moving AI forward.
How long will this last? I don't know. The president announced the use of Section 122. That has a 150-day cap on it. Obviously, the administration is looking at what the tariff strategy is going to be going forward. I think as far as the tech industry is concerned, resolving these issues, both on the physical trade issues that we've been talking about, but also digital trade.
The trade market between the U.S. and the EU in digital trade is close to a trillion dollars. It's an enormously important market there, too. We need that uncertainty resolved as quickly as possible so we can move forward with these trade deals, which in many cases have already been negotiated. We're just waiting for them to be signed.
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Chapter 3: How is President Trump's tariff policy evolving post-Supreme Court ruling?
It's a big NVIDIA week, posting earnings after market Wednesday. It's a stock that's up about 2% year to date, completely flat this Monday morning. And there is a lot of, let's say, not anxiety, but we're bracing for Wednesday because the story with the stock is very different to what it has been in the last two or three calendar years.
We're trading at 24 times forward earnings historically on a five-year basis, 38 times. The momentum's gone. We are kind of on pause with that. Salesforce down 5%. Later in the program, we're going to talk about what's happening in software right now. Again, that story carries through to earnings. They are putting AI into what they're already good at.
That insulates them a bit, but they're caught up with what's happening at a bigger picture. Look at the market right now, Cary. Yeah, same with Snowflake, same with Workday. We've got a lot of software earnings to digest.
But Ed, as President Trump does move to rebuild his tariff agenda, investors are navigating renewed trade uncertainty during that very busy week in earnings, as you say, with NVIDIA and Salesforce in focus. Carmen Reinecke has been writing all about this.
And Carmen, what are the investors you're talking to thinking about that lackluster trading oomph that we've seen in NVIDIA of late that Ed so clearly spelled out?
Yeah, I think it's something that's really interesting to have this sort of big macro overlay over Nvidia that's really weighing on the entire market. I mean, we were just saying the shares are pretty much flat now. They were up as much as 2% earlier today. So just getting dragged down by all of this uncertainty.
With the earnings coming up, I think the thing that everybody's watching for is can they do enough to quell any of these fears and calm the market. I mean, they have lost a lot of momentum in their shares. They've been trading sideways for a long time now, but they're still the biggest stock in the S&P with a nearly 8% weighting.
So however they move around earnings is going to be really important. And they've lost some of the buzz. They usually would be in raise and shares would gain. We haven't seen that in the last few quarters. So that reaction, the investor sentiment around this report is paramount.
The stock has fallen in each of the last two posts earning sessions for NVIDIA. By the way, Salesforce, for what it's worth, is down 34% year to date. And I checked it and I was like, really? But it is case in point of what's happening right now in software and the impact of AI on software. What are we bracing for?
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Chapter 4: What are the implications of AI disruption for tech stocks?
Salesforce, Snowflake, they'd be a test of that, wouldn't they? Jed Ellerbrook of Argent Capital Management, thank you very much. I want to go back to PayPal. The stock's up about 6% right now. They've been halted for volatility after a big spike post that Bloomberg News report that it is attracting takeover interest.
The Bloomberg report details that one big rival is considering buying all of PayPal. In other cases, other potential bidders looking at certain assets. And PayPal has been meeting with banks about this unsolicited interest. We know this is a stock that's been under pressure, not just year to date, but over the last 12 months, down about 46% in that 12-month period. Now we're up 7% in the session.
PayPal declined to comment. We'll continue to track it. Caro? We will. We'll also continue to track Bitcoin. It touched $65,000. In fact, went below it as tariff anxieties broaden out. On that next, this is Bloomberg Tech. I'm Carol Masser. And I'm Tim Stenevek, inviting you to join us for the Bloomberg Businessweek Daily Podcast.
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Chapter 5: How are companies navigating the current trade and investment uncertainty?
Let's get more with Bloomberg Equities reporter, Ryan Vesteliger. I guess the question, you know, now that we're a couple of hours into the session is what's going on, right? I saw BFW headline overnight about Anthropic and a new tool, seems familiar, but that was impacting trading in Europe. Is that just carrying over to the U.S. ?
Well, we saw a lot of anthropic-related selling on Friday after they announced a new security tool, which sent cybersecurity stocks down pretty sharply. And we are seeing a continuation of that trade today. There is really broad-based weakness within software. Basically, nothing is up today. And it's just this sort of percolating concern about AI disruption.
What is this going to mean for growth, for profit margins, for pricing power going forward? There is so much just concern and fear in the market right now. So much uncertainty. Now, we are going to get some results later on this week that will hopefully provide a little bit of clarity, at least about how management teams are feeling about, you know, the near term in the next coming quarters.
We have Salesforce, Autodesk, Workday, Intuit, Snowflake among the companies reporting. So those will be very close to watch out to. But in the meantime, people are just sort of, you know, selling everything they can and really just concerned about the latest headlines. It's less fundamentally driven than sentiment driven.
Brent Thill, sort of adding to that sentiment, he's over at Jefferies downgrading Workday into the earnings that come on Tuesday, really talking about execution risk with the CEO and other executive changes.
Just in what way can we see executives navigate what is just a hit from sometimes companies that really have no historical proof point that what they're doing and what they're building is significant to the industry in which they seem to upend from a share price perspective? Yeah, they're in an extremely difficult position right now.
I've spoken with portfolio managers and investors who basically say there's nothing they can really hope to hear from management teams that are going to ease these fears because AI is a multi-quarter, multi-year disruption entity out there. And so even if they say, you know, we're feeling pretty good about this year, you know, what does that mean for five years from now?
And it's just going to be very difficult to sort of untie all these knots that are out there that have people just sort of selling in mass. Now, I will say a lot of these stocks are at all time lows in terms of their valuations. Companies like
uh salesforce and workday i mean they have basically never been cheaper so there is a lot that is being priced into them right now so if they do indicate that maybe this disruption isn't happening as quickly as some people are afraid of or if they can talk about ways they're able to sort of ride the ai wave and turn it into a tailwind it is possible you see some kind of relief rally in these stocks but right now it just seems like people are so cautious and you know they just continue to sell a lot of these names are down 50 or more from their all-time highs
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