Ed google ceo blasting the failure of the gemini image generation feature is the Company Looks to remedy the situation. The Company Reports earnings going public. New ai products. All that and so much more prayed lets check in on these markets because there was Economic Data not much to catch the attention today. Currently off about 4 10 of 1 on the nasdaq really caring about the pce number. Inflation data by the Federal Reserve which comes out tomorrow. We see a little bit of a selloff ahead. This is the u. S. Trade inversion down 1. 5 so really some weakness coming over a pretty ugly day in china trading. Nothing really moving just about one basis point. Where there is action to him on the macro perspective looking at one particular asset choice. One 7. 7 higher. We are encroaching on that 69,000 record level we know the 61,000 has been eclipsed. Good old supply demand dynamics. We know the supply side will be halved in the amount of bitcoin mind during april. Not many holders are selling at the moment. Ed one story, apple. Apple is shutting down its car project after a decade of work, full kudos to bloombergs mark gurman, he is going to join us in a few moments pretty broke that story. That is the moment with mark broke the story. The stock wouldve been lower on tuesday and look at the gain on it. We are flat now but the reaction globally has been pretty profound. We know some of the 2000 people working on the project will lose their job. Some will be shifted into apples work on generative ai according to marx reporting. For me this story was about 10 years where apple did not know what that end car ev product would eventually look like. And youve seen it all over social media overnight this morning its the one thing everyone is talking about. Caroline a big backtrack. They talked about it over that decadelong process. Here is tim cook and what they had to say about plans in 2017. Tim we see it as the mother of all ai projects. Its probably one of the most difficult ai projects to work on and so autonomy is something that is incredibly exciting for us and we will see where it takes us. Caroline isnt that interesting the fact tim cook talked it as a mother of all ai projects and thats where the talent now goes. But you generative ai. Mark it is certainly an ai project. That that is Artificial Intelligence musing cloud, using onboard hardware to understand the vehicle to live processing and make those decisions using an ai engine on behalf of the user whether to stop, make that turn or change lanes, to understand the environment. To drive into the snow or rain. Those are decisions made by an ai processor so apple does have some ai talent there that they are able to relocate to their other ai initiatives that have nothing to do with the car. Ed lets go deep into the details you reported. There was a meeting held by two highlevel apple executives where they form to the 2000 or so staff working on the apple car project that it was being shut down. What else do we know . Mark there was a meeting where the apple coo and the vp of technology whos been in charge of the car project known as titan since 2021 they formed the informed the team that the project would be winding down immediately. Really three main groups there. You of the hardware engineers, the hardware side, the Software Side and the ai side. The ai side of the project will be shifting towards apples ai division. The Software Side most of those folks will be moved to craigs operating systems organization. Then the Hardware Team a lot of those people unfortunately are being laid off. Its one of the biggest layoffs i would say in apples modernday history certainly since tim cook became ceo in 2011. Some of the hardware engineers will have the opportunity to apply to other jobs in the company. Apple is a Hardware Company and perhaps some of those people will find roles on other teams. Lets of the iphone, a division pro, you name it. This is a Bombshell Development for apple. This is something apple just does not do throwing in the towel on a major project in such a public fashion. This started in 2014 years ago. Everyone knows theyve been working on this. Its been a really public failure for them. Ed terrific reporting, thank you for joining us on the show. What does it mean for apple in the ev industry at large. Lets bring in the global head to get into what apple winding down its electric car effort means for names like tesla. You look at tesla shares up in the session. Your thesis seems to be that if this is good for anyone, apple canceling its car project its good for tesla. Why . We always thought apple would be most likely to compete directly against tesla and to a lesser extent Companies Like gm and ford. A lot is changing with electric and software economies. One thing we are learning not just from this but other developments that to enter and succeed in scale in the ev and the autonomous side are still pretty high so i think this is another data point supporting that those barriers still should exist. Also in our coverage for tesla and to a lesser extent gm and ford. Ed you lead autos coverage at citi as opposed to apple. What i thought about with this over the last six years or so is apple is used to margins for Consumer Electronics and even if you get to tesla level margins its not even close. Did you have a sense of what you think apple was trying to get out of the car project . Broadly for the industry we see the biggest opportunity for higher margins and Software Services and particularly around autonomy. If you look at the average automaker in the u. S. A lifetime revenue car today those only generate 40 of the lifetime revenue of the car. Its a whole other 60 out there that tends to be a much higher margin you can tackle with Software Services. Think about Autonomous Vehicles subscription models. This is part of our industry basis that the future of this Business Model isnt just about selling a car and making money, we are really thinking about the entire lifetime of vehicle can generate plus incremental revenue to peer to peer sharing, deliveries the Autonomous Technology can unlock over time. It is a difficult challenge. Taking longer level 3 and level four technology. You could argue apple shutting down the program suggested may be a more negative view on the longterm potential but you could also argue the companies who are going away from level four will ultimately build much better competitive modes how difficult it is. That degree of technology and capability. What was so interesting was obviously the price point, there was talk of 100,000 on a car. It immediately made me think of the byd news that they will be having some supercar coming on to the market more than 100,000. In terms of a price point. Is that where the competition lies for a 10 look, ford, gm . Its looking over at what china is doing . Itay i i think every automaker is focused on this different degrees of penetration. The u. S. Being smaller. We think the u. S. More ev. They have not yet been penetrated. Its really a competitive market going forward. Of course the Competitive Price globally they are still thinking about it. Thinking about the ev platforms. And the Incremental Services and software being a big part at those lower price points. The fact we are expecting ellen 11 increase in sales of evs. More than 40 increase in the year of 2023. Is this the only Way Companies can extinguish desk to singles themselves. It is by services. This much more margin generation to be done from the auto sectors. Every auto company is trying to work the numbers that create some delays with the introductions but theres no question over time that Software Services is key towards making those economics Even Stronger and unlocking longerterm a lot of Revenue Opportunities i spoke about before. In the u. S. We are not just negative on ev adoption as consensus is today. We think the u. S. Needs more product to drive better coverage and we are seeing an uneven market in terms of the products today. With evs we see an uneven market even looking at geographical distribution of electric vehicle sales in the u. S. We think it would be slow and steady growth its not been a disruptive of course of transition. Its good for the legacy automaker who supports this notion about the comeback of legacy automakers in some degree but ultimately evs we think are the future and are done right there is very automakers are still going to be is aggressively into them. Global head of auto sector so great to have you on the show. Meanwhile theres more news out of apple in particular with the latest on allegations the company is impose software and hardware limitations for iphones and ipads that impede rivals from effectively competing grade representative met with the Justice Department last week and what is the final effort to persuade the agency not to file an antitrust suit against apple. The suit is expected to be coming in the next few weeks. What have you got . . Ed so much more on the program. A check back on tech markets fueled by the rally in aia names. I am also looking to the earnings context at two companies with different fortunes. Strong holiday quarter. Add them into the column for share buyback. Its probably why the stock is up 8 . Bumble down 10 . Weak Sales Outlook and its laying off a good shunk more than one third of its staff. We will be right back. This is bloomberg technology. So this is pickleball . Its basically tennis for babies, but for adults. It should be called wiffle tennis. Pickle yeah, aw whoo these guys are intense. We got nothing to worry about. With e trade from Morgan Stanley, were ready for whatever gets served up. Dude, you gotta work on your trash talk. Id rather work on saving for retirement. Or college, since you like to get schooled. Thats a pretty good burn, right . Got him. Good game. Thanks for coming to our clinic, first ones free. Than help you reach your goals. You can make this work. We can make this work. It can help you reach them with confidence. No wonder more than 9 out of 10 of our clients are likely to recommend us. Ameriprise financial. Advice worth talking about. Hey you, with the small business. Whoa. Youve got all kinds of bright ideas, that your customers need to know about. Constant contact makes it easy. With everything from managing your social posts, and events, to email and sms marketing. Constant contact delivers all the tools you need to help your business grow. Get started today at constantcontact. Com constant contact. Helping the small stand tall. Got to check in on bitcoin today because we are trading ever so close to the record high we saw in november of 2021. Back at the 61,000 handle. Thats the record high we saw. Another 7. 7 on the day. Risk assets are selling off more broadly and tech we are more focused on the Federal Reserve but bitcoin manages to push higher despite that. Lets dig into risk assets across the board. Senior market analyst getting your tech markets feel out here and more broadly when youre looking at the risk asset of bitcoin is the story more about mass adoption and that being a meaningful part of a general portfolio as to why we are seeing this at the moment . Bitcoin has become an important thing for the financial industry and we think it has a great future in terms of finance and decentralized finance and while the next couple of years. We also saw the etf c is very important in terms of adoption. If bitcoin could actually break that relation it has with the traditional risk assets then it would be just a very interesting asset someone should hold in his or her portfolio because it is an indifferent thing moving on different fundamentals and is really a great alternative for the portfolio diversification. Lets go to earnings season. A game of Artificial Intelligence or artificial sweetener which is everyone is doing buybacks and if you look at names like ebay or go back to disney, mercedesbenz in europe, everyone is doing buybacks and it makes it seem really euphoric. How do you feel about that. The earnings season has been good beyond the buybacks because if we are looking at magnificent seven stocks they eat out some 55 Earnings Growth and thats a big deal and its an even bigger deal when you think expectations have gone through the roof. We think theres something fundamentally positive in terms of development and ai was the major take away of this earnings season because what we see is ai investments are really pouring in and when we talk with industry heads we also realize the Investment Decisions and ai seem to be quicker than other Investment Decisions because industries and companies seem to understand very well how ai is going to increase their productivity, decreased cost and improve their profit margins. They also had quite a short payoff period, so investors are pouring in and thats absolutely helping the Big Technology stocks especially those related to ai. The main beneficiary of this story continues to be nvidia. The hardware provider of the underlying technology, the thesis you just outlined is more about the enduse or the end case, do you still think it is important to stay closely aligned with names like nvidia, and an some of the hyper scalars . I think yes because those are the early comers and the pillars of this ar revolution. What we see today is a little bit like the digital version, the digital equivalent of the industrial revolution. The potential is huge. Looking at the valuations media evaluations gone through the roof but not valuations as of today are not that shocking because nvidias valuation is lower today than it was at last years 2023 peak. So yes the stock prices going higher exponentially but the earnings follow as well. We think nvidia is a very interesting stock to hold and ai portfolio and zooming out of nvidia the global Technology Stocks are trading at valuations lower than their 2000s peak levels. By historical terms the valuations are not that shocking. Caroline if youre looking at forward pe, the ratio its only quality the ceo that company was joining bloomberg earlier. Guess what he was excited about, take a listen. Why we cannot predict when theres a next cycle what i can tell you right now is ai is changing how we interact and how we use our phone. And if eventually of consumers feel they need to have an ai phone, that will create this new growth momentum for the industry. Weve of course heard them talk about applications and the ai used within smart devices, but should we broaden our agreement of investment opportunities. Should we look less at perhaps the picks and shovels. Youre looking at other Industry Groups now. These three chipmakers. Its also geographically diversification of this. The japanese chipmakers or companies in the chip sector also looking very interesting to us in terms of good diversification opportunities while having exposure to ai. Obviously other Technology Areas are very interesting as well because technology as by nature is very adoptable to ai revolution. So every company that has potential to improve their products and services with ai are interesting to having an ai portfolio. Ed a guest coming on the show saying technology by its very nature can come back on the show again. A terrific conversation. Back to bitcoin quickly, hitting 60,000 for the first time in more than two years. This comes as demand for the token is widening beyond committed digital assets. U. S. Senator Elizabeth Warren sat down with bloomberg yesterday a wideranging interview on the looming government shutdown, the path ahead for rates also crypto regulation. In our financial system, pretty much everybody follows the same set of rules. Im talking banks and Credit Unions and Credit Card Companies , gold traders and stockbrokers. Private equity now has to follow the rules. Precious metal dealers. Venmo, western union. But not crypto. My view of the world is the same kind of activity, the same kind of risk should have the same regulation. Google, we have a response from the ceo sending email to staff what is been the problematic responses from the gemini ai engine describing them is completely unacceptable according to teams are now working aroundtheclock to rectify the issues. For more lets bring in seth. To put it lightly problematic. But is this enough of this sort of mea culpa moment this is not good enough enough for ultimately the damage to the brand this has done. The question is is this even a fixable problem and its very unclear right now that it is. They are working around the clock testing down different problems and weeding out cases of what we saw last week. The technology itself is fundamentally flawed. They are attempting bandaid measures here to get the product out there. Even if they wait two or three weeks they still see users effectively troubleshooting. Weve gone to spokespeople at google saying theyre focused on the productivity tool may not be accurate or reliable. This is an overcorrection of previous lack kings in other ai generators. Im interested as to whats gone wrong from a technical perspective. Behindthescenes google has effectively tried a technical fix here and have done prompt engineering. Ordinarily uncertain, strewn readers they will show you by default or often a woman but maybe without even knowing it will show a male nurse and a woman nurse. The problem is users dont know whats happening behind the scenes and they overcorrected for it and seemed like they prevented you from seeing the image of a white person. It just speaks to the urgency right now these Companies Feel to deploy these products even