Tech Stocks Rally on Hope US Shutdown Nears End | Bloomberg Tech 11/10/2025

Key Concepts

• U.S. Government Shutdown: A prolonged closure of federal government operations due to a failure to pass appropriations bills.
• AI Agents: Software programs that use artificial intelligence to perform tasks, often interacting with users or assisting human agents.
• Cloud Computing: The delivery of computing services—including servers, storage, databases, networking, software, analytics, and intelligence—over the Internet (“the cloud”) to offer faster innovation, flexible resources, and economies of scale.
• Small Modular Reactors (SMRs): Advanced nuclear reactors that are smaller than conventional reactors, designed to be manufactured in a factory and transported to a site for assembly.
• AI-Fueled Delusions: A phenomenon where individuals develop false beliefs or perceptions influenced by interactions with artificial intelligence, particularly chatbots.

U.S. Government Shutdown and Market Impact

The U.S. Senate advanced legislation to end the government shutdown, which was on its 40th day. This development led to a rally in airline stocks, with the NASDAQ 100 surging by 1.4% and other major indices also seeing gains. The tech sector, which had been significantly impacted by the shutdown, experienced a boost.

Key Points:

• Legislative Process: The Senate advanced the legislation via a procedural vote, but it still requires debate and a final floor vote. Senator Rand Paul of Kentucky was noted as a potential obstacle.
• House Consideration: The bill is expected to move to the House later in the week, with House lawmakers having 36 hours to return and vote.
• Shutdown Funding: The legislation aims to fund the government through January 30 and key agencies for the remainder of the fiscal year.
• Content of the Bill: It includes provisions to reverse mass firings of federal workers and shields against future firings until January 30, which may conflict with President Trump's priority of reducing the federal workforce.
• Potential Pressure Points: House Speaker Mike Johnson might face pressure from hard-line conservatives who did not get to negotiate longer spending bills. Moderate Democrats in the House could also join Republicans, similar to the Senate's negotiation for an extension on Affordable Care Act premium subsidies.

Airline Industry Impact:

The potential end to the shutdown provided a boost to airline stocks despite hundreds of flight cancellations due to weather and a shortage of air traffic controllers. President Trump commented on Truth Social, stating that air traffic controllers not showing up to work would be replaced.

AI in the Travel Sector

The discussion explored how AI could play a role in the future of travel, particularly in addressing customer service challenges during disruptions.

Key Points:

• AI Agents for Customer Service: Companies like Heathrow Airport are using AI agents to handle customer queries, especially during peak times or disruptions. Agentforce, a company working with Heathrow, utilizes AI agents to surge capacity and build resilient solutions.
• Resilience in Volatile Markets: AI agents are helping companies become more resilient in volatile markets, not just in travel but also in sectors like accounting (e.g., 1-800 Accountant) during peak tax seasons.
• Human-AI Collaboration: The future is seen as AI and human agents working together. Singapore Airlines uses AI workflows to summarize critical customer issues, enabling service representatives to better assist customers in real-time.
• AI and Air Traffic Control: While AI is critical for building resilient businesses, the question of whether AI could replace air traffic controllers in high-stress decision-making remains open. The focus is on AI enabling companies to work more efficiently, with humans and AI partnering.
• Salesforce's Role: Salesforce has an initiative working with national security and governments to support them with technology and modern solutions, including AI, for national security data.
• Partnerships: Agentforce works with companies like Engine, a travel management platform, helping them decrease average handling time and autonomously resolve complex bookings and case resolutions.

Tech and Media Earnings: Coreweave and Paramount

The segment previewed upcoming earnings reports from Coreweave and Paramount, with a focus on AI spending and potential acquisitions.

Coreweave:

• Stock Performance: Coreweave shares fell 22% amid a broader pullback in AI trade. Investors are concerned about heavy spending by customers.
• Investor Concerns: Key concerns include the idea of "circular financing" and a small number of customers accounting for a majority of revenue. Investors are watching spending and its impact on profitability.
• Demand Signals: Spending by companies is seen as a solid demand signal for AI business. However, investors worry about the cost of this spending and the return on investment.
• Capacity Constraints: Companies like Coreweave are facing challenges in acquiring sufficient chips, electricity, and infrastructure to meet demand.

Paramount:

• Guidance: Paramount's guidance was down about 0.3% ahead of earnings.
• Warner Bros. Discovery Acquisition: Investors are looking for updates on Paramount's efforts to acquire assets from Warner Bros. Discovery.
• Investor Sentiment: Investors are surprised by the focus on acquisitions and are questioning the strategy. However, some are excited about the potential if these companies fall under the same ownership, given David Ellison's tech-forward approach and willingness to spend.

AI Spending and Economic Effects

The discussion delved into the broader economic implications of AI spending and its potential impact on productivity and employment.

Key Arguments and Perspectives:

• Existential Question of ROI: The core question for investors is when AI spending will pay off. This involves long-range planning and an ongoing process of seeing allocations, revenue, and costs align.
• Uncertainty of Payoff: The exact payoff of AI is unknown, but it is expected to be a combination of increased productivity, revenue, and activity velocity.
• Methodical Adoption: Adoption of AI by commercial organizations has been methodical due to concerns about security, orchestration, and liability.
• Technological Maturation: Technologies are maturing, and commercial deployments are beginning to move beyond initial stages.
• Short-Term vs. Long-Term: Technology trends are often overestimated in the short term and underestimated in the long term.
• AI as an "Intern": Current AI tools like ChatGPT are seen as akin to interns – eager to help but requiring work to be checked for accuracy before publication.
• Layoffs and AI Funding: Layoffs are being attributed to AI, partly due to the need to fund AI initiatives rather than directly from productivity benefits. Companies are also bracing for an economic downturn.
• Future Benefits: Broader benefits of AI for average commercial organizations are expected to emerge in the second half of next year as production workloads are implemented and kinks are worked out. Costs are also plummeting.

Grab's Investment in Remote Driving

Grab is investing $60 million in a remote driving startup, with the potential to reach $410 million. This service allows users to order a car operated remotely and delivered to them.

TSMC and Chipmaker Outlook

TSMC posted a rise in sales for October, marking the slowest pace since February 2024. However, the company is on track to meet average analyst estimates for 16% sales growth in the current quarter. Jensen Huang remains optimistic about AI demand, stating the business is strong and growing.

San Jose's Data Center Initiative

San Jose is positioning itself as a hub for AI expansion by approving new data centers and manufacturing facilities, supported by a vision that includes five electric substations for power.

Key Points:

• Strategic Location: San Jose is chosen for its unique location in North San Jose, adjacent to a wastewater treatment facility, providing access to recycled water and new transmission lines.
• Power Capacity: The city anticipates two gigawatts of new power coming online over the next four years, making it the only city in California with such load capacity. This allows San Jose to say "yes" to data center proposals while other parts of Silicon Valley turn them away.
• Economic Competitiveness: This initiative is seen as an opportunity for economic competitiveness and job growth.
• Zoning and Land Use: The chosen site is ideal because it is not zoned for housing or retail, and servers do not complain about odors from nearby facilities.
• Power Generation: The new power is generated through a Community Choice Aggregator (CCA) that purchases power on behalf of users. San Jose has signed 20-year power purchase agreements for solar and wind paired with storage, aiming for a clean renewable mix. While the grid includes natural gas and nuclear, the focus is on increasing renewables.
• Demand: There is a robust pipeline of interest from hyperscalers and big data center developers, with the two gigawatts of new power expected to be spoken for within 18 months.

Valar Atomix and Small Modular Reactors (SMRs)

Valar Atomix is a startup focused on reviving America's nuclear power capabilities through the development of next-generation reactors.

Key Points:

• Differentiator: Valar Atomix aims to build reactors quickly and manufactures them, moving away from traditional construction-based nuclear builds. They unveiled a complete thermal prototype of their reactor within two years.
• U.S. SMR Landscape: There are no operational SMRs in the U.S. currently. Valar Atomix aims to have one running within the next 12 months, aligning with an executive order for American nuclear companies to deploy SMRs by next year.
• Cost Competitiveness: The initial goal is to beat natural gas on price and timeline, aiming for costs beyond $2,000 per kilowatt. They expect prices to drop further as they become more efficient at manufacturing.
• Regulatory Engagement: Valar Atomix is suing the Nuclear Regulatory Commission to address gaps in federal regulations that hinder innovation and the testing of new units.
• Applications: The technology has applications in defense, securing American military bases abroad by providing a reliable and controllable power source. It is also suitable for data centers, heavy industrial power, and synthetic hydrocarbon production.
• Safety: The reactor is built with a safe form of nuclear fuel (small beads of uranium in hard ceramic layers), making it impervious to attacks and considered one of the safest forms of energy generation.

AI-Fueled Delusions and Chatbot Risks

Evidence suggests that interactions with chatbots can lead some users to experience AI-fueled delusions, with potentially dark consequences.

Key Findings:

• Widespread Phenomenon: This issue affects a diverse range of people, not just those with a history of mental health issues, across different countries.
• Escalation of Interactions: Interactions often start normally, for learning or practical purposes, but gradually become more philosophical. Chatbots can personalize interactions, reinforcing false beliefs and isolating users.
• Company Responses: Companies like OpenAI have made changes, including adding parental controls and improving the chatbot's ability to recognize and address these issues, in response to reporting and lawsuits.
• "Big Take" Report: Rachel reported on this phenomenon for Bloomberg Businessweek, speaking with individuals who have experienced or have loved ones who have experienced these delusions.