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Maybe it’s not high-tech that’s the answer to improving the world, maybe it’s actually… “deep tech.” Pablos Holman ran a deep tech lab for investors, including Bill Gates and Nathan Myhrvold, and built spaceships for Jeff Bezos’ Deep Blue. He’s written a book this year called “Deep Future: Creating Technology That Matters.” BBTW editor Peter Green sat down with Holman for a chat.

Pablos Holman: With software, we’re just going places we’ve already been before. You’re going to move some puzzle pieces around, but they’re the same puzzle pieces, the same businesses. Starbucks $SBUX is going to have to tear out all their IT and put in new IT that has AI in it, but it’s still the same service they’re providing. I’m talking about what we call deep tech. Using advanced technology and science breakthroughs to reinvent things that humans do. Old industries. It’s about how do we make mining 10 times cleaner? How do we make shipping 10 times cheaper? How do we make airplanes 10 times cleaner and faster and cheaper? Things like that.

Software is what we’ve been doing for 25 years or more. Now we have to go there with AI, but we’re just going places we’ve already been before. Software is not going to solve the processed foods that are growing fat on your liver. We’re going to have to come up with new technologies that help us to solve those kinds of problems. That’s what I mean when I say deep tech.

We have a whole raft of breakthroughs that have come out of scientific research in the last few decades. But they get dropped on the floor because all of the capital in the world that’s there for doing new things, venture capital, is only being used for making software. And investors and capital allocators, when they see hardware coming, their brain says, ‘that looks hard.’ That’s why it’s called hardware.

One is all the easy stuff’s been done. All the big opportunities have been soaked up by somebody. So now they have to refocus their attention on where are the bigger opportunities? Well, the bigger opportunities are everything that software ignores and that software can’t fix.

The new inventions, the new technologies, the insights that make it possible to make something 10 times better, that’s new technology. Those are deep tech breakthroughs. And they come from all different kinds of places. They come from labs and garages, and they come from basements with nerds who are tinkering. Once they have that insight, you ask, does this make anything humans do 10 times better? And if the answer is yes, then you start looking at, all right, how do we bring that to life?

I co-opt the machinery of startups, of venture capital, because that’s the machinery that’s good at doing new things. I try to find these things, and then I invest in them early to get them out of a lab and into a startup. A startup is the package that the world knows what to do with. Then we can attract capital. The startup machinery is amazing because it’s a kind of milestone-based success thing. That’s the good part about Silicon Valley. They’re just aiming it in the wrong direction.

We have a nuclear reactor that goes in a borehole. It’s buried a mile deep. Even if the thing were to have a catastrophic meltdown, there’d be no radioactivity at the surface. It’s also super cheap. What you put on the surface is a turbine and generator: 54-inch diameter, 15-megawatt electric. That’s enough power for a skyscraper or a data center, and if it’s not enough, we drill another hole next to it, and deploy arrays of these things. We have a company in California. They’ve figured out how to automate apparel manufacturing. Instead of using stitches, they use glue on a seam. And the glue is now stronger than sewn seams. It’s stretchy. Now the robots can assemble the clothes. They can produce on demand, and the bonding for the seams is reversible: You heat them up, they fall apart, and you can recycle the fiber. Another great example: Cargo ships that can sail themselves. We have electric backup. With zero emissions, no fuel, and no crew. So we make fleets of smaller ships, and they go directly to where the cargo is needed without trans-shipping at a major port. I try to learn about all the big problems in the world. I’m kind of collecting problems, and big industries are basically a euphemism for big problems. So to me, that’s where it starts.

This interview has been condensed and edited.

—Peter S. Green

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• How high is up? For Nvidia’s $NVDA share price, the answer is all the way up. On Thursday, Nvidia became the first private company worth $5 trillion, with its shares closing at 207.16 on Wednesday, up nearly 50% in the past 12 months. That’s because the U.S. economy is making a massive bet on AI. So forget the shoulda, wouldda, couldda. Will Nvidia keep rising? “It is justified only if margins and profits continue on the current trajectory or even get better,” David Kotok, co-founder of Cumberland Advisors, told the Wall Street Journal. Nvidia is now trading at about 33 times its projected earnings for the 2027 fiscal year, while the S&P average is 24x. That said, Tesla is trading at 243 times earnings. Morningstar analyst Brian Colello says Nvidia will keep growing. “A 40%-plus growth year is [likely] in the cards for fiscal 2027,” he wrote on Wednesday.
• The cuts just keep on coming… or do they? It’s Powell Power time: The Fed’s Open Market Committee cut its benchmark overnight interest rate by another quarter of a percentage point, to 3.75% to 4%. But don’t expect that to show up anytime soon in your mortgage or credit card bill. That’s just the rate at which the Fed lends money to banks overnight. Mortgages and other consumer (and business) loans are shaped more by market forces than anything else. And those forces are not suggesting there’s any hurry to lower mortgage rates. The standard 30-year mortgage was at 6.19% before the cut, and on Thursday stood at 6.14%. That’s in part because home sales are rising again and mortgage demand is also rising as a result. Mortgage rates were down just a tenth of a percent, to 6.39% from 6.49% earlier this month, while the latest numbers on existing home sales showed a 4.1% jump from a year earlier, largely, says a CNBC survey of realtors, because home prices are dropping. Wednesday’s cut doesn’t mean there will be another at the Fed’s December meeting. For one thing, with the federal government shut down, the Fed is flying blind when it comes to real inflation and job numbers. And then there’s the fact that two of the 12 members were against the cut (one wanted no cut, and Trump appointee Stephen Miran wanted a half-point cut). Powell said, “There were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.”
• Cuts At Paramount: Well, that was quick: David Ellison, the new head of Paramount $PSKY and son of Oracle $ORCL founder Larry, has just made his first cuts since acquiring the fabled Hollywood studio and its assets, including CBS. More than 2,000 people are getting pink slips, including about 1,000 in the U.S. They include CBS Saturday Morning co-hosts Michelle Miller and Dana Jacobson. CBS Evening News anchor John Dickerson said he’s walking by the end of the year, and Paramount’s movie and TV unit is losing “Yellowstone” and “Landman” producer Taylor Sheridan, who’s off to Comcast’s $CMCSA NBCUniversal, where studio boss Donna Langley offered him a film and TV deal worth $1 billion over eight years. Hollywood news site The Wrap said Ellison “started butting into” Sheridan’s creative process, a longtime Hollywood no-no.
• Making the cuts: And more job cuts are coming: UPS $UPS has cut its half-million-member workforce by 48,000 people over the past year, the company said Tuesday, pointing to its share price, which is down about 27% in the past year. Tariffs have cut the number of packages sent to the U.S. from China by 30% in the third quarter, and Amazon $AMZN is shipping more of its own packages. Amazon cut 14,000 managerial jobs. Target’s cutting 1,800 of its 22,000 corporate roles, and pink slips are going to white-collar workers at Rivian $RIVN, Molson Coors $TAP, Booz Allen Hamilton, and General Motors $GM. Behind the trend: Shareholder and board pressure to use AI to boost profits, and general uncertainty about the future of the U.S. economy.
• Has Buffett had all he can eat? The departure of America’s favorite investor, 94-year-old Warren Buffett, from his holding company Berkshire Hathaway $BRK.A has some Wall Street analysts concerned the company may not be as good a bet without him. Analysts at Keefe, Bruyette & Woods downgraded Berkshire to “underperform,” saying lower car insurance margins, tariffs, falling interest rates, fewer clean energy tax credits, and Buffett’s own planned departure are hurting profits. KBW lowered its target price for Class A shares to $700,000 from $740,000. Berkshire shares have fallen 3.2% in the past five days, closing Wednesday at $713,036.

• More Nukes? AI needs power, but building new power plants is expensive and speculative, so where private industry fears to tread, the Trump Administration has gone in: On Tuesday, Energy Secretary Chris Wright announced an $80 billion deal with the owners of nuclear powerplant constructor Westinghouse, Brookfield Asset Management $BAM and Cameco $CCJ, to build an unspecified number of reactors to help fuel the AI boom. It’s not clear how the $80 billion in taxpayer money will be spent, and the cost of the last two reactors built by Westinghouse, in Georgia, cost $35 billion, about double initial estimates. They were also finished seven years late.
• Who’s gonna pay for all that power? You and me and anyone else who wants to invest. OpenAI this week completed its conversion to a for-profit company, and is now preparing to go public, raising $60 billion at a $1 trillion valuation next year, according to press reports.
• The heat is on OpenAI: Rival AI firm Anthropic says it’s reached a deal with Google $GOOG to buy up to 1 million of Google’s custom-designed Tensor Processing Units, adding a gigawatt of compute capacity by 2026. That’s a lot smaller than OpenAI’s planned 33 gW Stargate data center, but Anthropic’s picked the slow and steady lane, and its algorithms work across chips made by multiple designers, allowing for less expensive and more efficient computing.

• It’s never a quiet day in Trumplandia. Remember when Joe Biden was president and world trade hummed along fairly smoothly? As Canada’s Toronto Blue Jays trounced the L.A. Dodgers in the opening game of the World Series last weekend, Ontario Premier Doug Ford ran an ad on U.S. TV showing Ronald Regan speaking out against tariffs. Trump was outraged, and said he’s cutting off trade talks with Canada. Neither Ford nor Canadian PM Mark Carney seemed particularly upset. Meanwhile Trump’s three-day visit to Japan ended with an ill-defined pledge from Japanese leaders to invest some $550 billion, about one-eighth of its annual GDP, in the U.S. “No specific projects have been finalized at this point,” Finance Minister Satsuki Katayama said Tuesday. In South Korea, Trump tried to extract a $350 billion investment, or about 20% of the country’s annual economic output. But after being gifted a replica of an ancient Korean royal crown, he touted an as-yet-unsigned and undocumented agreement to invest the $350 billion at the rate of $20 billion a year. Any more, the Koreans said, and it might blow up their currency.
• Then came the big reveal: China, where Trump rolled back all his tariffs in exchange for China dropping the tariffs and rare-earth export ban it had imposed in response. China said it would buy U.S. soybeans again, and made vague promises to end the export of chemicals used to make fentanyl. The big business question is whether Trump will let Nvidia sell its Blackwell AI chip to China. Access to those AI wafers could let China get a permanent jump on the U.S. “The defining fight of the 21st century will be who controls artificial intelligence,” said Democratic Sen. Chris Coons. “It would be a tragic mistake for President Trump, in order to get some soybean orders out of China, to sell them these critical cutting-edge A.I. chips.”
• Shutside Story - The longer the government shutdown goes on, the more it costs, and the non-partisan Congressional Budget Office, working without a paycheck for the past four weeks, says the U.S. economy will never recover between $7 billion and $14 billion in lost productivity, between missing paychecks for 750,000 federal workers and interrupting food benefits for low-income Americans. “Depending on its length, the government shutdown will reduce annualized real GDP growth in that quarter by 1.0 to 2.0 percentage points,” the report adds.
• Apprentice Fed Chair Edition: it’s down to the Final Five, Treasury Sec. Scott Bessent said Monday, naming the finalists to replace Fed Chair Jerome Powell, when his term expires in May. The five are current Fed Governors Christopher Waller and Michelle Bowman, BlackRock executive Rick Rieder, and two guys named Kevin: National Economic Council Director Kevin Hassett and former Fed Governor Kevin Warsh. Bessent has been interviewing the candidates himself and said he’d present Trump with a super-short list after Thanksgiving.

• Alienation: Elon Musk’s controversial entry into being more outspoken about politics cost Tesla between 1 and 1.26 million car sales in two and a half years, according to a new study for the Bureau of Economic Research by four Yale professors. Tracking county-level data on car sales and partisan voting trends, they found that Musk’s increasingly extreme political views simply drove away potential Tesla buyers. He “antagonized his most loyal customer base, for, as we show, Democrats are far more likely than Republicans to purchase a Tesla,” they wrote.

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TKTK

ABOARD AIR FORCE ONE (AP) — President Donald Trump described his face-to-face with Chinese leader Xi Jinping on Thursday as a roaring success, saying he would cut tariffs on China, while Beijing had agreed to allow the export of rare earth elements and start buying American soybeans.

The president told reporters aboard Air Force One that the U.S. would lower tariffs implemented earlier this year as punishment on China for its selling of chemicals used to make fentanyl from 20% to 10%. That brings the total combined tariff rate on China down from 57% to 47%

“I guess on the scale from 0 to 10, with ten being the best, I would say the meeting was a 12,” Trump said. “I think it was a 12.”

Trump said that he would go to China in April and Xi would come to the U.S. “some time after that.” The president said they also discussed the export of more advanced computer chips to China, saying that Nvidia would be in talks with Chinese officials.

Trump said he could sign a trade deal with China “pretty soon.”

Xi said Washington and Beijing would work to finalize their agreements to provide “peace of mind” to both countries and the rest of the world, according to a report on the meeting distributed by state media.

“Both sides should take the long-term perspective into account, focusing on the benefits of cooperation rather than falling into a vicious cycle of mutual retaliation,” he said.

Despite Trump’s optimism after a 100-minute meeting with Xi in South Korea, there continues to be the potential for major tensions between the world’s two largest economies. Both nations are seeking dominant places in manufacturing, developing emerging technologies such as artificial intelligence, and shaping world affairs like Russia’s war in Ukraine.

Trump’s aggressive use of tariffs since returning to the White House for a second term, combined with China’s retaliatory limits on exports of rare earth elements, gave the meeting newfound urgency. There is a mutual recognition that neither side wants to risk blowing up the world economy in ways that could jeopardize their own country’s fortunes.

When the two were seated at the start of the meeting, Xi read prepared remarks that stressed a willingness to work together despite differences.

“Given our different national conditions, we do not always see eye to eye with each other,” he said through a translator. “It is normal for the two leading economies of the world to have frictions now and then.”

There was a slight difference in translation as China’s Xinhua News Agency reported Xi as telling Trump that having some differences is inevitable.

The leaders met in Busan, South Korea, a port city about 76 kilometers (47 miles) south from Gyeongju, the main venue for the Asia-Pacific Economic Cooperation summit.

In the days leading up to the meeting, U.S. officials signaled that Trump did not intend to make good on a recent threat to impose an additional 100% import tax on Chinese goods, and China showed signs it was willing to relax its export controls on rare earths and also buy soybeans from America.

Officials from both countries met earlier this week in Kuala Lumpur to lay the groundwork for their leaders. Afterward, China’s top trade negotiator Li Chenggang said they had reached a “preliminary consensus,” a statement affirmed by U.S. Treasury Secretary Scott Bessent who said there was “ a very successful framework."

Shortly before the meeting on Thursday, Trump posted on Truth Social that the meeting would be the “G2,” a recognition of America and China’s status as the world’s biggest economies. The Group of Seven and Group of 20 are other forums of industrialized nations.

But while those summits often happen at luxury spaces, this meeting took place in humbler surroundings: Trump and Xi met in a small gray building with a blue roof on a military base adjacent to Busan’s international airport.

The anticipated detente has given investors and businesses caught between the two nations a sense of relief. The U.S. stock market has climbed on the hopes of a trade framework coming out of the meeting.

Trump has outward confidence that the grounds for a deal are in place, but previous negotiations with China this year in Geneva, Switzerland and London had a start-stop quality to them. The initial promise of progress has repeatedly given way to both countries seeking a better position against the other.

“The proposed deal on the table fits the pattern we’ve seen all year: short-term stabilization dressed up as strategic progress,” said Craig Singleton, senior director of the China program at the Foundation for Defense of Democracies. “Both sides are managing volatility, calibrating just enough cooperation to avert crisis while the deeper rivalry endures.”

The U.S. and China have each shown they believe they have levers to pressure the other, and the past year has demonstrated that tentative steps forward can be short-lived.

For Trump, that pressure comes from tariffs.

China had faced new tariffs this year totaling 30%, of which 20% were tied to its role in fentanyl production. But the tariff rates have been volatile. In April, he announced plans to jack the rate on Chinese goods to 145%, only to abandon those plans as markets recoiled.

Then, on Oct. 10, Trump threatened a 100% import tax because of China’s rare earth restrictions. That figure, including past tariffs, would now be 47% “effective immediately,” Trump told reporters on Thursday.

Xi has his own chokehold on the world economy because China is the top producer and processor of the rare earth minerals needed to make fighter jets, robots, electric vehicles and other high-tech products.

China had tightened export restrictions on Oct. 9, repeating a cycle in which each nation jockeys for an edge only to back down after more trade talks.

What might also matter is what happens directly after their talks. Trump plans to return to Washington, while Xi plans to stay on in South Korea to meet with regional leaders during the Asia-Pacific Economic Cooperation summit, which officially begins on Friday.

“Xi sees an opportunity to position China as a reliable partner and bolster bilateral and multilateral relations with countries frustrated by the U.S. administration’s tariff policy,” said Jay Truesdale, a former State Department official who is CEO of TD International, a risk and intelligence advisory firm.

___

Ken Moritsugu in Beijing and Seung Min Kim and Michelle Price in Washington contributed to this report. Boak reported from Tokyo and Megerian reported from Busan, South Korea.

LONDON (AP) — Universal Music Group and AI song generation platform Udio have settled a copyright infringement lawsuit and agreed to team up on new music creation and streaming platform, the two companies said in a joint statement.

Universal and Udio said Wednesday that they reached a “compensatory legal settlement” as well as new licensing agreements for recorded music and publishing that will “provide further revenue opportunities” for the record label’s artists and songwriters.

The rise of AI song generation tools like Udio has disrupted the $20 billion music streaming industry. Record labels accuse the platforms of exploiting the recorded works of artists without compensating them.

The deal is the first since Universal, along with Sony Music Entertainment and Warner Records, sued Udio and another AI song generator, Suno, last year over copyright infringement.

“These new agreements with Udio demonstrate our commitment to do what’s right by our artists and songwriters, whether that means embracing new technologies, developing new business models, diversifying revenue streams or beyond,” Universal CEO Lucian Grainge said.

Financial terms of the settlement weren’t disclosed.

Udio and Suno pioneered AI song generation technology, which can spit out new songs based on prompts typed into a chatbot-style text box. Users, who don’t need musical talent, can merely request a tune in the style of, for example, classic rock, 1980s synth-pop or West Coast rap.

The tools have fueled debate over AI’s role in music while raising fears about “AI slop” — automatically generated low quality mass produced content — highlighted by the rise of fictitious bands passing for real artists.

Udio and Universal, which counts Taylor Swift, Olivia Rodrigo, Drake, and Kendrick Lamar, among its artists, said the new AI subscription service will debut next year.

It will let users “customize, stream and share music responsibly on the Udio platform” and be trained on “authorized and licensed music.”

Udio CEO Andrew Sanchez said the deal “empowers artists and fans” and unites “AI and the music industry in a way that truly champions artists.”

SEOUL, South Korea (AP) — Samsung Electronics on Thursday reported a 32.5% increase in operating profit for the third quarter, driven by rebounding demand for its computer memory chips, which the company expects will continue to grow on the back of artificial intelligence.

The South Korean technology giant set a new high in quarterly revenue, which rose nearly 9% to 86 trillion won ($60.4 billion) for the July-September period, fueled by increased sales of semiconductor products and mobile phones.

Samsung, which has dual strength in both components and finished products, said it expects the demand driven by AI to further expand market opportunities in coming months. SK Hynix, another major South Korean chipmaker, also reported a record operating profit of 11.4 trillion won ($8 billion) on Wednesday, which it also described as AI-related growth.

Samsung’s operating profit of 12.2 trillion won ($8.6 billion) in the last quarter marked a 160% increase from the previous quarter, when it said its semiconductor earnings were weighed down by inventory value adjustments and one-off costs related to technology export restrictions on China.

Samsung’s semiconductor division posted 7 trillion in operating profit for the third quarter, with the company reporting strong sales in high bandwidth memory chips, which are used to power AI applications.

“The semiconductor market is expected to remain strong, driven by ongoing AI investment momentum,” the company said in a statement. The company said an advanced version of its high-bandwidth memory chips, the HBM3E, is “currently in mass production and being sold to all relevant customers,” while samples of its next-generation product, the HBM4, are being shipped to key clients.

Starbucks halted a long sales slide in its fiscal fourth quarter as pumpkin drinks and improved service brought customers back to its stores.

The Seattle coffee giant said Wednesday that its global same-store sales, or sales at locations open at least a year, rose 1% over last year in the July-September period. It was the first time in nearly two years that the company posted an increase in same-store sales.

That increase was largely due to international markets, where same-store sales rose 3%. In the U.S., same-store sales were flat; spending per transaction was up 1% but transactions were down 1%. Still, that was an improvement from the third quarter, when U.S. same-store sales fell 2%.

Starbucks Chairman and CEO Brian Niccol said the results indicate the company’s turnaround, which he put in place after joining Starbucks a little more than a year ago, is working. Niccol has set new hospitality standards, redesigned stores to be cozier and more welcoming and adjusted staffing levels to better handle peak hours.

New software is also helping stores sequence drive-thru, in-store and mobile orders, cutting down on wait times. Niccol said 80% of company-operated U.S. stores have in-store wait times averaging four minutes or less, even on high-volume days like this year’s record-breaking U.S. launch of fall drinks in August.

“We still have a lot of work in front of us, but it’s clear we’re moving in the right direction,” Niccol said during a conference call with investors Wednesday.

Niccol said this year’s holiday season, which kicks off Nov. 6, will allow even more customers to see the difference that Starbucks’ investments have made over the last year.

Still, those changes have been costly. In addition to hiring more staff and redesigning stores, Starbucks incurred $755 million in restructuring charges in the fourth quarter. Late last month, the company laid off 900 non-retail employees and closed 627 stores as part of that restructuring; 90% of them were in North America.

As a result, Starbucks said its profit fell 85% in the fourth quarter to 12 cents per share.

Adjusted for one-time items, including its restructuring costs, Starbucks said it earned 52 cents per share in the fourth quarter. That was lower than the 56-cent profit Wall Street expected, according to analysts polled by FactSet.

Starbucks’ shares were flat in after-market trading Wednesday.

Niccol insisted the improvements in service and speed, along with innovations like protein drinks, will pay off in stronger sales.

Starbucks’ net revenue rose 5% to $9.6 billion in the July-September period. That was better than the $9.3 billion Wall Street was expecting, according to analysts polled by FactSet.

“I believe we’re best-positioned to provide the best customer experience in the industry,” Niccol said. “It is as simple as just being greeted when you walk into our stores. And that has changed.”

Niccol said Starbucks also plans to keep price increases in check even as the cost of labor, coffee and other commodities rises. The company had vowed not to increase prices in its 2025 fiscal year.

“We’re going to be very strategic, very targeted,” Niccol said. “I don’t envision us just doing broad-scale pricing across our menu.”

Starbucks Chairman and CEO Brian Niccol, who marked his first year with the company in September, said the fourth-quarter results indicate that Starbucks is making progress in its multi-year turnaround.

Starbucks shares rose nearly 2% in after-hours trading Wednesday.