# Target Tempers Expectations After Best Sales Gain in Years

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 20 May 2026, 21 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/7f534b8c-9e91-429a-b102-ae3c00090c6d/d82f247f-bf43-477a-a6e9-b4500116c98c/audio.mp3?utm_source=Podcast&in_playlist=0ad812bf-fd15-4012-a18c-ae3c00090c76

Watch Paul and Scarlet LIVE every day on YouTube: http://bit.ly/3vTiACF. Bloomberg Intelligence hosted by Paul Sweeney and Scarlet Fu - Jennifer Bartashus, Bloomberg Intelligence Senior Analyst, Retail Staples & Packaged Food, recaps Target earnings. Target Corp.'s comparable sales jumped 5.6% last quarter, the biggest increase since the end of 2021 and triple the gain analysts were expecting. The company raised its annual revenue guidance by 2 percentage points to about 4%, but executives warned of tougher comparisons and more cost challenges ahead. -Mary Ross Gilbert, Bloomberg Intelligence, Senior Equity Analyst, Covering Retail, discusses TJX Earnings. TJX Cos. raised its sales growth expectations for the year as cautious shoppers spend on lower priced goods at the company's discount chains. The company's comparable sales from its stores and e-commerce sites are now seen expanding as much as 4%, up from previous guidance for an increase of as much as 3%. -Drew Reading, Bloomberg Intelligence U.S Homebuilding Analyst, recaps Lowe's earnings. Lowe’s Cos. reported sales growth in the first quarter that just missed estimates, with comparable sales rising 0.6% during the period. The company kept its full-year outlook unchanged, citing productivity boosts from artificial intelligence, and expects to offset higher transportation costs through productivity initiatives. -Matthew Schettenhelm, Bloomberg Intelligence Media Litigation Analyst, discusses a jury rejecting Elon Musk's claims that OpenAI betrayed its mission to benefit the public by morphing into a for-profit business, finding that he waited too long to sue the company. The verdict is a major relief for OpenAI as it eyes a potential initial public offering, and Musk and his lawyers have vowed an appeal. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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[0:23] Speaker 2: I'm looking at Tarja Target report at earnings, strongest sales
[0:27] Speaker 2: gaining years, but they're a little cautionary. I think in
[0:29] Speaker 2: their guide it's here the stocks down six percent here today,
[0:32] Speaker 2: although it's up twenty two percent year to date. Chen
[0:34] Speaker 2: Bartash as she covers this part of the retail space
[0:37] Speaker 2: for Bloomberg Intelligence, She joins us from the BI offices
[0:41] Speaker 2: in Princeton, New Jersey. Jen talk to us about Target.
[0:44] Speaker 2: What did they report? What's their outlook?
[0:47] Speaker 3: Yeah, hi, Paul, So, Target had a really good first quarter,
[0:50] Speaker 3: much better than most people expected. And I think that
[0:53] Speaker 3: it really is a reflection that some of the tactics
[0:55] Speaker 3: they're putting in place as part of their turnaround are
[0:58] Speaker 3: taking hold and that consumer are responding. But as you
[1:01] Speaker 3: kind of sort of implied in your introduction, they really
[1:04] Speaker 3: didn't nudge much in with regards to their guidance in
[1:07] Speaker 3: response to a strong fiscal first quarter, and so I
[1:10] Speaker 3: think people are looking at that as a very conservative
[1:12] Speaker 3: outlook for the rest of the year.
[1:14] Speaker 4: The comp sales for the quarter that ended was pretty
[1:17] Speaker 4: eye opening, up five point six percent. That was the
[1:20] Speaker 4: biggest increase since the end of twenty twenty one, and
[1:22] Speaker 4: also three times the average anaal assessment. Is this more
[1:25] Speaker 4: than just easy comparisons?
[1:28] Speaker 3: Well, in part, Scarlett, it's easy comparisons, but we also
[1:31] Speaker 3: had other things like the tax refund season. There were
[1:35] Speaker 3: some good tax refunds out there that people were spending.
[1:38] Speaker 3: There were a few of those sort of tailwinds, and
[1:41] Speaker 3: so when you strip that out, it's really about, you know,
[1:45] Speaker 3: how much of this is sustainable going forward? And because
[1:48] Speaker 3: the company didn't really adjust much of their guidance for
[1:51] Speaker 3: the balance of the year, it really implies that that
[1:54] Speaker 3: pace of same store sales is going to drop way
[1:56] Speaker 3: off starting in second quarter. Still positive, but in the
[1:59] Speaker 3: very a very low single digit range.
[2:01] Speaker 5: Right.
[2:02] Speaker 4: Could this be a case of target managing expectations to
[2:04] Speaker 4: lower the bars so much that it becomes an easy
[2:08] Speaker 4: beat later on.
[2:10] Speaker 3: I think that it's not necessarily trying to really like
[2:14] Speaker 3: under underestimate, but I think there is a level of
[2:17] Speaker 3: conservatism there, and that's just really based out of the
[2:21] Speaker 3: track record that they've had. When they go too soon
[2:24] Speaker 3: and raising guidance, they get held with their feet to
[2:27] Speaker 3: the fire, and then if they for some reason don't
[2:30] Speaker 3: meet that, the stock gets hit even harder. And so
[2:33] Speaker 3: I think that there's that level of prudence in there
[2:35] Speaker 3: of saying it's only one quarter, there's four quarters in
[2:38] Speaker 3: a year, three more to go. You know, let's let's
[2:40] Speaker 3: let's see where we go.
[2:41] Speaker 6: Now.
[2:41] Speaker 3: If we get to second quarter and they have strong
[2:43] Speaker 3: results and they don't make an adjustment, then I would
[2:45] Speaker 3: say that they're definitely sort of under under promising so
[2:49] Speaker 3: they can over deliver.
[2:50] Speaker 2: Talk to us about this the turnaround. What is Target
[2:54] Speaker 2: trying to do and are they making any headway there?
[2:58] Speaker 3: Yeah, so you know a lot of the issues with Target,
[3:02] Speaker 3: they sort of lost their way with what they used
[3:05] Speaker 3: to deliver in that sense of like targe and the
[3:08] Speaker 3: joy and the discovery, and so they're going back into
[3:11] Speaker 3: sort of key topics and key categories where they think
[3:15] Speaker 3: that they can be differentiated, so things like baby, things
[3:19] Speaker 3: like beauty, areas of health and wellness where they think
[3:22] Speaker 3: that they can have a competitive advantage and bring people
[3:25] Speaker 3: back into stores. So they've been changing their assortment, changing
[3:28] Speaker 3: what's in the stores. And at the same time, I
[3:31] Speaker 3: think what's maybe underappreciated is the amount of work they've
[3:34] Speaker 3: done with their back house operations in terms of supply
[3:37] Speaker 3: chain to really improve availability of products in the stores.
[3:41] Speaker 3: There's nothing more worse than a bad experience when you
[3:44] Speaker 3: go in looking for something and it just isn't even there.
[3:47] Speaker 3: So those are the kinds of like small winds that
[3:50] Speaker 3: Target is starting to see that it's helping to build
[3:52] Speaker 3: a little bit of momentum.
[3:54] Speaker 4: Yeah, the comparison between Target and Walmart always seem to
[3:57] Speaker 4: be that Target appealed to the aspirational shopper in a
[4:01] Speaker 4: way that Walmart hadn't quite mastered. Have those roles reversed,
[4:04] Speaker 4: I mean Walmart, we keep hearing about how there's a
[4:07] Speaker 4: lot of customers trading down to Walmart.
[4:09] Speaker 3: Now, Yeah, I would say Walmart has definitely invested in
[4:12] Speaker 3: recent years in categories where Target had always been a leader.
[4:16] Speaker 3: Apparel is a really good example of that. So, you know,
[4:19] Speaker 3: Walmart has gone from being content of just being a
[4:22] Speaker 3: fashion basics where you go to buy your socks in
[4:25] Speaker 3: your underwear to being a little bit more fashion forward,
[4:28] Speaker 3: and they have seen their apparel sales improving, So there's
[4:32] Speaker 3: definitely more competition for target in areas where they used
[4:35] Speaker 3: to have a historical advantage. But we'll see whether this
[4:39] Speaker 3: new refresh is going to be enough to overcome anything
[4:43] Speaker 3: that they've lost.
[4:44] Speaker 2: Jen, you talked to a lot of these retail companies.
[4:47] Speaker 2: What are they saying about the inflation we're seeing out
[4:50] Speaker 2: there in the economy, particularly at the gas pump.
[4:54] Speaker 3: Yeah, it's a great question, Paul, And you know, there
[4:57] Speaker 3: are some reports out there that say that we haven't
[4:59] Speaker 3: seen consumers have a huge reaction yet to the higher
[5:03] Speaker 3: gas prices. When we look back historically, it's usually when
[5:06] Speaker 3: gas prices are at a high level for a sustained
[5:09] Speaker 3: period of time that you start to see consumer behavior shift,
[5:12] Speaker 3: and that shift really takes place into going fewer stops,
[5:16] Speaker 3: fewer retailers, maximizing your trips, that sort of thing. It's
[5:20] Speaker 3: still a little early to see that much of a
[5:22] Speaker 3: consumer reaction to high gas prices, which is why we
[5:26] Speaker 3: haven't really seen that flow through in results yet. But
[5:29] Speaker 3: the longer gas prices stay higher, the more that actually
[5:32] Speaker 3: is an advantage to companies like Walmart and Target that
[5:35] Speaker 3: have that broad assortment where people can make one stop
[5:38] Speaker 3: and shop in multiple categories.
[5:40] Speaker 4: Stay with us more from Bloomberg Intelligence coming up after this.
[5:47] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[5:51] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[5:54] Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
[5:57] Speaker 1: you get your podcasts, or watch us live on YouTube.
[6:01] Speaker 4: Let's talk about TJX, the owner of tj max and
[6:04] Speaker 4: in the UK, I think it's tkmax. Yeah, I don't
[6:07] Speaker 4: know why they changed a letter there, but Barry Ross
[6:10] Speaker 4: Gilbert Polly knows. She is our senior equity analyst covering
[6:13] Speaker 4: retail and TJX this morning came out with good earnings,
[6:18] Speaker 4: hiking its sales outlook a real contrast to Target. But Mary,
[6:23] Speaker 4: this is a very different company because this is a
[6:27] Speaker 4: off price retailer as opposed to Target, which has its
[6:29] Speaker 4: own brands and doesn't claim to be off price.
[6:33] Speaker 7: That's exactly right, Scarlett. Really, the big difference here also
[6:37] Speaker 7: is on the execution side. TJX is known for executing seamlessly,
[6:43] Speaker 7: so they also guide conservatively, and you expect them to
[6:47] Speaker 7: beat every time, and they also surpass analyst estimates because
[6:51] Speaker 7: analyst estimates are usually a tad above the guidance that
[6:54] Speaker 7: the company provides. So, yeah, there was a lot of
[6:57] Speaker 7: strength in the quarter, and I think both TJX and
[7:01] Speaker 7: also Target benefited from higher tax refunds in the quarter.
[7:06] Speaker 7: And it does appear that Target is improving their execution,
[7:11] Speaker 7: but they're also cycling a three year stacked comp sales
[7:15] Speaker 7: decline of seven point four percent, whereas TJX is cycling
[7:20] Speaker 7: a three year stacked comp sales increase of over nine percent. Again,
[7:26] Speaker 7: the difference in the execution and the appeal of off
[7:30] Speaker 7: price and especially now that consumers are having to cope
[7:34] Speaker 7: with higher gas prices, and then as earlier in your
[7:39] Speaker 7: just recent broadcast there you were talking about how the
[7:43] Speaker 7: implications for that are raising costs of some products, and also,
[7:49] Speaker 7: you know, we could get freight right now, we're not
[7:51] Speaker 7: seeing that because there's been some hedging in place. For
[7:53] Speaker 7: example with Target, that was one of the benefits in
[7:56] Speaker 7: their margin in the quarter was on the front side
[8:00] Speaker 7: freight hedging.
[8:02] Speaker 4: Mary, is there anything that TJX isn't doing well? You
[8:04] Speaker 4: mentioned execution has been flawless, but that's kind of what
[8:07] Speaker 4: investors expect from this company. What could it be doing better?
[8:10] Speaker 4: Where is it perhaps leaving money on the table.
[8:14] Speaker 7: Yeah, that's a good question, Scarlett. It seems I can't
[8:18] Speaker 7: see where they're really leaving money on the table at
[8:20] Speaker 7: this juncture. And if anything, what we continue to see
[8:25] Speaker 7: every single quarter is the availability of excess merchandise. And
[8:29] Speaker 7: this is across brands that spend you know, that span
[8:34] Speaker 7: the appeal from consumers at the very low end to
[8:38] Speaker 7: consumers at the very high end. So we're continuing to
[8:42] Speaker 7: see a lot more luxury merchandise. It looked like in
[8:46] Speaker 7: some of these shopping halls that we're posted there's a
[8:49] Speaker 7: lot of product from Saline, Gucci, Ive Song Luran. I mean,
[8:55] Speaker 7: it's amazing how much out there in luxury. And we're
[8:59] Speaker 7: seeing that luxury is off right now and so now
[9:03] Speaker 7: you can get it at discounted prices in the off
[9:06] Speaker 7: price channel, at least with TJX and their runway model.
[9:11] Speaker 2: What's the growth strategy for a company like TJX. Is
[9:14] Speaker 2: it more stores, is it driving digital growth? Is it
[9:19] Speaker 2: raising average selling price? What's kind of the growth story
[9:21] Speaker 2: for a company like TGX.
[9:24] Speaker 7: Yeah, so Paul, that's a good question for them. It's
[9:28] Speaker 7: really continuing to expand, so that is opening up new stores,
[9:31] Speaker 7: and they are opening up more newer stores this year.
[9:34] Speaker 7: I think they have on target over one hundred. But
[9:37] Speaker 7: they're also expanding internationally, which is why they have these
[9:40] Speaker 7: joint ventures in the Middle East, and they just entered
[9:43] Speaker 7: Spain this year, so that's a new market for them.
[9:48] Speaker 7: And then of course they also have an investment in Mexico.
[9:53] Speaker 7: So they're sticking with the off price channel but expanding
[9:58] Speaker 7: around the globe. And part of the the reason why
[10:00] Speaker 7: they're doing that is because they have seasoned executives that
[10:04] Speaker 7: want to take on more responsibility and this is a
[10:06] Speaker 7: way to do it. So they continue to see a
[10:10] Speaker 7: long runway, not only in North America. For example, they're
[10:15] Speaker 7: expecting to open somewhere around I think it's like seven
[10:22] Speaker 7: thousand stores, so they still have about seventeen hundred and
[10:26] Speaker 7: thirty eight to go, so they have a big runway still.
[10:29] Speaker 7: Okay that and by the way, they keep moving that
[10:33] Speaker 7: target right as they see more and more opportunities.
[10:37] Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.
[10:44] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[10:48] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[10:51] Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
[10:54] Speaker 1: you get your podcasts, or watch us live on YouTube.
[10:58] Speaker 1: All right, boks.
[10:59] Speaker 2: Our next segment is is sponsored by John Tucker and
[11:01] Speaker 2: All to Do with Yourself. People out there Drew reading
[11:04] Speaker 2: joints the here. Bloomberg Intelligence home building analyst Low's reported
[11:08] Speaker 2: some numbers there, Drew. Are all these crazy people that
[11:12] Speaker 2: actually do their work on their own homes? Are they
[11:14] Speaker 2: still buying stuff?
[11:15] Speaker 5: It was still largely in inline quarter for Lows zero
[11:20] Speaker 5: point six percent comp on same store sales. They maintained
[11:24] Speaker 5: their full year guidance calling for flat to two percent growth,
[11:28] Speaker 5: which I think was encouraging. So underlying trends in the
[11:34] Speaker 5: business are relatively stable, but I think that still reflect
[11:38] Speaker 5: a number of challenges out there, the most important being
[11:42] Speaker 5: what we're seeing in the housing market. Turnover still we
[11:46] Speaker 5: about twenty percent below normalized levels. We haven't seen that
[11:50] Speaker 5: meaningful lift in spring demand that we were hoping for,
[11:54] Speaker 5: and now we have rates back up to six and
[11:56] Speaker 5: three quarters percent through on housing at least in the
[11:58] Speaker 5: near term. At the same time, we've got consumer uncertainty,
[12:03] Speaker 5: you know, whether people are concerned about the outlook for
[12:05] Speaker 5: economic growth, the outlook for employment. Now we have these
[12:08] Speaker 5: geopolitical tensions, so all these are kind of of weighing
[12:11] Speaker 5: on that DIY consumer And where we're seeing it most
[12:14] Speaker 5: importantly is in a pullback and spending in those bigger
[12:17] Speaker 5: ticket discretionary categories.
[12:20] Speaker 4: So for companies like Lows and Home Depot, they kind
[12:22] Speaker 4: of have to wait out this cycle. They have to
[12:24] Speaker 4: wait for things to improve, and that's that's a cyclical
[12:27] Speaker 4: headwind that they really have no control over. Where they
[12:31] Speaker 4: do have control over is to create more productivity, create
[12:34] Speaker 4: more efficiencies. What is Low's doing on that front.
[12:38] Speaker 5: Yeah, So you make a great point is they really
[12:41] Speaker 5: can't battle what's happening in the housing market. But what
[12:43] Speaker 5: they have been doing is investing for when the market
[12:46] Speaker 5: eventually turns. And where we've seen it from both retailers
[12:49] Speaker 5: is really on the pro side. So Loads have done
[12:52] Speaker 5: has done a lot of investments, you know, in crafting
[12:56] Speaker 5: kind of a portfolio of products that the pros really demand.
[12:59] Speaker 5: They've worked hard on build holding out a loyalty program.
[13:02] Speaker 5: They've done two pretty significant acquisitions of LBM and ADG,
[13:06] Speaker 5: which will give them exposure not only to kind of
[13:09] Speaker 5: the larger pro where there's somewhat of an untapped addressable
[13:13] Speaker 5: market for both of those retailers, but it'll also give
[13:16] Speaker 5: them exposure to the home building space, which is an
[13:19] Speaker 5: area that they have historically had no exposure. Now, as
[13:24] Speaker 5: we've discussed before, the new home market is under similar pressure.
[13:27] Speaker 5: We're seeing housing starts actually contract, But as you mentioned,
[13:32] Speaker 5: it's really about positioning themselves for the next leg of
[13:35] Speaker 5: growth when the housing market and the consumer starts to
[13:38] Speaker 5: come back.
[13:39] Speaker 2: Existing home sales bumping along around four million per year,
[13:44] Speaker 2: Where should that number be in a healthy market?
[13:47] Speaker 5: Yeah, so we've been there for a couple of years.
[13:49] Speaker 5: We're about twenty percent or so below normalized levels, so
[13:53] Speaker 5: we should be, you know, somewhere around the five million mark.
[13:57] Speaker 5: You know. I think the fact that we've been bumping
[13:59] Speaker 5: along these legs with all of the different challenges that
[14:02] Speaker 5: we've had, you know, from rates to economic uncertainty to
[14:05] Speaker 5: gap political uncertainty, tells us that we're at a bottom.
[14:09] Speaker 5: You know. We think that we can grow existing home
[14:11] Speaker 5: sales low single digits in twenty twenty six as more
[14:15] Speaker 5: inventory starts to come onto the market. That's likely to
[14:18] Speaker 5: come at the expense of home prices, which you know,
[14:21] Speaker 5: as we know, are up over fifty percent over the
[14:23] Speaker 5: last several years. So you know, for the home improvement retailers,
[14:26] Speaker 5: the headwind associated with the existing home market has started
[14:31] Speaker 5: to fade, but it just hasn't emerged it as a
[14:34] Speaker 5: catalyst for growth.
[14:36] Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.
[14:43] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[14:47] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[14:50] Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
[14:53] Speaker 1: you get your podcasts, or watch us live on YouTube.
[14:57] Speaker 4: We are an AI obsessed market in every way, whether
[15:02] Speaker 4: it's talking about companies that are making some changes to
[15:05] Speaker 4: staffing because of spending due to AI, or awaiting in
[15:09] Speaker 4: videos results, or watching a legal case involving open AI
[15:14] Speaker 4: and Elon Musk. And it's really that one that I
[15:16] Speaker 4: want to pick up on because that's been going on
[15:19] Speaker 4: for a couple of weeks and it's really captured a
[15:21] Speaker 4: lot of people's attention. La sweeneers two billionaires joking it
[15:24] Speaker 4: now and it looks like Elon Musk lost, and he
[15:27] Speaker 4: says he's going to appeal. I want to get a
[15:29] Speaker 4: better understanding of what this lawsuit means and what it
[15:33] Speaker 4: allows for Matthew Schttenhelm is our media litigation analyst at
[15:36] Speaker 4: Bloomberg Intelligence. He is joining us right now from Washington,
[15:39] Speaker 4: d C. So is it as simple as Matthew Elon
[15:43] Speaker 4: Musk lost Sam Altman one? So now open ai can
[15:45] Speaker 4: go public.
[15:48] Speaker 6: I think that's the big takeaway from this. It's not
[15:50] Speaker 6: completely over yet. As you said, Elon Musk has vowed
[15:54] Speaker 6: to appeal this decision on Monday, but at this stage
[16:00] Speaker 6: things are looking much better for open Ai. This was
[16:04] Speaker 6: a pretty serious case that because it had advanced this far,
[16:08] Speaker 6: the judge had led it clear motion to dismiss a
[16:12] Speaker 6: motion for summary judgment, let it go all the way
[16:14] Speaker 6: to trial. And Musk was seeking pretty severe remedies against
[16:20] Speaker 6: open Ai, not just over one hundred billion dollars in
[16:23] Speaker 6: potential damages, but limits on the company's ability to seek
[16:29] Speaker 6: private investor returns. Musk wanted the company to be limited
[16:34] Speaker 6: to serve the good of the world first and foremost,
[16:37] Speaker 6: and effectively that would cap private investor returns. Doesn't really
[16:41] Speaker 6: work for an AI company. So Musk losing this with
[16:45] Speaker 6: this jury decision that the judge adopted on Monday is
[16:49] Speaker 6: a big step forward for Open Ai in avoiding this overhang.
[16:53] Speaker 2: Elon, Musk says he's going to appeal. I know you
[16:57] Speaker 2: have opinions on how successful appeals may be. What do
[17:00] Speaker 2: you think in this case?
[17:01] Speaker 6: Yeah, so I think it's going to be an uphill
[17:03] Speaker 6: battle for Musk. At this point, most appeals fail, and
[17:08] Speaker 6: here this appeal would go to the Ninth Circuit Court
[17:10] Speaker 6: of Appeals and Musk would be limited to arguing that
[17:14] Speaker 6: the jury and then the judge got it wrong on
[17:17] Speaker 6: the statute of limitations. The jury said Musk filed this
[17:21] Speaker 6: suit too late, and there's a three year statute of
[17:23] Speaker 6: limitations for breach of charitable trust claims. Typically, appeals courts
[17:28] Speaker 6: look at legal questions. Was the judge right on that
[17:32] Speaker 6: three year test? As being the controlling law Where appeals
[17:36] Speaker 6: courts have trouble and have limited ability to intervene is
[17:40] Speaker 6: factual questions, And here a jury took up the factual
[17:44] Speaker 6: questions of what did Musk know and when did he
[17:47] Speaker 6: know it? And getting into the nitty gritty of that,
[17:51] Speaker 6: their conclusion that he should have sued earlier because he
[17:55] Speaker 6: knew about any alleged wrongdoing earlier. That's going to be
[17:59] Speaker 6: a tough thing for or three appellate judges to to
[18:02] Speaker 6: second guests because they tend to deffer on factual questions.
[18:05] Speaker 6: So I would think Muskt is a pretty significant underdog
[18:09] Speaker 6: as this case goes to appeal.
[18:11] Speaker 4: So what did Elon Musk get out of this trial
[18:13] Speaker 4: this case?
[18:16] Speaker 6: Well, I mean, anyway, he put a lot of pressure
[18:20] Speaker 6: on open AI. I think some have argued that that
[18:24] Speaker 6: Sam Altman, he had a very difficult cross examination, and
[18:29] Speaker 6: and maybe there were questions raised about his his truthfulness.
[18:34] Speaker 6: Some some may view and and some some may suggest
[18:37] Speaker 6: may maybe open AI isn't as pleasing a place for
[18:41] Speaker 6: investment going forward based on that leadership. I think this
[18:44] Speaker 6: was was certainly motivated, arguably by Musk's desire to compete
[18:50] Speaker 6: with this company since he's no longer tied to it.
[18:53] Speaker 6: And and you could you could argue that maybe this
[18:56] Speaker 6: you know passed some dirt at the company in a
[18:58] Speaker 6: way that that that you know may may have set
[19:01] Speaker 6: it back slightly, but I more likely than that. I
[19:05] Speaker 6: think Musk losing this case is the big takeaway I
[19:08] Speaker 6: think that's a big win for open ai, and unless
[19:11] Speaker 6: he can overturn that, I think open Ai moves ahead,
[19:14] Speaker 6: and I don't think Must gets all that much at
[19:15] Speaker 6: the end of the day.
[19:17] Speaker 2: So at the heart of this, though, was whether open
[19:20] Speaker 2: ai should be, I guess, a kind of for the
[19:23] Speaker 2: public trust or is it a profit making institution. Where
[19:27] Speaker 2: does that whole concept standout whole argument because again that
[19:30] Speaker 2: we may see I tried to go public here exactly.
[19:34] Speaker 6: So the argument was was a very unique one that
[19:38] Speaker 6: this was a breach of a charitable trust, that open
[19:40] Speaker 6: ai basically created a charitable trust when it started as
[19:45] Speaker 6: a nonprofit seeking to benefit the world, and Musk's claim
[19:50] Speaker 6: was that by moving to a for profit model that
[19:55] Speaker 6: breached that charitable trust and that open Ai couldn't move
[19:59] Speaker 6: ahead to you seek private investor returns because of how
[20:03] Speaker 6: it started up. What Musk never really had, though, was
[20:06] Speaker 6: any sort of written documentation. There's no trust agreement that
[20:10] Speaker 6: says that. What there was was sort of piece together
[20:13] Speaker 6: conversations and corporate filings and things like that to try
[20:18] Speaker 6: to make that argument. So it was never a real
[20:21] Speaker 6: air type case on Musk's part. And so what this
[20:24] Speaker 6: freeze OpenAI to do is to go ahead to have
[20:27] Speaker 6: a for profit component. It still has the charity, it
[20:31] Speaker 6: still has been not for profit, but it also has
[20:34] Speaker 6: a secondary piece, the for profit model, which fuels the
[20:37] Speaker 6: business brings in the money needed for an AI company
[20:40] Speaker 6: to work. And so now that business model can proceed
[20:43] Speaker 6: full speed ahead with this case out of the way.
[20:47] Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
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