Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Carolline Hide in New York
Speaker 1: and Eva Low in San Francisco.
Speaker 2: This is Bloomberg Tech Coming up.
Speaker 3: Broadcom CEO Hocktan says the company expects AI chips to
Speaker 3: top one hundred billion dollars next year, the stock pushing
Speaker 3: higher on the earnings.
Speaker 4: Plus.
Speaker 5: Anthropic has resumed discussions with the Pentagon about the use
Speaker 5: of its AI models by the US military amid of
Speaker 5: feud over safety details.
Speaker 3: US hour an industrial software startup, Nominal, is now valued
Speaker 3: at a billion dollars thanks to Series B funding led
Speaker 3: by Founders Fund. We speak to the company CEO and
Speaker 3: Trey Stevens of Founders Fund.
Speaker 5: First we check in on these publicly traded markets. Then
Speaker 5: once again anxiety rips through. We're in a sixth day
Speaker 5: of conflicts with Iran and all prices are still and
Speaker 5: concern brank crude up three points three percent, supply chains
Speaker 5: being choked. We're going to get into that story later on,
Speaker 5: but it means that we're seeing inflationary pressures, worrying people
Speaker 5: about the Federal Reserve's ability to cut rates going forward.
Speaker 6: We got jobs data tomorrow.
Speaker 5: Then as that one hundreds down by tenth of a percent,
Speaker 5: two tenths of percent, let's call it bitcoin of by
Speaker 5: more than two percent.
Speaker 6: What are you looking at?
Speaker 3: Yeah, it's the difficult tension in public market, the Iran war,
Speaker 3: but also earnings is there.
Speaker 2: So broad comes up five percent.
Speaker 3: It's a big gain, but nothing sort of remarkable against
Speaker 3: recent history. The key data point is one hundred billion
Speaker 3: dollars just in AI chip sales in twenty twenty seven,
Speaker 3: which is remarkable because in the current quarter they'll do
Speaker 3: about ten billion dollars. In the quarter gone chip sales
Speaker 3: grew doubled basically one hundred percent from a year ago.
Speaker 3: There's a lot of momentum there, but it was a
Speaker 3: high bar. There's also anxiety about them executing. We need
Speaker 3: to dig into it.
Speaker 6: Let's dig into it.
Speaker 5: A Blueberg exuty supporter run A Stelca, who goes to
Speaker 5: all the analysts, reports the reactions to the numbers. Are
Speaker 5: they buying this one hundred million dollar figure?
Speaker 2: So far?
Speaker 7: It does seem like people are. People are pretty optimistic
Speaker 7: about the company's position with AI, and a lot of
Speaker 7: the AI forecasts at broadcome game we're seen as much
Speaker 7: better than expected. So there's certainly a lot of optimism,
Speaker 7: but like you said, we're not seeing the stock really
Speaker 7: go on a tier here the way we've seen in
Speaker 7: past quarters when they really surprise to the upside.
Speaker 3: Part of this in the data is that there was
Speaker 3: an existing data point of backlog of seventy three billion
Speaker 3: dollars relating to AI, and they seem to be getting
Speaker 3: a lot of credit by coming out and saying we
Speaker 3: have line of sights quotes to this one hundred billion
Speaker 3: dollars through twenty twenty seven or on an annual basis
Speaker 3: twenty twenty seven, Like, is that just what the street
Speaker 3: is seizing on. Did they make an assessment of margins?
Speaker 3: Did they make an assessment of the other parts of
Speaker 3: Broadcom's business, which is also software.
Speaker 7: Yeah, I believe the software business disappointed at least mildly
Speaker 7: this past quarter. But I think the focus really is
Speaker 7: on the AI side of things. I've spoken to people
Speaker 7: who say that Broadcom just doesn't get the credit for
Speaker 7: a position in AI, especially relative to companies like in video,
Speaker 7: So this is obviously a very positive data point for them. Now,
Speaker 7: I think there are a lot of just sort of
Speaker 7: growing concerns out there about you know, capital spending on
Speaker 7: AI infrastructure. Are we getting to a point where we're
Speaker 7: getting near peak earnings. There might be some of that
Speaker 7: that are sort of tempering some of the enthusiasm for
Speaker 7: Broadcoms results, But I think overall, anyone who is just
Speaker 7: looking at the numbers should be pretty happy.
Speaker 3: Whomo's Ryan for the l Selca who all morning in
Speaker 3: Chicago has been across dozens of sales side notes and
Speaker 3: gave us the summary there. I want to talk more
Speaker 3: about broadcon Jomfienie Advisors, capital partner and portfolio manager about
Speaker 3: thirteen billion dollars that you manage for clients and broad
Speaker 3: cooms the top three right in terms of holdings. It's
Speaker 3: really interesting the direction of a six and custom silicon.
Speaker 3: You know, how do you go from ten billion dollars
Speaker 3: of sales in the current quarter to telling your investors, oh,
Speaker 3: by the way, next year in excess of one hundred
Speaker 3: billion dollars just in chips.
Speaker 2: That's believable to you.
Speaker 8: It's an incredible ramp ed Ludlow, no question about it.
Speaker 8: But you know, when you look at the history of Broadcom,
Speaker 8: you know we've owned them we've owned this stock for
Speaker 8: clients since I arrived at the firm in twenty fifteen.
Speaker 2: It's been a core holding.
Speaker 9: It's been a leading.
Speaker 8: Holding for many of our strategies on the equity side
Speaker 8: because of several things. One, they've always managed to maintain
Speaker 8: a deep moat in their products relative to the competition,
Speaker 8: whether it was for iPhone chips or storage or elsewhere.
Speaker 8: And their acquisitions have generally led to better cost savings
Speaker 8: than folks have predicted. And you know now with the
Speaker 8: diversification you know into software and that continuing to do
Speaker 8: well through VMware, you know, they have recurring revenue streams
Speaker 8: through the software side, which helps maintain margins. And they've
Speaker 8: shown their ability to execute the fact that they've locked
Speaker 8: up capacity through twenty twenty eight tells us how good
Speaker 8: their visibility is.
Speaker 3: So I want to seize on that pot. A lot
Speaker 3: of people ask me, like, what is it the brawl
Speaker 3: com actually does. So if you take goo Goll's TPU,
Speaker 3: for example, they co design the architecture, make it a
Speaker 3: manufacturable chip. But Rowcom is fabulous, right, And so that
Speaker 3: bit you just said, as far as I can tell,
Speaker 3: the value is not just in the design of the TPU,
Speaker 3: which they've been discrete talking about in recent years. It's
Speaker 3: the ability to scale and get it to market a scale.
Speaker 3: Is that how you look at it?
Speaker 2: Yeah, that's that's definitely part of it.
Speaker 10: Ed.
Speaker 8: You know, their ability to work well with TSMC. I mean,
Speaker 8: it's not just up to TSMC to get these.
Speaker 9: Designs to work.
Speaker 8: It's very much a coordinated process of design with the
Speaker 8: manufacturing capabilities. So they have shown that they're very effective
Speaker 8: in helping TSMC get to high yields and that's behind
Speaker 8: the scaling capability.
Speaker 9: But it isn't just the TPU or the XPU.
Speaker 8: It's also the fact that they're selling the networking you know,
Speaker 8: technology along with these chips. In fact, with networking expected
Speaker 8: to grow faster, they're selling networking devices beyond their six
Speaker 8: customers to the broader ecosystem of AI based data centers.
Speaker 5: They're becoming even more like in video in terms of
Speaker 5: just a full stack offering and in many ways going
Speaker 5: for the key competition that is designing the chips for
Speaker 5: the META for the open AI. Did you get enough
Speaker 5: certainty that relationship with Meta is really strong that they
Speaker 5: are going to be able to ramp in the way
Speaker 5: that they expect for open AI and these companies that
Speaker 5: want to build their own and not just wholly rely
Speaker 5: on in video.
Speaker 8: You know, I think one thing we know about Broadcom
Speaker 8: is that they work very closely with their customers and
Speaker 8: that is what has given them visibility in the past.
Speaker 8: And it's that visibility they're pointing to now. They work
Speaker 8: on multi year roadmaps and so yes, when they say
Speaker 8: that Meta is continuing to work with them, you know,
Speaker 8: that seems like a reliable piece of information. There was
Speaker 8: a lot of information on last night's call. But you know,
Speaker 8: beyond what Nvidia does, the networking capability that Broadcom brings
Speaker 8: to the table allows their customers not just to build
Speaker 8: right around the chip, but also to the connectivity to
Speaker 8: other parts of the server and the data center. And
Speaker 8: that's you know, that's a different line of products. And
Speaker 8: and then you look beyond just the AI business and
Speaker 8: you've got software that is separate and storage and other
Speaker 8: iPhone and other technologies. Gives them a more diversified positioning
Speaker 8: relative to in video. We like in video. We've owned
Speaker 8: it for a long time for clients as well, and
Speaker 8: we think it's going to continue to grow. We think
Speaker 8: the pie is expanding so much at those room for
Speaker 8: both of them. But the visibility that that broadcom articulated,
Speaker 8: I think is really compelling, and I think that's why
Speaker 8: you're going to see the analyst community get more on
Speaker 8: board and raise those estimates.
Speaker 5: Can you talk a little bit more how complementary it
Speaker 5: is to have the hardware and the software offering why
Speaker 5: VMware matters.
Speaker 8: Yeah, So you know, the you know the role of
Speaker 8: the enterprise software is to not just be able to
Speaker 8: run AI for your company and use other AI models,
Speaker 8: but it's to integrate those you know, capabilities of AI
Speaker 8: to deliver insights into how you run your businesses right,
Speaker 8: And so that's it's not enough just to have the information, right,
Speaker 8: You've got to then pass that information through to your
Speaker 8: enterprise software to enable you to change the way you're
Speaker 8: doing things within the business, change the way you're serving customers.
Speaker 8: So that's the integration that you know that they articulate,
Speaker 8: and I think is a pretty compelling story.
Speaker 3: You know, hoc Tan historically has been mister m and
Speaker 3: A right, and I look at like how Nvidia has
Speaker 3: kept itself in the lead, not necessarily outright acquisition, but investments, Uh,
Speaker 3: you know, licensing agreements. Do you see Broadcom doing more
Speaker 3: of that, Joanne.
Speaker 8: I'm not sure which direction you're going in with that one, Ed.
Speaker 8: I do see Broadcom continuing to look for M and
Speaker 8: A opportunities. I mean, right now, it's like they're flat
Speaker 8: out in terms of, you know, co developing these xpus.
Speaker 8: I don't know if they currently have the bandwidth to
Speaker 8: do any major M and A. They're you know, using
Speaker 8: up their capacity allocation at TSMC for what is clearly
Speaker 8: a high growth, high margin opportunity. But one thing they
Speaker 8: have done in the past regularly is when any one
Speaker 8: area of their business got too large relative to the rest,
Speaker 8: they'd go find some other area in which to invest
Speaker 8: in which to bring in into the company. So, you know,
Speaker 8: maybe over the next couple of years, I would see
Speaker 8: that as a possibility. I don't see it as imminent.
Speaker 6: At the moment.
Speaker 5: They're investing in their shares and buying them back. Johanne
Speaker 5: Phoeni of Advice's Capital.
Speaker 6: This aways great to check in with you. Thank you.
Speaker 5: Look, let's turn to private credit now because black Rock
Speaker 5: It's marked down its loan to Infinite Commerce holdings to
Speaker 5: zero from one hundred to zero in just three months,
Speaker 5: having varned that tech company is dead at one hundred
Speaker 5: cents on the dollar. Look, the roughly twenty five million
Speaker 5: dollar loan to the so called Amazon aggregator is now
Speaker 5: can and worthless, marking the second sudden wipeout to hit
Speaker 5: BlackRock's private credit division in recent months. What's interesting about
Speaker 5: Infinite Commerce ED is.
Speaker 6: It's also VC backed.
Speaker 5: And look they're saying Black Crocks saying a lot of
Speaker 5: this business was written in twenty twenty one. Well, we
Speaker 5: just think about what the venture community has got in
Speaker 5: terms of liabilities to twenty twenty one equity and where
Speaker 5: that currently trades for them.
Speaker 3: This is Caroline Hyde's stomping ground. So being a bit
Speaker 3: careful in going to the key risk in private credit.
Speaker 3: But the thing is that when you have a loan
Speaker 3: to a private company, it doesn't like trade every single day.
Speaker 3: The valuation kind of lacks and so before you know it,
Speaker 3: if something's gone wrong, then you get the piece of
Speaker 3: news that you just read out. That's kind of how
Speaker 3: I understand the market at least.
Speaker 5: What's interesting is another credit offering, well, another partner that had.
Speaker 6: Been lending to Infinite Commerce.
Speaker 5: They mark that loan down in December, so maybe black
Speaker 5: person might flow to it.
Speaker 3: Most read story on the Bloomberg in No Surprise and
Speaker 3: coming up in the program, talks resume between Antrotropic and
Speaker 3: the Pentagon over the military's AI use the details.
Speaker 2: Next this is Bloomberg.
Speaker 5: Tech Anthropic when it's resumed talks with the Pentagon over
Speaker 5: how it's AI models are used by the US military. Now, that's,
Speaker 5: according to a source, follows a feud between the two
Speaker 5: sides that had seen President Trump threatened to actually blacklist
Speaker 5: the company.
Speaker 6: Let's get more.
Speaker 5: The Bloomberg Tech editor Seth Figuerman and Dario Amanda had
Speaker 5: taken this dispute into the public realm. Now we understand
Speaker 5: perhaps some of talks going on in private again.
Speaker 11: Yeah, it feels like some of the public rhetoric, which
Speaker 11: on both sides that sounded pretty fierce, may not be
Speaker 11: reflecting what's going on behind the scenes right now. Now,
Speaker 11: we don't know how much closer they are to an
Speaker 11: agreement here after the standoff last week, but it does
Speaker 11: suggest that Onanthropic side there's a cloud of uncertainty now
Speaker 11: over its business. And for the Pentagon, we've known throughout
Speaker 11: that they've leaned pretty heavily on this model, and there's
Speaker 11: been calls both within the defense industry and in Silicon Valley.
Speaker 11: You're trying to de escalate the situation, So.
Speaker 3: I guess we don't know what a resolution would look
Speaker 3: like yet, right, But could you just go back Sephan
Speaker 3: explain what the point of difference was originally between Anthropic
Speaker 3: and what Anthropic's red lines were and why the Pentagon,
Speaker 3: I guess labeled them a supply chain risk.
Speaker 9: Yeah.
Speaker 11: I mean, throughout Anthropic has been pushing for two key
Speaker 11: red lions, first on protections against mass surveillance of American
Speaker 11: citizens and the other deployment of autonomous weapons. It seems
Speaker 11: like throughout the negotiation they've gotten close. There have been
Speaker 11: stipulations on the contract that get close to it, but
Speaker 11: there have been certain wording differences that might be nu
Speaker 11: ones to usk AB, which Anthropic seems to feel are
Speaker 11: key to ensuring their appropriate safeguards.
Speaker 3: Bloomberg's AI editor Seth Figmann, thank you very much that
Speaker 3: stick with AI because data centers have proven to be
Speaker 3: a target in the Middle East conflict. The war in Iran,
Speaker 3: a modern version of the wartime strategy of attacking an
Speaker 3: opponent's critical infrastructure. Bloomberg's Lonni Prince Lou is one of
Speaker 3: the reporters who's been looking into this and joins us. Now,
Speaker 3: really we're showing kind of the map right now of
Speaker 3: the infrastructure impacted, but there are key sites in the
Speaker 3: United Arab Emirates and in Bahrain.
Speaker 2: Bring us the latest reporting and what we know.
Speaker 4: Yes, so basically after the Israelian US strikes, Iran retaliated
Speaker 4: and they hit three Amazon sites in the UAE in Bahrain.
Speaker 4: The other way around, there was also two sites hit
Speaker 4: in Iran, or what we know of according to our reporting,
Speaker 4: And what this tells US is that data centers are
Speaker 4: becoming as critical and as strategic as oil and ports
Speaker 4: when it comes to war and the functioning of the
Speaker 4: state during war times. So why yeah, yeah, yeah, And
Speaker 4: why were Amazon specifically hit? They are of course wholly
Speaker 4: owned by the US software company, and there's been some
Speaker 4: reports that they may have hosted some military data.
Speaker 5: This is a frightening story and at the moment we're
Speaker 5: seeing breaking news around the UAE telling to buy residents
Speaker 5: to seek shelter immediately due to missile threats. We go
Speaker 5: back to therefore, what operators of strategic infrastructure should do.
Speaker 5: How can these operators protect data centers right now and
Speaker 5: the people within them.
Speaker 4: So obviously you have to evacuate some of these or
Speaker 4: operate on minimal staff going forward, I think you have
Speaker 4: to treat it as a military priority, so hard in
Speaker 4: your infrastructure, which is very costly. Maybe build underground in
Speaker 4: bunkers and caves. Yeah, but it's going to be have
Speaker 4: to have some sort of rethink as we go forward
Speaker 4: and think about data centers and how critical they are
Speaker 4: becoming also in during times of war.
Speaker 5: What that means I think those Lennie Prince viah thank
Speaker 5: you so much for joining us on this important story. Meanwhile,
Speaker 5: coming up, we're going to talk more about logistics. The
Speaker 5: logistics firms H Robinson joining us to talk about integrating
Speaker 5: artificial intelligence into systems and dealing with an.
Speaker 6: AI scare trade. Not to mention what's happening logistics in
Speaker 6: the Middle East. As a bloombog tech.
Speaker 3: We're in Iran has put pressure on global supply chains
Speaker 3: in recent weeks. Global logistics stocks have also been hit,
Speaker 3: like other sectors by the AI scare trade. But one
Speaker 3: name that's been given some credit in the markets for
Speaker 3: its AI integration is H Robinson. How is the company
Speaker 3: managing both of those disruptive events? Dave Boseman, the company
Speaker 3: CEO joins us now here in San Francisco, and you
Speaker 3: are in town with a big focus on AI in
Speaker 3: terms of who you're meeting with, But you are when
Speaker 3: I talk about c Is Robinson. Your job is to
Speaker 3: move goods from point A to point B. So let's
Speaker 3: start with the conflict in the Middle East. What are
Speaker 3: you seeing right well, how is it impacting you day
Speaker 3: to day so far?
Speaker 9: Well, first of all, thanks for having me here.
Speaker 12: Ed.
Speaker 13: One thing that's happening right now is disruption in our
Speaker 13: industry is a reality. Global disruption is a reality, and
Speaker 13: this is just one more thing that we're seeing and
Speaker 13: that we are navigating with our customers. We're obviously seeing,
Speaker 13: you know, the airports within the Middle East are shut down.
Speaker 13: It was an estimate of about ten to thirteen percent
Speaker 13: of that capacity being affected.
Speaker 3: Which an air freight in that context, correct air freight.
Speaker 13: Out of the airports out of the Middle East. The
Speaker 13: Strait of Hanus has obviously been affected, and that's called
Speaker 13: some re routing of ships around the Horn of Africa.
Speaker 13: And just slowing down overall shipments with that disruption.
Speaker 9: But again it's.
Speaker 13: Something that we deal with, we've dealt with it before
Speaker 13: and will help our customers navigate through that.
Speaker 3: This is a technology show, but you know, throughout the
Speaker 3: week we've been looking very closely at energy. You know,
Speaker 3: is there anything specific and distilled that you can tell
Speaker 3: us about diesel in other markets that impact your operations?
Speaker 9: Really?
Speaker 13: No, Obviously it's more of a wake issue. We look
Speaker 13: at oil prices really down the line. Obviously we have
Speaker 13: carriers that can be affected by potential prices down the line,
Speaker 13: but if that's something that we just keep an eye on,
Speaker 13: not something that is affecting.
Speaker 9: Us right now.
Speaker 5: So let's talk about how with one hundred thousand goods
Speaker 5: you're delivering every single day, Dave, how Ai and in
Speaker 5: particular lean Ai as you see it, supply chains helping
Speaker 5: you in this situation.
Speaker 13: Yeah, Caroline, we are essentially and we are in town
Speaker 13: for a tech conference and when industrial being invited to
Speaker 13: a tech conference, and we feel really good about that,
Speaker 13: and we essentially operate like an industrial or tech built
Speaker 13: company in an industrial space. We ship thirty seven million
Speaker 13: shipments annually and we have seventy five thousand customers that
Speaker 13: we deal with at Robinson and relationships with hundreds of
Speaker 13: thousands of carriers, and AI has allowed us to really
Speaker 13: disrupt the industry and disrupt ourselves by the way, and
Speaker 13: we feel good about that. It's going to the bottom
Speaker 13: line because we have real customers, real shipments, and real
Speaker 13: data and that's allowed us to have a productivity increases
Speaker 13: of forty percent since the end of twenty twenty two,
Speaker 13: and it's just going to the bottom line. At the
Speaker 13: end of the day. We're the end user beneficiary of AI.
Speaker 13: There's a lot of talk right now, but a company
Speaker 13: like Robinson benefits from that in the industrial space.
Speaker 6: I mean that talk.
Speaker 5: Just take me back to February the twelve, when you
Speaker 5: saw your stock plummet about twelve percent because there was
Speaker 5: talk that some karaoke company that's pivoted into the world
Speaker 5: of AI logistics was suddenly going to eat everyone's lunch.
Speaker 5: Shape Like, how do you ground shareholders in the reality?
Speaker 5: What is it show that the innovation keeps on coming
Speaker 5: and that you're disrupting yourself and not allowing others to
Speaker 5: come and take that chet.
Speaker 13: Well, Caroline, I look at that as perception and reality,
Speaker 13: and we're the reality in that space.
Speaker 9: It's Robinson and not perception.
Speaker 13: You have to have real, tangible things, and for us,
Speaker 13: our tangible things are our data, it's our engineers. That
Speaker 13: we are a builder, not a buyer, and we have
Speaker 13: things that are going to the bottom line. I was
Speaker 13: really really pleased that our investors, the analysts, the banks
Speaker 13: really came out and said it's Robinson that is actually
Speaker 13: the disruptor. And as Robins said, that should be up
Speaker 13: on this news and we agree quite frankly.
Speaker 3: I'm trying to get a sense of what happens next
Speaker 3: for you a little bit. You know, we accept AI
Speaker 3: low as costs, so you have to make a decision
Speaker 3: if they're lowering your costs, do you keep that for
Speaker 3: yourself or you do something with customers And then you
Speaker 3: look at your specifically for tech, where's that going.
Speaker 2: You've got to keep spending through it.
Speaker 13: Yeah, this is this is amazing when you think about it.
Speaker 13: First of all, AI is driving that efficiency and that
Speaker 13: it just gives us that more competitive moat that we have.
Speaker 13: It's a deeper and wider competitive moat if you look
Speaker 13: at the numbers. Being an end user AI play a
Speaker 13: fun fact for you.
Speaker 9: Our usage is up eighty five.
Speaker 2: X eighty eighty five X.
Speaker 13: We're up on our usage, but our costs are only
Speaker 13: up one and a half x, and so so we.
Speaker 9: Get that benefit of that that end user. We don't
Speaker 9: spend a lot.
Speaker 13: Our token costs is a little less than a million dollars,
Speaker 13: and so it's really about token costs for us. The
Speaker 13: agents that we build essentially have a marginal cost of
Speaker 13: zero because we are internal builder, and so all of
Speaker 13: this continues to drive a competitive deep mote for.
Speaker 9: Us that is super hard to replicate.
Speaker 3: That chart we're showing is what credit I was talking
Speaker 3: about that you're getting for being early early movies and AI. Okay,
Speaker 3: so two events. We have a conflict in the release
Speaker 3: and we have AI with disruption. But I know that
Speaker 3: our colleagues in research in particular like want to understand
Speaker 3: where we're at in the freight cycle and whether those
Speaker 3: two micro events or maybe macro events have changed the
Speaker 3: trajectory of what your industry was seeing.
Speaker 9: Yeah.
Speaker 13: Well, first of all, with seventy five thousand customers, we
Speaker 13: see a broad impact of what's going on in the world.
Speaker 13: And right now what we're seeing is with the disruption. Again,
Speaker 13: this has not been the only disruption. There is some
Speaker 13: caution from customers that they have on doing that, and
Speaker 13: for us, we watch two things. You have to watch capacity,
Speaker 13: which we've seen some tightening in the cost of carriers.
Speaker 13: But then there's the demand side, and specifically we look
Speaker 13: at housing, retail, manufacturing, and automotive. All of those have
Speaker 13: been somewhat muted and we're really looking for those to
Speaker 13: be up into the right.
Speaker 9: No major green shoot on that.
Speaker 13: Certainly disruptions can affect that, but we're watching that. And
Speaker 13: at Robinson it doesn't matter. We have a system that
Speaker 13: wins at the low and we have a system that
Speaker 13: certainly will win.
Speaker 9: At the high and we're excited about it.
Speaker 5: And you've got more AI agents as well with Quinn.
Speaker 5: Come back and talk to us about those in the future.
Speaker 5: Dave Boseman, CEO the h Robinson, enjoy your time on
Speaker 5: the West Coast.
Speaker 6: Thank you.
Speaker 5: Now coming up China it bolsters it's AI ambitions. More
Speaker 5: on that next, this is blue meg Tech. Welcome back
Speaker 5: to Blue meg Tech. Another day of macro that affects
Speaker 5: the tech markets. Look, we're in a six day of
Speaker 5: conflict with the middle East. We've also had some resilient
Speaker 5: jobs data here in the United States with jobless claims.
Speaker 5: We've got non farm payrolls as soon as tomorrow. The
Speaker 5: market trying and digest what the reality is of the
Speaker 5: FED being able to cut into this perhaps more inflationary environment.
Speaker 5: We're down six tens seven percent big tech roads. But
Speaker 5: there are some single names I want you to shine
Speaker 5: a light on because we are on the upside. When
Speaker 5: we look at Broadcom, we're up almost five percent for
Speaker 5: this name. Their numbers shining a light doing better in
Speaker 5: terms of earnings, but really it's the one hundred billion
Speaker 5: dollar commitment that we're getting from the CEO Hottan one
Speaker 5: hundred billion dollars in AI sales by twenty twenty seven,
Speaker 5: up from just twenty billion and twenty twenty five.
Speaker 6: The market likes that.
Speaker 5: Also for the shared buy back, I'm looking at Booking
Speaker 5: dot Com up seven percent. In fact, the zoo host
Speaker 5: seeing this could be a waterloo moment if there are
Speaker 5: reports out there that chatchipt is not going to have
Speaker 5: a pay for in chatchipt, but actually you go to
Speaker 5: chatchipt apps to end up buying your Booking dot Com
Speaker 5: or other e commerce plays that could mean much better
Speaker 5: news in terms of disruption for companies like this, in
Speaker 5: terms of generator AI I'm looking at JD dot Com
Speaker 5: by one point eight percent, first loss in four years
Speaker 5: for this giant in e commerce ED And we're talking
Speaker 5: China a little bit more.
Speaker 2: Now, Yeah, because overnight shares of Chinese AI chip stocks
Speaker 2: were on the right is.
Speaker 3: In its latest five year plan drafts, the Chinese government
Speaker 3: announced a pledge to speed up AI chip development. And
Speaker 3: some of those names have familiar to you, right, We've
Speaker 3: been talking about them at least in the recent quarters.
Speaker 3: Bloomberg Senior Tech editor Mike Shepherd joins us, Now, you know,
Speaker 3: the idea of the Chinese government having policy support for
Speaker 3: the chip sector domestically is not new, but I guess
Speaker 3: we now put some flesh on the bones of that
Speaker 3: plan in this draft document. What's the kind of need
Speaker 3: to know on what China plans to do?
Speaker 10: Well, we did see a little bit more flesh on
Speaker 10: the bones. And of course this also is part of
Speaker 10: an effort really under way since twenty fifteen to shift
Speaker 10: from low end manufacturing to higher end manufacturing, and especially
Speaker 10: when it comes to advanced technology and chip making. Really
Speaker 10: is at the center of that. They really want to
Speaker 10: wean their dependence on US designers and providers like Nvidia
Speaker 10: and like advanced micro devices for those chips that would
Speaker 10: be powering artificial intelligence, which is an area that China
Speaker 10: has also, like the US, staked the claimant and this
Speaker 10: is giving wing to companies like Cambra con like Moors
Speaker 10: and others that have really tried to make leaps and
Speaker 10: strides in this area of AI chips. We can look
Speaker 10: for further subsidies and further scientific support area in areas
Speaker 10: to help these chip makers. And it's not just chipso
Speaker 10: this is an effort that also focuses on robotics. It
Speaker 10: also focuses on batteries as well, and rare earths, and
Speaker 10: those are three areas where China already has a bit
Speaker 10: of a global edge, and it's even showing that it
Speaker 10: may use its advantage in those areas as potential choke
Speaker 10: points in negotiations with trading partners like the US.
Speaker 5: Talking in the US, now, what China has also got
Speaker 5: leaps and bounds more of than the US is energy,
Speaker 5: many would say, and the ability therefore to not have
Speaker 5: to pass on costs of energy to consumers when they
Speaker 5: ramp up their data center.
Speaker 6: Is that something that's front and centered here in the US.
Speaker 5: Just want to go back to what President Trump said
Speaker 5: just yesterday having met with some of the leaders' tech
Speaker 5: CEOs in Washington about those energy costs.
Speaker 6: Take us to, Mike.
Speaker 12: Under this new agreement, big tech companies are committing to
Speaker 12: fully cover the costs of increased electricity production required for
Speaker 12: AI data centers, and that would be prices for American
Speaker 12: communities will not go up, but in many cases will
Speaker 12: actually come down and very substantially.
Speaker 6: What was committed to yesterday.
Speaker 10: Mike, Well, it's a great question, Carol, because the commitment
Speaker 10: is really something on paper that sounds really big sounding
Speaker 10: that they will buy or build any additional power that
Speaker 10: they need for all of those data centers that they
Speaker 10: are pushing as part of the artificial intelligence and boom.
Speaker 10: They will also work with states and localities on rate
Speaker 10: increases that might be affected by whatever they are trying
Speaker 10: to build in the way of all that data center infrastructure.
Speaker 10: And they have also committed to fund any additional grid
Speaker 10: or other infrastructure that will be needed to support all
Speaker 10: that additional power supply. There is a catch though, and
Speaker 10: that is that none of this is really binding. What
Speaker 10: the company's signed doesn't really have teeth in it from
Speaker 10: the federal government to actually force them to follow through
Speaker 10: on any.
Speaker 9: Of those pledges.
Speaker 10: It will really be up to states and the utilities
Speaker 10: to actually enforce any of that compliance on the ground,
Speaker 10: either through regulation at the state level, and we have
Speaker 10: seen that in New Jersey with the freeze on rate
Speaker 10: hikes or in the negotiations over rate increases by utilities. Now,
Speaker 10: one of the other big questions is on the state side,
Speaker 10: and that is permitted. And a lot of these companies
Speaker 10: that were present yesterday, that included Meta, micro Soft and
Speaker 10: open Ai, they all are interested in building their own
Speaker 10: power sources near those data centers. But what they need
Speaker 10: is support on the state side to try to speed
Speaker 10: the permitting. And that was another question that was left
Speaker 10: open during yesterday's conversation.
Speaker 3: But it was also a central tenet of the AI
Speaker 3: Action Plan published last July, which shep you and I
Speaker 3: went through in some detail. Right, we'll get to it
Speaker 3: later in the week, Bloombergs Mike Shephard, Thank you very much, Carrie.
Speaker 3: Plenty of other news headlines.
Speaker 5: Today, there is and it's time now for Talking Taget
Speaker 5: First up Nicey owner NYSE owner into the Continental Exchange,
Speaker 5: is acquiring a stake in a cryptocurrency exchange operator Okax
Speaker 5: and a deal that values the digital asset platform at
Speaker 5: two five billion dollars now. According to the statement seen
Speaker 5: by Bloomberg, I will get a seat on Okax's board.
Speaker 6: Financial terms were not just slowed now.
Speaker 5: Chares a stub Hub are plunging today after the ticket
Speaker 5: reseller posted fourth quarter results and twenty twenty six outlook.
Speaker 6: The fell short of estimates now, and.
Speaker 5: I say comparison's particularly tough this year, noting the absence
Speaker 5: of one tailor, Swift Tour that boosted sales in the
Speaker 5: prior period.
Speaker 6: At least two firms have downgraded the stock, and Aura
Speaker 6: Health is acquiring Gesture.
Speaker 5: Recognitions startup Double Point Technologies CEO Tom Hale says the
Speaker 5: deal will help shape the future versions of Aura's smart rings,
Speaker 5: potentially add in controls powered by voice.
Speaker 6: And hand gestures. Terms they weren't disclosed dead.
Speaker 3: Okay coming up Nominal CEO, Camera Record and founders from
Speaker 3: partner Trey Stevens joined us talk about the startups, Ladies' fundings,
Speaker 3: but also the effort to modernize US manufacturing through software.
Speaker 2: So this is Bloomberg Tech.
Speaker 3: Industrial software startup Nominal has raised an eighty million dollar
Speaker 3: Series BE extension led by Founders Fund that brings the
Speaker 3: company's valuation to one billion dollars at a time when
Speaker 3: the US is increasingly focused on modernizing and rebuilding its
Speaker 3: manufacturing capabilities. Camera mcords, Nomenal and Tray Stevens partner founds
Speaker 3: funded with us too in San Francisco. A lot of
Speaker 3: people say to me, I think you and I've discussed
Speaker 3: this in the past as well, that the industrial sector
Speaker 3: kind of missed cloud and the cloud revolution. And if
Speaker 3: I was to try and summarize what it is you
Speaker 3: want to do, you want to build the platform that
Speaker 3: would account for that, it easier place to start would
Speaker 3: be like, why did you need to raise more funds
Speaker 3: to do that?
Speaker 2: To move more quickly?
Speaker 14: Yeah, well, thank you for having me ed. We've been
Speaker 14: busy since the last ten months when I was in
Speaker 14: the studio for our last financing. So we're building a
Speaker 14: platform for hardware testing and operations, a fully integrated solution
Speaker 14: for the modern era. Frankly, we hadn't touched the seventy
Speaker 14: five million of capital that we raised earlier last year.
Speaker 14: But when Founder's Fund approaches you, they approached us late
Speaker 14: last year with an offer to lead a preemptive financing,
Speaker 14: I think you take it very seriously. They have a
Speaker 14: really unique position and vantage point in the industry, particularly
Speaker 14: for companies building hardware, and I think particularly an interesting
Speaker 14: insight into the work that we've been doing with Androil,
Speaker 14: particularly which we announced a few weeks ago.
Speaker 2: So this is the joint up.
Speaker 3: It was Trey that phoned you, presumably, so this is
Speaker 3: the intersection of what you're working on every day right
Speaker 3: with ander Rail as executive chair. But also like the
Speaker 3: types of companies you invest in through Founders Fund, I
Speaker 3: always know you separate those two when it comes to
Speaker 3: Anderil and Founders Funds backing of them. But what was
Speaker 3: the thesis for you with Nominal Why did you think
Speaker 3: that this was an important name to back?
Speaker 15: Well, you know, there's been an explosion in enterprise SaaS.
Speaker 15: There's a literal infinite number of companies that you could
Speaker 15: bring on to help with enterprise software kind of problems
Speaker 15: inside of an organization. But any reasonable efficient organization is
Speaker 15: going to take an approach of trying to cut as
Speaker 15: much of that out as possible to minimize the spin
Speaker 15: for the org. So there are no nice to have
Speaker 15: nice to have Enterprise software is not not good at ANDROL.
Speaker 15: You know, we have a incredibly intense process coming from
Speaker 15: my co founder Matt Grimm and our chief information officer
Speaker 15: Tom Bosco, who are constantly trying to weed out all
Speaker 15: of the excess spend. But in that same process you
Speaker 15: come across software that's critical, things that you really really need,
Speaker 15: that are it's worth the money, it's worth the time
Speaker 15: and effort. Nominal is one of those products that we
Speaker 15: use inside the enterprise. We were already investors at Founder's Fund,
Speaker 15: but it certainly increased the conviction when you know that
Speaker 15: an organization that I obviously worked day to day very
Speaker 15: closely with was adamant that we needed to have our
Speaker 15: hands on this.
Speaker 5: Cameron, your background is fascinating and also what's notable is
Speaker 5: how you talk about this mission critical necessity for the
Speaker 5: software that you're building at the moment. I mean, front
Speaker 5: end center is the geopolitical issue that currently confronts us.
Speaker 5: How are you seeing engineers leaning on the software at
Speaker 5: the moment, how much you thinking about this being ever
Speaker 5: more integral.
Speaker 14: No, thank you, Carolyn. Yeah, I think we think of
Speaker 14: Nominal as building very serious software and building on Trade's
Speaker 14: point in an era where the last two decades saw
Speaker 14: a lot of very unserious software optimized for dot Com
Speaker 14: era sign ups, clicks et, cetera. But the engineers that
Speaker 14: use Nominal and trust it every single day, they're instrumenting hardware,
Speaker 14: they're automating very complex tasks. They're watching their hardware systems
Speaker 14: deployed in the field in operations, and so it has
Speaker 14: to work. It is the definition of mission critical, especially
Speaker 14: at a time when that's increasing and the world is
Speaker 14: moving faster and.
Speaker 6: Faster automating complex tasks. Trey.
Speaker 5: That is at the heart of a disagreement that's currently
Speaker 5: upon us with Anthropic and the Pentagon, And we know
Speaker 5: that conversations have started again in private between those two entities.
Speaker 5: But how do you think about some of the ethical
Speaker 5: confrontation that consume a focused AI enterprise That focus AI
Speaker 5: is currently being confronted with with its use in the military.
Speaker 5: This is something you've had to think about first, almost
Speaker 5: ages ago with Andrei.
Speaker 15: Yeah, you're absolutely right, you know, being able to give
Speaker 15: our warfighters the capabilities that they need to be successful
Speaker 15: not only in deterring conflict.
Speaker 9: But in winning conflict.
Speaker 15: If we would you get to a point where we
Speaker 15: needed to do, that is incredibly important. And I think
Speaker 15: there's nothing more ethical than engaging in good faith with
Speaker 15: our institutions, our democratic institutions, to make sure that American companies,
Speaker 15: leading American companies, leading American technology companies are sitting alongside
Speaker 15: in partnership with those democratic institutions. So, you know, super
Speaker 15: proud to do that at ANDREL and a know Cameron
Speaker 15: is super proud to do that at Nominal as well.
Speaker 3: I'm trying to think how we can talk about what's
Speaker 3: happening in the war in Iran in the context of
Speaker 3: what normal actually does right. The defense sector is one
Speaker 3: of is a part of your customer base. And what
Speaker 3: I've been trying to understand when normal is is it
Speaker 3: the software that's manufacted is helping to manage the asset
Speaker 3: that is the factory or the output of the factory.
Speaker 3: That's quite an interesting distinction because throughout the week we've
Speaker 3: been talking about the rundown of short range, long range munitions,
Speaker 3: the different technologies that the play in irom How would
Speaker 3: Nominal help make that process better.
Speaker 9: Yeah.
Speaker 14: Really, Ed, we're trying to own the end to end process.
Speaker 14: So really everything from the end of a manufacturing production
Speaker 14: line through to the experimentation R and D sort of
Speaker 14: lab testing of those systems, and then the end deployment.
Speaker 14: And a lot of the thesis behind Nomenal is those
Speaker 14: who have become very siloed operations and you gain huge efficiency, speed,
Speaker 14: scale reliability if you actually can link sort of a
Speaker 14: common data platform that entire process. I always say, I
Speaker 14: said this last time I was on the show. The
Speaker 14: biggest I think tester and validator of advanced hardware systems
Speaker 14: is the US, the partner of war, and we're very
Speaker 14: proud to support that mission. For US, it's we are
Speaker 14: an engineering tool, you know, full stop, and so we
Speaker 14: try to give those who needed the best, most modern
Speaker 14: tools to support their mission.
Speaker 3: Trey, you are the executive chair of ANDERIL. Could I
Speaker 3: ask simply if any aerial technology has been deployed or
Speaker 3: used in Iran and what the footprint is there and
Speaker 3: also where Nomenal kind of fits in in managing that process.
Speaker 15: Yeah, I mean, we have all sorts of primarily counter
Speaker 15: airr systems that are present in conflict zones. So we
Speaker 15: are actively working day to day with the department in
Speaker 15: ongoing operations. Obviously can't give a whole lot of details
Speaker 15: beyond that, but you know, this is kind of one
Speaker 15: of the challenges of building a defense technology company is
Speaker 15: that you don't build for the wars of yesterday or
Speaker 15: the wars of today. It takes time to integrate these
Speaker 15: things into concepts of operation. So the work that we're
Speaker 15: doing in the region is work that we've actually been
Speaker 15: doing for a long time. It's not that we just
Speaker 15: showed up, you know, in the moment of the conflict.
Speaker 15: And I think that a lot of this goes to
Speaker 15: the test and evaluation operations is you know, getting to
Speaker 15: preparedness so that you're not just building a technology demonstrator,
Speaker 15: but you're building something when it's resilient and that is
Speaker 15: going to work in times of conflict. That requires a
Speaker 15: lot of reps and it's much harder to do than
Speaker 15: it is with just doing like a sim for software.
Speaker 15: These things have lives and debt, like they have human
Speaker 15: lives involved in them, and you can't afford to make mistakes.
Speaker 2: So, you know, we're super proud of.
Speaker 15: Partner with Nominal to make sure that we're ready, We're
Speaker 15: ready for game time. When when that shows up like
Speaker 15: it hasn't aroun.
Speaker 2: Trey, can I also ask you.
Speaker 3: Bloomberg reported this week that Anderil is looking to raise
Speaker 3: about four billion dollars with Andresen and Thrive Co leading
Speaker 3: the round. A comment on that, but also, what is
Speaker 3: it that Anderil needs funding for right now? You're building
Speaker 3: in Ohio, you're expanding in California.
Speaker 9: Yeah, I mean, you nailed it.
Speaker 15: The challenge is going from being a defense technology company
Speaker 15: where you're building thousands of things to being a defense
Speaker 15: manufacturing juggernaut where you're building tens of thousands of things.
Speaker 15: I can't think of a whole lot of companies in
Speaker 15: the last twenty years new companies that have set up
Speaker 15: mass scale manufacturing. Maybe Tesla is the only real example.
Speaker 15: And role is on the path to, you know, trying
Speaker 15: to be number two in that in that space, and
Speaker 15: that's going to require a lot of capital, and it's
Speaker 15: going to require partnership from the Department to get that
Speaker 15: off the ground, which is Department of War, the Department
Speaker 15: of Work, which is where we are right now, and
Speaker 15: it will require partnership with companies like Nominal as well
Speaker 15: to make sure that we are fielding capable systems and
Speaker 15: we're scaling in a way where we're delivering a functioning
Speaker 15: capability rather than just a technology demonstrator or prototype.
Speaker 5: Cameron, I reference that you had a fascinating background. You
Speaker 5: worked at Androl yourself. You've been an investor yourself at Lux.
Speaker 5: You've also been heading up sale drone as well the defense.
Speaker 5: You're head of defense for sale drone on autonomous maritime companies.
Speaker 5: So you've been thinking about all of these questions that
Speaker 5: currently investors, builders and the community written larger thinking about
Speaker 5: how what was the signal you think has been sent
Speaker 5: by the Pentagon with its feud with Anthropic and how
Speaker 5: does it make you feel building alongside the government at
Speaker 5: the moment?
Speaker 14: Yeah, I think you know, we we at Nominal, we
Speaker 14: think a lot about where AI will intersect with our
Speaker 14: technology area, and I think the uh, the unfortunate reality
Speaker 14: is in the industrial sector, in the hardware world, much
Speaker 14: of the software and technology is so antiquated that it
Speaker 14: is just now I think becoming AI ready and AI adjacent,
Speaker 14: and we are working to help a lot of our customers, uh,
Speaker 14: you know, operationalize that that technology. I think in terms
Speaker 14: of partnerships with the Department of War, the messages that
Speaker 14: we get loud and clear are you know, speed and
Speaker 14: scale are our paramount and Nominal plays a huge part
Speaker 14: in helping all types of uh, you know, companies fuel
Speaker 14: those systems to meet that resilient need.
Speaker 5: Camera McCord, CEO Nominal and the Tree Stevens partner at
Speaker 5: Founders Fund. Fascinating to have you both join. We really
Speaker 5: appreciate it. Now coming up, El mask is putting millions
Speaker 5: into the Kentucky GOP primary.
Speaker 6: How is it going off? That's next? This is bluembg tech.
Speaker 5: Elol Musk told a jury that his twenty twenty two
Speaker 5: posts about putting pandsled by.
Speaker 6: Twitch on hold was not one of his wisest.
Speaker 5: Musk was testifying in a trial alleging he purposely drove
Speaker 5: down Twitter's share price during his negotiations to buy the
Speaker 5: Company's Max Chafkin joins us.
Speaker 6: Now, it's not the first time that El Muscus.
Speaker 5: Has his social media posts sort of breaked over the
Speaker 5: calls by this.
Speaker 16: No, this is a long running thing, and in fact
Speaker 16: often in these cases his best defense is that he
Speaker 16: tweets a lot, and you know, his tweets are not
Speaker 16: always taken seriously, and you know there is something too
Speaker 16: that that of course came up during the funding secured
Speaker 16: dispute of twenty seventeen or twenty eighteen, when he threatened
Speaker 16: to buy out Tesla and then was accused of not
Speaker 16: having the money. So I think it's going to be
Speaker 16: the same story we've seen over and over again, which
Speaker 16: is just that he has a tendency to speak his mind.
Speaker 16: Let's let's put it mildly on Twitter in ways that
Speaker 16: sort of don't fall traditional securities norms or sometimes rules.
Speaker 3: Max lost August, you and I tried to dissect what
Speaker 3: the net result was from from Ela Musk going.
Speaker 2: Into the White House.
Speaker 3: Your latest for BusinessWeek is is again like his financial
Speaker 3: backing of certain races, this time in Kentucky.
Speaker 2: Like what's the learning here? What are you writing it? Well?
Speaker 16: So top line, ed, I think that the Musk Trump
Speaker 16: alliance is very much back now. Maybe things are uneasy
Speaker 16: a little not as not as kind of friendly as
Speaker 16: they were when he was had you know, constant access
Speaker 16: to the Oval Office and his child was kind of
Speaker 16: clowning around with the President of the United States. But
Speaker 16: he is certainly in the you know, in the circle
Speaker 16: of friends. Now, this race is interesting because the candidate
Speaker 16: that Elon Musk is backing, Nate Morris, is very close
Speaker 16: to JD.
Speaker 9: Vance.
Speaker 16: My sense is that Elon and Nate Morris do not
Speaker 16: have any you know, pre existing connection. This is really
Speaker 16: a jdv thing. He is kind of backing the person
Speaker 16: who is close to JD.
Speaker 9: Vance.
Speaker 16: And when you look at this race, it is kind
Speaker 16: of like a miniature version of the Jdvans thing. You
Speaker 16: have a candidate in Kentucky who is very well connected
Speaker 16: with tech donors. Nate Morris also connected to Peter Teel.
Speaker 16: He started a tech company called Rubicon, which was the
Speaker 16: uber of trash but not necessarily hitting it off with voters.
Speaker 16: The polls, I'll just say, have been a little bit spotty,
Speaker 16: including after this huge infusion.
Speaker 2: Of money from Elon Musk.
Speaker 16: Ten million dollars has gone into Kentucky advertising.
Speaker 6: So do we think it's going to be effective?
Speaker 5: Have we dissected whether it's effective in.
Speaker 16: The past So far it hasn't paid off. But I'll say,
Speaker 16: number one, there are a lot of undecided voters. When
Speaker 16: you look at the polling, you know, between twenty and
Speaker 16: forty percent of the voters in Kentucky, you're STI undecided.
Speaker 16: So maybe they've seen a few ads, but they haven't
Speaker 16: made up their mind. That is one potential factor. And
Speaker 16: the other potential factor, and this is huge, cannot be underestimated,
Speaker 16: is Donald Trump. A lot of these races are essentially
Speaker 16: running for Donald Trump's endorsement.
Speaker 9: That was JD.
Speaker 16: Vance's plan and I think that's Name Morris's plan here.
Speaker 16: And the truth is that part of what Trump is
Speaker 16: looking at is can you raise money? And so that
Speaker 16: is something you can do with the world surges man.
Speaker 5: You can Max Schaffkin across this for BusinessWeek and for
Speaker 5: our show.
Speaker 6: We appreciate it. That does it for the decision A
Speaker 6: Bloomberg tech head.
Speaker 2: Yeah, check out the pod.
Speaker 3: You know where to find it from New York City
Speaker 3: and San Francisco. This is Bloomberg Tech