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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live

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Speaker 1: from the heart of Silicon Valley with ed La Loow

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Speaker 1: in San Francisco.

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Speaker 2: This is Bloomberg Tech.

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Speaker 3: Coming up, we speak to Nvidia's CEO Jensen Wang as

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Speaker 3: the AI industry gets back to talking circular financing. Plus

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Speaker 3: this week's power on all about Apple taking on Meta

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Speaker 3: in the smart glasses department, and the biggest week of

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Speaker 3: the year so far for big tech earnings Microsoft, Meta, Amazon,

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Speaker 3: many more on.

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Speaker 2: Deck our top story.

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Speaker 3: The technology world is talking about circular financing again. Today's

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Speaker 3: big number seven hundred and fifty billion. That's the potential

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Speaker 3: value of a fresh round of AI.

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Speaker 2: Infrastructure deals in videos.

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Speaker 3: Working on the first piece, Bloomberg reports in videos in

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Speaker 3: talks to Garan up to two hundred and fifty billion

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Speaker 3: dollars to help open AI lease computing from soft Banks

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Speaker 3: planned data center in Ohio. It's also discussing, by the way,

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Speaker 3: financing three hundred and fifty billion dollars of open AIS

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Speaker 3: in Vidia chip purchases for that project, and that's not

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Speaker 3: even counted in today's big number. The second piece a

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Speaker 3: five hundred billion dollar plus deal with sk Group in

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Speaker 3: Vidia buying sk Heinex memory. SK builds AI infrastructure using

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Speaker 3: in video systems. On Friday, I discussed the SK deal

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Speaker 3: within video CEO Jensen One in San Francisco.

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Speaker 4: This is the golden ages for career. As you know,

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Speaker 4: there's semiconductor businesses booming, their industrial businesses booming. You know,

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Speaker 4: this is a country that has the ability to help

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Speaker 4: the world build out the AI infrastructure that they're incredibly

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Speaker 4: adapt at adopting new technologies, and it's a really technologically

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Speaker 4: forward leaning society and they love using AI. AI has

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Speaker 4: really diffused throughout their society and their industry, and so

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Speaker 4: this is a great time for them. We're announcing several things.

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Speaker 4: We announce a big partnership with SK Group where our

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Speaker 4: companies are going to enter into a business partnership where

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Speaker 4: we do over five hundred billion dollars of business with

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Speaker 4: each other, whether it's consumption and purchasing of memories or

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Speaker 4: selling AI supercomputers to them as a scale out to

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Speaker 4: gigawatts of AI factories. There's a whole bunch of other announcements.

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Speaker 4: We're investing a billion dollars in neighbor to help they're

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Speaker 4: the COREA is leading a cloud, they're going to scale

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Speaker 4: up in Korea up to two they're going to scale

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Speaker 4: up two hundred megawatts I think it is, and they're

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Speaker 4: going to expand across the world. And so we have

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Speaker 4: a whole bunch of announcements that we're making today.

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Speaker 2: With the expanded sk relationship.

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Speaker 3: There's also sort of more direct involvement within video on

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Speaker 3: the roadmap for HBM future generations of HBM.

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Speaker 2: Talk about that.

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Speaker 3: I remember you being on stage earlier this year saying

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Speaker 3: five years ago we told our supply chain what was

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Speaker 3: going to happen, and it did happen, and you gave

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Speaker 3: some credit to the memory makers in going with you

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Speaker 3: on that journey, but clearly you want to be involved

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Speaker 3: in the direction of travel for future generations of HBM.

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Speaker 4: Yeah, we're working together on of course, we started with

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Speaker 4: HPM two, worked on HPM three, three E, four, four E,

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Speaker 4: and then beyond, and so we've got a whole roadmap

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Speaker 4: of memories that we're working on together. It is also

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Speaker 4: the case that the semiconductor industry has really changed, and

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Speaker 4: the reason for that because we used to build computers

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Speaker 4: for people to use, and we're going to still continue

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Speaker 4: to build incredible computers. These are now processing AIS for

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Speaker 4: humans to collaborate with. But in the future, we also

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Speaker 4: have AI agents and robots, and they're going to be

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Speaker 4: using computers. So instead of just a billion people using computers,

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Speaker 4: we're going to have one hundred billion agents and billions

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Speaker 4: of robots all using computers. The computer industry, the chip

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Speaker 4: that's built on top of the chip industry, surely is

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Speaker 4: not big enough. And so this is one of the

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Speaker 4: realizations of the semiconductor industry that now computers are built

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Speaker 4: not just for people to use, but computers are being

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Speaker 4: built for computers to use. My guess is that that

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Speaker 4: the semiconductor industry is probably going to have to be

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Speaker 4: ten times larger than it is today over the next

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Speaker 4: decade or so, and so working with our partners in

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Speaker 4: Korea and around the world to scale up the supply

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Speaker 4: chain and the semiconductors so that we're prepared for this

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Speaker 4: AI future. It is really important.

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Speaker 3: That was part of my conversation with Nvidia CEO Jensen

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Speaker 3: one from Friday, and the deals aren't stopping. Just this morning,

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Speaker 3: in Video announced a substantial investment in Iliosutskova's startup Safe

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Speaker 3: super Intelligence SSI. Says the partnership will increase its computing

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Speaker 3: power tenfold over the next year, allowing it to scale

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Speaker 3: its AI research. Meanwhile, the mask's asking an a question,

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Speaker 3: is in Vidia creating a feedback loop by helping finance

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Speaker 3: demand for its own products? Joining us now is Alice

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Speaker 3: and Porter Janet Henderson, investment portfolio manager on the Global

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Speaker 3: Technology Leaders team, and in Video's the top holding sks

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Speaker 3: in there as well.

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Speaker 2: A lot of newsflow to.

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Speaker 3: Digest, But that is the question once again, is this

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Speaker 3: circular financing?

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Speaker 2: And if it is, should we be worried about that?

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Speaker 5: I think when we think about circular financeing, it's it's

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Speaker 5: an answer to circular problem, which is that the ability

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Speaker 5: to be able to grow AI revenues and applications is

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Speaker 5: being constrained still by the capacity that the hyper scalers have.

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Speaker 5: Just as the market continues to be surprised as Alphabet

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Speaker 5: and metally for this week and Amazon continue to push

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Speaker 5: out capex push up capics not just for twenty twenty six,

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Speaker 5: but for only twenty seven and twenty twenty eight. The

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Speaker 5: flip side of that is in Verdia doubling its free

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Speaker 5: cash flow year over year, So it makes sense that

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Speaker 5: in radio at the heart of this ecosystem, it's trying

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Speaker 5: to help resolve some of this circular problem that we

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Speaker 5: have in being able to help underwrate some.

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Speaker 6: Of that growth.

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Speaker 5: Now there is a point at which that can be problematic.

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Speaker 5: We don't think that that's there because tech still has

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Speaker 5: amongst the strongest balance sheets in the market, but we

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Speaker 5: continue to keep a course watch on that circularity.

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Speaker 3: The constructive view on it is that in the case

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Speaker 3: study I gave where Bloomberg reports that in Nvidia would

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Speaker 3: guarantee the least financing but also finance over n ires

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Speaker 3: purchase of chips, you know our own analysts would say, well,

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Speaker 3: actually the banks might look at that and say, oh good.

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Speaker 3: In VideA is involved. That gives us confidence. It gives

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Speaker 3: literally the construction industry confidence to get involved in the project.

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Speaker 3: Is that something that is worth hanging one's hat on

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Speaker 3: the video effect that the market gets confidence from.

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Speaker 5: In video have the free cash flow as do an alphabet,

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Speaker 5: So I think that's important. I think we have to

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Speaker 5: look at Ultimately, it's about will open AI continue to

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Speaker 5: generate revenues and the kind of gold standard that investors

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Speaker 5: are looking at here, it's not so much the capex

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Speaker 5: that they spend, but really whether that annual revenue run

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Speaker 5: rate that they have is going to grow more quickly

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Speaker 5: than the capex run rate that they require, and the

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Speaker 5: credit markets continue to look at that. But just the

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Speaker 5: actual quantum and this magnitude of this capex raising means

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Speaker 5: that it's an important level for Nvidia or some of

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Speaker 5: these companies with the strongest balances and strongest free cash

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Speaker 5: flew to be able to back that because it's difficult

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Speaker 5: for the credit markets to be able to underrate that otherwise.

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Speaker 2: Find that so interesting.

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Speaker 3: I think, you know, Nvidia ended its fiscal twenty six

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Speaker 3: year with ninety seven billion dollars of free cash flow

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Speaker 3: and had to like blink, do a double take that

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Speaker 3: the street sees two hundred and six billion dollars a

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Speaker 3: free cash flow next year and to many that might

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Speaker 3: even be conservative. Final one on Nvidia, what's the metric

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Speaker 3: that we track in video by now right? Is it

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Speaker 3: as simple as top line growth? Is it as simple

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Speaker 3: as free cash flow? Because they continue to be in

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Speaker 3: a position where they have a near technical monopoly in

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Speaker 3: compute and nothing is really slowing down, it is.

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Speaker 5: Such an interesting question. I think I'll go back to

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Speaker 5: how we used to think about Apple. The key metrics

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Speaker 5: that we have to think about for Nvidia are very

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Speaker 5: much how they glow the ECO system. So just as

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Speaker 5: people used to wonder, if you know, Apple's at satuation,

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Speaker 5: if it was just about the number of iPhones that

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Speaker 5: they sold, for Nvidia is beyond just how many GPUs

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Speaker 5: of what the next generation is.

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Speaker 2: It's really about how Nvidia is growing.

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Speaker 5: The ecosystem and remaining core to the AI ecosystem overall,

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Speaker 5: because the valuation on Nvidia is really inexpensive versus other

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Speaker 5: semiconductors versus the rest of the AI complex, because the

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Speaker 5: market hasn't quite bought into the sustainability of this, and

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Speaker 5: we think really developing their possession and the ecosystem, the

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Speaker 5: software and the platform aspects as they develop is really

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Speaker 5: going to help enhance not just their earnings, but the

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Speaker 5: multiple and how investors value that.

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Speaker 2: I appreciate that a great deal.

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Speaker 3: It's a big week, maybe a big week every week

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Speaker 3: at the moment that in the earnings context, Wow, we

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Speaker 3: really get underway. So meta Microsoft Wednesday, Apple on Thursday,

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Speaker 3: Amazon on Thursday. It used to be really simple if

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Speaker 3: capital expenditures went up and there was top line growth.

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Speaker 2: Then Great Wall Street love.

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Speaker 3: Technology, but it seems to not be as simple as

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Speaker 3: that anymore. What's kind of the watch for you this week?

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Speaker 5: Yeah? I think you know, we learned a little bit

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Speaker 5: from Alphabet last week because you know, within Alphabet's Cloud

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Speaker 5: division they grew that eighty two percent. Previously, we were

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Speaker 5: watching these cloud divisions and saying, are they going to

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Speaker 5: grow revenues more than capex? And that was certainly the

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Speaker 5: case versus just the cloud division, But we're now looking

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Speaker 5: at that from an overall perspective, so the market will

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Speaker 5: want to see that not just Amazon is growing it's

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Speaker 5: AWS division, but the overall we're starting to see revenue growth.

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Speaker 5: And I think one of the golden metrics ultimately is

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Speaker 5: going to be at what point we see an inflection

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Speaker 5: where these companies continue to grow revenues above their capex.

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Speaker 2: And it doesn't look.

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Speaker 5: Like given all of the signs or the capex is

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Speaker 5: going up significantly materially for twenty twenty seven. It looks

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Speaker 5: like that's going to be a twenty twenty eight event.

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Speaker 5: But the market's going to look for continued growth in AWS,

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Speaker 5: continued back called growth and seeing that they are being

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Speaker 5: able to manage those costs and margins are very important,

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Speaker 5: particularly at Amazon, the largest cloud division. They've got a

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Speaker 5: huge role to play in orchestrate on the cost of

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Speaker 5: AI with their Bedrop division, and that's something the market's

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Speaker 5: going to be looking for how their margins progress, because

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Speaker 5: we saw real margin enhancement there at Alphabet last week.

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Speaker 3: I listen Forwarder Jenna Senders and investors back on Bloomberg Tech,

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Speaker 3: thank you very much. In TEED, there's another big story

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Speaker 3: in the chip sector. ASML's European shares down seven point

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Speaker 3: five twenty minutes left to go in the European session,

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Speaker 3: but on track for this biggest drop since July of

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Speaker 3: twenty five, at one point, the biggest drop on record.

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Speaker 3: The Information reported that a Chinese state backed technology company

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Speaker 3: has started production of deep ultra violet lithography tools CEUV tools,

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Speaker 3: a case study and example that China's domestic industry could

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Speaker 3: bridge the gap with what is the key chip equipment

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Speaker 3: maker in the world. In ASML, it's really roped the

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Speaker 3: stock and as we get more info, we'll bring it

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Speaker 3: to you coming up on the show. Keto Network CEO

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Speaker 3: Shlimo Kramer joins us with an update on his company's financials,

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Speaker 3: but also his take on the state of cybersecurity post

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Speaker 3: that hugging face incident.

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Speaker 2: That's next. This is Boomberg Tech.

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Speaker 3: Cybersecurity firm Cato Network says it has surpassed four hundred

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Speaker 3: and fifteen million dollars in annual recurring revenue. It's driven

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Speaker 3: by what it sees as a shift from companies buying

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Speaker 3: a slu of security products to single platform solutions. Keto's

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Speaker 3: co founder and CEO, Shlimo Kramer back with us on

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Speaker 3: Bloomberg Tech. This is growth about forty to forty five

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Speaker 3: percent you're on year. But what's so interesting is what's

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Speaker 3: behind it. You see clearly a shift in how enterprises

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Speaker 3: are doing business. Give me the evidence of that shift

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Speaker 3: is seen through your top line growth.

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Speaker 6: So obviously the market is maturing and we are seeing

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Speaker 6: larger and larger enterprises adopting SASSI, as evident by the

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Speaker 6: multi million dollar deals of Fortune five hundred customers we

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Speaker 6: close the beginning first half of this year. This is

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Speaker 6: driven by the fact that our platform based solution now

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Speaker 6: is not only about operational efficiency and business agility, but

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Speaker 6: with AI threat landscape, it's a do or die security

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Speaker 6: innovation for the for customers, So that has really been

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Speaker 6: attainment in a mainstream adoption.

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Speaker 3: What I find further interesting is the different industries or

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Speaker 3: domains that are looking to manufacturing robotics. You know, people

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Speaker 3: like Gentleman tell us that that's the next wave physical AI,

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Speaker 3: the physical world. You seem to also be benefiting from

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Speaker 3: spend there.

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Speaker 6: Yeah, you know, every organization is facing with two huge transformations.

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Speaker 6: One is internally implementing AI that has, as we've seen

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Speaker 6: from recent attacks, is a very significant additional area to

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Speaker 6: protect and is facing increasingly augentic cleansing. And this is

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Speaker 6: going to replace in every organization the previous generation of

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Speaker 6: applian spased solution of POxy based solutions with two for

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Speaker 6: consecurity cloud solutions that can address this new AI era realities.

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Speaker 3: The top story of the last week were two powerful

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Speaker 3: open AYE models escaping their sandbox environment and mistakenly accessing

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Speaker 3: hugging faces systems. A big moment for AR. You're a

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Speaker 3: veteran of the technology industry and of security. Your impressions

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Speaker 3: of that.

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Speaker 6: This is a watershed moment in the security where it's

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Speaker 6: becoming increasingly clear that unleashing an army of agents inside

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Speaker 6: the organization creates a completely new level of inside your

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Speaker 6: threat to organizations and the need to control these agents,

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Speaker 6: control the user intellactions of them, control the other asian interaction,

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Speaker 6: and primarily control the interaction with data and critical applications

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Speaker 6: is becoming the number one security challenge of enterprises and

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Speaker 6: this has to be addressed by a network security solution

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Speaker 6: like Kitten networks.

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Speaker 3: What happened was a frontier lab tested the capabilities of

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Speaker 3: cutting edge models, right, and that was really cheered by industry.

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Speaker 3: They were saying, it's not a scandal. We want to

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Speaker 3: see the frontier labs do that right. But in its defense,

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Speaker 3: Hugging Face relied on open weighted models or open models,

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Speaker 3: where the guard rails on that model. The open model

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Speaker 3: diminished its ability to defend itself. So now we have

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Speaker 3: this huge open closed debate as well. You understand the field,

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Speaker 3: explain your position on that.

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Speaker 6: Yeah, So two points here please. The one is the

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Speaker 6: fact that I do not expect the model companies, whether

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Speaker 6: it's Fontier models or open source models, to provide the

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Speaker 6: cyber protection to these models.

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Speaker 2: It always has.

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Speaker 6: Been the case that cyber is a very specialized category

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Speaker 6: that needs to be addressed by specialized company that focus

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Speaker 6: on that, and that's exactly what we are doing at CATO.

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Speaker 6: And the second is it also has nothing to do

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Speaker 6: with nationality. It's not about the open source model, which

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Speaker 6: is Chinese models or the close models American models. I

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Speaker 6: think the challenges here and cyber security is the list

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Speaker 6: of which there are such vivial challenges, political, social economical

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Speaker 6: challenges that globally we need to unify in order to

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Speaker 6: address them. And I don't think that defining borders and

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Speaker 6: eighteen and even uncontrolled competition between countries is helpful in

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Speaker 6: order to face and solve these issues.

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Speaker 3: Shomo Cramer cookto networks who's hit four hundred and fifty

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Speaker 3: million dollars of R but also giving the veterans perspective

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Speaker 3: of security in the AI.

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Speaker 2: Thank you so much.

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Speaker 3: Now, coming up, Apple claims to separate itself in the

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Speaker 3: smart glasses market with an emphasis on privacy. We're going

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Speaker 3: to tell you about its plans.

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Speaker 2: Next. This is going back tech.

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Speaker 7: It's time out for talking tech. First up, Chinese check

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Speaker 7: makers CXMT searched four hundred and sixty six percent into

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Speaker 7: Shanghai trading debut, making it the country's largest onshore listed

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Speaker 7: company at a four hundred and eighty eight billion dollar valuation. CXMP,

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Speaker 7: which makes d ramships, is emerging as China's best hope

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Speaker 7: to building a self sufficient semiconductor industry plus staying in China.

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Speaker 7: It says it will take quote all measures necessary if

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Speaker 7: the US sanctions Chinese AI companies overclaims they train their

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Speaker 7: models on American technology. Beijing's Commerce ministry rejected the Trump

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Speaker 7: administration's accusations of IP theft, calling the allegations a smear campaign,

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Speaker 7: and SoftBank's forty billion dollar bridge loan for its Open

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Speaker 7: AI investment is attracting more lenders. That's according to people familiar.

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Speaker 2: With the matter.

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Speaker 7: A new group of twenty one lenders has taken on

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Speaker 7: about seven billion dollars of the financing. Meanwhile, First Abu

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Speaker 7: Dhabi Bank, GIC and Standard Chartered have each taken a

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Speaker 7: nearly one billion dollar share.

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Speaker 2: John ed thank you Hira Now.

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Speaker 3: Apple is aiming to unveil its first smart glasses next June. That's,

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Speaker 3: according to sources, it's a year later than initially planned,

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Speaker 3: as the IFI maker looks to overcome some concerned dogging

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Speaker 3: the wearable tech one of them is privacy. Bloomberg's consumer

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Speaker 3: tech editor Dana Warman joins us for more. So we

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Speaker 3: kind of had the calendar. Now the Apple Smart Glasses

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Speaker 3: will come WWDC of twenty twenty seven. Talk a bit

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Speaker 3: about what we know about the product, the approach.

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Speaker 2: The timing, and it's selling points. Yeah.

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Speaker 8: So if Apple does indeed at least give an initial preview,

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Speaker 8: an initial announcement of the glasses during WWDC next year,

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Speaker 8: that would suggest the company is looking to get buy

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Speaker 8: in from developers to make sure that there are apps.

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Speaker 8: As many apps as possible would integrate and work well

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Speaker 8: with these glasses. And our understanding is that the glasses

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Speaker 8: wouldn't go on sale, wouldn't hit the market until later

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Speaker 8: next year, but the developer show would be a good

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Speaker 8: opportunity to get the creative juices flowing, so to speak.

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Speaker 8: On the developer side.

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Speaker 3: Your team has been so busy in the world of

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Speaker 3: consumer electronics consumer technology. Foldable phones is one big category,

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Speaker 3: and I think you've been able to get hands with

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Speaker 3: Samsung's Galaxy Z fold eight. What the team's impressions, What

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Speaker 3: do we know? Is it just like any other foldable phone?

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Speaker 3: Why do foldable phones matter. These are all big questions

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Speaker 3: for bling bug Tech.

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Speaker 2: Yeah so too.

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Speaker 8: My colleagues had a chance to play with the Galaxy

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Speaker 8: Z fold eight, and I think what's notable about it

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Speaker 8: is more of the form factor, not just that it's

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Speaker 8: a foldable, but it has a shorter, squatter design that

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Speaker 8: looks a lot like what we understand the folding the

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Speaker 8: upcoming foldable iPhone to look like, which, of course it

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Speaker 8: hasn't been announced, but based on our best understanding, and

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Speaker 8: aside from it being kind of cute and definitely different,

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Speaker 8: meaningfully different from normal smartphones, which have kind of hit

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Speaker 8: a very incremental update cadence, I think it's harder for

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Speaker 8: even regular people to be impressed by new smartphones. This

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Speaker 8: definitely is different looking than most smartphones on the market,

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Speaker 8: and just from a practical perspective, it is especially well

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Speaker 8: suited to media consumption, including both looking at all the

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Speaker 8: photos you have on your phone and watching videos the

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Speaker 8: aspect ratio which is better suited for both of those things.

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Speaker 2: And Dana real quick remind us how much the z

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Speaker 2: fol costs.

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Speaker 8: It ain't cheap, just short of two thousand dollars. I

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Speaker 8: think it's about nineteen hundred here in the US, so

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Speaker 8: definitely not cheap even by modern smartphone standards, which have

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Speaker 8: undergone some price hikes across different brands.

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Speaker 3: Been most saying a Warman editor on the Consumer Technology team,

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Speaker 3: with everything Apple and everything Samsung, thank you very much.

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Speaker 3: Now coming up, in Vidia doubles down on AI, new investments,

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Speaker 3: bigger partnerships, the growing debate over who's really financing the

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Speaker 3: AI boom. It is interesting that in Nvidia is now

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Speaker 3: down almost five percent for all the headlines on what

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Speaker 3: were headline positive pieces of news.

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Speaker 2: This is what markets look like.

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Speaker 3: We opened higher, we're now a lot lower, particularly in chips.

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Speaker 3: We can unpackle that. It is halftime. We'll be right back.

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Speaker 3: This is spoombog tech.

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Speaker 4: We used to build computers for people to use, and

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Speaker 4: we're going to still continue to build incredible computers. These

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Speaker 4: are now processing AIS for humans to collaborate with. But

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Speaker 4: in the future we also have AI agents and robots,

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Speaker 4: and they're going to be using computers. So instead of

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Speaker 4: just a billion people using computers, we're going to have

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Speaker 4: one hundred billion agents and billions of robots all using computers.

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Speaker 4: The computer industry, the chip that's built on top of

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Speaker 4: the chip industry surely is not big enough.

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Speaker 2: Welcome back to blombag tech.

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Speaker 3: Some of my conversation with video CEO Jensen one, let's

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Speaker 3: get back to today's big number, seven hundred and fifty billion dollars.

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Speaker 3: That's the potential value, potential value of a fresh round

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Speaker 3: of AI infrastructure deals in videos working on markets have

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Speaker 3: reacted in a really unusual way to a number of

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Speaker 3: headlines this morning, the concerns about circular financing, the idea

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Speaker 3: that in videos bankrolling the same companies that are buying

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Speaker 3: their technology. There's some nuance in that seven hundred and

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Speaker 3: fifty billion dollar number. We need to understand it. But

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Speaker 3: having opened higher nas like one hundred, but particularly chip

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Speaker 3: stocks are now markedly lower.

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Speaker 2: Joining us for more is Blue.

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Speaker 3: Moosine King, who is with me in San Francisco Friday night,

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Speaker 3: trying to understand what was a big AI event hosted

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Speaker 3: by the Korean government. Let's just focus on the sk

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Speaker 3: bit half a trillion dollars. I had the opportunity to

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Speaker 3: ask Jensen to sort of just explain what it encompasses.

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Speaker 3: You also did some reporting what it encompasses? What does

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Speaker 3: it encompass?

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Speaker 9: Yeah, that's a good question, and the problem is we

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Speaker 9: still don't know. I mean, a while ago, big numbers

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Speaker 9: were a good thing, it was great, they were celebrated.

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Speaker 9: Now you need to bring the details. So this could

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Speaker 9: be spending by SK on the data centers that would

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Speaker 9: be SK Telecom. This could be spending by in video

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Speaker 9: on sk Heynex's memory chips. This could be investment by

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Speaker 9: in video on helping sk Heinex develop future memory chips.

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Speaker 9: We just don't know, because we don't know.

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Speaker 3: There's the I think Gensen's response to me is basically

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Speaker 3: all of the above, right, And there's no timeline for

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Speaker 3: the deployment of that five hundred billion dollars. But s

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Speaker 3: k heiiniz has sixty percent market share in high bandwidth memory,

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Speaker 3: in video has a greater market share of compute. So

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Speaker 3: that's kind of how it has explained to me. There's

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Speaker 3: the open eyepiece of this. And one thing I think

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Speaker 3: the audience really appreciate is there's all the reporting about

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Speaker 3: what in video is or isn't committed to. But what

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Speaker 3: argument does in video make historically about whether it is

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Speaker 3: or isn't a circular financing?

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Speaker 9: Yeah, I mean it's pretty much what Jensen said to you,

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Speaker 9: which is Look, this thing is going to the moon.

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Speaker 9: It's growing, and it's growing, and it's growing. I'm making

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Speaker 9: these investments to speed up that growth and to facilitate

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Speaker 9: that growth, make sure it doesn't stall. And guess what

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Speaker 9: if I'm buying parts of these fantastic companies and that's

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Speaker 9: going to provide a great return on that investment. That's

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Speaker 9: his argument and but obviously underpinning that is that we're

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Speaker 9: going to the moon, and not everybody believes that.

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Speaker 3: Right, So it's whether or not you believe in the

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Speaker 3: future state of the market that gensers are like, just

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Speaker 3: to finish, it was very interesting to be there on Friday.

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Speaker 3: You know, Jensen Wong is still a leader in industry,

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Speaker 3: but it's kind of more than that.

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Speaker 2: You had the president of.

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Speaker 3: South Korea, all of the major AI CEOs, and then

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Speaker 3: Jensen kind of leading the way in the middle.

439
00:26:13,680 --> 00:26:15,359
Speaker 2: What else do we learn from that event?

440
00:26:15,640 --> 00:26:19,280
Speaker 9: Yeah, I mean, you have arguably the two leaders of

441
00:26:20,080 --> 00:26:23,280
Speaker 9: you know, the the AI software development efforts. You have

442
00:26:23,400 --> 00:26:27,560
Speaker 9: you know, Dario and you have and we're talking about

443
00:26:27,560 --> 00:26:29,960
Speaker 9: who's doing what, who's doing chips? Said they one is like, oh, well,

444
00:26:30,160 --> 00:26:32,639
Speaker 9: you know, these guys are making chips now, and that

445
00:26:32,840 --> 00:26:35,679
Speaker 9: was a revelation. And you know Dario was there on

446
00:26:35,720 --> 00:26:38,880
Speaker 9: stage with him supposedly having told him this. Jensen, who

447
00:26:39,160 --> 00:26:41,240
Speaker 9: it would be competing with, was there on stage, So

448
00:26:41,280 --> 00:26:43,080
Speaker 9: there was a lot of dynamics and that just showed

449
00:26:43,119 --> 00:26:44,480
Speaker 9: how fluid the situation is.

450
00:26:44,680 --> 00:26:46,880
Speaker 3: On a very serious note, in video's decline is now

451
00:26:46,920 --> 00:26:50,879
Speaker 3: accelerated to five percent again, markets opened higher in videos

452
00:26:50,920 --> 00:26:53,280
Speaker 3: now down. There's no explicit headline, but the chat in

453
00:26:53,320 --> 00:26:57,040
Speaker 3: the market is about circular financing, grimose inking, thank you

454
00:26:57,119 --> 00:26:59,160
Speaker 3: very much. Indeed, let's get more in a video. Men Deep,

455
00:26:59,200 --> 00:27:02,639
Speaker 3: seeing of blue Berg Intelligence joins us now and really

456
00:27:02,640 --> 00:27:05,080
Speaker 3: interesting to see what you and the team had to write.

457
00:27:05,240 --> 00:27:07,600
Speaker 3: I talked a little bit earlier, Man Deep, with a

458
00:27:07,680 --> 00:27:11,359
Speaker 3: portfolio manager who really agreed with your thesis, which is

459
00:27:11,440 --> 00:27:15,240
Speaker 3: on the other hand, in Vidia doing this gives a

460
00:27:15,280 --> 00:27:20,480
Speaker 3: lot of confidence to the market, right, it's constructive overall

461
00:27:20,520 --> 00:27:21,560
Speaker 3: for the AI buildout.

462
00:27:21,600 --> 00:27:23,919
Speaker 2: Is that what we're writing here? It is?

463
00:27:23,960 --> 00:27:27,840
Speaker 10: And look, I think because the numbers are getting so big,

464
00:27:27,880 --> 00:27:31,840
Speaker 10: and who has the most free cash flow to invest

465
00:27:32,000 --> 00:27:36,600
Speaker 10: in the backstop off leases, it's Nvidia, and Vidia wants

466
00:27:36,640 --> 00:27:39,840
Speaker 10: to boost up, you know, not just open AI or

467
00:27:39,880 --> 00:27:44,720
Speaker 10: any specific company, but that entire neocloud complex because they

468
00:27:44,880 --> 00:27:48,520
Speaker 10: want that compute to be deployed beyond the cloud providers,

469
00:27:48,760 --> 00:27:51,600
Speaker 10: who are in turn developing their own chips. But at

470
00:27:51,640 --> 00:27:55,159
Speaker 10: the end of the day, the more fragmented this model

471
00:27:55,720 --> 00:27:59,119
Speaker 10: ecosystem is and the more companies that use Nvidia, I

472
00:27:59,160 --> 00:28:02,880
Speaker 10: think that's what they are focused on for the next

473
00:28:02,880 --> 00:28:03,480
Speaker 10: few years.

474
00:28:04,720 --> 00:28:07,200
Speaker 3: Right now, in videos down five percent, it's biggest drop

475
00:28:07,280 --> 00:28:09,040
Speaker 3: since the first week of June. But I'm just trying

476
00:28:09,080 --> 00:28:11,560
Speaker 3: to understand the sort of reaction in markets. So what

477
00:28:11,680 --> 00:28:14,280
Speaker 3: was like lots of different headlines. We're also showing your

478
00:28:14,320 --> 00:28:17,600
Speaker 3: research and there's a line in that easing concern that

479
00:28:17,640 --> 00:28:21,680
Speaker 3: capacity demand is fading. You still see very long term

480
00:28:21,720 --> 00:28:24,719
Speaker 3: demand outpacing this industry's ability to supply.

481
00:28:25,480 --> 00:28:28,560
Speaker 10: Yeah, I think the core of the thesis is that,

482
00:28:29,520 --> 00:28:32,040
Speaker 10: you know, AI is going to be a lot more

483
00:28:32,080 --> 00:28:35,879
Speaker 10: compute and power intensive than it used to be memory intensive.

484
00:28:36,119 --> 00:28:39,280
Speaker 10: And when it comes to the type of computing that

485
00:28:39,400 --> 00:28:42,400
Speaker 10: is required for large arid models that have got trillions

486
00:28:42,400 --> 00:28:45,760
Speaker 10: of parameters and do so much computation to get to

487
00:28:45,840 --> 00:28:48,800
Speaker 10: the next word, there is no shortcut. I mean, if

488
00:28:48,840 --> 00:28:52,920
Speaker 10: these open weight models were tomorrow coming up with, you know,

489
00:28:53,000 --> 00:28:56,440
Speaker 10: a much smaller model that can have the same type

490
00:28:56,440 --> 00:28:59,720
Speaker 10: of reasoning as the frontier models, then we would have

491
00:28:59,720 --> 00:29:03,400
Speaker 10: a different conversation. But for now, even with the open

492
00:29:03,440 --> 00:29:07,040
Speaker 10: weight models, the number of parameters seems to be going up.

493
00:29:07,160 --> 00:29:10,400
Speaker 10: Gimme K three is two point eight trillion top parameters.

494
00:29:10,440 --> 00:29:14,520
Speaker 10: So that's where I think the compute needs will remain.

495
00:29:14,560 --> 00:29:17,280
Speaker 10: And that's the kind of the core thesis that Jensen

496
00:29:17,320 --> 00:29:17,960
Speaker 10: has as well.

497
00:29:18,520 --> 00:29:21,000
Speaker 3: I got some details on that model in just a minute, Mandy,

498
00:29:21,120 --> 00:29:24,160
Speaker 3: real quick. The research on Nvidia also ties in what

499
00:29:24,200 --> 00:29:26,360
Speaker 3: we learned last week from Alphabet and this week we

500
00:29:26,440 --> 00:29:29,800
Speaker 3: have a big earnings week on deck. Where are you

501
00:29:29,840 --> 00:29:32,080
Speaker 3: thinking right now about Capex as a guide?

502
00:29:32,720 --> 00:29:35,800
Speaker 10: I mean, these number at the hyperscale, Capex would exceed

503
00:29:35,920 --> 00:29:39,760
Speaker 10: one trillion for those five companies, and everyone will raise

504
00:29:39,800 --> 00:29:43,200
Speaker 10: their Capex. I see no reason for anyone, you know,

505
00:29:43,240 --> 00:29:46,440
Speaker 10: not raising capex. And if they're not raising Capex, then

506
00:29:46,520 --> 00:29:49,280
Speaker 10: that's where you know, the memory price increases have to

507
00:29:49,280 --> 00:29:52,000
Speaker 10: be accounted for and there is some sort of an offset.

508
00:29:52,040 --> 00:29:52,880
Speaker 10: I'll be looking for.

509
00:29:54,200 --> 00:29:57,360
Speaker 3: Bogs Man deep saying, leading technology research at BI.

510
00:29:57,400 --> 00:29:58,320
Speaker 2: Thank you so much.

511
00:29:58,560 --> 00:30:02,080
Speaker 3: Now, we've just been discussing base based Moonshot AI has

512
00:30:02,160 --> 00:30:05,640
Speaker 3: officially released its latest model, Kimmy K three, as Chinese

513
00:30:05,720 --> 00:30:08,880
Speaker 3: firms closed the gap with US rivals. Moonshot posted on

514
00:30:09,040 --> 00:30:12,120
Speaker 3: x saying the model has architecture of two point five

515
00:30:12,200 --> 00:30:15,520
Speaker 3: times the intelligence per unit of compute. The initial announcement

516
00:30:15,520 --> 00:30:18,480
Speaker 3: of Kimmus K three and benchmark performance triggered a sell

517
00:30:18,520 --> 00:30:20,680
Speaker 3: off in AI related stocks Ei this month.

518
00:30:20,520 --> 00:30:21,640
Speaker 2: We covered it on This Show.

519
00:30:21,840 --> 00:30:24,400
Speaker 3: The company was accused by the White House last week

520
00:30:24,600 --> 00:30:28,200
Speaker 3: of improperly using AI models and banned in video chips

521
00:30:28,200 --> 00:30:32,320
Speaker 3: as part of development and training of their products. Coming up,

522
00:30:32,360 --> 00:30:35,280
Speaker 3: we got way more on private markets, specifically why one

523
00:30:35,360 --> 00:30:38,360
Speaker 3: firm is looking into supply chains for its next investment,

524
00:30:38,480 --> 00:30:41,840
Speaker 3: joining US as overmatch Ventor's general partner Morgan Hitzig.

525
00:30:41,960 --> 00:30:42,920
Speaker 2: This is Bloomberg Tech.

526
00:30:53,200 --> 00:30:57,440
Speaker 3: Europe is divorcing Palented despite being a critical component of

527
00:30:57,520 --> 00:31:01,440
Speaker 3: the continent security apparatus. Talent is Trump aligned infamy has

528
00:31:01,520 --> 00:31:05,240
Speaker 3: heightened urgency for Europe to repatriate key services that have

529
00:31:05,280 --> 00:31:09,360
Speaker 3: long been outsourced to American companies, giving way to European newcomers.

530
00:31:09,360 --> 00:31:10,880
Speaker 2: Bloomberg's Matt Bergen joins.

531
00:31:10,720 --> 00:31:12,800
Speaker 3: US with one of the most read stories in tech

532
00:31:12,840 --> 00:31:16,080
Speaker 3: on Bloomberg today. This has all the hallmarks of something

533
00:31:16,120 --> 00:31:17,960
Speaker 3: that's like right at the heart the Bloomberg Tech audience's

534
00:31:18,040 --> 00:31:21,960
Speaker 3: interest right now. But in simple terms, Europe wants to

535
00:31:22,000 --> 00:31:25,520
Speaker 3: find a European Palenteer to do the business that palente

536
00:31:25,600 --> 00:31:26,320
Speaker 3: is currently doing.

537
00:31:26,320 --> 00:31:29,240
Speaker 2: What are you reporting, Yeah, that's right.

538
00:31:29,320 --> 00:31:31,040
Speaker 11: I think there's a couple of things happening. One, as

539
00:31:31,080 --> 00:31:35,800
Speaker 11: you mentioned, Palenteer is becoming the stand in for Silicon

540
00:31:35,880 --> 00:31:38,880
Speaker 11: Valley Tech and a particular type of Silicon Valley company.

541
00:31:38,920 --> 00:31:41,760
Speaker 11: It's very close to the Trump administration, working with the Pentagon,

542
00:31:41,840 --> 00:31:44,720
Speaker 11: working in Israel. It has the political ballot baggage and

543
00:31:44,760 --> 00:31:48,040
Speaker 11: the outspoken CEO Alex Karp of co founder Peter Tiel.

544
00:31:48,560 --> 00:31:51,960
Speaker 11: The second component is that it you know, the impetus

545
00:31:52,000 --> 00:31:55,360
Speaker 11: for our story was that the French intelligence agency has

546
00:31:55,400 --> 00:31:58,440
Speaker 11: swapped out the paleteering contract for a local provider called

547
00:31:58,480 --> 00:32:01,800
Speaker 11: Chaps Vision, working with the intelligence services for the past decade.

548
00:32:01,800 --> 00:32:04,600
Speaker 11: This is kind of national critical work and you're seeing

549
00:32:04,680 --> 00:32:07,560
Speaker 11: increasing amount officials in Europe saying this is something that

550
00:32:07,600 --> 00:32:09,080
Speaker 11: we just can't afford to outsource.

551
00:32:09,680 --> 00:32:11,480
Speaker 3: Well, this is being played out in the public domain.

552
00:32:11,880 --> 00:32:16,080
Speaker 3: French Prime Minister's Sobsinda Canoe posted this on Instagram. The

553
00:32:16,160 --> 00:32:19,640
Speaker 3: divorce line that we opened our conversation with, that's a

554
00:32:19,680 --> 00:32:22,719
Speaker 3: case study. But are the European nations kind of following

555
00:32:22,720 --> 00:32:23,480
Speaker 3: in his example?

556
00:32:24,800 --> 00:32:26,840
Speaker 11: I think that was far more political theater than when

557
00:32:26,880 --> 00:32:29,120
Speaker 11: you're going to see elsewhere. But we have seen We've

558
00:32:29,120 --> 00:32:31,680
Speaker 11: seen the Dutch Defense Minister come out and say we're

559
00:32:31,720 --> 00:32:34,400
Speaker 11: going we're looking to phase out Palenteer. You know, we

560
00:32:34,440 --> 00:32:37,240
Speaker 11: have some reporting on our story that the Poland is

561
00:32:37,880 --> 00:32:41,200
Speaker 11: looking for alternatives as well. The company we profiled is

562
00:32:41,320 --> 00:32:46,200
Speaker 11: Chap's Vision, a pretty i would say, relatively obscure tech company.

563
00:32:46,240 --> 00:32:48,640
Speaker 11: It kind of operates more like a private equity roll

564
00:32:48,720 --> 00:32:51,920
Speaker 11: up firm. It's bought almost thirty different companies. They told

565
00:32:52,000 --> 00:32:54,320
Speaker 11: us they want to be European champion, that they're talking

566
00:32:54,360 --> 00:32:58,160
Speaker 11: to every single country in Europe right now. Again, they

567
00:32:58,160 --> 00:33:01,440
Speaker 11: are very small relative to palent here, but clearly they

568
00:33:01,440 --> 00:33:03,280
Speaker 11: have a lot of political will on their side.

569
00:33:04,320 --> 00:33:08,200
Speaker 3: Mark with our colleagues in research, you've essentially calculated what

570
00:33:08,240 --> 00:33:10,360
Speaker 3: it's going to take for Europe to get to a

571
00:33:10,400 --> 00:33:12,760
Speaker 3: pace where it's not relying on US tech. What's the

572
00:33:12,800 --> 00:33:15,040
Speaker 3: headline dollar figure and what does it account for.

573
00:33:16,960 --> 00:33:17,720
Speaker 2: In the trillions.

574
00:33:17,720 --> 00:33:20,320
Speaker 11: It's massive, and I think there's a distinction, however, between

575
00:33:20,600 --> 00:33:23,240
Speaker 11: you know, the kind of building out a cloud infrastructure,

576
00:33:23,280 --> 00:33:26,960
Speaker 11: building up chips, building it even large language models, and

577
00:33:27,000 --> 00:33:30,440
Speaker 11: then some of the tooling and the services layer that

578
00:33:30,520 --> 00:33:33,280
Speaker 11: a company like Palenter provides. And you know, Palenter obviously

579
00:33:33,560 --> 00:33:36,240
Speaker 11: will argue that they have twenty years plus of experience

580
00:33:36,320 --> 00:33:39,440
Speaker 11: and that they're their tools are far more advanced than

581
00:33:39,520 --> 00:33:42,440
Speaker 11: these countries, and companies that are switching off are going

582
00:33:42,480 --> 00:33:46,120
Speaker 11: to realize that they're suffering. But I think the counterpoint

583
00:33:46,160 --> 00:33:47,920
Speaker 11: to that is that it's much cheaper to build an

584
00:33:47,920 --> 00:33:51,120
Speaker 11: alternative palenteer than it would be to build an alternative

585
00:33:51,160 --> 00:33:52,880
Speaker 11: to open AI and anthropic.

586
00:33:53,320 --> 00:33:55,600
Speaker 2: Bloombersmark Bergen from London, thank you very much.

587
00:33:55,600 --> 00:33:58,320
Speaker 3: Indeed, we have more on Defense Tech California startup and

588
00:33:58,400 --> 00:34:01,680
Speaker 3: Terry's Nuclear Race four one hundred and seventy million dollars

589
00:34:01,880 --> 00:34:05,080
Speaker 3: to advance its plan to build tiny reactors aimed at

590
00:34:05,080 --> 00:34:07,040
Speaker 3: supplying power for US military bases.

591
00:34:07,160 --> 00:34:08,719
Speaker 2: The Torrent Space startup.

592
00:34:08,320 --> 00:34:11,360
Speaker 3: Is part of a US Energy Department program aimed at

593
00:34:11,440 --> 00:34:15,440
Speaker 3: acceleration of nuclear power. Venture capital firm's Paradigm and Caffeated

594
00:34:15,440 --> 00:34:18,440
Speaker 3: Capital are co leading the funding round. The investments expected

595
00:34:18,480 --> 00:34:20,640
Speaker 3: to help the company deploy its first systems to the

596
00:34:20,719 --> 00:34:24,520
Speaker 3: US military installations by twenty twenty eight, and The Financial

597
00:34:24,560 --> 00:34:29,360
Speaker 3: Times reported that SpaceX's European rival, the Exploration Company, is

598
00:34:29,400 --> 00:34:31,800
Speaker 3: in talks to raise at least three hundred million dollars,

599
00:34:31,840 --> 00:34:35,440
Speaker 3: bumping the company's valuation to more than two billion dollars.

600
00:34:35,560 --> 00:34:38,080
Speaker 3: The funding round, which isn't yet finalized, is aimed at

601
00:34:38,120 --> 00:34:42,120
Speaker 3: financing the Exploration Company's efforts to develop the first European

602
00:34:42,400 --> 00:34:45,520
Speaker 3: reusable space capsule, which would be used to transport cargo

603
00:34:45,760 --> 00:34:49,120
Speaker 3: to the International Space Station, and its planned successes. According

604
00:34:49,360 --> 00:34:51,880
Speaker 3: to the FT report, Let's stick with private markets and

605
00:34:51,960 --> 00:34:56,160
Speaker 3: deep tech. One venture firm believes investing in single points

606
00:34:56,200 --> 00:34:59,640
Speaker 3: of failure or SPOFs as a core part of its

607
00:34:59,640 --> 00:35:03,800
Speaker 3: investment and thesis joining US is overmatch Venture's general partner,

608
00:35:04,320 --> 00:35:10,920
Speaker 3: Morgan Hitzig SPOFs, SPOFF single points of failure. You and

609
00:35:10,920 --> 00:35:15,160
Speaker 3: I have had really robust conversations about how to be specific,

610
00:35:15,440 --> 00:35:18,919
Speaker 3: how to focus on what is now broad category right

611
00:35:19,000 --> 00:35:20,680
Speaker 3: defense tech, national interest tech.

612
00:35:21,360 --> 00:35:23,000
Speaker 2: Explain your thesis here.

613
00:35:24,080 --> 00:35:25,759
Speaker 12: Thanks, Ed, It's great to be back with you. One

614
00:35:25,760 --> 00:35:28,160
Speaker 12: of the things we've focused on is single points of failure,

615
00:35:28,200 --> 00:35:30,960
Speaker 12: and we wrote this piece last week. We called it

616
00:35:31,000 --> 00:35:33,160
Speaker 12: the most valuable map in the world. And this really

617
00:35:33,160 --> 00:35:36,120
Speaker 12: came on the heels of the President's executive order focused

618
00:35:36,160 --> 00:35:39,320
Speaker 12: on supply chain, and that executive order had sort of

619
00:35:39,400 --> 00:35:41,279
Speaker 12: three key pieces of it. The one we honed in

620
00:35:41,320 --> 00:35:44,800
Speaker 12: on was mapping supply chains down to the raw materials,

621
00:35:44,840 --> 00:35:48,600
Speaker 12: particularly for defense contractors. So how does that manifest for

622
00:35:48,760 --> 00:35:52,759
Speaker 12: us here at overmatch. We're really focused on companies that

623
00:35:52,920 --> 00:35:56,000
Speaker 12: have some edge that is oriented on these single points

624
00:35:56,000 --> 00:35:58,760
Speaker 12: of failure. And those single points can be technical in nature,

625
00:35:58,800 --> 00:36:03,359
Speaker 12: so think the heat shielding on a hypersonic missile. They

626
00:36:03,400 --> 00:36:05,680
Speaker 12: can be physical in nature. It could be a plant

627
00:36:05,960 --> 00:36:07,840
Speaker 12: or a mine. We've got a couple of companies that

628
00:36:07,880 --> 00:36:11,040
Speaker 12: are orienting in that domain. Or it could be regulatory

629
00:36:11,239 --> 00:36:15,200
Speaker 12: or labor or several other key facets were focused on.

630
00:36:16,160 --> 00:36:19,200
Speaker 3: So I want to get deeper into what we are

631
00:36:19,200 --> 00:36:22,040
Speaker 3: literally talking about. Drones are a good case study, so

632
00:36:22,080 --> 00:36:24,000
Speaker 3: you can go out and invest in a drone company,

633
00:36:24,560 --> 00:36:28,359
Speaker 3: but the fetters or barriers to the drone industry are

634
00:36:28,360 --> 00:36:30,719
Speaker 3: their supply chain. So it sounds like what you're trying

635
00:36:30,719 --> 00:36:34,080
Speaker 3: to identify is that problem. And then the people that

636
00:36:34,120 --> 00:36:36,960
Speaker 3: are solving specifically for the supply chain problem.

637
00:36:37,360 --> 00:36:40,760
Speaker 12: Correct, And I think the drone example is a great

638
00:36:40,960 --> 00:36:43,759
Speaker 12: case in point. You know, the Department of War has

639
00:36:43,800 --> 00:36:46,440
Speaker 12: been very focused in the Office of Strategic Capital. Their

640
00:36:46,480 --> 00:36:49,800
Speaker 12: first major tranch of financing was oriented on critical minerals.

641
00:36:49,960 --> 00:36:53,160
Speaker 12: They're now focused on the unmanned system's supply chain and

642
00:36:53,200 --> 00:36:56,120
Speaker 12: so that's everything from printed circuit boards. We actually have

643
00:36:56,160 --> 00:36:59,360
Speaker 12: a company that's focused on that space called Principal Mineral,

644
00:37:00,080 --> 00:37:02,960
Speaker 12: so focused on actuators all of these places where we

645
00:37:03,760 --> 00:37:06,800
Speaker 12: have drone companies that are effectively I mean they're systems

646
00:37:06,840 --> 00:37:09,799
Speaker 12: integrators at their core, but they are also doing this

647
00:37:10,040 --> 00:37:14,520
Speaker 12: hardware software combination. But one of the things we realize

648
00:37:14,560 --> 00:37:18,080
Speaker 12: is they're all reliant on the same core suppliers, and

649
00:37:18,120 --> 00:37:22,000
Speaker 12: how do we create better secondary suppliers to create more

650
00:37:22,160 --> 00:37:23,360
Speaker 12: robust supply chains.

651
00:37:25,200 --> 00:37:31,160
Speaker 3: You write today, sbofs are simultaneously a strategic crisis for

652
00:37:31,239 --> 00:37:34,200
Speaker 3: America as well as one of the most missed priced

653
00:37:34,200 --> 00:37:39,480
Speaker 3: investment opportunities. Mispriced to the downside of what do you

654
00:37:39,480 --> 00:37:40,000
Speaker 3: mean by that?

655
00:37:40,440 --> 00:37:43,839
Speaker 12: So they're mispriced because they're not factoring in just how

656
00:37:43,880 --> 00:37:48,239
Speaker 12: critical they are from a geopolitical perspective. So SpaceX is

657
00:37:48,320 --> 00:37:51,520
Speaker 12: a good example. If you think about the upside of SpaceX,

658
00:37:51,520 --> 00:37:53,720
Speaker 12: I think one of the things that's not yet priced

659
00:37:53,800 --> 00:37:57,359
Speaker 12: in is just how reliant some of the communications companies are,

660
00:37:57,440 --> 00:38:00,520
Speaker 12: just how reliant the military increasingly is on starf Shield.

661
00:38:00,840 --> 00:38:03,000
Speaker 12: So there's a lot of upside there if you factor

662
00:38:03,040 --> 00:38:07,440
Speaker 12: in geopolitical risk. Same thing for some of these assets

663
00:38:07,480 --> 00:38:12,120
Speaker 12: that are sort of sleepy industrial assets. Think actuators, think,

664
00:38:13,719 --> 00:38:16,799
Speaker 12: think uranium mining, think all of these things that used

665
00:38:16,840 --> 00:38:19,759
Speaker 12: to not be venture backable, but with the combination of

666
00:38:19,800 --> 00:38:22,360
Speaker 12: some of the financing that's coming from the government side.

667
00:38:22,400 --> 00:38:26,520
Speaker 12: So Office of Strategic Strategic Capital is one example, but

668
00:38:26,560 --> 00:38:29,879
Speaker 12: you also have xmbank, you also have DFC under Bend

669
00:38:29,920 --> 00:38:33,400
Speaker 12: Blacks leadership. You've got a whole bunch of organizations that

670
00:38:33,440 --> 00:38:38,120
Speaker 12: are making it pricing some of these assets in a

671
00:38:38,160 --> 00:38:41,040
Speaker 12: way where they're actually venture backable now, although there's always

672
00:38:41,080 --> 00:38:44,000
Speaker 12: still going to be that conversation of what can be

673
00:38:44,120 --> 00:38:46,680
Speaker 12: an early stage venture business and what should stay in

674
00:38:46,680 --> 00:38:47,720
Speaker 12: the private equity domain.

675
00:38:48,680 --> 00:38:51,560
Speaker 3: Okay, so that last point I find fascinating. The cap

676
00:38:51,600 --> 00:38:54,759
Speaker 3: tables look different when I read you know, big rounds

677
00:38:54,880 --> 00:38:57,400
Speaker 3: maybe at the growth stage, but the names are different.

678
00:38:57,480 --> 00:38:57,640
Speaker 2: Right.

679
00:38:57,719 --> 00:39:01,719
Speaker 3: So American Dynamism for a and recent founders funds very

680
00:39:01,719 --> 00:39:05,080
Speaker 3: focused on this area. But increasingly you've got like the

681
00:39:05,680 --> 00:39:09,280
Speaker 3: legacy mutual funds, private growth equity also kind of catching

682
00:39:09,280 --> 00:39:12,960
Speaker 3: on that this is important. What's overmatch's experience of playing

683
00:39:12,960 --> 00:39:13,640
Speaker 3: in that field.

684
00:39:14,160 --> 00:39:17,480
Speaker 12: So we have great relationships with these organizations. I think

685
00:39:17,560 --> 00:39:20,600
Speaker 12: one of the things that has built a bridge to

686
00:39:20,640 --> 00:39:23,720
Speaker 12: the Blackstones of the world, to the services of the world,

687
00:39:23,760 --> 00:39:26,359
Speaker 12: to the JP Morgans of the world is the fact

688
00:39:26,440 --> 00:39:29,560
Speaker 12: that the government is putting their money where their mouth is.

689
00:39:29,560 --> 00:39:32,160
Speaker 12: There's a real demand signal there, and so you know,

690
00:39:32,239 --> 00:39:35,960
Speaker 12: we work a lot with JP Morgan. That's one example.

691
00:39:36,000 --> 00:39:37,399
Speaker 12: I'm sure you've talked about on.

692
00:39:37,400 --> 00:39:38,440
Speaker 2: The Yeah, we covered it.

693
00:39:38,520 --> 00:39:43,080
Speaker 12: They've been really focused not just on on and off

694
00:39:43,160 --> 00:39:45,480
Speaker 12: balance sheet investments, but also they've got a ten billion

695
00:39:45,520 --> 00:39:50,160
Speaker 12: dollar fund focused specifically in this domain. So we see

696
00:39:50,200 --> 00:39:52,840
Speaker 12: it as a great way to bring follow on capital

697
00:39:52,960 --> 00:39:55,960
Speaker 12: alongside some of our early stage companies. We just had

698
00:39:56,000 --> 00:39:58,719
Speaker 12: that in one of our more recent funding rounds with

699
00:39:58,760 --> 00:40:02,640
Speaker 12: a company called Armada, really getting some of that growth

700
00:40:02,680 --> 00:40:06,480
Speaker 12: capital in earlier to focus on some of the capex spends.

701
00:40:06,520 --> 00:40:09,319
Speaker 12: That's just really tough when it's early stage venture capital.

702
00:40:09,040 --> 00:40:13,279
Speaker 3: Dollars over match Ventures. General partner Morgan Hitsick, Thank you

703
00:40:13,400 --> 00:40:17,000
Speaker 3: very much. Indeed, now coming up, investor anxiety of AI

704
00:40:17,080 --> 00:40:19,759
Speaker 3: spending has picked up ahead of big tech earnings. That's

705
00:40:19,760 --> 00:40:22,239
Speaker 3: the calendar for this week. But let's take another look

706
00:40:22,239 --> 00:40:26,840
Speaker 3: at Nvidia down five percent, you know, having opened our

707
00:40:26,960 --> 00:40:29,120
Speaker 3: higher with the rest of the market, and like, very

708
00:40:29,200 --> 00:40:32,960
Speaker 3: quickly the conversation has gone from announcements on investments and

709
00:40:33,000 --> 00:40:35,120
Speaker 3: aur infrastructure to circular financing.

710
00:40:35,920 --> 00:40:37,680
Speaker 2: There's more to come. This is Spoomberg Tech.

711
00:40:50,760 --> 00:40:53,840
Speaker 3: Big tech earnings coming thick and fast this week. Bloomberg's

712
00:40:53,880 --> 00:40:57,080
Speaker 3: Ryan vistellca here to talk us through how markets se

713
00:40:57,080 --> 00:40:59,040
Speaker 3: gearing up. I would say there's a lot of pressure,

714
00:40:59,280 --> 00:41:02,560
Speaker 3: particularly in sen conducts is right now. Look, that's a

715
00:41:02,560 --> 00:41:06,239
Speaker 3: lot of names Microsoft, Amazon, and Meta. It's going to

716
00:41:06,280 --> 00:41:09,920
Speaker 3: come down to capito expenditure, right, Like the vibe has

717
00:41:10,040 --> 00:41:13,399
Speaker 3: changed on what Wall Street needs to see to get

718
00:41:13,400 --> 00:41:14,640
Speaker 3: a pause on the school card.

719
00:41:15,440 --> 00:41:17,680
Speaker 13: Yeah, someone told me last week that it used to

720
00:41:17,680 --> 00:41:21,000
Speaker 13: be the more Capex you were doing, the better. Now

721
00:41:21,000 --> 00:41:24,800
Speaker 13: it's completely the opposite. Now, the less you're doing the better.

722
00:41:24,920 --> 00:41:28,640
Speaker 13: We saw last week even Alphabet, which by most Accounts

723
00:41:28,719 --> 00:41:32,240
Speaker 13: is the best position company of the big four hyperscalers

724
00:41:32,440 --> 00:41:35,760
Speaker 13: to compete in AI. It has Gemini, it has Chips,

725
00:41:35,840 --> 00:41:38,120
Speaker 13: it has Weimo, it has Search, it has YouTube. It

726
00:41:38,120 --> 00:41:41,200
Speaker 13: has all these different businesses that it can use its

727
00:41:41,239 --> 00:41:46,080
Speaker 13: AI in. And even it was unable to justify the

728
00:41:46,120 --> 00:41:48,600
Speaker 13: amount of capex it's doing, at least based on the

729
00:41:48,640 --> 00:41:51,319
Speaker 13: stop price reaction. It had the worst day in more

730
00:41:51,360 --> 00:41:53,680
Speaker 13: than a year, in part because it is spending so

731
00:41:53,880 --> 00:41:57,040
Speaker 13: much that it turned cash flow negative for the first

732
00:41:57,080 --> 00:42:00,360
Speaker 13: time in its history as a public company. We have,

733
00:42:00,600 --> 00:42:05,040
Speaker 13: like you said, Microsoft, Meta, Amazon, they're all reporting this week.

734
00:42:05,239 --> 00:42:07,479
Speaker 13: The spending plans are going to be I would say,

735
00:42:07,600 --> 00:42:10,879
Speaker 13: by far the most important thing people are watching for,

736
00:42:11,239 --> 00:42:14,359
Speaker 13: as well as their ability to kind of articulate why

737
00:42:14,440 --> 00:42:16,879
Speaker 13: they feel like they need to continue spending this much,

738
00:42:17,080 --> 00:42:19,840
Speaker 13: and they need to show that it is translating to

739
00:42:19,960 --> 00:42:24,560
Speaker 13: improved growth, improved prospects, improved efficiencies. There's a big hurdle

740
00:42:24,600 --> 00:42:25,360
Speaker 13: here for them.

741
00:42:25,880 --> 00:42:30,000
Speaker 3: Reading your weekend piece with Jaren about how earnings collide

742
00:42:30,040 --> 00:42:32,760
Speaker 3: with the sort of market revolt of HIINGI spending, Apple

743
00:42:33,200 --> 00:42:36,400
Speaker 3: is the outlier right different to the hyperscalers.

744
00:42:36,719 --> 00:42:37,719
Speaker 2: What do we look for there?

745
00:42:39,200 --> 00:42:41,640
Speaker 13: Well, Apple, I'd say the thing I am most paying

746
00:42:41,680 --> 00:42:45,320
Speaker 13: attention to is how it's talking about memory prices. Obviously,

747
00:42:45,560 --> 00:42:48,200
Speaker 13: memory chips have been in huge demand this year because

748
00:42:48,200 --> 00:42:51,840
Speaker 13: of the AI infrastructure build out. Now Apple recently raised

749
00:42:51,840 --> 00:42:54,600
Speaker 13: prices for some products, but not the iPhone. So it's

750
00:42:54,600 --> 00:42:56,920
Speaker 13: going to be very interesting to see what they say

751
00:42:56,920 --> 00:42:59,480
Speaker 13: about the landscape with respect to memory. Is it having

752
00:42:59,520 --> 00:43:02,880
Speaker 13: an impact on demand, is it having an impact on margins?

753
00:43:03,080 --> 00:43:07,480
Speaker 13: Are they thinking about expanding their pricing to other categories

754
00:43:07,680 --> 00:43:10,120
Speaker 13: like the iPhone? Of course, we have the foldable iPhone

755
00:43:10,120 --> 00:43:13,000
Speaker 13: that's expected later on this year. We don't really know

756
00:43:13,000 --> 00:43:15,360
Speaker 13: what the pricing is going to look like there. Maybe

757
00:43:15,360 --> 00:43:16,800
Speaker 13: this is a way for them to kind of sweep

758
00:43:16,880 --> 00:43:19,040
Speaker 13: some of the memory prices under the rug with just

759
00:43:19,040 --> 00:43:20,680
Speaker 13: a higher price target for this.

760
00:43:20,640 --> 00:43:21,920
Speaker 2: New form of the phone.

761
00:43:21,960 --> 00:43:23,520
Speaker 13: We don't know, but that's going to be something I

762
00:43:23,600 --> 00:43:25,680
Speaker 13: am paying a lot of attention to, and I imagine

763
00:43:25,800 --> 00:43:27,600
Speaker 13: memory is going to be the real issue for.

764
00:43:27,560 --> 00:43:31,680
Speaker 3: People just very very quick. The market's kind of weird today.

765
00:43:31,880 --> 00:43:34,960
Speaker 3: It seems circular financing concern. Is there anything else you see?

766
00:43:35,920 --> 00:43:37,640
Speaker 13: One thing I would just flag that you see in

767
00:43:37,640 --> 00:43:39,719
Speaker 13: an media down quite a bit today and it looks like,

768
00:43:39,760 --> 00:43:41,920
Speaker 13: at least at the moment, Apple is once again the

769
00:43:42,000 --> 00:43:44,239
Speaker 13: largest company in the world. So really shows you right

770
00:43:44,280 --> 00:43:48,560
Speaker 13: now the bifurcation in the market. Apple not really participating

771
00:43:48,560 --> 00:43:50,920
Speaker 13: in the AI spending trade. The stock has really been

772
00:43:50,920 --> 00:43:52,839
Speaker 13: rewarding and others have been falling back.

773
00:43:53,480 --> 00:43:56,719
Speaker 3: Luma's Ryan for Seleka across everything. Thank you so much.

774
00:43:56,920 --> 00:43:58,759
Speaker 3: That does it for this edition of Bloomberg Tech. And

775
00:43:58,760 --> 00:44:01,399
Speaker 3: as Ryan said, this what markets like. Big sell off

776
00:44:01,400 --> 00:44:05,520
Speaker 3: in chip stocks in video down five percent. Some conversation

777
00:44:05,960 --> 00:44:09,640
Speaker 3: around circular financing which you can recap on the podcast.

778
00:44:09,960 --> 00:44:12,839
Speaker 3: Find it online on Apple, Spotify, iHeart.

779
00:44:12,560 --> 00:44:15,239
Speaker 2: And also on the Bloomberg terminal. Have a good week.

780
00:44:15,280 --> 00:44:16,200
Speaker 2: This is the Bloomberg Tech