WEBVTT - SpaceX Kicks Off High-Grade Bond Sale 0:00:02.520 --> 0:00:14.400 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live 0:00:14.520 --> 0:00:18.000 from the heart of Silicon Valley with ed la Though 0:00:18.160 --> 0:00:19.240 in San Francisco. 0:00:22.200 --> 0:00:23.800 This is Bloomberg Tech coming up. 0:00:23.840 --> 0:00:27.400 SpaceX is selling investment grade bonds for the first time 0:00:27.560 --> 0:00:29.200 following its record breaking IPO. 0:00:29.480 --> 0:00:30.560 We'll have the details. 0:00:30.760 --> 0:00:34.879 Plus Micron strikes an AI infrastructure agreement with Anthropics to 0:00:34.960 --> 0:00:38.199 drive enterprise AI adoption and a lot more. And Chevron 0:00:38.280 --> 0:00:41.879 signs a twenty year deal with Microsoft to power a 0:00:41.960 --> 0:00:45.000 West Texas data center could be one of the biggest 0:00:45.440 --> 0:00:46.400 in US. 0:00:46.520 --> 0:00:48.400 Good Morning, Monday. 0:00:48.080 --> 0:00:53.559 June twenty second, twenty twenty six, SpaceX's inaugural bond sale. 0:00:53.800 --> 0:00:58.040 This is about repaying their existing debt funding corporate needs, 0:00:58.400 --> 0:01:01.360 and Bloomberg's reporting has been spot on. What we understand 0:01:01.440 --> 0:01:03.640 is that right now you have the same banks they've 0:01:03.680 --> 0:01:07.440 been working with on their existing financing going out, holding 0:01:07.480 --> 0:01:12.240 investor meetings, gauging appetite. But we believe that they'll look 0:01:12.280 --> 0:01:15.280 at maybe raising around twenty billion dollars through this mechanism. 0:01:15.360 --> 0:01:17.720 By the way, the stock is down for a third 0:01:17.760 --> 0:01:21.399 straight session, down ten percent this Monday, trading below one 0:01:21.480 --> 0:01:24.039 hundred and seventy dollars a share. Remember this is an 0:01:24.040 --> 0:01:30.640 IPO that priced on June twelfth, June eleventh Trader June twelve, 0:01:30.840 --> 0:01:32.800 one hundred and thirty five dollars a share. Now, why 0:01:32.840 --> 0:01:35.920 would a company sitting on one hundred billion dollars and 0:01:36.000 --> 0:01:39.679 more of cash need to tap the corporate debt market? 0:01:39.720 --> 0:01:44.720 Bloomberg Intelligence writing that quote, despite operational questions and considerable 0:01:44.800 --> 0:01:48.800 key man risk, they expect SpaceX's debt issue to be 0:01:49.080 --> 0:01:50.160 very warmly received. 0:01:50.200 --> 0:01:51.440 There's only one man for the job. 0:01:51.480 --> 0:01:55.840 Bloomberg Intelligence senior credit analyst, Robert Schiffman. That's the story, right, 0:01:56.160 --> 0:01:58.680 Why would a company that has one hundred billion dollars 0:01:59.120 --> 0:02:01.200 of cash on hand and do this? 0:02:01.440 --> 0:02:01.840 Explain? 0:02:02.440 --> 0:02:04.160 Well, I didn't think I could be more bullish, but 0:02:04.440 --> 0:02:06.720 every day I wake up and show up at Bloomberg, 0:02:06.800 --> 0:02:09.480 I'm more and more bullish on AI, and I think 0:02:09.520 --> 0:02:12.160 this deal is just going to support that. You know, 0:02:12.280 --> 0:02:14.280 why do they need to raise more money. It's because 0:02:14.320 --> 0:02:16.680 over the next handful of years they're probably going to 0:02:16.720 --> 0:02:19.839 spend a lot more than one hundred billion dollars. In fact, 0:02:19.840 --> 0:02:21.440 the free cash flow is probably going to be a 0:02:21.440 --> 0:02:25.520 lot more than one hundred billion dollars. On the negative side. 0:02:25.600 --> 0:02:28.960 So they're going to need money because they're building the 0:02:29.000 --> 0:02:30.920 next hyperscaler business in space. 0:02:32.080 --> 0:02:34.800 Let's go to the investor demand or appetite for this. 0:02:35.360 --> 0:02:39.120 We had reported even prior to the IPO that SpaceX 0:02:39.160 --> 0:02:41.720 had managed to get investment grade ratings from the three 0:02:41.760 --> 0:02:45.840 main agencies, and in your react you basically say, this 0:02:45.880 --> 0:02:48.480 is how we think they'll stack up relative to their 0:02:48.560 --> 0:02:52.079 hyperscale piers. You have a greater rating. Still, why does 0:02:52.120 --> 0:02:53.000 all of that matter? 0:02:53.520 --> 0:02:56.080 Well, I think listen, nobody owns SpaceX right now from 0:02:56.120 --> 0:02:58.600 the bond side, so there's going to be enormous demand 0:02:58.800 --> 0:03:01.280 when you have an inaugural offering like this, it's going 0:03:01.320 --> 0:03:03.679 to be a feeding frenzy. And quite frankly, I think 0:03:03.720 --> 0:03:05.200 three quarters of the people that are going to buy 0:03:05.200 --> 0:03:07.400 the bonds aren't even going to know what this company does. 0:03:07.720 --> 0:03:10.200 It's going to be very much of a buy now, 0:03:10.320 --> 0:03:13.280 ask questions later. But what do they have supporting them? 0:03:13.560 --> 0:03:17.360 They've got very strong, stable investment grade ratings. You do 0:03:17.400 --> 0:03:19.200 not have to worry about this name going to jump. 0:03:19.680 --> 0:03:24.120 You've got perhaps the greatest investor of our generation, Elon Musk, 0:03:24.160 --> 0:03:29.280 who I think has replaced Warren Buffett, and you have 0:03:29.280 --> 0:03:31.280 one hundred billion dollars of cash sitting on the books, 0:03:31.520 --> 0:03:36.360 plus tremendous upside across a diversity of businesses. My sense is, 0:03:36.400 --> 0:03:38.880 if they raise twenty odd billion dollars, you're going to 0:03:38.880 --> 0:03:41.440 have a book size that's well north of one hundred 0:03:41.480 --> 0:03:42.080 billion dollars. 0:03:43.200 --> 0:03:46.040 You mean the demand, the one hundred billion dollars demand 0:03:46.040 --> 0:03:49.000 for twenty billion dollars of supply, just real quick like, 0:03:49.320 --> 0:03:50.680 trying to compare and contrast. 0:03:50.440 --> 0:03:51.160 The equity story. 0:03:51.160 --> 0:03:53.600 This stocks down nine percent one hundred and sixty seven 0:03:53.640 --> 0:03:57.880 dollars a share for the equity investor. They read the prospectives, 0:03:57.920 --> 0:04:01.520 they listen to Elon Musk, and everything that's being pitched 0:04:01.600 --> 0:04:04.360 is very far into the future, but is the kind 0:04:04.360 --> 0:04:07.320 of common denominator between the equity investors' approach and the 0:04:07.320 --> 0:04:11.160 credit investors approach to SpaceX. Trying to understand the path 0:04:11.160 --> 0:04:13.640 of CAPEX. Does it work the same way? 0:04:13.880 --> 0:04:16.719 Listen? Equity and credit are different. Equity is based on 0:04:16.920 --> 0:04:20.360 hope and future cash flows. Credit generally is based upon 0:04:20.480 --> 0:04:24.359 present cash flows and what leverage looks like right now. 0:04:24.600 --> 0:04:26.640 I actually do think that those are going to somewhat 0:04:26.640 --> 0:04:29.760 come together over time. This company is committed to reasonably 0:04:29.800 --> 0:04:33.119 low leverage below three times. They're committing to having twenty 0:04:33.120 --> 0:04:35.800 five billion dollars of cash on the books for the 0:04:35.839 --> 0:04:40.239 foreseeable future, and there's a hope of just absolute tremendous growth. 0:04:40.320 --> 0:04:43.440 Quite frankly, it's not so different than what Microsoft or 0:04:43.480 --> 0:04:46.200 Alphabet or Amazon is doing. And just remember in the 0:04:46.279 --> 0:04:48.280 early days of names like Amazon, they lost a lot 0:04:48.279 --> 0:04:51.080 of money too. You have to spend money to make money. 0:04:51.080 --> 0:04:52.680 This is what this company is doing. I think the 0:04:52.720 --> 0:04:54.760 bond market's going to be there to fund it, and 0:04:54.800 --> 0:04:57.839 I think the equity market when you start thinking about valuations, 0:04:57.920 --> 0:05:01.279 all these AI revenues in particular come in. Remember this 0:05:01.360 --> 0:05:05.800 company is going to transition from what is a satellite 0:05:06.520 --> 0:05:10.400 data business and aerospace and defense business to what's going 0:05:10.480 --> 0:05:13.640 to be a hyperscaler in the sky. I think there's 0:05:13.839 --> 0:05:16.560 nothing but upside when it comes to revenues and casualows 0:05:16.600 --> 0:05:19.560 for this business. So bondholders and credit holders will sort 0:05:19.560 --> 0:05:21.120 of all be looking at the same thing a few 0:05:21.160 --> 0:05:22.000 years from now. 0:05:22.640 --> 0:05:23.040 Doing both. 0:05:23.120 --> 0:05:25.880 Robert Schiffman, senior credit analysts of Bloomberg Intelligence, thank you 0:05:26.000 --> 0:05:28.120 very much. We talked a lot about SpaceX so far, 0:05:28.160 --> 0:05:31.800 this morning, But the bigger market story is this return 0:05:31.839 --> 0:05:35.480 of tech leadership. Right, chip stocks outperforming and leading again. 0:05:35.920 --> 0:05:38.719 Software continues to lag. There's a lot of focus on 0:05:38.760 --> 0:05:42.599 lower energy prices, what's happening in the golf, and that's 0:05:42.600 --> 0:05:44.000 supporting the growth trade. 0:05:44.279 --> 0:05:45.240 Joining US senior. 0:05:44.960 --> 0:05:48.920 Portfolio manager Tiffany Wade at Columbia Frednedle, there's a lot 0:05:48.960 --> 0:05:51.919 to kind of put together in this morning session. But 0:05:52.080 --> 0:05:55.480 again technology continues to be the story in this market. 0:05:55.839 --> 0:05:56.599 Is that true for you? 0:05:57.120 --> 0:05:59.600 Yes, that's absolutely true. We did see tech stocks take 0:05:59.600 --> 0:06:02.120 a bit of a breather, including semi stocks last week, 0:06:02.160 --> 0:06:04.760 but they're after the races again this week and that 0:06:04.760 --> 0:06:06.200 continuously the market higher. 0:06:07.200 --> 0:06:11.760 Of course, for investors of all types, the outlook for 0:06:11.800 --> 0:06:14.839 monetary policy and rates is important. It was really interesting 0:06:15.000 --> 0:06:19.520 Noria Rabini on Bloomberg Television earlier basically saying, nah, it's 0:06:19.520 --> 0:06:20.000 still tech. 0:06:20.120 --> 0:06:23.400 Just listen to this real quick. People obsessed with the FED. 0:06:23.720 --> 0:06:26.560 Whether there's fifty businesspose higher, where's al right? Now, what's 0:06:26.560 --> 0:06:29.719 the difference. The key story is tech boom and that's 0:06:29.720 --> 0:06:31.720 going to be the most important first order I feel 0:06:31.800 --> 0:06:32.360 anything else. 0:06:33.920 --> 0:06:36.800 You know, Tiffany, I grew up in the Bloomberg Newsroom 0:06:36.920 --> 0:06:39.640 school of Well, you got to understand the rate environment 0:06:39.720 --> 0:06:42.839 because higher rates discount the present value of future cash flows, 0:06:43.000 --> 0:06:45.120 and future cash flows are one way that we measure 0:06:45.160 --> 0:06:48.320 the health and valuation of technology companies big and small. 0:06:48.960 --> 0:06:50.320 Does the FED really matter at all? 0:06:50.960 --> 0:06:52.479 I think the FED still matters a lot, and it 0:06:52.520 --> 0:06:54.760 matters a lot for tech stocks as well. It matters 0:06:54.760 --> 0:06:57.039 a lot for high growth stocks. We did see a 0:06:57.080 --> 0:07:01.039 slightly more hawkish FED meeting last week, Kevin Worsh's first 0:07:01.040 --> 0:07:04.160 FED meeting. However, you know, quite a bit has changed 0:07:04.200 --> 0:07:06.359 since the data they were looking at last week, including 0:07:06.640 --> 0:07:08.680 the MoU between the US and Iran. So I think 0:07:08.720 --> 0:07:11.080 we might see, you know, potentially some different news coming 0:07:11.080 --> 0:07:13.320 out of the next FED meeting. Off oil prices continue 0:07:13.320 --> 0:07:15.200 to normalize, and. 0:07:15.240 --> 0:07:17.480 In the background, of course, for the Bloomberg Tech audience, 0:07:17.560 --> 0:07:20.240 you know that there are headlines coming from the Vice 0:07:20.280 --> 0:07:24.320 President and his participation in the talks between the United 0:07:24.360 --> 0:07:27.920 States in Iran. We're very soon going to start talking 0:07:27.920 --> 0:07:31.440 about earnings again, and I just wondered Tipany from Columbia 0:07:31.480 --> 0:07:36.000 thread Neils perspective, how important earning's momentum is going to 0:07:36.000 --> 0:07:39.440 be for a market where technology continues to dominate. 0:07:39.960 --> 0:07:41.920 We're going to get a first read on that from 0:07:42.000 --> 0:07:43.960 Micron this Wednesday. I think that's going to be very 0:07:43.960 --> 0:07:46.840 important to see if the momentum from these stocks can continue. 0:07:47.480 --> 0:07:50.000 We're going to want to see continued revenue upside from 0:07:50.040 --> 0:07:52.400 a lot of the semiconductor stocks, and we're also probably 0:07:52.400 --> 0:07:56.000 going to want to see continued CAEPEX positive capex comments 0:07:56.000 --> 0:07:58.280 from all of the hyperscalers. That will help keep the 0:07:58.320 --> 0:08:00.880 spending party going. For all of the ass cated infrastructure 0:08:00.920 --> 0:08:02.600 names related to AI build out. 0:08:03.440 --> 0:08:06.640 It's really hard in aggregate to kind of say where's 0:08:06.680 --> 0:08:08.720 the beginning, middle, and end here? You know, I think 0:08:08.760 --> 0:08:10.600 you'd note right, tiffanyed it last week some of the 0:08:10.680 --> 0:08:12.920 chip stocks, the picks and shovels, took a bit of 0:08:12.920 --> 0:08:15.760 a breather, and off we are again today with the 0:08:15.760 --> 0:08:20.080 Philadelphia Semiconductor Index outperforming and engauge that's up ninety percent 0:08:20.160 --> 0:08:20.760 year to date. 0:08:21.440 --> 0:08:22.840 How long can that carry on for? 0:08:24.000 --> 0:08:26.880 I think we're going to see this continue for another 0:08:26.960 --> 0:08:29.800 couple of quarters. The outlook for these stocks related to 0:08:29.840 --> 0:08:34.040 AI infrastructure spending is tremendous, and the revenue and earning 0:08:34.160 --> 0:08:36.160 estimates continue to be revised higher, and I think as 0:08:36.200 --> 0:08:38.800 long as that continues, you'll continue to see these stocks working. 0:08:39.559 --> 0:08:41.520 And some of the announcement we've seen, you know, with 0:08:41.600 --> 0:08:46.320 Micronanthropic and then also around you know, Microsoft and you 0:08:46.360 --> 0:08:51.840 know more data center spending in Texas continues to reinforce 0:08:51.880 --> 0:08:54.079 the story that this spending is going to continue for 0:08:54.160 --> 0:08:56.360 another couple of years and probably continue at a faster 0:08:56.440 --> 0:08:58.800 pace than it has been for the last one or 0:08:58.840 --> 0:09:00.640 two years. So I think we'll cantinue to see those 0:09:00.679 --> 0:09:03.640 positive earnings revisions that will continue to push the stockshire. 0:09:04.720 --> 0:09:09.720 We started the program today talking about SpaceX's inaugural bond sale, 0:09:10.160 --> 0:09:12.520 but I just use that as a case study that 0:09:13.120 --> 0:09:17.280 with Capex, both in equity, the market's being flooded, right, 0:09:17.360 --> 0:09:22.800 Alphabet doing its offering, the use of corporate credit to 0:09:22.880 --> 0:09:27.079 fund what's going on. How closely are you tracking these 0:09:27.120 --> 0:09:30.160 companies going to market to get the capital. 0:09:29.800 --> 0:09:32.160 They need to fund these big commitments. 0:09:33.040 --> 0:09:36.160 We're certainly focused on the outcome of these bond sales 0:09:36.160 --> 0:09:38.120 because I think it's an indicator of the appetite for 0:09:38.160 --> 0:09:40.480 the market for the amount of Capex spending that the 0:09:40.480 --> 0:09:41.320 companies are doing. 0:09:41.960 --> 0:09:42.640 It's also non. 0:09:42.520 --> 0:09:46.320 Indicator of future capex expectations. So as those bond sales 0:09:46.360 --> 0:09:50.240 continue to increase in size, it can you know, it 0:09:50.280 --> 0:09:53.040 means that capex spending intentions continue to rise. So it's 0:09:53.040 --> 0:09:55.800 certainly something that we're watching to indicate the health of 0:09:55.840 --> 0:09:58.480 the capex spending cycle and also the intention of a 0:09:58.480 --> 0:10:02.400 lot of the large companies around additional spending for AI infrastructure. 0:10:03.640 --> 0:10:05.840 Tiffany, real quick, what's the next thing you're watching for 0:10:05.920 --> 0:10:06.640 on your calendar? 0:10:07.679 --> 0:10:10.240 I think it's probably earnings Micron this Wednesday is certainly 0:10:10.280 --> 0:10:11.800 a big one that we'll be keeping an eye out for. 0:10:12.679 --> 0:10:14.680 And there's been some news this morning about Micron and 0:10:14.679 --> 0:10:16.360 a deal with Anthropic, which we'll get to you later 0:10:16.400 --> 0:10:19.040 in the program. Tiffany Wade of Columbia, Fred needle Back on. 0:10:18.960 --> 0:10:20.559 Bloomberg Tech, thank you very much. 0:10:20.720 --> 0:10:24.040 Now coming up, Meta invests nine hundred million dollars into 0:10:24.080 --> 0:10:27.959 an Indian fintech startup called Cred, with plans to appoint 0:10:28.000 --> 0:10:31.760 its founder as the new leader of WhatsApp. We've got 0:10:31.760 --> 0:10:34.000 more on that story next, and sticking with big tech names, 0:10:34.240 --> 0:10:37.760 also taking a look at shares of Alphabet, parent of Google, 0:10:38.160 --> 0:10:42.119 down six percent in the session, biggest drop since February, 0:10:42.200 --> 0:10:44.719 as it stands, a lot in the newsflow has been 0:10:44.720 --> 0:10:48.960 about the departures from various parts of Google's AI initiatives, 0:10:48.960 --> 0:10:52.280 the latest being a prominent AI research or Google DeepMind. 0:10:52.360 --> 0:10:57.599 Vice president John Jumper said Friday he was leaving for Anthropic. 0:10:58.000 --> 0:11:00.679 That seems to be weighing on this stock. Keep tracking it. 0:11:00.720 --> 0:11:09.800 This is Bloomberg Tech, all right. Some headlines have just 0:11:09.840 --> 0:11:12.560 crossed the Bloomberg terminal. SpaceX appears to have signed a 0:11:12.600 --> 0:11:16.760 deal with Reflection AI worth about six point three billion dollars. 0:11:17.040 --> 0:11:18.440 That's according to some reports out there. 0:11:18.440 --> 0:11:21.080 I think the company is also just put headlines out 0:11:21.200 --> 0:11:24.560 of its own. SpaceX can end the deal after three months, 0:11:24.720 --> 0:11:27.440 and Reflection is set to pay SpaceX one hundred and 0:11:27.440 --> 0:11:31.480 fifty million dollars per month for that compute as part 0:11:31.480 --> 0:11:33.920 of the deal. It didn't really do much to ease 0:11:33.920 --> 0:11:35.760 the pressure on the stock, which is again down for 0:11:35.760 --> 0:11:38.880 a third straight day, but still above its IPO price 0:11:38.920 --> 0:11:41.480 one hundred and thirty five dollars a share. Big Tech 0:11:41.600 --> 0:11:45.360 is turning to big oil to meet the electricity demand 0:11:45.360 --> 0:11:48.440 of the AI boom. Microsoft has signed a twenty year 0:11:48.559 --> 0:11:52.400 deal with Chevron to build a massive natural gas fire 0:11:52.440 --> 0:11:56.760 generating station for a proposed data center in West Texas, 0:11:57.000 --> 0:12:01.480 dubbed Project Kilby. The power once expected to power up 0:12:01.960 --> 0:12:04.440 by twenty twenty eight. Bloomers Kevin Crowley joins US for 0:12:04.480 --> 0:12:09.040 more from Houston. The scale of this is on paper 0:12:09.080 --> 0:12:11.520 pretty big, right, So they're talking about ramping up to 0:12:11.960 --> 0:12:14.240 about two point six two point seven gigawatts. 0:12:14.320 --> 0:12:15.400 What do we need to know about this? 0:12:15.520 --> 0:12:18.480 And like the natural gas part of it, the Permian 0:12:18.640 --> 0:12:21.080 West Texas very interesting. 0:12:22.040 --> 0:12:24.160 Yes, exactly. Well, that's the key part of this. 0:12:24.240 --> 0:12:27.360 It's a huge power power plant to fund an enormous 0:12:27.440 --> 0:12:30.319 data center. But the really important part is it's right 0:12:30.360 --> 0:12:32.880 in the middle of the Permian Basin, which which many 0:12:32.920 --> 0:12:33.560 people know is the. 0:12:34.280 --> 0:12:36.760 Biggest oil field here in the US. 0:12:36.840 --> 0:12:38.960 But with all the oil that comes up, there's an 0:12:39.040 --> 0:12:41.840 enormous amount of natural gas that also comes and there's 0:12:41.880 --> 0:12:44.520 so much natural gas within the basin that it actually 0:12:44.559 --> 0:12:48.079 often overwhelms pipeline capacity and has to be either burned 0:12:48.080 --> 0:12:51.760 off or companies have to pay people to take it away. 0:12:51.760 --> 0:12:54.520 So there is abundance of natural gas and that is 0:12:54.559 --> 0:12:57.480 what Chevron and Microsoft and they're partner Engine Number one, 0:12:58.080 --> 0:13:01.000 are looking to take advantage of here got incredibly cheap 0:13:01.080 --> 0:13:05.079 natural gas that can that can fuel the power station 0:13:05.240 --> 0:13:08.760 that will then power this this big data center that 0:13:09.000 --> 0:13:10.199 Microsoft plans to build. 0:13:12.400 --> 0:13:16.040 Discuss in your report the bigger picture of what Microsoft's 0:13:16.040 --> 0:13:18.559 trying to do right. Microsoft has said it wants to 0:13:18.600 --> 0:13:20.959 double data center capacity of its own over the next 0:13:21.040 --> 0:13:23.880 two years, and in aggregate, that's the direction that the 0:13:23.960 --> 0:13:27.480 United States is going in over the next decade. But 0:13:27.480 --> 0:13:30.760 they'd also had these like prior commitments to match the 0:13:30.880 --> 0:13:34.160 sourcing of their power in terms of their commitments from 0:13:34.200 --> 0:13:38.280 renewable sources, this is natural gas. So how are they 0:13:38.320 --> 0:13:39.319 managing all of that? 0:13:41.000 --> 0:13:43.560 Microsoft have said that they're they're pursuing kind of a 0:13:43.600 --> 0:13:48.960 diversification strategy, So they want they want diversification both in 0:13:49.000 --> 0:13:52.360 terms of geography but also in terms of fuel sources 0:13:52.440 --> 0:13:56.760 to renewables and natural gas. And I think they're pursuing 0:13:57.440 --> 0:14:00.160 nuclear as well. I mean, obviously the natural gas as 0:14:01.320 --> 0:14:03.160 is on is on the fossil fuel side, so it 0:14:03.160 --> 0:14:05.359 does does create a lot more a lot more emissions. 0:14:06.240 --> 0:14:09.400 We are seeing some of these big tech companies UH 0:14:09.440 --> 0:14:13.920 sort of diluting or walking away some of these prior 0:14:13.960 --> 0:14:18.280 commitments to two one hundred percent renewable energy, just because 0:14:18.320 --> 0:14:21.320 of the sheer scale of the of the demand and 0:14:21.360 --> 0:14:25.680 the ambitions that AI in AI that they have. 0:14:27.320 --> 0:14:28.480 There is in this project. 0:14:28.520 --> 0:14:34.560 There are there are guardrails to mitigate the emissions, and 0:14:34.600 --> 0:14:38.080 they do have plans to to maybe build in some 0:14:38.400 --> 0:14:40.920 build in some solar, maybe some batteries at some point 0:14:41.000 --> 0:14:43.160 in the in the future. But but the end of 0:14:43.200 --> 0:14:45.640 the day, it's an enormous natural gas plants, so the 0:14:45.640 --> 0:14:48.840 emissions are going to are going to be sizable associated 0:14:48.880 --> 0:14:49.120 with that. 0:14:50.600 --> 0:14:54.360 Chevron's shares modestly higher. Microsoft shares modestly lower after still 0:14:54.360 --> 0:14:57.000 was announced. Bloombers Kevin Crowley in Houston, thank you well. 0:14:57.120 --> 0:14:57.560 Modestly so. 0:14:57.640 --> 0:15:01.360 Misoft down two percent, turning out to news in big tech, 0:15:01.560 --> 0:15:05.720 Meta is shaking up the executive suite at WhatsApp and 0:15:05.880 --> 0:15:09.080 is in part a massive nine hundred million dollar investment 0:15:09.520 --> 0:15:14.080 into an Indian fintech startup, Cred. So Meta is tapping 0:15:14.160 --> 0:15:18.400 Cred's founder Canal Shah to step in is the new 0:15:18.440 --> 0:15:21.680 global chief of WhatsApp to build out new revenue streams 0:15:21.720 --> 0:15:24.720 for the mesaging platform. Ms Kat Wagner joins us with 0:15:24.760 --> 0:15:28.440 the story, it's not straightforward, this okay, so basically the 0:15:28.480 --> 0:15:31.840 news is there's a new head of WhatsApp. But the 0:15:32.240 --> 0:15:35.280 mechanism that Metas used to get there is also interesting. 0:15:36.480 --> 0:15:38.880 It is and you're right, there's two parts of this, 0:15:38.880 --> 0:15:42.840 the investment part in credit. There's the new executive for 0:15:42.920 --> 0:15:47.280 WhatsApp in Kunal Shah. And this is a strategy that 0:15:47.320 --> 0:15:50.840 you may be somewhat familiar with from Meta. With this 0:15:50.920 --> 0:15:53.800 sort of like invest in recruit at the same time. 0:15:54.080 --> 0:15:56.880 This is how they got Alexander Wang from Scaleai. 0:15:57.000 --> 0:15:57.600 Last summer. 0:15:57.680 --> 0:16:01.680 They invested heavily in Scale and recruited alex Wang at 0:16:01.720 --> 0:16:05.280 the same time. This is a very similar approach smaller scale. 0:16:05.880 --> 0:16:09.080 This is a smaller investment than last summers, but this 0:16:09.280 --> 0:16:12.040 is sort of their way of bringing entrepreneurs who have 0:16:12.120 --> 0:16:14.880 their own businesses, who have you know, a financial stake 0:16:14.920 --> 0:16:17.880 in a startup and enticing them to come work at 0:16:18.080 --> 0:16:20.640 a more established company like Meta. 0:16:21.800 --> 0:16:23.880 How's Meta sort of explaining this. 0:16:24.680 --> 0:16:26.160 You know, we put a lot of emphasis on the 0:16:26.200 --> 0:16:30.960 idea that WhatsApp can monetize in different ways future revenue streams. 0:16:31.120 --> 0:16:32.920 Is there any kind of hint of what that looks like. 0:16:34.080 --> 0:16:37.840 Well, they're doing a handful of things right now, including ads, subscriptions, 0:16:37.880 --> 0:16:40.480 and business messaging. Those are sort of the three things 0:16:40.520 --> 0:16:43.600 that are going for revenue. What I think is important 0:16:43.640 --> 0:16:47.560 here is that Khunaalshab being from India and having an 0:16:47.600 --> 0:16:49.560 Indian startup is not a coincidence. 0:16:50.160 --> 0:16:51.560 WhatsApp is huge in India. 0:16:51.840 --> 0:16:54.720 They see a ton of potential there from a business standpoint, 0:16:54.960 --> 0:16:57.440 and I think they thought that it was important to, 0:16:58.320 --> 0:17:00.880 you know, have someone very familiar with market and very 0:17:00.880 --> 0:17:03.680 familiar with how WhatsApp is used in that region coming 0:17:03.680 --> 0:17:06.400 in and taking over. And so the hope is certainly 0:17:06.480 --> 0:17:09.439 that he can take those revenue streams that are sort 0:17:09.440 --> 0:17:13.320 of already in place but grow them considerably in India, 0:17:13.359 --> 0:17:17.560 but also in other markets outside of North America. 0:17:17.840 --> 0:17:20.640 Bloomberg text cut Wagner with the meadow WhatsApp story, thank 0:17:20.640 --> 0:17:23.280 you very much. I want to go to China's battery 0:17:23.280 --> 0:17:27.600 metals market. Chinese lithium futures have plunged nearly nine percent 0:17:27.720 --> 0:17:32.360 over the last two days over speculation that caatl could 0:17:32.400 --> 0:17:35.879 soon restart, one of the world's largest lithium mines. A 0:17:35.960 --> 0:17:40.199 preliminary provincial land notice has some investors' bedding that the 0:17:40.240 --> 0:17:43.440 site may reopen in the second half of twenty twenty six. 0:17:43.520 --> 0:17:45.280 Now that supply. 0:17:45.040 --> 0:17:50.360 Volatility comes as Beijing tries to sharpen its geopolitical leverage 0:17:50.440 --> 0:17:55.040 over other critical minerals integral to making everything from iPhones 0:17:55.320 --> 0:17:59.679 to missiles. China has imposed new export controls on major 0:18:00.160 --> 0:18:04.200 US rare earth producers, MPEd Materials and USA rare Earth. 0:18:04.480 --> 0:18:08.720 The retaliatory move comes off to the Pentagon blacklisted some 0:18:08.760 --> 0:18:12.719 of China's biggest firms earlier this month. Okay, coming up, 0:18:12.760 --> 0:18:17.800 Apple's design revival incoming, CEO John Turnas looks to restore 0:18:17.880 --> 0:18:20.840 the creative edge that defined the iPhone era. 0:18:21.480 --> 0:18:23.240 That's sex, this is Bloomberg tech. 0:18:31.440 --> 0:18:34.600 I mean hara anod, and it's time now for talking tech. 0:18:34.680 --> 0:18:38.200 First up, ten Cents is giving we Chat an AI upgrade. 0:18:38.280 --> 0:18:41.199 The company is testing a new assistant called Shaowei with 0:18:41.320 --> 0:18:44.359 a small group of users, allowing them to complete tasks 0:18:44.359 --> 0:18:47.359 through text or voice. The move could bring AI to 0:18:47.440 --> 0:18:50.200 weed Chat more than one billion users and help ten 0:18:50.240 --> 0:18:53.359 cents compete with rivals like Ali Baba and byte Edance 0:18:53.720 --> 0:18:55.200 in China's AI race. 0:18:55.320 --> 0:18:55.760 Plus. 0:18:56.119 --> 0:18:58.960 Robinhood is looking to raise two billion dollars through a 0:18:58.960 --> 0:19:03.600 convertible bond off, tapping into a booming market for corporate fundraising. 0:19:03.600 --> 0:19:06.199 The company says about three hundred million dollars of the 0:19:06.240 --> 0:19:10.680 proceeds will go towards share buybacks, with additional funds earmarks 0:19:10.720 --> 0:19:14.719 for hedging transactions tied to the deal end. Climb is 0:19:14.760 --> 0:19:18.760 gearing up for its Wall Street debut. The electric bike 0:19:18.880 --> 0:19:21.520 and scooter rental company is looking to raise up to 0:19:21.560 --> 0:19:24.360 one hundred and eighty one million dollars in its USIPO, 0:19:24.520 --> 0:19:28.400 offering six point seven million shares at between twenty four 0:19:28.720 --> 0:19:31.280 and twenty six dollars a piece. At the top end 0:19:31.280 --> 0:19:34.240 of that range, that uberbacked company would be valued at 0:19:34.240 --> 0:19:36.960 about one point seven billion dollars ed. 0:19:37.800 --> 0:19:39.240 Thank you very much, you hire right now. 0:19:39.280 --> 0:19:43.240 Apple built its reputation on iconic product design, but the 0:19:43.280 --> 0:19:46.560 influence of the team behind the iPhone and iPad has 0:19:46.560 --> 0:19:50.040 faded over the past decade. Bloombo's Mark German writes in 0:19:50.040 --> 0:19:53.960 this week's power On newsletter that the incoming CEO knows 0:19:54.040 --> 0:19:57.439 a major design shakeup is needed and is getting ready 0:19:57.480 --> 0:20:01.560 to put his firm imprint on the tea. Mark joins us, now, 0:20:01.680 --> 0:20:05.320 and this is about the industrial design studio that in 0:20:05.400 --> 0:20:08.080 the era of first Steve Jobs and then Johnny Ive 0:20:08.520 --> 0:20:11.760 for a very long time held a lot of power 0:20:12.400 --> 0:20:16.520 within the organization at Apple. What are you writing about 0:20:16.560 --> 0:20:19.359 empower on that's changed and why do you think that 0:20:19.680 --> 0:20:23.359 the incoming CEO takes us back to that place of power. 0:20:23.720 --> 0:20:23.920 Yeah. 0:20:23.960 --> 0:20:26.720 Over the past decade or so, you've seen the industrial 0:20:26.760 --> 0:20:30.800 design studio go from where exactly the future products are 0:20:30.800 --> 0:20:33.399 is dreamed up, where the whole company would come in 0:20:33.440 --> 0:20:36.200 to rally around the next big thing, leading to products 0:20:36.200 --> 0:20:39.960 like the iPhone, the iPad, the iMac, the iPod, the 0:20:40.000 --> 0:20:42.159 Apple Watch, you name it. And it's now more of 0:20:42.200 --> 0:20:47.320 a service organization where different teams, operations, engineering, they come in, 0:20:47.600 --> 0:20:49.480 they get what they need, and they get out. It's 0:20:49.520 --> 0:20:53.080 no longer the central hub, the influential center of innovation 0:20:53.680 --> 0:20:56.760 for the company, and John Turnus knows that things need 0:20:56.800 --> 0:20:59.600 to be shaken up there. The head of the industrial 0:20:59.640 --> 0:21:04.560 design team Molly Anderson. She's known as a great individual designer. 0:21:05.160 --> 0:21:08.119 She's known as someone who's beloved by her team. But 0:21:08.280 --> 0:21:10.640 it's not like Apple went out to look for the 0:21:10.680 --> 0:21:14.400 best industrial design leader in the world to take that position. 0:21:14.720 --> 0:21:18.240 They made that choice from a place of defense, not 0:21:18.280 --> 0:21:21.679 wanting more people to leave the team. Versus the perspective 0:21:21.720 --> 0:21:24.600 of a company that's worth three trillion dollars plus that 0:21:24.640 --> 0:21:26.760 could go out and get anyone they want to lead 0:21:26.840 --> 0:21:29.719 design in this post Johnny ive era that's already been 0:21:29.760 --> 0:21:31.160 going on for nearly a decade. 0:21:32.240 --> 0:21:35.879 Mark you've detailed recently the kind of roadmap on the 0:21:35.920 --> 0:21:38.040 hardware side for not just the rest of this year, 0:21:38.080 --> 0:21:41.080 but beyond that. Is there a case study of where 0:21:41.119 --> 0:21:43.840 this kind of return to design focus plays out. 0:21:43.840 --> 0:21:45.280 We just have about thirty seconds. 0:21:45.640 --> 0:21:48.960 Yeah, I mean we would like to see bigger design changes, 0:21:49.080 --> 0:21:52.600 right for the first time in twenty years. You're going 0:21:52.640 --> 0:21:55.560 to have a meaningful shakeup to the iPhone over the 0:21:55.600 --> 0:21:58.360 next few months with the fold wall phone, which I'm 0:21:58.359 --> 0:22:01.399 calling the iPhone Ultra. But there's a lot more to 0:22:01.480 --> 0:22:05.399 be done. There's more product categories. Major changes are necessary 0:22:05.440 --> 0:22:08.520 to freshen up the AirPods and the album watch. Those 0:22:08.520 --> 0:22:12.479 are categories that have essentially looked the same since twenty sixteen. 0:22:13.359 --> 0:22:16.200 Right, Blue Moos Mark German who puts power on out 0:22:16.200 --> 0:22:19.000 on Sunday mornings and then comes on Bloomberg Tech Monday 0:22:19.240 --> 0:22:19.760 to go through it. 0:22:19.760 --> 0:22:20.480 Thank you so much. 0:22:20.480 --> 0:22:23.880 Now, coming up, Micron lands a key deal with anthropic 0:22:24.160 --> 0:22:28.520 as AI demand keeps surging. It's so interesting to see 0:22:28.800 --> 0:22:33.080 Micron and Memory name go direct to a frontier lab. 0:22:33.119 --> 0:22:35.080 We're going to go through that. This is what your 0:22:35.080 --> 0:22:35.760 markets look like. 0:22:35.880 --> 0:22:39.080 Kind of muted, but outperformance in chips, which has been 0:22:39.080 --> 0:22:40.120 the story of the year. 0:22:44.080 --> 0:22:45.720 Welcome back to Bloomberg Tech. 0:22:45.840 --> 0:22:50.360 Our top stories today, SpaceX's bond sale and Micron striking 0:22:50.359 --> 0:22:54.520 a partnership with Anthropic. Bloomberg executive reporter Kim Ragki here 0:22:54.640 --> 0:22:55.680 with details. 0:22:55.240 --> 0:22:55.920 On both coming. 0:22:56.440 --> 0:22:58.360 Yeah, thanks, Ed. So we're seeing a lot of red 0:22:58.359 --> 0:23:00.440 on the screen today here with SpaceX share the are 0:23:00.440 --> 0:23:02.960 down about eight percent off the lows of the day. 0:23:03.080 --> 0:23:05.760 But if this continues, this will notch a third straight 0:23:05.880 --> 0:23:09.160 day of selling and the name after its record breaking IPO. 0:23:09.680 --> 0:23:11.960 So what we're seeing here this morning is that investors 0:23:12.040 --> 0:23:14.159 might be reacting to a few different things. One is 0:23:14.200 --> 0:23:17.640 this investment grade bond sale the company looking to raise 0:23:17.680 --> 0:23:20.840 even more money to spend on AI funded sort of 0:23:20.840 --> 0:23:24.280 future growth after raising a record seventy five billion in 0:23:24.320 --> 0:23:26.919 an IPO. The other thing we're seeing here is, you know, 0:23:27.000 --> 0:23:30.840 classic volatility that we see from IPOs, especially ones that 0:23:30.880 --> 0:23:33.560 have low float, like we know is the case here 0:23:33.600 --> 0:23:37.760 for SpaceX. We also are looking today at shares of Micron, 0:23:38.040 --> 0:23:39.920 so this stock is looking a little bit better today, 0:23:40.000 --> 0:23:43.920 up about four point four percent. It's bucking the broader 0:23:44.000 --> 0:23:47.560 trend down in the market today. What's happening this morning 0:23:47.640 --> 0:23:50.840 is that the company said that it has a strategic 0:23:50.920 --> 0:23:54.159 agreement with Anthropic, so it's going to work together on 0:23:54.240 --> 0:23:59.080 things like memory and storage architecture for AI, and also 0:23:59.119 --> 0:24:02.560 gave some money to to one of the Anthropics funding rounds. 0:24:02.680 --> 0:24:06.240 This company has been on an absolutely massive stock rally. 0:24:06.240 --> 0:24:07.879 The shares are up more than two hundred and sixty 0:24:07.920 --> 0:24:11.320 percent from a March thirtieth trough here, and we're going 0:24:11.359 --> 0:24:13.640 to be watching this one really closely because it reports 0:24:13.720 --> 0:24:15.720 earnings on Wednesday after market. 0:24:15.760 --> 0:24:19.560 Clothes the most common rhinicky, Thank you very much, Let's 0:24:19.600 --> 0:24:23.719 stay with Micron. Jake Silverman of Bloomberg Intelligence says Micron's 0:24:23.920 --> 0:24:27.720 new supply deal with Anthropic highlights just how tight memory 0:24:27.800 --> 0:24:30.680 chip capacity has become. He says major AI data center 0:24:30.720 --> 0:24:34.840 customers are increasingly locking in long term agreements to secure 0:24:34.880 --> 0:24:37.440 that supply, and Jake joins us, now, this is the thing, though, 0:24:38.000 --> 0:24:43.119 it's a deal between Micron and a frontier lab direct right, 0:24:43.280 --> 0:24:47.760 not not the middleman that we call hyperscale. How unusual 0:24:47.840 --> 0:24:49.719 is that? How surprised were you to see it? 0:24:50.480 --> 0:24:53.480 It's definitely not typical for memory makers themselves to sign 0:24:53.560 --> 0:24:56.560 these kind of deals, but it's not necessarily uncommon for 0:24:58.119 --> 0:25:02.600 big customers to look for supply assurances. Hyperscalers themselves have 0:25:02.720 --> 0:25:04.840 often done this in terms of how you think about 0:25:05.200 --> 0:25:07.800 wayfer allocation from someone like TSMC, for. 0:25:07.760 --> 0:25:13.080 Example, in your react, you're talking about it being reflective 0:25:13.160 --> 0:25:16.000 of the situation, the state of play, and how tight 0:25:16.000 --> 0:25:18.760 supply is. But this is good news for Micron, right 0:25:18.960 --> 0:25:21.119 if you just go on the sheer reaction alone. 0:25:21.600 --> 0:25:23.639 Yeah, this is good for Micron in the sense that 0:25:23.680 --> 0:25:25.720 it gives them a little bit more visibility into the 0:25:25.760 --> 0:25:29.000 actual downstream demand, at least theoretically based on what we're 0:25:29.000 --> 0:25:32.280 seeing from the agreement that they actually put out in 0:25:32.280 --> 0:25:36.280 their press release. So you know, Micron needs to build 0:25:36.320 --> 0:25:40.120 out capacity, right, The entire industry is supply constrained, and 0:25:40.359 --> 0:25:42.960 this allows them to potentially build it out in a 0:25:43.000 --> 0:25:46.720 responsible way so that when Anthropic is serving their customers, 0:25:46.720 --> 0:25:50.320 increasing their capacity not specifically of memory, but the chips 0:25:50.920 --> 0:25:55.119 to allow people to use their models. So now theoretically 0:25:55.840 --> 0:25:59.000 Micron can get an idea of exactly how much chip 0:25:59.000 --> 0:25:59.960 demand there actually is. 0:26:01.160 --> 0:26:04.840 You write in the react note that this sets them 0:26:04.920 --> 0:26:09.119 up well for the next down cycle situation. You know, 0:26:09.359 --> 0:26:13.680 historically memory markets have been cyclical, right, boom and bust. 0:26:13.760 --> 0:26:15.800 We talk about that a lot on the show, But 0:26:15.840 --> 0:26:17.560 there are loads of people that don't think there'll be 0:26:17.560 --> 0:26:21.480 a downcycle, you know, in the traditional sense, because of 0:26:21.560 --> 0:26:25.840 the trajectory of data center building an investment. Just explain 0:26:25.920 --> 0:26:27.400 your point of view on that. 0:26:28.000 --> 0:26:30.159 Yeah, I think just if you look at historical trends, 0:26:30.200 --> 0:26:33.439 Having covered memory for a while, we've always seen up 0:26:33.520 --> 0:26:36.199 cycles and down cycles, and I don't think that just 0:26:36.240 --> 0:26:39.240 because we're seeing very robust demand right now, it doesn't 0:26:39.280 --> 0:26:41.800 mean that we won't see price declines on say a 0:26:41.840 --> 0:26:44.640 sequential or you're over your basis in the future. What 0:26:44.680 --> 0:26:46.879 these agreements might do, though, on the other hand, is 0:26:46.920 --> 0:26:49.920 it might reduce some of the volatility. We've seen massive 0:26:49.960 --> 0:26:53.200 price decreases in the past during down cycles, such as 0:26:53.400 --> 0:26:56.760 you know, fifty percent or so quarter over quarter, So 0:26:56.840 --> 0:26:59.760 we might see a reduction in some of that volatility. 0:27:00.720 --> 0:27:02.440 And at the same time, if you look at past 0:27:02.440 --> 0:27:06.040 cloud cycles, there are periods where capex if flattens or 0:27:06.200 --> 0:27:09.160 declined slightly, and so that might be an opportunity for 0:27:09.800 --> 0:27:12.920 hyperscalers to get slightly better deals on the actual memory 0:27:12.960 --> 0:27:15.600 that they're purchasing. So we don't necessarily think that the 0:27:15.720 --> 0:27:19.320 cycle is not going to happen again or downcycle, but 0:27:19.400 --> 0:27:22.840 we do think that we might see less volatility, more 0:27:22.960 --> 0:27:26.000 of a straightforward idea of what the demand levels will 0:27:26.040 --> 0:27:27.480 be over the next say five years. 0:27:28.640 --> 0:27:31.600 Jacob, As you know, Micro reports fiscal third quarter earnings 0:27:31.600 --> 0:27:32.960 after market closed Wednesday. 0:27:33.040 --> 0:27:35.120 What are your expectations got. 0:27:34.960 --> 0:27:39.400 Yeah, yeah, yeah, we think they're definitely going to offer 0:27:40.000 --> 0:27:43.879 guidance results that are above consensus right now. 0:27:44.119 --> 0:27:44.800 We do think that. 0:27:44.760 --> 0:27:47.359 They'll talk a little bit about some of their contracts. 0:27:47.359 --> 0:27:50.000 But I think one of the reasons that they make 0:27:50.040 --> 0:27:52.520 this announcement today with Anthropic is it's something that they 0:27:52.520 --> 0:27:56.280 can highlight to investors to give everyone idea of what 0:27:56.400 --> 0:28:00.600 types of customers that they're signing to these agreements. But 0:28:00.880 --> 0:28:02.600 we don't necessarily think that they're going to give a 0:28:02.640 --> 0:28:04.720 lot of details in terms of you know, we don't 0:28:04.720 --> 0:28:06.640 think they're going to give anything in terms of pricing. 0:28:06.800 --> 0:28:08.560 They might not say anything in terms of the length 0:28:08.600 --> 0:28:11.919 of these contracts or a lot of the very intricate details. 0:28:13.040 --> 0:28:16.119 But that said, I think they'll probably give a longer 0:28:16.200 --> 0:28:18.320 term view of how they see the market, given the 0:28:18.359 --> 0:28:21.199 fact that there are more of these contracts being signed 0:28:21.720 --> 0:28:24.240 and memory prices continue to be very strong, and the 0:28:24.320 --> 0:28:27.040 environment is very favorable for them at least through this year, 0:28:27.040 --> 0:28:29.720 and we think at least into next year as well. 0:28:29.920 --> 0:28:31.960 And to recap micro on not four percent on this 0:28:32.080 --> 0:28:35.560 supply agreement with Anthropic, but up more than three hundred percent. 0:28:36.040 --> 0:28:39.440 Here today Jake Silverman of Bloomberg Intelligence, with the analysis 0:28:39.480 --> 0:28:42.160 now coming up. The CEO of Base ten and one 0:28:42.200 --> 0:28:44.840 of its lead investors, is coming on the show to 0:28:44.880 --> 0:28:48.840 talk about the inference startup's latest one point five billion 0:28:48.880 --> 0:28:51.640 dollar fundraise. But this is really a conversation about the 0:28:51.680 --> 0:28:57.520 economics of AI, and particularly as we transition increasingly to inference, 0:28:57.840 --> 0:29:01.120 the use of open source and getting the best cost 0:29:01.640 --> 0:29:02.479 dollar per token. 0:29:03.080 --> 0:29:05.680 Really really looking forward to this one. It's next. Swim 0:29:05.800 --> 0:29:06.400 Bog Tech. 0:29:21.440 --> 0:29:24.320 In Video is developing chips and software that will make 0:29:24.400 --> 0:29:28.720 humanoid robots safer around people. Humanoid robotics are expected to 0:29:28.760 --> 0:29:31.720 generate two hundred billion dollars in revenues by twenty thirty five, 0:29:32.000 --> 0:29:35.680 according to Barkley's estimates, but current safety systems can make 0:29:35.720 --> 0:29:39.440 the machines less productive. In Vidia's Halo software will give 0:29:39.520 --> 0:29:42.400 robots a much better sense of their surroundings so they 0:29:42.400 --> 0:29:45.240 can interact and even make contact with people. 0:29:45.280 --> 0:29:46.600 We're going to talk with a little bit more about 0:29:46.600 --> 0:29:47.400 that later in the week. 0:29:48.080 --> 0:29:51.080 Aim ferance startup Base ten has raised one point five 0:29:51.120 --> 0:29:54.800 billion dollars across two tranchers, one an eleven billion dollar valuation, 0:29:54.920 --> 0:29:58.400 the other at thirteen billion dollars. Base ten specializes in 0:29:58.440 --> 0:30:02.880 delivering software and computing capacity to companies tapping open source, 0:30:03.160 --> 0:30:07.040 typically lower cost AI models. The firm's co founder and 0:30:07.160 --> 0:30:10.560 CEO two instead of US that joins along with one 0:30:10.600 --> 0:30:13.760 of its investors, Ultimated Capital partner Paul of Agrowaile, who's 0:30:13.800 --> 0:30:16.600 firm co led the round and actually was really interesting 0:30:16.640 --> 0:30:21.200 the list of participants that back to you. Let's start 0:30:21.240 --> 0:30:24.240 with the basic questions that the audience always has, which is, wow, 0:30:24.520 --> 0:30:26.000 you know, one point five billions doll a round to 0:30:26.040 --> 0:30:28.600 a lot of funds, but the stories seem to not 0:30:28.760 --> 0:30:32.719 change right. Compute as a constraint talent is a competitive 0:30:32.720 --> 0:30:36.080 marketplace and assuming that's where those those proceeds go. 0:30:36.280 --> 0:30:39.480 Yeah, absolutely, Look we're with inference right now. What we 0:30:39.560 --> 0:30:42.760 are seeing is there's a lot of demand for inserting 0:30:42.800 --> 0:30:46.320 intelligence everywhere we possibly can, because open source models are 0:30:46.320 --> 0:30:49.880 getting very good, right and post training techniques to specialize 0:30:49.880 --> 0:30:52.600 those models for specific tasks are getting very good. And 0:30:52.640 --> 0:30:55.600 as the app player comes online, you know, there's an 0:30:55.760 --> 0:30:59.560 enormous surge of demand for us. What that means is, look, 0:30:59.600 --> 0:31:02.920 when you're procure a lot of compute to be able 0:31:02.960 --> 0:31:08.000 to fulfill that demand and also hire amazing infrastructure engineers 0:31:08.040 --> 0:31:10.920 and research engineers to be able to build the software 0:31:11.000 --> 0:31:11.840 later on top of that too. 0:31:12.040 --> 0:31:15.880 Just real quick, what's that like trying to acquire that 0:31:16.160 --> 0:31:19.680 the compute? Like, do you have any leverage in that market? 0:31:19.680 --> 0:31:23.959 If everyone is supply constrained? How is the experience of 0:31:24.000 --> 0:31:26.760 being a company of base tends, age and size going 0:31:26.840 --> 0:31:29.520 to in video as an example, saying we kind of 0:31:29.560 --> 0:31:29.920 need this. 0:31:30.240 --> 0:31:32.120 Yeah, Look, we have a very strong relationship with the 0:31:32.200 --> 0:31:34.600 Video and you know, they've been very supportive of us 0:31:34.640 --> 0:31:38.760 over the years. Look, we one thing that we realize 0:31:38.800 --> 0:31:41.280 is that you cannot be reliant on one compute lost. 0:31:41.720 --> 0:31:45.880 You have to, you know, work to diversify, not necessarily 0:31:45.920 --> 0:31:48.560 from a chip perspective, from a cloud perspective. So you know, 0:31:48.280 --> 0:31:52.080 we acquire compute from eighteen different clouds. Now we sit 0:31:52.400 --> 0:31:56.160 in around nineteen different clusters, and that's the flexibility we 0:31:56.160 --> 0:31:58.600 need to be able to acquire compute and fulfill the demand. 0:31:58.840 --> 0:32:01.280 I posted on x that you're both coming on the 0:32:01.280 --> 0:32:03.080 show and poor I kind of put this quession out 0:32:03.080 --> 0:32:05.880 there that if you could only invest in one part 0:32:05.920 --> 0:32:08.040 of the five layer cake, as Jensen calls it, what 0:32:08.040 --> 0:32:12.280 would it be? But Altimus has been so busy, you know, 0:32:12.520 --> 0:32:16.080 with the frontier labs at one end and other parts 0:32:16.120 --> 0:32:19.479 of the five layer cake at the other end. What 0:32:19.600 --> 0:32:22.400 was the thesis around base ten and why you wanted 0:32:22.440 --> 0:32:24.080 to get in here to co lead the. 0:32:24.120 --> 0:32:26.560 Round ed It's good to be here. 0:32:27.200 --> 0:32:29.880 Some troops cannot be said enough times, and one of 0:32:29.880 --> 0:32:32.040 those is that Inference is going to be one of 0:32:32.080 --> 0:32:35.120 the largest, if not the largest markets not an AI 0:32:35.360 --> 0:32:38.120 in the world. And why is that the case? You know, 0:32:38.640 --> 0:32:41.960 the early innings of AI were Q and A tell 0:32:41.960 --> 0:32:44.680 me about my trip. We've come a long way since then. 0:32:44.920 --> 0:32:47.640 You know, it's multi agent they've gotten longer context. You 0:32:47.680 --> 0:32:51.800 go retrieve, analyze, synthesize, verifying, then you go again, and 0:32:51.920 --> 0:32:54.440 each request is kicking off hundreds, if not thousands of 0:32:54.440 --> 0:32:58.160 inference requests. The second thing is, you know I might 0:32:58.200 --> 0:33:01.960 correct something you said ed. It's not just it's capability 0:33:02.840 --> 0:33:08.640 control and cost frontier models. The open s post train 0:33:08.680 --> 0:33:11.400 open source model comes very close to frontier model performance, 0:33:11.400 --> 0:33:15.240 sometimes even better for specific workflows control. As satan Adilla 0:33:15.280 --> 0:33:18.040 said last weekend, you know, you've got to compound your 0:33:18.240 --> 0:33:21.240 unique advantages as an enterprise, your data, your knowledge or 0:33:21.280 --> 0:33:23.800 know how in a way that you're not giving away 0:33:23.840 --> 0:33:27.880 your intelligence to on rent. And that's what BASM allows. 0:33:28.400 --> 0:33:30.240 And so to your question from this morning is like 0:33:30.280 --> 0:33:32.120 where does value your crew? Is it at the app layer? 0:33:32.200 --> 0:33:33.480 Is it at the model air? You know, the way 0:33:33.520 --> 0:33:35.640 I like to frame it is, Look, the model air 0:33:35.880 --> 0:33:39.040 is a phenomenal business for very few people. It's a 0:33:39.040 --> 0:33:41.360 game of emperors. You've got to be at the frontier 0:33:41.520 --> 0:33:43.400 to accrue a lot of value. And it's it's a 0:33:43.480 --> 0:33:46.000 knife fight. As you know, I've started joking, there's four 0:33:46.040 --> 0:33:49.920 seasons to the year. It's anthropic open EI SpaceX Google 0:33:50.040 --> 0:33:52.160 with an evergreen of open source, and. 0:33:52.200 --> 0:33:55.120 So that's that part's so fascinating, right, if we could 0:33:55.400 --> 0:33:58.760 just go to open source. When this story started for us, 0:33:58.880 --> 0:34:02.160 let's say twenty two, but for you guys probably before that, 0:34:02.680 --> 0:34:06.360 it was this idea that it was only the model, 0:34:06.440 --> 0:34:09.680 the largest models with the hundreds of billions of parameters 0:34:09.719 --> 0:34:12.840 that mattered, and in the world of open source that 0:34:12.880 --> 0:34:17.400 the issue was that that just didn't work. People couldn't 0:34:17.400 --> 0:34:20.000 make any real use of them. I go back to 0:34:20.000 --> 0:34:23.200 what Paul just said. You know, you are making utility 0:34:23.239 --> 0:34:26.680 out of open source models, but probably also a slightly 0:34:26.719 --> 0:34:27.880 smaller scale of model. 0:34:28.239 --> 0:34:29.319 Is that fair? Yes? 0:34:29.680 --> 0:34:32.319 Look, I think if you look at you know, when 0:34:32.320 --> 0:34:34.120 you think about open source has kind of gone through 0:34:34.280 --> 0:34:36.520 a bit of a journey. You know, there's LAMA three, 0:34:37.600 --> 0:34:39.799 maybe two two and a half years ago, and then 0:34:39.840 --> 0:34:41.600 there was a bit of a winter, and then I 0:34:41.680 --> 0:34:44.000 think the deep Seek moment last year really put it 0:34:44.040 --> 0:34:46.400 back on the map, and there was definitely the capability 0:34:46.400 --> 0:34:50.040 gap shrunk. I think this is happening again just over 0:34:50.080 --> 0:34:52.239 the last couple of weeks with GLM five Print two, 0:34:52.960 --> 0:34:56.600 which is i'd say a frontier level model that is 0:34:56.680 --> 0:34:59.319 actually usable and it isn't just doing well on the benchmarks. 0:34:59.480 --> 0:35:02.840 When people we're using it, they are feeling that, you know, 0:35:02.960 --> 0:35:05.920 at the frontier capability. For us, it's just like, how 0:35:05.920 --> 0:35:07.960 do we make these models very very easy to use it? 0:35:08.000 --> 0:35:10.160 And it doesn't really matter what size they are that 0:35:10.280 --> 0:35:14.080 we work with small models, big models, massive models. What 0:35:14.200 --> 0:35:17.000 we are trying to give our customers the ability to 0:35:17.040 --> 0:35:20.279 run these models when they don't necessarily have access to 0:35:20.320 --> 0:35:23.279 the infrastructured teams of the frontier labs. 0:35:23.040 --> 0:35:23.840 Doing it for them. 0:35:24.000 --> 0:35:26.720 So let's go back to what we were talking about cost, 0:35:26.840 --> 0:35:32.040 but also giveability and capability. You know, the other case 0:35:32.080 --> 0:35:34.160 study in this open source debate was Meta kind of 0:35:34.239 --> 0:35:38.120 changing its narrative saying, well, actually, we are committed to 0:35:38.160 --> 0:35:40.360 open source, but we you know, at some point we 0:35:40.440 --> 0:35:44.120 need to be realistic about about the benefit of closed models. 0:35:45.840 --> 0:35:49.040 Is what is the point on the capability part and 0:35:49.600 --> 0:35:52.560 actually take a moment explain what base ten does, why 0:35:52.600 --> 0:35:55.520 it's why it is such an important player in that respect. 0:35:55.680 --> 0:36:01.000 Sure, look at yesterday it was Deepseek, today it's GLM. 0:36:01.160 --> 0:36:02.280 It'll be something tomorrow. 0:36:02.400 --> 0:36:06.120 And as I said, it's seasonal, and that battle at 0:36:06.120 --> 0:36:09.040 the model here is not we're nowhere near the endgame. 0:36:09.320 --> 0:36:12.520 What base tend does is it helps customers like cursor, 0:36:12.719 --> 0:36:15.600 like a bridge, like open evidence, harness the power of 0:36:16.280 --> 0:36:19.640 the model underneath, combine that with your unique advantage as 0:36:19.680 --> 0:36:23.240 an enterprise, your workflow, and deliver something that is best 0:36:23.280 --> 0:36:24.360 for that specific workflow. 0:36:24.360 --> 0:36:25.520 Now it's not just one model. 0:36:25.840 --> 0:36:28.200 It's typically a collection of portfolio of models that are 0:36:28.200 --> 0:36:31.440 fine tuned to deliver that and that compounds over time, 0:36:32.120 --> 0:36:35.399 and so based in is successful. As these models get better, 0:36:35.680 --> 0:36:38.000 it benefits us and ultimately in the service of the 0:36:38.000 --> 0:36:40.520 app layer, which is you know, the customers that we discussed, 0:36:41.760 --> 0:36:43.960 who are delivering AI to the customer. 0:36:44.760 --> 0:36:48.080 Jensen's been repeating a lot recently, just among the CEO 0:36:48.120 --> 0:36:50.840 of Nvidia. Sometimes you have to remind the audience testing case. 0:36:52.040 --> 0:36:56.280 You know, he wants to see his teams burning tokens. 0:36:58.680 --> 0:37:00.840 How does that apply to your custom is right? So 0:37:01.600 --> 0:37:05.120 pouls just explain really clearly the value that you're adding. 0:37:05.200 --> 0:37:09.759 But the economics are really really important to some of 0:37:09.760 --> 0:37:10.480 these companies. 0:37:11.360 --> 0:37:13.120 Yeah, Look, I think. 0:37:14.800 --> 0:37:18.759 Using tokens is obviously just what's synonymous with, Hey, I 0:37:18.800 --> 0:37:21.400 want us to be using AI everywhere. 0:37:22.040 --> 0:37:24.080 It's in their interest for that to be the story 0:37:24.160 --> 0:37:24.560 right now. 0:37:25.000 --> 0:37:27.479 And I think for us, you know, what we see 0:37:27.560 --> 0:37:29.960 is that customers kind of go through the same curve 0:37:30.040 --> 0:37:32.600 over and over again. Is that, you know, they go 0:37:32.800 --> 0:37:35.920 very aggressively, they start using AI everywhere, they start to 0:37:35.960 --> 0:37:39.680 see gains, but they don't necessarily do it profitably, and 0:37:39.719 --> 0:37:41.640 then they need to figure out how to do it profitably, 0:37:42.040 --> 0:37:43.920 and that's when they come to open source models. That's 0:37:43.920 --> 0:37:45.520 when they come to Base ten. That's when they come 0:37:45.560 --> 0:37:48.960 to you know, post train models on Base ten to 0:37:49.000 --> 0:37:51.359 be able to do it better, faster and cheaper. And 0:37:51.400 --> 0:37:55.400 that's when you decide to get both you know, intelligence everywhere, 0:37:55.600 --> 0:37:58.000 but also unit economics that makes sense for your business. 0:37:58.680 --> 0:38:01.520 What I've been trying to reconcile is. 0:38:03.360 --> 0:38:06.680 Ultimita is invested in in the big frontier labs as well, 0:38:07.600 --> 0:38:10.320 and those big frontier labs plus S FACEX, depending on 0:38:10.360 --> 0:38:11.640 how you define what they are. 0:38:11.880 --> 0:38:14.279 Would also say that they have a role to play 0:38:14.320 --> 0:38:15.080 in that market. 0:38:15.880 --> 0:38:18.040 Where are we in this cycle of where they're just 0:38:18.080 --> 0:38:20.160 in the NBA, very big players. 0:38:20.280 --> 0:38:22.480 Where does Space ten fit in that? Look? 0:38:22.520 --> 0:38:25.360 A lot of ink has been spilled on this debate 0:38:25.400 --> 0:38:26.480 of open versus closed. 0:38:26.920 --> 0:38:28.120 Let me just take that head on. 0:38:28.719 --> 0:38:31.680 The closed models of Frontier models are very very good, 0:38:32.040 --> 0:38:34.680 and they're very good for the use case that require 0:38:34.760 --> 0:38:39.319 highest intelligenced, highest reasoning, new use case discovery. If you 0:38:39.320 --> 0:38:41.280 didn't want to think about just one model as a service, 0:38:41.400 --> 0:38:43.800 they're very good and they will always be very good. 0:38:43.719 --> 0:38:47.920 For that for a class of customers. That's not a 0:38:47.920 --> 0:38:48.440 long list. 0:38:48.480 --> 0:38:50.520 You know, as Jonathan Ross said, there's about thirty five 0:38:50.560 --> 0:38:53.640 companies that drive ninety nine percent of all inference. The 0:38:53.680 --> 0:38:56.360 top five are the labs that you just listed, top four, top. 0:38:56.160 --> 0:38:57.760 Five, the next thirty. 0:38:57.800 --> 0:39:00.120 You know, that's people like Cursor, like open Evidence, like 0:39:00.160 --> 0:39:04.200 a bridge, like Harvey, and for them, if you if 0:39:04.200 --> 0:39:05.839 you're not playing the game of the Emperors and you're 0:39:05.840 --> 0:39:08.680 you know, you're thinking about how do I deliver something 0:39:08.719 --> 0:39:11.440 that is not rented from somebody else but mine that 0:39:11.480 --> 0:39:15.160 I can compound with. That's where that's where post trained, 0:39:15.200 --> 0:39:18.000 open source can help. And so you know, we posted 0:39:18.000 --> 0:39:21.400 this start this morning about how you know, Harvey, for example, 0:39:21.480 --> 0:39:25.880 delivery achieved Frontier capabilities post training and open source model, 0:39:26.320 --> 0:39:29.520 but obviously with a much better cost and control. Frontier 0:39:30.000 --> 0:39:32.840 as an example of what the next thirty are thinking about. 0:39:32.880 --> 0:39:34.840 And then the next thousand were thinking. 0:39:34.640 --> 0:39:40.000 About two hinges for Vestava back on Bloomberg Tech, found 0:39:40.000 --> 0:39:43.320 a CEO based ten and Paul Varruaal of Ultimata. Back 0:39:43.760 --> 0:39:45.480 again on Bloomberg Tech. It's really great to have you 0:39:45.560 --> 0:39:48.160 here in person. Thank you very much. Indeed, coming up 0:39:48.160 --> 0:39:52.960 on the show, Amazon is pairing Prime Day with pizza delivery. 0:39:53.600 --> 0:39:55.760 We're going to talk about what's behind the e commerce giants, 0:39:55.840 --> 0:39:56.800 fast food pivot. 0:39:56.840 --> 0:39:58.760 Next, this is Bloomberg Tech. 0:40:03.680 --> 0:40:07.080 Today's big number, twenty six point three billion dollars. That's 0:40:07.080 --> 0:40:10.560 how much US consumers are expected to spend on Amazon 0:40:10.680 --> 0:40:13.400 and other retailers during the four day sale that we 0:40:13.480 --> 0:40:16.759 all know as Prime Day. That figure comes from Adobe. 0:40:16.960 --> 0:40:21.080 Amazon's facing headwinds though consumer confidence to competition for the 0:40:21.080 --> 0:40:23.200 e commence giant has a few tricks up its sleeve 0:40:23.280 --> 0:40:28.399 to encourage shoppers to spend, including pizza delivery, Bluebog'spenser Sofa 0:40:28.520 --> 0:40:31.600 here with the latest. Okay, we're getting ready for Prime Day. 0:40:31.920 --> 0:40:35.120 Adobe Analytics always puts out numbers like this. Put that 0:40:35.160 --> 0:40:38.000 twenty six point three billion into context for us. That's big, 0:40:38.040 --> 0:40:40.000 it's small, it's growth, it's not. 0:40:41.680 --> 0:40:42.200 It's big. 0:40:42.239 --> 0:40:45.359 I mean Adobe's predicting nine percent growth from the four 0:40:45.440 --> 0:40:48.520 day Prime Day period last year, which was July. You know, 0:40:48.760 --> 0:40:51.960 it's always tricky to compare Prime Day to the year 0:40:52.000 --> 0:40:54.080 earlier because the date moves around, and this is going 0:40:54.120 --> 0:40:55.520 to be the second year that they do a four 0:40:55.600 --> 0:40:59.120 day sale. But Adobe is predicting a nine percent lift, 0:40:59.120 --> 0:41:01.279 which is pretty size bull and a lot of that 0:41:01.320 --> 0:41:05.000 can be not you know, it's counterintuitive. Even though there's 0:41:05.000 --> 0:41:07.480 a lot of things weighing on consumers, sometimes that compels 0:41:07.520 --> 0:41:10.080 them to kind of save up money and hold off 0:41:10.080 --> 0:41:13.000 a big ticket purchase for a big deal, big deal period, 0:41:13.360 --> 0:41:14.840 which can which can raise spending. 0:41:14.880 --> 0:41:15.759 And Walmart and. 0:41:15.760 --> 0:41:18.920 Target both have overlapping sales, so there's going to be 0:41:19.000 --> 0:41:20.920 just a lot of a lot of deals going on 0:41:20.960 --> 0:41:21.720 those four days. 0:41:22.560 --> 0:41:25.879 Okay, the latest tech in depth, Amazon offers. 0:41:25.560 --> 0:41:32.520 Pizza in Prime Day experiment. Explain So this is the 0:41:32.520 --> 0:41:33.480 first year I've seen this. 0:41:33.640 --> 0:41:38.880 The Amazon's offering five dollars pizza from Little Caesars. So basically, 0:41:38.920 --> 0:41:41.040 if you go to the site, you'll see this pretty 0:41:41.040 --> 0:41:45.120 prominently a Little Caesar's emblem on the site. You can 0:41:45.120 --> 0:41:47.839 click over there to get to redeem a five five 0:41:47.880 --> 0:41:50.839 dollars pizza. And they're running that every day of Prime Day, 0:41:50.840 --> 0:41:54.080 even a couple of days before it, and it seems 0:41:54.120 --> 0:41:56.040 to be something to you know, get people to come 0:41:56.040 --> 0:41:59.040 to the site, you know, just another another sweetener to 0:41:59.040 --> 0:42:00.480 get people that come to the site and check out 0:42:00.520 --> 0:42:03.520 the deals. Because Amazon really doesn't have anything in hot 0:42:03.520 --> 0:42:07.160 food delivery. You know, they had an Amazon Restaurants thing 0:42:07.239 --> 0:42:09.719 years ago that they shuddered. They now have kind of 0:42:09.719 --> 0:42:12.600 a tie in with grub Hub. But you know, when 0:42:12.640 --> 0:42:15.560 you think about grocery and Amazon really is its eye 0:42:15.560 --> 0:42:18.320 on the grocery business. A lot of people couple grocery 0:42:18.360 --> 0:42:21.120 and dinner, you know, especially when it's hot in the summer, 0:42:21.160 --> 0:42:23.239 you don't get the kitchen hot. So this might be 0:42:23.280 --> 0:42:25.960 a way to just you know, get people to check 0:42:25.960 --> 0:42:27.799 out their deals and also cross something off the list 0:42:27.800 --> 0:42:30.600 that they got to get done done that night. 0:42:31.880 --> 0:42:35.200 Bloomberg'spenser Sopa with a look ahead to Prime Day. But 0:42:35.280 --> 0:42:36.879 go and read the Tech in depth that went out 0:42:36.880 --> 0:42:39.400 this morning as well, Thank you very much, before you go. 0:42:39.760 --> 0:42:44.000 Disney's Toy Story five has gone to infinity and beyond. 0:42:44.160 --> 0:42:47.479 On its opening weekend, Woody Buzz and their friends brought 0:42:47.480 --> 0:42:50.000 in one hundred and sixty million dollars in US box 0:42:50.000 --> 0:42:53.880 office sales, marking the best launch in that franchise's history, 0:42:54.239 --> 0:42:57.080 and lastly, the title of best twenty twenty six debut 0:42:57.440 --> 0:42:59.880 from the Super Mario Galaxy movie The Whole Was It. 0:43:00.000 --> 0:43:03.319 The low end of Bloomberg Intelligence is lofty expectations for 0:43:03.400 --> 0:43:07.560 the film and enthusiasm for blockbusters including Toy Story Spider 0:43:07.600 --> 0:43:11.160 Man The Odyssey is anticipated if you're a ten percent 0:43:11.239 --> 0:43:14.360 year over year growth rate and the best summer for 0:43:14.440 --> 0:43:19.239 cinemas since the pandemic. All right, that does it for 0:43:19.280 --> 0:43:21.839 this addition of Bloomberg Tech. From here in San Francisco, 0:43:21.880 --> 0:43:24.320 this is what markets look like. A little soft on 0:43:24.360 --> 0:43:27.000 than has that one hundred down a percentage point, half 0:43:27.000 --> 0:43:30.440 a percentage point, but still outperformance in semiconductors that socks 0:43:30.520 --> 0:43:33.560 up almost percent, a lot of that being the newsflow 0:43:33.560 --> 0:43:36.600 around micron and Anthropics deal. SpaceX down for a third 0:43:36.640 --> 0:43:40.000 straight session, but well above it's IPO price as it 0:43:40.040 --> 0:43:42.520 goes to the bomb market for the first time. Check 0:43:42.520 --> 0:43:44.839 out the pod. You know where to find it. This 0:43:44.880 --> 0:43:45.680 is Bloomberg Tech.