Speaker 1: From Mahard that we're innovation, money and power. Collie in
Speaker 1: Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hide
Speaker 1: and Ed Lovelove.
Speaker 2: A Meed Lovelow in San Francisco. Caroline hides off. This
Speaker 2: is Bloomberg Technology coming up in video snaps. It's three
Speaker 2: day route that wiped four hundred and thirty billion dollars
Speaker 2: off its market cap. Full analysis ahead, plus Oracle warning
Speaker 2: of a financial impact to its business should TikTok be
Speaker 2: banned in the US? Details to come and we go
Speaker 2: live to our Bloomberg invest Summit, uniting leaders in asset management, banking,
Speaker 2: wealth and private markets.
Speaker 3: Some key conversations to come.
Speaker 2: Let's get to financial markets for the only thing that
Speaker 2: everyone is talking about is in video. We have rebounded
Speaker 2: up aroun three percent in the Tuesday session, but it
Speaker 2: follows three straight days of declines which total more than
Speaker 2: ten percent, so therefore a technical correction and also four
Speaker 2: hundred and thirty billion dollars of market cap shed. There's
Speaker 2: a lot of conversation narrative around valuation but also the
Speaker 2: predictability of sales. How much money in video is going
Speaker 2: to make? It's been really difficult, whether you're a sell
Speaker 2: side analyst or even management to correctly say how much
Speaker 2: revenue is going to come in, particularly with new generations
Speaker 2: of AI accelerator coming online. So from a market cap perspective,
Speaker 2: this is what we're supposed to look at in Video
Speaker 2: down that's the same chart market cap. The point is
Speaker 2: it's below Apple, it's below Microsoft. So in that time period,
Speaker 2: in Video has gone from being the most valuable company
Speaker 2: in the world down a few pegs. Jomping me into
Speaker 2: my Bloomberg terminal and look.
Speaker 3: At this chart.
Speaker 2: Because of all the anxiety around the selloff, there is
Speaker 2: also some I guess sanguine thinking. From a technical perspective,
Speaker 2: it's a stock that continues to trade pretty handsomely above
Speaker 2: it's fifty and one hundred day moving average. We're trading
Speaker 2: at one hundred and twenty two dollars a share, and
Speaker 2: people see one hundred and fifteen dollars a share for
Speaker 2: those of you who follow the technicals as a key
Speaker 2: level of resistance. Back from a short break, and I'm
Speaker 2: delighted to be reunited on set with Bloomberg's Ian King.
Speaker 2: I want to go back to that idea of how
Speaker 2: difficult it is to forecast sales because over the weekend,
Speaker 2: that's what we're all talking about. In part, it's because
Speaker 2: since this all kicked off in twenty twenty three, every
Speaker 2: time they book revenue, it always comes in pretty handsomely
Speaker 2: above the midpoint of the guidance that Jensen gives, and
Speaker 2: it's difficult for the cell size to say, well, what
Speaker 2: happens next?
Speaker 1: Yeah, no, you're absolutely right.
Speaker 4: They are effectively over shooting expectations at every point, and
Speaker 4: there are a number of factors that play into that,
Speaker 4: including supply, including this kind of lumpiness of demand because
Speaker 4: they only have really a small number of large customers.
Speaker 1: So all of those things make it very difficult. But
Speaker 1: at a certain point, you know, things will even out.
Speaker 4: Supply will catch with demand, these big customers will decide
Speaker 4: they've got enough infrastructure for the time being, and then
Speaker 4: the story changes. Then other factors come in, and it's
Speaker 4: when do we reach that transition point?
Speaker 2: As you heard Ian over in New York City Bloomberg Investor,
Speaker 2: it's underway. Some big names have been attendance and what
Speaker 2: is it do you think they've been talking about?
Speaker 3: It's in Vidia. Listen to this real quick.
Speaker 5: I mean, if you look at the chart on in video,
Speaker 5: you can barely see the correction, so I mean, you know,
Speaker 5: on a percentage basis, it's down something like ten percent,
Speaker 5: but you have to like peer really really carefully at
Speaker 5: the chart to see that move. So I don't think
Speaker 5: it means anything the people were on that stock, nor
Speaker 5: what's expensive. But they're buying into a story, and as
Speaker 5: long as the story is intact, like in video is
Speaker 5: obviously intact, the story is going to continue.
Speaker 2: Steve Wiseman of The Big Short Fame on Bloomberg's Avliance
Speaker 2: earlier today.
Speaker 3: He talked about the story.
Speaker 2: The thing that I think investors are finding difficult is
Speaker 2: the story of new products coming online. So H two
Speaker 2: hundred is the kind of middle ground generation AI accelerator
Speaker 2: that's ramping right now. But Jensen told us May twenty
Speaker 2: second at earnings that Blackwell, which is the next generation accelerator,
Speaker 2: will also ship this year, and so working out where
Speaker 2: they're going and how much money they'll make from them
Speaker 2: is really tough.
Speaker 4: It is, I mean, but that's really something that the
Speaker 4: guys who run the.
Speaker 1: Xpl you should be doing a good job with.
Speaker 4: What I think is more difficult, and what causes more
Speaker 4: concern is all of this infrastructure that's being put into place,
Speaker 4: is it paying off, is it making money or is
Speaker 4: it just being basically thrown at the wall to see
Speaker 4: what will stick. And I think that's where if there
Speaker 4: is a fundamental concern, we want to see AI translate
Speaker 4: into real revenue and real profit at some of these
Speaker 4: guys who are paying all of this money for all
Speaker 4: of this in video.
Speaker 2: Gear bloom Bezi and King who leads us and making
Speaker 2: ducts a coverage at Bloomberg but for quite a long time.
Speaker 2: Also like let our stocks team, we will continue talking
Speaker 2: about in video. Bloomberg invest is now underway in the
Speaker 2: heart of New York's financial district, where leaders in asset
Speaker 2: managed and banking well from private markets are connecting with
Speaker 2: world class journalists led by Bloomboa's Global Finance correspondent Shnali
Speaker 2: Bassek to track the future's greatest risks and opportunities now.
Speaker 2: Moments ago, Felipe Lafont of COTU was asked by David Rubinstein,
Speaker 2: who would be the winner in AI, existing big tech
Speaker 2: companies or smaller startups listen to.
Speaker 6: This at the beginning of these new waves, the new
Speaker 6: winners ten or twenty years out. Some of them are
Speaker 6: existing companies and some of them are new. But the
Speaker 6: new ones that get big, there's maybe one a year.
Speaker 6: No more.
Speaker 2: Delighted to say, as if by magic Bloomberg Shnale Bassek
Speaker 2: joins us now with more.
Speaker 3: This is a really big event.
Speaker 2: And it's not surprising that whether you are in the
Speaker 2: private equity or private growth equity area of the market,
Speaker 2: or you're a hedge fund or whatever it is you are,
Speaker 2: everyone seems to be talking about artificial intelligence.
Speaker 7: It certainly does pervade a lot of the conversations we're
Speaker 7: having here today. And of course Felipe Leafont is one
Speaker 7: of the perfect people to talk about artificial intelligence too. Earlier,
Speaker 7: as he was talking to David Rubinstein, David Rubinstein did
Speaker 7: ask him if he thinks there's a lot.
Speaker 3: Of hype around AI.
Speaker 7: And he really leaned into the opportunities that are happening
Speaker 7: in AI and really downplayed other types of opportunities, say
Speaker 7: quantum computing, for example. So what is he seeing in
Speaker 7: the AI opportunity? Some things got really wonky here, this
Speaker 7: idea of artificial brains being implanted in a robot that
Speaker 7: lives alongside humans, though that is probably about fifteen years away.
Speaker 7: According to Kotoo's Lafonte, he's also seeing a lot of
Speaker 7: opportunity here in power. That is something that a lot
Speaker 7: of Wall Street is also watching, the banks the hedge
Speaker 7: funds as well, and so certainly a more near term
Speaker 7: opportunity a little earlier. Also on the AI front, I
Speaker 7: would just say we also talked to Bollie of Eldridge
Speaker 7: Industries and he talked about how it's changing media and entertainment.
Speaker 7: The reason I bring this all up is because you
Speaker 7: hear different types of investors ed really talking about the
Speaker 7: AI opportunity, particularly in private markets as opposed to public markets,
Speaker 7: and the growth opportunity you're seeing there, as well as
Speaker 7: the governance structures that exist around companies like that that
Speaker 7: would allow for that kind of experimentation.
Speaker 2: As regular views of this show, No, I'm a longstanding
Speaker 2: Chelsea season ticket holder, a member of Chelsea Football Club,
Speaker 2: so I go watch the top early interview in full online.
Speaker 8: What's to come?
Speaker 3: You've put so much.
Speaker 2: Work into Aditionale along with our colleagues from the Live
Speaker 2: Events team. There are some big names to come in
Speaker 2: the next few hours.
Speaker 7: There certainly are shortly, we'll be talking to boaz Y
Speaker 7: and Stein of SABA Capital, And I've got to say
Speaker 7: one reason that's interesting, Ed is because we are just
Speaker 7: in the center of his dispute with Blackrock. We know
Speaker 7: that there are a couple of funds that he's targeting
Speaker 7: as activists and closed end funds run by black Rock.
Speaker 7: They have proxy voting that's going on in the last
Speaker 7: couple of weeks. In the next couple of weeks, so
Speaker 7: we don't really know yet if Saba is winning. We'll
Speaker 7: find out a little more what he thinks on stage
Speaker 7: in the afternoon. We're going to have a couple of
Speaker 7: private credit conversations as well, John Zido, I'm looking forward
Speaker 7: to Gary Gensler, the chairman.
Speaker 3: Of the SEC. Of course, with Ann Marie Hordern.
Speaker 7: We know the presidential debate is just days away, and
Speaker 7: hearing what Gensler has to say about what a change
Speaker 7: of the administration could mean if there is a change
Speaker 7: in administration for the policies that he's set forth today.
Speaker 7: Of course, a lot of people in tech and in
Speaker 7: general markets looking at the potential for an etheream ETF.
Speaker 7: There's some real potential for news later this afternoon.
Speaker 2: Bluemokes Shinali Bassic. Just an incredible lineup. Stay tuned. The
Speaker 2: Bloomberg invest Summit is taking place all of today and
Speaker 2: tomorrow right there in New York City. Don't forget to
Speaker 2: tune in, check it out.
Speaker 3: We'll be right back. This has been bug technology.
Speaker 2: China's President's using ping is urging the nation to step
Speaker 2: up innovation because other countries dominate certain key technologies.
Speaker 3: While he said.
Speaker 2: China had quote made great progress in science, he added
Speaker 2: that original innovation ability is still relatively weak. Some key
Speaker 2: core technologies are controlled by others, and there is a
Speaker 2: shortage of top scientific and technological talents sticking with China.
Speaker 2: After initial reporting in May from Bloomberg that Huawei was
Speaker 2: secretly sponsoring a research competition run by Optica, a review
Speaker 2: of internal Optica corporate records shows the alliance ran far
Speaker 2: deeper than publicly known, blossoming over decades even as US
Speaker 2: China tensions over technology intensified. Let's bring in Bloomberg's Mike Chef,
Speaker 2: who leads our coverage at the intersection of politics and technology.
Speaker 2: You know, the original Bloomberg report in May was astonishing, frankly,
Speaker 2: and the further details in this sort of a polisical environment,
Speaker 2: and the headlines of the last twelve months are almost unbelievable.
Speaker 3: What have we learned?
Speaker 9: Well?
Speaker 10: At first, let me commend you on the segue into
Speaker 10: this segment, because it really highlights the importance of this story.
Speaker 10: It shows that China is really on the quest. It's
Speaker 10: on the hunt for the technological advances. It needs to
Speaker 10: bolster its economy and gain that technological edge and key areas,
Speaker 10: and this shows one way it's been doing it. Huawei,
Speaker 10: which is such an industrial champion in China, was not
Speaker 10: only sponsoring secretly this competition, but it was forging a
Speaker 10: much deeper relationship with Optica, and it was a two
Speaker 10: way street. Optica is a century old organization that whose
Speaker 10: members twenty four thousand members worldwide do research and sensitive
Speaker 10: areas in light that apply to things like semiconductors that
Speaker 10: are essential to everything in the modern economy. So the
Speaker 10: consequences of this are significant. And Keith O'Keefe, whose initial
Speaker 10: report really broke the ground on this and her latest
Speaker 10: reporting advanced the story further. She found that there was
Speaker 10: a whistleblower who flagged the risks that some of the
Speaker 10: work being done by US scientists could be exported to
Speaker 10: China as a result of this.
Speaker 2: I don't want to simplify it too much, but the
Speaker 2: basic idea is that that money came from Huawei. And
Speaker 2: in response to this reporting by Kato o'keef, who's had
Speaker 2: a great impacts ince joining Bloomberg, Obtica's spokesperson basically says
Speaker 2: that that group Obtica's confident that they acted properly and
Speaker 2: in good faith. Were showing the response of Liz Rogan,
Speaker 2: who's the OCTICA CEO on the screen, Mic, I.
Speaker 3: Guess what happens next.
Speaker 2: You know, when stories like this develop, sometimes law makers
Speaker 2: take notice, sometimes regulators take notice.
Speaker 10: Well, lawmakers have taken notice, and the top Republican and
Speaker 10: Democrat on how Science Committee are looking into this. They
Speaker 10: expressed grave concern that US scientific research could be exposed
Speaker 10: or even exported unwittingly to China as a result of
Speaker 10: a relationship like this. Now the organization is saying that
Speaker 10: it acted in good faith and to be fair, it
Speaker 10: did not violate any rules per se in allowing this
Speaker 10: fund this competition to be funded anonymously, and yet the
Speaker 10: appearance was complicated for one, for the organization, but it
Speaker 10: was also a risk for the scientists who accepted the
Speaker 10: money without knowing that it came from Huawei. You see,
Speaker 10: many researchers in the US have to disclose to other
Speaker 10: government and university funding agencies where their other sources of
Speaker 10: money are coming from. And if they don't tell those
Speaker 10: other funders, if they don't disclose it, hey, some money
Speaker 10: from Wawei by the way, there could create a problem
Speaker 10: for them down the road as well.
Speaker 2: Blnberg's Mike Shephard, really appreciate your insight and reporting here
Speaker 2: on Boombog Technology.
Speaker 3: Thank you.
Speaker 2: We continue to talk about China. China based Byte Dance
Speaker 2: is facing a ban in the US in the form
Speaker 2: of TikTok, and Oracle is now warning that that would
Speaker 2: adversely affect its revenues and profits. This is a story
Speaker 2: that caught my eye pretty late yesterday. I want to
Speaker 2: bring in Bloomberg Intelligence and this Satura Irana and you've
Speaker 2: basically constantly crunched the numbers on what the impact would be.
Speaker 2: But it's not straightforward, you know, for our audience's benefit.
Speaker 3: Oracle was at the heart of TikTok's.
Speaker 2: Compromise by on shoring US user data in Oracle servers. Basically, Now,
Speaker 2: if that's banned, what's the point of the Oracle relationship.
Speaker 11: Yeah, it's hosting the IQ application. So their infrastructure has
Speaker 11: been used to do host that, so which is why
Speaker 11: if it goes they're not going to be getting that
Speaker 11: much revenue out Now they've never disclosed what the exact
Speaker 11: revenue amount is. But you know, I think one thing
Speaker 11: that's happening good on the article side is there's a
Speaker 11: massive demand for their infrastructure as a service business. They are,
Speaker 11: you know, helping out Microsoft there, They're helping out or
Speaker 11: to Google and the I mean, they just really deal
Speaker 11: with them. So that business is growing over forty percent.
Speaker 11: It's running at a rundrate of about two billion a
Speaker 11: quarter right now, so annualized rundrate of about eight billion.
Speaker 11: So I mean, you know, it will be a setback
Speaker 11: I would say for a quarter or two, but they
Speaker 11: can make up that sales with other demand that's out there.
Speaker 2: Stucks down a percentage point in the session in the moment,
Speaker 2: up more than thirty percent year today. But what you
Speaker 2: said is interesting, Right, we don't have a number, we
Speaker 2: don't know what the value of the relationship is, but
Speaker 2: You've covered this industry long enough, right you know that
Speaker 2: if a company issues a statement saying this is substantive
Speaker 2: material is the word, then it's worth looking into.
Speaker 1: No, no fair amount.
Speaker 11: I completely agree with you, But what I'm trying to
Speaker 11: say is the demand for these kinds of work is
Speaker 11: so strong right now. So maybe it's a setback for
Speaker 11: Oracle for six months or nine months, but they will
Speaker 11: make up that revenue from other sources. It's not as
Speaker 11: if it's lost forever that particular revenue stream, you know.
Speaker 11: In the in the defense of Oracle, right now, they
Speaker 11: are really becoming the fourth largest cloud provider out there,
Speaker 11: you know, right behind Amazon, Microsoft and Google Cloud Platform,
Speaker 11: because this kind of work is really the biggest thing
Speaker 11: in demand right now. Application software is struggling, but infrastructure
Speaker 11: software is doing well because of cloud resources.
Speaker 2: And that was the focus of the research out this
Speaker 2: morning from you and Blue mg Intelligence, narrowing the gap
Speaker 2: when it comes to cloud Ana rag Rana, Bloomberg Intelligence,
Speaker 2: Thank you so much.
Speaker 3: Okay.
Speaker 2: Staying with China, It's spacecraft carrying samples collected on the
Speaker 2: far side of the Moon return to Earth today, marking
Speaker 2: an important milestone in China's path for further lunar exploration.
Speaker 3: The change is six space landed.
Speaker 2: In a grasslands region of Inner Mongolia, and was the
Speaker 2: second mission by China to the more distant part of
Speaker 2: the Moon, following the twenty nineteen landing by Chang E four.
Speaker 2: No other country has sent a spacecraft to the far side,
Speaker 2: although NASA has plans to support missions there by a
Speaker 2: US spacecraft. Okay, it's signed for Talking Tech and first up.
Speaker 2: In yesterday's show, we discussed Wall Street Journal report that
Speaker 2: Meta and Apple had held talks on an AI partnership.
Speaker 2: After the show, Bloomberg's Mark German reported or clarified the
Speaker 2: real situation. Apple dismissed Meta's AI chatbot months ago. According
Speaker 2: to sources, the iPhone maker held brief discussions about using
Speaker 2: Meta's Lama chatbot, but ultimately decided not to move forward,
Speaker 2: citing privacy practices that weren't stringent enough. Plus Open ai
Speaker 2: issues are warning to China. According to local media reports,
Speaker 2: open ai says it will begin blocking access to tools
Speaker 2: and software in the region beginning in July.
Speaker 3: It's unclear what prompted.
Speaker 2: The move, and while open ai is unofficially available in
Speaker 2: the country, many can access its features through VPN and
Speaker 2: US defense startup Anderil has secured one point five billion
Speaker 2: dollars of new capital, boosting its valuation to about fourteen
Speaker 2: billion dollars. That's according to a report by The Information.
Speaker 2: The startup, backed by Peter Teel, makes drones and autonomous
Speaker 2: weapons systems, and recently one a major contract to develop
Speaker 2: unmanned fighter jets for the US Air Force. Another story retracking,
Speaker 2: the health platform Function reached fifty three million dollars in
Speaker 2: its Series A funding round. The platform focuses on preventative
Speaker 2: approaches to help individuals manage their well being. Delighted to
Speaker 2: say that Function's co founder Mark Heyman joins us. Now
Speaker 2: you know it's a significant summer money. Congratulations Mark on
Speaker 2: the Series A. But actually, what caught my eye in
Speaker 2: the first instance is how many users you've onboarded. Yeah,
Speaker 2: and how big the weight list is relative to those
Speaker 2: on board.
Speaker 3: It just explain that to me.
Speaker 1: Yeah, Well, thank you for having me.
Speaker 12: This is an incredible moment in medical history because we're
Speaker 12: seeing consumer driven healthcare exploding and we hit a nerve,
Speaker 12: a pain point where people want access to their own data,
Speaker 12: their own biology. They want to look under the hood
Speaker 12: and not just rely on the healthcare system to provide
Speaker 12: access to their own health information. And so we've gotten
Speaker 12: fifty thousand people as members in the first year in
Speaker 12: our data and two hundred thousand people on the waitlist,
Speaker 12: and there's just a hunger for people to know about
Speaker 12: their health, to be empowered with the tools and have
Speaker 12: their own agency over their health, using their data from
Speaker 12: their own body and having ownership of it, which right
Speaker 12: now is sort of held within the healthcare system in
Speaker 12: a very tight way that's hard to access for people,
Speaker 12: hard to understand, and we make it easy accessible, and
Speaker 12: it's the first personalized health platform that allows you to
Speaker 12: access to your own health data through initial one hundred
Speaker 12: and ten and bound markers for four hundred and ninety
Speaker 12: nine dollars. It's about fifteen thousand dollars worth. Lab tests
Speaker 12: and provides deep insights from world scientific literature from top
Speaker 12: knowledge experts, and provides guidance on what likely things that
Speaker 12: are going on with you and what to do about
Speaker 12: them in order to empower you to change your behaviors
Speaker 12: and your lifestyle, which is really where more of these
Speaker 12: right is.
Speaker 2: Mark just explain the basics of the technology you know,
Speaker 2: every time we hear about a data driven platform like this,
Speaker 2: we immediately start talking about our official intelligence. But I
Speaker 2: think in this case function has problem that the expression
Speaker 2: a more simple function just to explain the basics.
Speaker 12: Absolutely, no, you know, it's hard to believe, but medicine
Speaker 12: is still in the dark ages. It's very analog. We
Speaker 12: don't have pen and paper. We have electronic medical records,
Speaker 12: but essentially pen and paper put in a PDF for
Speaker 12: electronic medical record with no relational content, with no understanding
Speaker 12: of the interactions between the data points, with no correlation.
Speaker 12: And so it's really a unique moment in history where
Speaker 12: we can gather your own data from the blood from
Speaker 12: eventually biom bios sensors and wearables, from your electronic records
Speaker 12: from oh mix and into your own health platform allows
Speaker 12: you to understand what's going on with your body. So
Speaker 12: it's a very simple process to sign up. It's five minutes.
Speaker 12: You go to functionhealth dot com. You can sign up
Speaker 12: and you get a scheduled appointment for your lab test
Speaker 12: at one of the two thousand Quest laboratories. Your blood's drawn.
Speaker 1: It takes about fifteen minutes.
Speaker 12: It's frictionless, you don't have to go through insurance, your
Speaker 12: doctor gets away from the patronalistic healthcare system. It allows
Speaker 12: people to be agents of their own health and the
Speaker 12: seeo your own health, which I think is what we
Speaker 12: all need to be given the epidemic of chronic disease
Speaker 12: that's now based.
Speaker 2: Okay, just want to jump in on that insurance point.
Speaker 2: As you can tell you, I come from the United Kingdom,
Speaker 2: where your healthcaret is very different. Six years in, I'm
Speaker 2: used to the insurance basis here. How does your business
Speaker 2: model work within the confines of that system.
Speaker 12: Well, it's very interesting because people are going outside the
Speaker 12: system to actually learn more about their health, to get
Speaker 12: data about their health, whether it's home testing or whether
Speaker 12: it's wearables. Now this is successible to your blood test
Speaker 12: and you don't have to go through insurance. It's four
Speaker 12: hundred nine nine dollars a year. It's a dollar thirty
Speaker 12: seven cents a day, which is less than your dunkin
Speaker 12: Donuts a cup of coffee, and it allows you to
Speaker 12: have deep insights about your health across the spectrum of
Speaker 12: your health, from nutritions to hormone to metabolic health, to
Speaker 12: toxins to cardiovascer risk to all your biomarkers that relate
Speaker 12: to your overall well being and something that was never
Speaker 12: accessible to people before.
Speaker 1: And so when you go through your.
Speaker 12: Doctor insurance, there's a big resistance, a firewall where they say, no,
Speaker 12: you don't need these tests, you don't need that test,
Speaker 12: or they just want these small number of tests. But
Speaker 12: it's better to look at things early on in the
Speaker 12: trajectory of disease. And we've seen just by the simple approach,
Speaker 12: we've saved lives. One man was in his forties, forty
Speaker 12: four years old did the panel, found out he had
Speaker 12: prostate cancer, was able to treat it early, get cured,
Speaker 12: and was able to then live on a healthy life
Speaker 12: with his young kids as opposed to being at.
Speaker 3: Risk for death.
Speaker 12: So I think we are seeing incredible uptake. We're seeing
Speaker 12: incredible results from the users and incredible stories of lives changed.
Speaker 8: And really this is all about ending sight.
Speaker 2: Mak Himan Kai, founder Health, thank you for joining us
Speaker 2: on the Programer're coming up. We're going to be joined
Speaker 2: by the CEO of x Scaviniberti on how the startup
Speaker 2: plans to take on in Vidia.
Speaker 3: That's coming up next, a.
Speaker 2: Quick look at shares of Microsoft the European Commission has
Speaker 2: issued it a statement of objections alleging that Microsoft's teams
Speaker 2: an office three sixty five fel flou of the EU's
Speaker 2: competition rules. The stock up four ten percent. A story
Speaker 2: we'll dig into this is Bloomberg Technology. Welcome back to
Speaker 2: Bloomberg Technology at Ludlow in San Francisco. Let's take a
Speaker 2: quick look at the markets. Broadly speaking, US equities are
Speaker 2: higher then as that one hundred, up a four percentage point.
Speaker 2: A big part of that story, of course, is in
Speaker 2: Vidia now up five percent in this session. Is the
Speaker 2: rebound from that technical correction three straight days of declines
Speaker 2: exceeding ten percent until now, and there's no real news
Speaker 2: flow around in video. This is about some serious gains.
Speaker 2: It was about a forty three percent jump from May
Speaker 2: twenty second when in Video reported earnings. And the conversation
Speaker 2: around how hard it is to predict sales growth because
Speaker 2: you're jumping from H one hundred to H two hundred.
Speaker 2: Blackwell will start shipping at the end of the year,
Speaker 2: and the street is basically saying we can't keep up
Speaker 2: with a management's forecast. What's going on. I also take
Speaker 2: a quick look at bitcoin trades twenty four to seven.
Speaker 2: We focused on it big time in yesterday's show, but
Speaker 2: we're back nearer to sixty two thousand dollars per token,
Speaker 2: noting that there have been pretty substantive outflows from a
Speaker 2: dedicated bitcoin spot. Ets I want to linger on the
Speaker 2: AI accelerator market for a moment. Etched is a young
Speaker 2: AI chip company making a big bet on AI. They
Speaker 2: spent the past two years building soho the world's first
Speaker 2: specialized AI chip for transformers, or so they claim, and
Speaker 2: that bet is paying off. The company just nabbed a
Speaker 2: one hundred and twenty million dollar Series A round led Briy,
Speaker 2: Primary Venture Partners and Positive some Ventures. Let's bring in
Speaker 2: Gavin Aberti, one of the company's two co founders and
Speaker 2: its CEO.
Speaker 3: Okay, let's go back to basics on this. There were
Speaker 3: a lot of.
Speaker 2: Big claims in that introduction. Your main point is that
Speaker 2: the specifically designed chip for the development to transform transformers
Speaker 2: and models is better than the GPU. But what is
Speaker 2: it that you're building? What is so well so?
Speaker 13: Who's a kind of aioship that is only able to
Speaker 13: do one very specific thing. An accelerator from Nvidio or
Speaker 13: Google is flexible. It can be programmed to run many
Speaker 13: different kinds of AI models like convolutional networks, LSTMs or transformers.
Speaker 8: Right, our chips are different.
Speaker 13: They are only able to run this one very neurow
Speaker 13: class of model, which we call transformers. But when running
Speaker 13: these kinds of models, they are vastly more performant, more
Speaker 13: than twenty times higher throughput than eight one hundred.
Speaker 2: So what is it from an intellectual property standpoint or
Speaker 2: a technology standpoint unique to H that allows for that?
Speaker 2: What is the secret source behind? So that makes it
Speaker 2: any different from a performance perspective or a design perspective
Speaker 2: relative to H one hundred eight two hundred.
Speaker 13: Well, we're able to burn the transformer algorithm into the
Speaker 13: chip we're building, our own silicon and our own servers,
Speaker 13: and this enables us to get more than twenty times
Speaker 13: higher throughput in terms of output words per second from
Speaker 13: models like check GPT or LAMA. But you're also able
Speaker 13: to get much better latency numbers. If you measure the
Speaker 13: time to the first token, we can cut that by
Speaker 13: a factor of twenty as well.
Speaker 2: You told my colleague Piles Vary that you think H
Speaker 2: can be the world's biggest company. That's quite a claim
Speaker 2: to make outline the pathway to that For.
Speaker 8: Me, well, we are taking a bet.
Speaker 13: Unlike every other company in the market, our chips can
Speaker 13: only run transformers. So if transformers change dramatically or go away,
Speaker 13: then we'll be in a bad place. But if we're
Speaker 13: right and transformers keep being the dominant way that AI
Speaker 13: models work, will be the most performance chip on the
Speaker 13: market by an order of magnitude.
Speaker 2: So let's talk about who your target customer is because transformers,
Speaker 2: or let's let's use another term, large language model in
Speaker 2: the natural language context.
Speaker 8: For us a misconception.
Speaker 3: Actually, we'll fix the misconception.
Speaker 13: Transformers used to be for just large language models. Other
Speaker 13: kinds of models like image generators and video generators used
Speaker 13: to be what's called units, but that's changed over the
Speaker 13: past year. It's turned out that transformers work better than
Speaker 13: other kinds of AI models for generating images and videos too.
Speaker 8: I don't know if you saw Sora.
Speaker 13: From open AIS, but that's a transformer as well, powered
Speaker 13: by the same underlying kind of models check GPT.
Speaker 2: But the point I'd like to get to it with
Speaker 2: regards to who your customers or potential customers would be
Speaker 2: is that some transformers have parameters in the hundreds of billions,
Speaker 2: SOA may be a good example of that. What's happening
Speaker 2: now in AI development is more modest ambitions, lots of
Speaker 2: companies working on models with scale a much lower scale
Speaker 2: in terms of parameters.
Speaker 3: Where do you want to go that we.
Speaker 8: Are selling to the big transformer models.
Speaker 13: We have tens of millions and pre orders from the
Speaker 13: customers you'd expect, but I expect that we are going
Speaker 13: to get much much bigger AI models. The way we've
Speaker 13: gone from GPT two and twenty nineteen to GPT four
Speaker 13: today is not by inventing new algorithms. The transformer algorithm
Speaker 13: is almost the same. Instead, we have made the models
Speaker 13: far bigger or one point five billion parameters like GPT
Speaker 13: two at one point in.
Speaker 3: The tens or one hundreds of billions or trillions.
Speaker 8: One point trullion for GPT four.
Speaker 2: Let me ask you this though one hundred and twenty
Speaker 2: million dollars series A, it seems like an eye watering
Speaker 2: sum of money, but we've learned that this is a
Speaker 2: capital intensive enterprise from an R and D perspective of
Speaker 2: talent perspective, One thing that was of interest to me
Speaker 2: and wanting used to come on the show is that
Speaker 2: your contract manufacturing partner is TSMC, and not only TSMC,
Speaker 2: but their emerging business group where they basically say, okay,
Speaker 2: you're just starting out, but we can help you to
Speaker 2: scale this product.
Speaker 3: What's that experience been like?
Speaker 13: TSMC is ay a pleasure to work with working on
Speaker 13: their foreign nimeter node. One of their state of the
Speaker 13: art processes, same one that in the video is making
Speaker 13: their black Well GPS on. They were building a eoretical
Speaker 13: sized diet, so a very big chip that is a
Speaker 13: complicated kind of chip to build well.
Speaker 2: On Blackwell's case, they had to literally split it in two,
Speaker 2: which that's a.
Speaker 8: Great point that for Blackwell.
Speaker 13: Normally, what happens in chips is as you move from
Speaker 13: generation to generation, you move to a more advanced kind
Speaker 13: of chip technology. So from the A one hundred to
Speaker 13: the H one hundred, they moved from seven nimeter to
Speaker 13: five an animeter.
Speaker 8: But that's changed.
Speaker 13: They couldn't move to the new technology for the Blackwell
Speaker 13: chips and as a result they had to put two
Speaker 13: of them together.
Speaker 8: And if you look at the.
Speaker 13: Progress of GPUs over the past four or five years,
Speaker 13: they haven't gotten better, They've just gotten bigger performance per
Speaker 13: area stayed constant.
Speaker 2: Yeah, I mean you are an incredibly confident found a
Speaker 2: co founder CEO. It's a pleasure to have you on
Speaker 2: the program, and you're clearly ambitious. The difference between nvideor
Speaker 2: Inexsynvidior is producing at volume. You have one hundred and
Speaker 2: twenty million dollars in the bank. Now, what do you
Speaker 2: need to use that cash?
Speaker 3: Four?
Speaker 2: And how capital intensive is the process of scaling this product?
Speaker 2: Even if you have a partner like TSMC, this is
Speaker 2: a capital intensive business.
Speaker 13: A majority of our Series A is going to go
Speaker 13: into building these products and scaling.
Speaker 8: Up the business. That is where the money goes.
Speaker 13: And I think the big difference too is again we
Speaker 13: are very specialized that we are inherently taking a bet
Speaker 13: on the transformer architecture. A lot of folks in the
Speaker 13: industry will say that, especially transformers were invented, there could
Speaker 13: be something else on the horizon that will put us
Speaker 13: out of business, and we are gambling.
Speaker 2: That's not just very quickly, we just have ten seconds.
Speaker 2: Have you shown Jensen your product?
Speaker 8: I imagaine Jensen's Road of Us by now.
Speaker 2: Gavin ABERTI co founder and CEO of etched. A lot
Speaker 2: of fighting talk, a lot of confidence. Thank you for
Speaker 2: joining us in the program. Okay, back to the story
Speaker 2: we were discussing, open ai has worn developers in China
Speaker 2: it will begin blocking their access to its sools and
Speaker 2: software from July. That's according to local media reports suggesting
Speaker 2: the chat GPT creators taking a more active stance to
Speaker 2: bar users from nations where it doesn't offer services. Bloombased,
Speaker 2: Jackiedavlos leading the AIB joins me at a DC. This
Speaker 2: is really interesting because it's kind of an old school
Speaker 2: tech thing that a lot of the access to open
Speaker 2: ai in China was through VPN, you know, which is
Speaker 2: what people do to stream things in different places.
Speaker 3: But give me more details in this story.
Speaker 9: Well, what we know ed is that Chinese developers will
Speaker 9: have this access cut off starting in July. As you mentioned,
Speaker 9: this really originated through local media reporting, which cited screenshots
Speaker 9: that had this open Ai memo to developers saying they
Speaker 9: were going to have this access removed. Open Ai has
Speaker 9: now confirmed the decision to Bloomberg News earlier this morning
Speaker 9: that it is in fact taking quote additional steps to
Speaker 9: block API traffic from regions where we do not support
Speaker 9: access to open AI's services. Now, this is not the
Speaker 9: first time that China has come against the crosshairs of
Speaker 9: American tech companies and even regulators here and US officials
Speaker 9: who believe that China is using this technology for more
Speaker 9: nefarious purposes. Now open ai really started ratching it up
Speaker 9: its own actions against who it believes is bad actors
Speaker 9: and using its technology, perhaps to manipulate public opinion. For example,
Speaker 9: remember that report in May ed that said Russia, China,
Speaker 9: Iran and Israel we're using open ai to manipulate public opinion.
Speaker 9: So you really see these actions really starting to take
Speaker 9: shape here.
Speaker 2: There's two sides of the story, right, there's the use
Speaker 2: of the technology by malicious actors or on authorized actors
Speaker 2: and also i think a data access point. But there's
Speaker 2: also a competition side of the story. Right, you have
Speaker 2: to sick champions in China like bay Do that are
Speaker 2: building large language models, big large language models to support
Speaker 2: generative AI technology, give me that side of the story.
Speaker 9: Well, they were quick to pounce on the fact that
Speaker 9: now there's this wide swath of developers who need AI
Speaker 9: technology to turn to, and so what some of these
Speaker 9: local reports were saying is that they started appealing to
Speaker 9: developers and saying, hey, come switch to our tech. Really
Speaker 9: goes to show that there is this not just this
Speaker 9: technology battle, but there's a need to really start ramping
Speaker 9: up its own internal AI capabilities. This is exactly what
Speaker 9: lawmakers here in Washington need are concerned about that AI
Speaker 9: is really ramping up their efforts not just to have
Speaker 9: AI play a role in it's economic capabilities, but military
Speaker 9: and so of course, this isn't just you know, about
Speaker 9: what consumers have access to, but how it can be
Speaker 9: used against kind of national security. And this is exactly
Speaker 9: where we're seeing here in Washington actions on behalf of
Speaker 9: for example, the Treasury Department imposing rules to curb investment
Speaker 9: that would support AI investment in some of these areas,
Speaker 9: and also, of course, you know curbs on chip exports.
Speaker 9: We're really starting to see both of these things really
Speaker 9: come together.
Speaker 2: I think that what they're doing from a technical standpoint,
Speaker 2: I'm just reiterating what an open ai spokesperson told us
Speaker 2: is that they are taking additional sets to block API traffic.
Speaker 2: I still find it astonishing that the origin of this
Speaker 2: story is people being able to access open AI from
Speaker 2: China through VPN. Just give me a little bit more
Speaker 2: on what you just said about the DC side of this.
Speaker 3: You know Joe Biden.
Speaker 2: President Biden has some policy towards restricting Chinese products entering
Speaker 2: the United States or tariffs, and the Treasury.
Speaker 3: Department you mentioned as well.
Speaker 2: Are we expecting a sort of expansion of that activity.
Speaker 3: That's a key question. I think.
Speaker 9: If there's one area where lawmakers here in Washington have
Speaker 9: really come together, it's around the national security argument that
Speaker 9: China has capabilities in artificial intelligence and it will continue
Speaker 9: to bolster them. Now you saw this with TikTok. Really
Speaker 9: the concern that Chinese influence was coming through somehow in
Speaker 9: TikTok and influencing public opinion here through that tech. But
Speaker 9: then you look at artificial intelligence and what can be
Speaker 9: done with drones for example, really things on the battlefield.
Speaker 9: This is where a lot of that concern is coming from.
Speaker 9: And so of course you're seeing chip manufacturing is kind
Speaker 9: of the hallmark example for the Biden administration really starting
Speaker 9: to take the lead here. It's all part of this
Speaker 9: broader strategy to really undercut Beijing's efforts to have AI
Speaker 9: kind of bolster its military capabilities.
Speaker 2: Bloomba's Jackiedavolos, this is a pretty fast developing story. Grateful
Speaker 2: for you keeping us honest on it out of Washington,
Speaker 2: d C. Thank you, Bloombo Technology.
Speaker 1: The Bay open every day, open