Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and v Lovelow in Sent Francisco.
Speaker 2: This is Bloomberg Tech coming up in video. Invests an
Speaker 2: additional two billion dollars in core. We've expanding their partnership
Speaker 2: to accelerate the buildout of AI factories.
Speaker 3: Plus, ion Q continues its acquisition spree as the quantum
Speaker 3: company ad buys chip maker Skywater Technology in a casher
Speaker 3: stock deal worth one point eight billion dollars.
Speaker 2: And gearing up for big tech earnings, Meta, Microsoft, Tesla,
Speaker 2: and Apple all set to report earnings throughout the week.
Speaker 4: We have the preview and.
Speaker 3: The markets are up ahead of those allportant earnings tests.
Speaker 3: We want to see whether there's vindication where the revenue
Speaker 3: and the profit lives up to some mighty valuations, particularly
Speaker 3: in the AI space. But we're up for a four
Speaker 3: straight day on the LASTAP one hundred longest winning streak.
Speaker 3: It says back in December when we had a five
Speaker 3: day run heading in to the Christmas period. So there
Speaker 3: is optimism, but not if you look at the US dollar.
Speaker 3: Not if you're seeing the search for safety in gold.
Speaker 3: But we stick to our missing here in tech and
Speaker 3: what have you got ed?
Speaker 2: We've got a deal and it's for in VideA to
Speaker 2: invest in an additional two billion dollars into core Weave.
Speaker 2: They're going to buy Corwave's common stock at eighty seven
Speaker 2: dollars and twenty cents a share. There is a technology
Speaker 2: sharing part of this, but the bigger picture is to
Speaker 2: accelerate the buildout of capacity. Bloomberg last night speaking on
Speaker 2: the phone with the CEOs of both companies. Bloomberg's Ian King,
Speaker 2: who conducted that conversation, joins us now on set. I'm
Speaker 2: going to get to the circular financing bit. First, we
Speaker 2: asked him, is this circular financing? Him being gentsen One,
Speaker 2: the CEO of and Video. His answer was pretty simple
Speaker 2: that he's saying, this is a very small proportion of
Speaker 2: what core Weave's going to need to raise on an
Speaker 2: ongoing basis to bull out croacity, and it's in line
Speaker 2: with what they invest in lots of other companies take
Speaker 2: it from there.
Speaker 5: Yeah, I mean, he said, look, whether it's core Weave,
Speaker 5: whether it's Xai, whether it's any of the others that
Speaker 5: he's open ay obviously that he's agreed to give a
Speaker 5: lot of money too. He's like, this is just a
Speaker 5: small portion. This is me just helping them out a
Speaker 5: little bit and showing faith in what they're trying to do.
Speaker 5: They're going to have to go and raise this money themselves.
Speaker 5: The market will basically sort this out. This isn't circular financing.
Speaker 3: It's his argument, and it felt like the call we've seo.
Speaker 3: Michael and Trader came back and said, look, it's a
Speaker 3: drop in the ocean compared to the amount of infrastructure
Speaker 3: spend that we're having to do. But where do they
Speaker 3: strategically are like, why dig even deeper into their pockets
Speaker 3: to give money to call Weave at this time?
Speaker 5: Yeah, I mean Jensen said that this is really a
Speaker 5: technology partnership that core Weave is a very early adopter
Speaker 5: of in Vidio systems. Tends to do them in the
Speaker 5: way that Invidia thinks they should be done, and this
Speaker 5: kind of serves as like a reference platform, so they
Speaker 5: like that. And also he just thinks a lot of
Speaker 5: demand out there, so the faster we can go, the
Speaker 5: better things get.
Speaker 2: There's also CPU put the GPUs to one side. What
Speaker 2: Jensen one really wanted to emphasize, as far as I
Speaker 2: can tell from reading the transcript of your conversation, is
Speaker 2: that vera CPU is now going to be a standalone
Speaker 2: infrastructure product. Core weaves relevant here, just explain what he
Speaker 2: told you on the phone.
Speaker 5: Yeah, I mean, as you know, Jensen never says anything
Speaker 5: without having carefully thought it through, so he really wanted
Speaker 5: to deliver a message that this is a standalone product
Speaker 5: as well as being part of the infrastructure. You remember,
Speaker 5: previous versions have been sort of integrated into and videos.
Speaker 4: One of six chips.
Speaker 5: Right now, Hey, you can use it on your own
Speaker 5: if you want. And that makes it a direct rival
Speaker 5: to some big real.
Speaker 2: Quick carrot a m D under pressure, Intel also under pressure.
Speaker 4: Is that a surprise?
Speaker 5: It shouldn't be, no, right thinking.
Speaker 3: We thank you so much for breaking down a really
Speaker 3: important story for us. And look there's another one in
Speaker 3: the world of AI semic conductors. Microsoft is rolling out
Speaker 3: the second generation of its own AI chip. So see
Speaker 3: shares up about a percentage point, not moving much on
Speaker 3: the news that is just dropping and Rooomberg's Matt Day
Speaker 3: is a person who covers Microsoft for US breaks that news.
Speaker 3: How important is it that yet another company is building
Speaker 3: their own AI chips.
Speaker 4: Well, for Microsoft, it's it's really important.
Speaker 6: They've got a bit later jump than their biggest rival
Speaker 6: of Amazon and Google and building their own. So can
Speaker 6: they see this as an important way to reduce costs
Speaker 6: to find another source of availability. So it's going to
Speaker 6: be a really really big test for their chips unit
Speaker 6: and for the cloud business.
Speaker 2: We write in our in our Bloomberg story that it
Speaker 2: could eventually provide an alternative right to Nvidia's hardware. But
Speaker 2: the reality is, like all the other hyperscalers, Microsoft still
Speaker 2: depends on Nvidia. Just explain its scale of its compute
Speaker 2: and what it does rely on Nvidia four.
Speaker 6: So in Vidia is the workhorse that powers, you know,
Speaker 6: the vast, vast majority of the AI workloads in Microsoft's
Speaker 6: data centers. You know, if you're using open AIS as
Speaker 6: a ch GPT consumer, chances are you're pinging and in
Speaker 6: video chip running in some Microsoft data center somewhere.
Speaker 7: You know.
Speaker 6: Now, like everybody in the industry, Microsoft would love to
Speaker 6: have some other options. Hence this effort with Maya to
Speaker 6: try to build a better mouse trap, one more suited
Speaker 6: for their data centers and one that ideally could could
Speaker 6: reduce some of their costs in the long term.
Speaker 3: Tell us how it's rolling out, where it's rolling out first,
Speaker 3: and ultimately when customers going to be using it.
Speaker 4: So it's not clear when customers are going to get
Speaker 4: their hands on this.
Speaker 6: The first units are live today, Microsoft tells us in
Speaker 6: data centers near Des Moines, Iowa. More coming to the
Speaker 6: Phoenix area, but we don't have a date yet for
Speaker 6: what a wider rollout looks like, or you know, sort
Speaker 6: of crucially, what availability looks like. Because it's going to
Speaker 6: be a global rollout. Is this more of a kind
Speaker 6: of R and D step and future chips are going
Speaker 6: to are going to sort of carry the mail for them,
Speaker 6: So kind of yet to be seen how how broad
Speaker 6: they take this one.
Speaker 2: Lumbo's Matt Day out of Seattle with the latest on
Speaker 2: Microsoft's latest day I chip efforts. Let's talk through the
Speaker 2: market reactions all of this with Kim Forrest, cio and
Speaker 2: founder of Bouquet Capital Partners, and go back to the
Speaker 2: Nvidia Core Weave deal. You know it's a driver in
Speaker 2: markets this morning. The explanation from Nvidia CEO Jensenong is
Speaker 2: that it is not circular financing because it is a
Speaker 2: small portion of core Weave's overall capital requirements. Are you
Speaker 2: concerned about that? And what do you make of his response?
Speaker 8: Sure, well, of course it's circular financing. You know core
Speaker 8: Weave as well as everybody else. Even Microsoft is a
Speaker 8: big customer of NVIDIAs. So if Nvidia is investing in
Speaker 8: its customers, by definition, it's circular financing. It is a
Speaker 8: good point that, you know, two billion is probably a
Speaker 8: rounding error for Nvidia at this point. But it's also
Speaker 8: true that core weave has to prove itself to the
Speaker 8: market and raise its own money.
Speaker 2: Kim, We're saying circular financing the term as a bad word,
Speaker 2: bad phrase, is it right?
Speaker 4: Yeah? Kind of?
Speaker 8: You know, Jensen points out that core Weave is going
Speaker 8: to be one of their references accounts. What you ideally
Speaker 8: want is in a reference account is somebody that has
Speaker 8: worked with you is kind of pure and it has
Speaker 8: no inside kind of relationship with what they're recommending other
Speaker 8: than they use the product, they love the product, and
Speaker 8: you know, this kind of sullies the relationship the core
Speaker 8: We've had so much investment from the company that they're
Speaker 8: giving a reference.
Speaker 3: For Meanwhile, many would say it's just because we cannot
Speaker 3: build compute fast enough. And in many ways, Nvidia more
Speaker 3: than anyone, sees the opportunity, and it's just piling money
Speaker 3: behind this to be able to get the end demand
Speaker 3: that it needs for the products that's currently building. Can
Speaker 3: are we likely to see through these sorts of technological
Speaker 3: partnerships as well as financial partnerships actually us get the
Speaker 3: compute out of the cype of speed that we need.
Speaker 8: Sure well, you know we're going to see them until
Speaker 8: we don't. I'm not trying to rain on anybody's parade,
Speaker 8: but at this point it's all kind of you know,
Speaker 8: up in the air. Right now. There is a huge
Speaker 8: demand for compute, but like everything else in the world,
Speaker 8: somebody's going to overbuild and it's gonna, you know, be
Speaker 8: jarring and disappointing. I'm not saying that that's any time
Speaker 8: in the future. I'm just pointing out the obvious that
Speaker 8: you know, Yes, this is a very symbiotic world with
Speaker 8: customers and providers and competitors all kind of working in
Speaker 8: the same pool. It's messy and it's like real life
Speaker 8: because it is. But you know, just be warned that
Speaker 8: this is not trees don't grow, you know, well, trees
Speaker 8: grow into the sky, but not forever.
Speaker 3: Put it that way, Well, they're not going into the
Speaker 3: sky today for Intel and AMD because both of them
Speaker 3: under pressure that maybe his Jensen coming for their piece
Speaker 3: of the pie, the CPU part of the pie that
Speaker 3: everyone was very excited for them. Indeed, intell of late
Speaker 3: and they run up in their stock. Does ver brand
Speaker 3: the CPU on its own prove that it's a key
Speaker 3: competitive to them too?
Speaker 8: Well, I think at first it's going to work in
Speaker 8: its own environment, and it may become a competitor, sure.
Speaker 8: I mean, I think the takeaway from all these announcements
Speaker 8: over the last I don't know, forty eight hours is
Speaker 8: that everybody's innovating, and that is excellent. I love competition.
Speaker 8: I'm a capitalist, innovate, try to outcompete, do it live
Speaker 8: that way. But the fact of the matter is the
Speaker 8: CPUs that are the workhorses and just plain old cloud
Speaker 8: computing aren't necessarily going to be interesting or aren't necessarily
Speaker 8: going to look to Nvidia. And Vidia loves the highest
Speaker 8: priced product. That's what it does. And I'm sorry. The
Speaker 8: workhorse people need reliability, they need it to look the
Speaker 8: same across their platform. They need a lot of stuff
Speaker 8: that a new CPU chip isn't necessarily going to be
Speaker 8: interesting to them. Now in the world of AI data centers, sure,
Speaker 8: but in the old fashioned ones that are going to
Speaker 8: have to persevere for decades, I don't know that that's
Speaker 8: really a competitor in video.
Speaker 2: That's an interesting observation because the GPUs and the AI
Speaker 2: context are on base, and so if you're running those
Speaker 2: GPUs of x eighty six, you're gonna have to do
Speaker 2: some special software work to make the match. Let's put
Speaker 2: us one side. It is a massive week in the
Speaker 2: world of technology from earnings alone, we also have a
Speaker 2: FED meeting on Wednesday. Of those names that are reporting
Speaker 2: this week, what are you most concerned about and what
Speaker 2: do we need to be looking for in the earnings context?
Speaker 8: Well, you know, what, how are things looking in the future.
Speaker 8: I don't really even care about how things looked for
Speaker 8: last quarter. I have to tell you I'm looking for
Speaker 8: the next six months, and I think especially on more
Speaker 8: consumer leaning things like Apple, that might be you know,
Speaker 8: the focal point for all investors is what new products
Speaker 8: are driving consumers to the company and are they meeting demand.
Speaker 8: That whole thing about how in demand are consumer items.
Speaker 8: Microsoft has a little special issue. I think there's a
Speaker 8: lot of concern that AI maybe Claude is going to
Speaker 8: replace a lot of software packages that make businesses run.
Speaker 8: I don't know how true that is, but I think
Speaker 8: we're going to get a glimpse into how popular or
Speaker 8: you know, whether or not businesses are paying up for
Speaker 8: enterprise licenses, and that's always a concern.
Speaker 3: Kim forest Cio, founder of Boka Capital Partnius, thanks for
Speaker 3: joining us across the spectrum of earning xance semis today.
Speaker 3: Coming up, going to the world of quantum I on TUCU.
Speaker 3: Niclode Massi is going to be joining us. How his
Speaker 3: company has just bought yet another quite the acquisitions free
Speaker 3: we talk about why once they get into semi conductors
Speaker 3: dis agree bay Tech iron Q Well, it's agreed to
Speaker 3: buy US based chip foundry Skywater Technology for around one
Speaker 3: point eight billion dollars. Shares on the downside for r
Speaker 3: Q now they have been up earlier, we're seeing Skywater
Speaker 3: up more than five point eight percent. It's cash and
Speaker 3: stock deal and it's the largest in quite the string
Speaker 3: of recent acquisitions by the quantum computing firm. I and Q.
Speaker 3: Let's talk to its CEO now, Niccolo de Massi. What
Speaker 3: does having a US based chip foundry add to the
Speaker 3: speed of your own technology.
Speaker 9: It actually does three exciting things for ian Q. The
Speaker 9: first is that it accelerates.
Speaker 10: Our entire roadmap.
Speaker 9: So we talked this morning on a public webinar sort
Speaker 9: of earnings call style about the fact that it's going
Speaker 9: to bring in the cycles of R and D design
Speaker 9: and packaging iteration we do to build our quantum computing
Speaker 9: chips and hence our full fault tolerant machines quite considerably.
Speaker 9: We're moving things in by about a year on our
Speaker 9: two million cubic chip, and we're moving full fault tolerant
Speaker 9: chips forward into twenty twenty eight, where we'll have them
Speaker 9: ready for scale up by the end of the year.
Speaker 9: What's exciting also is this is a big bet for
Speaker 9: us on what's called the merchant.
Speaker 10: Supplier play in the quantum industry.
Speaker 9: So IMQ already sells our atomic clocks to a number
Speaker 9: of quantum computing companies in the US. This is going
Speaker 9: to expand our ability to supply the quantum industry. Our
Speaker 9: photonic interconnect quantum networking business is also built to cater
Speaker 9: for multiple quantum computing paths and modalities. And last, but
Speaker 9: not least, of course, it's a big spread bet on
Speaker 9: the US semi country manufacturing tailwind that I think is
Speaker 9: already being experienced for critical industries as we rethink through
Speaker 9: supply chains, security and the important of keeping everything domestic
Speaker 9: insured security.
Speaker 3: Does that help build and leverage the relationships you already
Speaker 3: have with the US government, for example, is that an
Speaker 3: area that you think is going to drive growth?
Speaker 10: Oh? For sure.
Speaker 9: The US Government's a very important partner in the Department
Speaker 9: of War, of course, is very important.
Speaker 10: Skywater obviously does a lot.
Speaker 9: Of work not only for the quantum industry as a whole,
Speaker 9: where I would argue they are far and away the leading,
Speaker 9: if not only quantum foundry, but Scott Ward also does
Speaker 9: work more broadly in classified programs, as does I INQ
Speaker 9: and so there's plenty of synergies on that vector alone.
Speaker 9: We look forward to doing more for our nation's government
Speaker 9: classified and not We look forward to doing more for
Speaker 9: our nation's fortune five hundred companies. And this is a
Speaker 9: relationship really excited about because it increases the velocity and
Speaker 9: the frequency with which we can spin across all of
Speaker 9: our product generations, which means the further out we're talking,
Speaker 9: the more room there is to move things forward. And
Speaker 9: you're seeing us continue to spend money to move things
Speaker 9: to the left on our roadmap and win this geopolitical
Speaker 9: space race of our era.
Speaker 4: Nicola continuing to spend money.
Speaker 2: There's a lot of emphasis that this is Skywater with
Speaker 2: US only operations. Do you look at Europe and other
Speaker 2: jurisdictions and give yourself backing to go out and do
Speaker 2: another deal if you need to have a similar footprint
Speaker 2: and presence in a different market or geography.
Speaker 9: Well, Skywater has a tremendous amount of upside capacity that
Speaker 9: we can tap into here, not just on the design
Speaker 9: engineering side, but on actual manufacturing. So we did this
Speaker 9: deal because we believe that manufacturability is paramount. Our ambition,
Speaker 9: as I think you both know, is to be both
Speaker 9: the Nvidia and the Cisco if you will, of the
Speaker 9: quantum computing and quantum networking in security space, and so
Speaker 9: our full quantum platform networking, sensing, security and computing all
Speaker 9: has foundry requirements, all has sem country manufacturing requirements. What
Speaker 9: this deal does is it improves certainty, brings forward the roadmap,
Speaker 9: and of course make sure that we have industry leading costs.
Speaker 9: So I think this is going to be enough capacity
Speaker 9: for global production. Skywater focuses on high security, classified program
Speaker 9: work and US government work, and that's usually a standard
Speaker 9: that's accepted very internationally for the Five Eyes, NATO and
Speaker 9: our allies.
Speaker 4: Nikolo.
Speaker 2: In the global quantum race, how do you stack the
Speaker 2: US as a leader in field against the prospects of
Speaker 2: Europe and what you see being worked on in Asia.
Speaker 9: Well, I fancy I Inq's chances, you know most, And
Speaker 9: first of all, I think that beyond I INQ, there's
Speaker 9: a very vibrant ecosystem in the US, and of course
Speaker 9: there is in Europe. The geopolitical race is I think
Speaker 9: very much between the US and our allies and what's
Speaker 9: going on in China, to be honest, and this is
Speaker 9: of course of paramount strategic importance, not just on the
Speaker 9: computing side, but also on the quantum security side.
Speaker 10: These are all solutions that I INQ provides.
Speaker 9: We're the only quantum platform company in history, and as
Speaker 9: you both know, we already have a strong foothold in Oxford, England, Geneva,
Speaker 9: Switzerland and Soul Korea with our offices that continue to
Speaker 9: expand to ensure that we're able to not just deliver
Speaker 9: those solutions, but deliver them in the right global and
Speaker 9: local way across government and commercial needs in every one
Speaker 9: of our allies.
Speaker 3: Well, that was the other big deal that you did,
Speaker 3: Oxford Ionics, quantum chip technology that you're purchased, and I'm
Speaker 3: interested in how the relationships though, going back to Skywater
Speaker 3: are going to continue because they also serve other quantum
Speaker 3: competitors of yours. Will they continue to do so?
Speaker 9: Absolutely, We are steadfastly dedicated to ensure that the quantum
Speaker 9: industry prevails. We respect everyone's pathways to market. At the
Speaker 9: same time, as I mentioned a couple of minutes ago,
Speaker 9: I Inq already is a merchant supplier on our own.
Speaker 9: We supply atomic clocks and photonic interconnects to the industry
Speaker 9: and networkain equipment, and so Skywater will be taking our
Speaker 9: existing merchant supplying business and accentuating, deepening and broadening that
Speaker 9: with of course their chip's business. So rest assured, we
Speaker 9: see this very much as a bet on us quantum,
Speaker 9: our allies quantum. The quantum industry's supply chain needs doing.
Speaker 9: Those fulfilling those securely and a scale, and at the
Speaker 9: same time in a walled off manner.
Speaker 10: I Inq's own roadmap, of course, will.
Speaker 9: Also be accelerated and if supply chain domestically assured.
Speaker 2: Nicolo very quickly, you said that this brings things forward
Speaker 2: by a year. There are people that just aren't familiar
Speaker 2: with quantum computing. How real is this going to be
Speaker 2: in the real world.
Speaker 9: And well, we've been saying since we completed the acquisition
Speaker 9: of Oxford Ionics that full tolerant gate model quantum computing
Speaker 9: is going to happen by the end of this administration.
Speaker 9: This transaction obviously accentuates that, underwrites that, and assures that.
Speaker 9: And so I think you're going to see in the
Speaker 9: next three years everything that we have promised on our
Speaker 9: roadmap come good and hopefully then some The reason why
Speaker 9: this is so exciting for us is that with Skywater,
Speaker 9: we can make quantum computing a mass market reality, and
Speaker 9: we can do that at a price point that's accessible
Speaker 9: not just for governments but also Fortune five hundred companies.
Speaker 9: And that's very much our goal to build the winning
Speaker 9: quantum ecosystem across all solutions and product family offerings. That
Speaker 9: I INQ have security, sensing, networking and computing.
Speaker 2: I on Qceo, Niccolo Demasi, is great to have you
Speaker 2: back on the show.
Speaker 4: Thank you very much. The precious.
Speaker 2: Building on crop AI and Elon Musk's AI chatbot, the
Speaker 2: European Union says it's probing X over concerns that it
Speaker 2: didn't prevent its chatbot from generating deep fake images that
Speaker 2: quote may amount to child sexual or boost material. Bloomberg's
Speaker 2: London based tech editor Olivia Solan joins us, Olivia, what's
Speaker 2: they need to know here from the EU probe kind
Speaker 2: side of this?
Speaker 7: Well, it's another day another investigation into X from the EU.
Speaker 7: This time, yeah, it was about whether or not they
Speaker 7: did ex died a sufficient risk assessment to prevent harmful
Speaker 7: outputs from GROC before deploying it across the EU. This
Speaker 7: is a legal requirement under the Digital Services Act, which
Speaker 7: is a kind of set of rules around illegal and
Speaker 7: harmful content. And so yeah, there's quite a long list
Speaker 7: of investigations of X at the moment within the EU,
Speaker 7: but this certainly adds to it.
Speaker 3: I mean you mentioned France has also been looking into it,
Speaker 3: ofcom in a UK way you sit India but Olivia
Speaker 3: X's responses, they've taken the necessary steps in some way.
Speaker 3: Of course, it's a unit of XAI. And this again
Speaker 3: builds tensions between the US and the EU in some
Speaker 3: government manner, right.
Speaker 7: I mean, this has been a bit of a flash
Speaker 7: point in a sort of debate over free speech and
Speaker 7: control over big tech between DC and Europe. Clearly, I've
Speaker 7: been kind of checking to see if there's been a
Speaker 7: response so far from either Elon Musk or jd Vance
Speaker 7: or Trump on this particular announcement. So far, I haven't
Speaker 7: seen anything, but I'm sure it'll be something that will
Speaker 7: come up in the coming days. Yeah, the Trump administer
Speaker 7: Dictoration has been very critical of this, of the EU
Speaker 7: in police trying to police content on these platforms.
Speaker 4: Speech violation.
Speaker 2: We just showed xce's statement, but it was a previous
Speaker 2: statement on how they go about removing illegal content, including.
Speaker 4: Child sexual abuse material.
Speaker 2: Very quick fifteen second, as does the EU probe have teeth?
Speaker 4: It does.
Speaker 7: I mean, they can find as much as six percent
Speaker 7: of global and your revenue if it's found to be
Speaker 7: in violation of the DSA.
Speaker 3: And already they are hot on the heels of a
Speaker 3: separate one hundred and twenty million euro EU penalty coming
Speaker 3: access way. Previously bloom Beg's Olivia So long, breaking all down,
Speaker 3: We thank you so much. Look coming up defense docks.
Speaker 3: They're on the higher side of fact. They soared as
Speaker 3: governments ramp up spending on heightened geopolitical tensions. Were on that.
Speaker 3: Next this is Bloomberg Tech.
Speaker 4: Welcome back to Bloomberg Tech.
Speaker 2: We're halfway through the show, and it's a big week
Speaker 2: in the world of technology.
Speaker 4: When it comes to earnings.
Speaker 2: Tesla, which reports on Wednesdays, currently the lag it down
Speaker 2: two percent, but it's a bit of a calendar to track.
Speaker 11: Now.
Speaker 2: Apple's the most interesting, up almost three percent. Actually, it's
Speaker 2: on track for its biggest jump since October. People have
Speaker 2: been passing the third party data. There are lots of
Speaker 2: analysts out there that have said, by the recent dip
Speaker 2: because it might be better in China than we first thought.
Speaker 2: When it comes to Apple, of course, you move past
Speaker 2: that moment in time carry that is earnings, particularly the
Speaker 2: court of gone and people want to know what's happening
Speaker 2: with Siri, what's happening with the AI version of Siri.
Speaker 2: Mark Gumman has done a lot of reporting on that,
Speaker 2: of course, but until the company says something material, that's
Speaker 2: still what the hopes and expectations of the street resting.
Speaker 4: What are you looking at it?
Speaker 3: That's an alphabet story too, isn't it. But I'm going
Speaker 3: to pivot away from the earning story just for a moment, ed,
Speaker 3: because we've got to talk about gibilitical tensions. We have
Speaker 3: seen the effect it's had on defense docks. They saw
Speaker 3: is you see in fact, the sector gained nearly we'll
Speaker 3: see forty four percent you've seen in the last one year. Basis,
Speaker 3: military contractors are cashing in as governments a wrap up
Speaker 3: the spending on fighter jets, Yes, on missiles, but also
Speaker 3: so tech areas drones. And some investors really say that
Speaker 3: the rally is just getting started here with more as
Speaker 3: Bluemberg Equities Reporter, a Venice, Vanilla, Ramos and Avelie. Is
Speaker 3: it sustainable? What are we expecting in terms of revenue growth,
Speaker 3: profitable growth, fundamental growth on these earnings?
Speaker 12: Sure, Caroline, thanks so much for having me. And yes,
Speaker 12: political developments are definitely a mayor driver of this sentiment.
Speaker 12: You know, the rally is driven by expectations that the
Speaker 12: sustain increases and.
Speaker 4: Global defense spending.
Speaker 12: Uh, this geopolitical instability, shifting alliances, ongoing conflicts are going
Speaker 12: to sort of like, you know, boost more this rally
Speaker 12: and continue this rally, and then these earnings this week
Speaker 12: are going to be really a test to what can
Speaker 12: actually happen. And you know, the Aerospace and Defense sex
Speaker 12: index is rising or rose about forty two percent last year,
Speaker 12: you know, pacing a little bit of the broader market.
Speaker 12: Analysts are concern about certain things. You know, these stocks
Speaker 12: are in the political cross heres, just to get it
Speaker 12: that way, definitely, the well, the other concern.
Speaker 2: Is, yeah, sir, let's do a bit more on the
Speaker 2: political process. When Caroline and I were in Las Vegas
Speaker 2: for CEES, the President on true social was very clear
Speaker 2: ahead of an executive order that he wasn't happy about
Speaker 2: defense company compensation, the compensation the CEOs at the head
Speaker 2: of these primes because they weren't delivering. That seems in Congress.
Speaker 2: With the massive run up in those stocks.
Speaker 12: Sure, I mean, the the investor confidence right now, and
Speaker 12: that's very interesting. But the investor confidence right now when
Speaker 12: momentum is sort of like these companies are growing a
Speaker 12: little bit faster than what they the sort of like
Speaker 12: classic thought about or behind the defense stocks usually is
Speaker 12: or was, because a lot of these companies are moving
Speaker 12: into the technology play. There's a lot you know, modern
Speaker 12: warfare is increasing, there's relying on more reliance on drones,
Speaker 12: on AI, on events, sensors, software, missile defense system. So
Speaker 12: once all these companies are sort of like tapping into that,
Speaker 12: investors continue to be a little bit more positive on
Speaker 12: this side.
Speaker 3: And that is exactly why we have you on. Because
Speaker 3: of the tech focus that these businesses are having. We'll
Speaker 3: watch out for their earnings. Bloomberg's earlies, Vanilla Ramas, thank
Speaker 3: you so much for joining us. Meanwhile, US turn to
Speaker 3: wintry weather. It is blanketed most of the United States.
Speaker 3: It's leaving lingering effects too. Power grids, they're expected to
Speaker 3: endure increased stress from really brutal cold in the wake
Speaker 3: of the damaging winter storms. Get this, more than eight
Speaker 3: hundred thousand homes and businesses nationwide are currently without power,
Speaker 3: and this is Concerns already have been growing around the
Speaker 3: US's power grids resilience in the face of rising AI
Speaker 3: power demands. No Ma's power Natural Gas reporter Laurine Malik
Speaker 3: has been very busy this weekend reporting all of this out.
Speaker 3: What's the effect on prices.
Speaker 13: Yeah, prices got really high yesterday. Weekend is usually a
Speaker 13: lull for prices, and we saw prices around like one
Speaker 13: thousand dollars this morning. The Texas grid in like West Texas,
Speaker 13: where they're usually lower, was like two thousand dollars right
Speaker 13: And in Dominion in northern Virginia where there is that
Speaker 13: concentration of data centers, we got to like one thousand
Speaker 13: dollars as well. Spot prices are a little lower because
Speaker 13: real time demand seems to be affected by school closures
Speaker 13: and businesses just everyone working from home. But it's going
Speaker 13: to be an extended cold and that's what's most concerning
Speaker 13: right now.
Speaker 2: Gnorin out here on the West coast, we're used to
Speaker 2: a very similar story, but the opposite right in the summertime,
Speaker 2: extreme heat, the grid being under pressure and either the
Speaker 2: utility can or count cope. What is it like from
Speaker 2: a technology perspective or just operations perspective, that the grid
Speaker 2: can actually do to managing cope in scenarios like the
Speaker 2: extreme coal we've seen and weather on the East coast.
Speaker 13: Yeah, I think what's interesting about the East coast and
Speaker 13: even down to Texas is they've also become winter peaking grids,
Speaker 13: not just summer like California, and so they're basically trying
Speaker 13: to take out all stops. You've had the Energy Department
Speaker 13: grant authority to Texas, New England and PJM, which is
Speaker 13: the largest grid that stretches from the mid Atlantic to
Speaker 13: the Midwest. They've granted them authority to run power plants
Speaker 13: basically all out, irrespective of like emissions limits. The DOE
Speaker 13: also told erkat the Texa Grid Operator that they can
Speaker 13: use backup generators at data centers and factories to supply
Speaker 13: the grid, and last night PGM had a call with
Speaker 13: members to tell them that hey, we're going to We're
Speaker 13: putting in place measures to also do the same to
Speaker 13: use data centers in lieu of blackouts if things got
Speaker 13: that bad right now, they're expecting to have enough power.
Speaker 3: Who bears the price? Who bears the cost right now?
Speaker 13: Ultimately the consumers. Everything is passed on to consumers. How
Speaker 13: quickly will depend on your utility rate, but wholesale prices
Speaker 13: are often a pass through.
Speaker 2: Cost alec Bloomberg busy weekend for you across what is
Speaker 2: an astonishing visual story as well.
Speaker 4: Thank you very much.
Speaker 6: Coming up.
Speaker 2: Base ten CEO two he in Srivastava, and one of
Speaker 2: its back is Convictions Sarah Guard.
Speaker 4: They join us.
Speaker 2: As the startup more than doubles its valuation. We had
Speaker 2: the details next confirmation of that round. This is Bloomberg
Speaker 2: Tech AI inferant startup Base ten Labs has raised three
Speaker 2: hundred million dollars. The funding round lifts base tense valuation
Speaker 2: to five billion dollars, more than doubling what it was
Speaker 2: just six months ago. Based ten, CEO two in Shriver
Speaker 2: Starva and Conviction founder and partner Saraguar, who participated in
Speaker 2: that round, join us here in San Francisco. I've been
Speaker 2: using a number of generative AI tools this morning to
Speaker 2: try and distill down what it is that Base ten does.
Speaker 2: I'm going to read you one and you can tell
Speaker 2: me and I won't say what engine was. Base ten
Speaker 2: provides the software and infrastructure that lets companies run AI
Speaker 2: models reliably at massive scale only once they're built. It's
Speaker 2: about being fast, stable, and cost efficient. Is that what
Speaker 2: you do? And why did you need to raise three
Speaker 2: hundred million dollars to do it?
Speaker 14: Yeah?
Speaker 15: Well, the way we think about it is that inference
Speaker 15: is probably the largest market that will ever exist. Yeah,
Speaker 15: I think you see this like amazing set of companies
Speaker 15: like Cursor, a Bridge, Open Evidence, Notion kind of growing
Speaker 15: with the their infront workloads and you know to support
Speaker 15: the scale of these massive companies and you know, we're
Speaker 15: just arming ourselves there. More importantly, the amount of compute
Speaker 15: that we're going to need to support this is going
Speaker 15: to be very large. And again computer is a capital
Speaker 15: intensive business and that's the business we're going after.
Speaker 2: Lots of very interesting participants in the round. And Sarah,
Speaker 2: it's great to have you back on flimbog Tech. I
Speaker 2: was really interest to see Conviction in there, right, you know,
Speaker 2: the size of the round, the valuation is interesting, but
Speaker 2: you're all about helping founders build.
Speaker 4: Up you know at Conviction. Why did you you want
Speaker 4: to do this?
Speaker 11: Well, I'd say this is a very secular bet for us. First,
Speaker 11: we have invested in every round of Base ten since
Speaker 11: inception from my prior firm and then through Conviction, and
Speaker 11: so I think five million actually is a very small number.
Speaker 2: Graylock was your prior firm at Graylock.
Speaker 11: And then at Conviction, my current firm, five million dollars
Speaker 11: is a very small number compared to the opportunity ahead.
Speaker 11: I genuinely believe that, and so you know, we're we're
Speaker 11: looking at the difference when we make that investment. But
Speaker 11: I think from a broader perspective, in Nvidia and Base
Speaker 11: ten and Conviction, we have the same vision for what
Speaker 11: needs to happen to enable all of these AI native startups.
Speaker 4: Inference engineering URL.
Speaker 11: As a service, the optimization of models to make them
Speaker 11: cheap and efficient to run. These are like the three
Speaker 11: hottest jobs in AI right now. And one one thing
Speaker 11: Based ten does is take these capabilities and use in
Speaker 11: video capacity and make them available to everyone rather than
Speaker 11: just the labs.
Speaker 3: Let's talk there for a little bit to him about
Speaker 3: you said, you're arming yourself for this opportunity, and inference
Speaker 3: in video is interested in investing. But how much do
Speaker 3: you end up using technology competing against Where do you
Speaker 3: see the future of what it is that you're solving for.
Speaker 15: Yeah, Look, we've been partnered with in video for you know,
Speaker 15: almost five years now. They're you know, they're a big
Speaker 15: part of the future. We you know, we work really
Speaker 15: really closely with the chips. They provide. We don't see
Speaker 15: them as a competition. Honestly, we think everything's cab of
Speaker 15: a writing diet, and we want to we want to
Speaker 15: work with the you know, the biggest and best players
Speaker 15: and customers and suppliers and vendors and technologies, and in
Speaker 15: video is a big part of that.
Speaker 3: Sarah to that point. It's an interesting amount of news
Speaker 3: we've had around in video today, whether or not it's
Speaker 3: another what people call circular financing, deal backing call weave,
Speaker 3: buying stock, indeed talking about a CPU, and indeed we've
Speaker 3: seen Microsoft announcing yet another CHIPAI version for themselves too.
Speaker 3: How does this bear out? Does everyone win? Are they
Speaker 3: going to be select winners? Well?
Speaker 11: I think so far it looks like in Video is
Speaker 11: a pretty strong winner at the chip level. I do
Speaker 11: think that there are enormous investments in accelerators, particularly at
Speaker 11: deep Mind, but there are other legitimate efforts as well,
Speaker 11: and I think it all speaks to the overall demand
Speaker 11: in this market. The reason people are making these really
Speaker 11: strong investments in other chips is because they're going to
Speaker 11: go spend billions and tens of billions and hundreds of
Speaker 11: billions of dollars trillions if you listen to Sam against
Speaker 11: this compute over the next decade, right and so I
Speaker 11: think the question of winners is the problem today is
Speaker 11: just meeting the demand, and all of these players are
Speaker 11: trying to come up with alternatives less about cost and
Speaker 11: more about creating more supply.
Speaker 2: I enjoy reading about and learning about Base ten. There's
Speaker 2: a section on your website where you break down pricing
Speaker 2: and I don't know that might seem really mundane to
Speaker 2: both of you, but you basically have payers, you go
Speaker 2: at the low end right through to enterprise level deals.
Speaker 4: Explain that kind of strategy.
Speaker 2: You know, we've discussed with Cursor, the idea of per
Speaker 2: desk versus payers you go. It's actually a very interesting model.
Speaker 15: Well, I think pay as you go pricing is fully
Speaker 15: align to ourselves with our customers. So we are only getting.
Speaker 4: Made who are they are? Who are our customers?
Speaker 15: So I think about the fastest growing AI companies in
Speaker 15: the world, so anywhere from a Bridge, Open Evidence, Cursor,
Speaker 15: no Sha, Gamma, Clay, all these companies that you've covered.
Speaker 15: I'm sure over the last year these companies are going
Speaker 15: incredibly fast, and you know they are using a lot
Speaker 15: of inference and by aligning ourselves on a pay as
Speaker 15: you go model. We only make money, you know, when
Speaker 15: they are getting value out of the models that they
Speaker 15: are training for their customers. And so that's actually a
Speaker 15: very important part of our business. We think it's a
Speaker 15: very important part of the ecosystem. And it's all about
Speaker 15: being a long term partner to the best companies in
Speaker 15: the world.
Speaker 3: And Sarah, what gives you the confidence this doesn't get
Speaker 3: commultitized or at least how sticky all customers When it
Speaker 3: comes to inference.
Speaker 11: I think training is a job by job sort of
Speaker 11: buy right. Inference has the stickiest characteristics of any business
Speaker 11: I've ever seen. Right and so, you know, without giving specifics,
Speaker 11: the NDR on base ten is through the roof and
Speaker 11: we see customers. They come with us, they scale with us.
Speaker 11: They don't want to take on this enormous engineering burden
Speaker 11: of you know, these different specializations I described like the
Speaker 11: labs want the kernel engineers too.
Speaker 4: They're very expensive.
Speaker 11: Managing across ten different clouds is very expensive owning your
Speaker 11: own capacity. You know, Ed was just talking with two
Speaker 11: about the pay as you go versus the CAPEX upfront model.
Speaker 11: The application winners, they don't want that they want to
Speaker 11: go after new business and creating value for users.
Speaker 2: There's a lot of energy in your industry. Still really
Speaker 2: cool to have you both both here in person. Deal
Speaker 2: flow hasn't slowed down at all. I wondered what the
Speaker 2: talent story is right now. Sarah's talking about the three
Speaker 2: kind of core roles hottest jobs. I'm assuming that a
Speaker 2: chunk of that three hundred million reflects the capital intensity
Speaker 2: of talent right now as well.
Speaker 15: Yeah, we look, we've been very lucky to be able
Speaker 15: to attract really great.
Speaker 4: Talent up until now.
Speaker 15: That being said, as Sarah said earlier, like the folks
Speaker 15: that we are going after are very very in demand.
Speaker 15: There is you know, if you think about influence being
Speaker 15: this massive market, and there's big systems engineering and kernel engineering
Speaker 15: problem that needs to be solved, and probably there's you know,
Speaker 15: sub on thousand people in the world have solved this
Speaker 15: at scale. Yes, they're just going to be very aggressive
Speaker 15: and you know, to win the ultimate prize for us,
Speaker 15: which is you know, being the inference cloud, the aws
Speaker 15: for inference, that target, it's a big target to have,
Speaker 15: and yeah, we need to be able to get that talent.
Speaker 2: Sarah, I also know you as kind of Sarah the
Speaker 2: operator not necessarily just right writing check. Yes, we've been
Speaker 2: talking about is circular financing a bad word, for example
Speaker 2: with in Video and core Weave, But like, is there
Speaker 2: an opportunity here for you to look at the rest
Speaker 2: of your portfolio and your historic investments and say to
Speaker 2: some of these companies like you guys should work together.
Speaker 4: What's the reality of that.
Speaker 11: Well, I'd say base ten does have a lot of
Speaker 11: customers they've won within the portfolio, and one of the
Speaker 11: things that we do at small scale that's very related
Speaker 11: to this in Nvidia move of enabling its ecosystem and
Speaker 11: its customers is have an incubator. Base ten is a
Speaker 11: contributor to that. They give credits to startups. They're offering
Speaker 11: their expertise to these companies. We give people compute upfront
Speaker 11: as well, and it's to reduce the barrier to entry
Speaker 11: for the next generation of application companies. This program is
Speaker 11: called embed and I think our entire investment is we
Speaker 11: want to see more of these AI native application companies win,
Speaker 11: which base ten does and in Video does too.
Speaker 2: Two instru Vistava based ten CEO Conviction founder Sarahua, It's
Speaker 2: great to have you both here in San Francisco.
Speaker 4: Thank you very much.
Speaker 2: Carry There are so many more tech headlines out there today.
Speaker 3: Boy, are there and around compute and such. We're talking SoftBank. First,
Speaker 3: it stopped talks to buy data center operator Switch.
Speaker 2: Now.
Speaker 3: That's according to sources. The company has been pursuing Switch
Speaker 3: for months, offering as much as fifty billion dollars, but
Speaker 3: the deal would have helped build out soft Bank Stargate
Speaker 3: AI infrastructure. Discussions continue, though, for a partial investment or
Speaker 3: a partnership.
Speaker 4: Plus.
Speaker 3: Samsung is getting close to securing a certification from Nvidia
Speaker 3: for its latest AI memory chip, the HBM four. Sources
Speaker 3: say the South Korean company has entered the final qualification
Speaker 3: phase after supplying samples to the US chip maker in September.
Speaker 3: Samsung is said to be preparing mass production for the
Speaker 3: HBM four in February, and shares of USA rare earth
Speaker 3: there surgeon. The company entered a non binding letter of
Speaker 3: intent with the United States Commerce Department form boy six
Speaker 3: billion dollars in funding in exchange for sixteen point one
Speaker 3: million shares and warrants. Now. The company also raised one
Speaker 3: and a half billion dollars in private investment to accelerate domestic,
Speaker 3: heavy rare earth production.
Speaker 14: From Wall Street to rural America. Today's AI is the economy,
Speaker 14: and markets have priced it like a miracle that can't fail.
Speaker 12: Barth.
Speaker 16: Investors are really banking on incredible growth Microsoft Meta Alphabet.
Speaker 16: They are just committing billions and billions of dollars to
Speaker 16: capital expenditures.
Speaker 14: But in this burgeoning industry, what goes around doesn't necessarily
Speaker 14: come around. A precarious investment strategy is emerging.
Speaker 4: Multi billion dollars circular deals.
Speaker 6: Huge, huge sums of money are just being passed between
Speaker 6: these enormous companies, appouring hundreds of billions of dollars into
Speaker 6: the promise of II.
Speaker 14: And the promise is huge.
Speaker 5: So this is a structural shift, like electricity or the internet.
Speaker 14: But AI, with all its potential, remains largely unproven for profitability.
Speaker 17: Probably the biggest question in Cisco right now is are
Speaker 17: we in an AI bubble? And if we are, then
Speaker 17: well how big is this bubble and how bad would
Speaker 17: it be if and when it does burst?
Speaker 14: So is this the dawn of a new age of
Speaker 14: AI powered growth or the biggest bubble ever?
Speaker 2: You can watch the full episode of that Bloomberg originals
Speaker 2: place on YouTube and Bloomberg dot Com. We have another
Speaker 2: alleged example of circular financing just today in Video and
Speaker 2: investing another additional two billion into core Weave in Video
Speaker 2: co Jensen onong saying that it is ridiculous to call
Speaker 2: it circular financing because it is just a tiny portion
Speaker 2: of what Core Weave's going to have to raise overall,
Speaker 2: and it's in line with in Video's other investments. Make
Speaker 2: your own mind up on that. There's also a piece
Speaker 2: on the Bloomberg about how in Video's rally of late
Speaker 2: shows that a year ago Deep Seek fears might be
Speaker 2: a little unfounded, and that is written by Bloomberg's Carmen
Speaker 2: Rhinicky Carmen, great piece, as always data focused.
Speaker 4: What do we need to know here? What are you
Speaker 4: in writing about? Yeah?
Speaker 16: I think the thing that's most important or interesting to watch
Speaker 16: here is how you know a year ago this Deepseek
Speaker 16: news came out and Navidia sold off. You know, almost
Speaker 16: six hundred billion dollars in market value was erased in
Speaker 16: one day, and it looked like maybe the startup or
Speaker 16: maybe a practice run for the AI bubble popping. But
Speaker 16: if you look a year on now, a lot of
Speaker 16: those fears are really unfounded. You know, the stock is
Speaker 16: up nearly sixty percent since then. We've seen it just
Speaker 16: continue to grow revenue, and overall the AI ecosystem has
Speaker 16: also continued to develop. You know, a year ago in
Speaker 16: video was still by and far the kingmaker. It was
Speaker 16: seen as sort of the only show in town when
Speaker 16: it came to chips, and now we're just seeing so
Speaker 16: many more businesses sort of step up, come to the
Speaker 16: plate with their own chips, trying to not be so reliant.
Speaker 16: And then you know, we're also seeing you know, more
Speaker 16: energy and construction and infrastructure stocks kind of come online.
Speaker 16: So while there still are concerns about some of the
Speaker 16: circularity here for sure, and even you know, the deal
Speaker 16: with Corey van Navidia goes deeper than just the most
Speaker 16: recent news, the overall sort of expansion of the AI
Speaker 16: trade is giving bulls sort of more room to run.
Speaker 3: What do we need to see this week? Common For example,
Speaker 3: Microsoft today unveils that it's got yet its second round
Speaker 3: of its own AI accelerator. Pointed maybe it's trying to
Speaker 3: reduce its dependence on an Nvidia, but we're also going
Speaker 3: to see what is capital expenditure looks like how much
Speaker 3: is continuing to invest. That's going to be important for
Speaker 3: Nvidia's numbers that don't come until the end of February exactly.
Speaker 16: Really, the biggest thing I think that investors are watching
Speaker 16: in these big tech earnings that we're seeing over the
Speaker 16: next few weeks is that capax line item. Are these
Speaker 16: companies continuing to grow or say that they're going to
Speaker 16: spend even more. That's really sort of paramount to the
Speaker 16: rest of the AI trade or how it continues to develop.
Speaker 16: And then on the flip side, I think investors will
Speaker 16: also be looking for signs of ROI. Right, we want
Speaker 16: to know that all of this money is going to
Speaker 16: something that it's going to help the bottom line, that
Speaker 16: it's helping efficiency and to drive business forwards. So really
Speaker 16: two big things that we're going to be watching.
Speaker 3: Bloomberg's Common Ryanikee, it's great to have you on. It's
Speaker 3: a great piece that you also are in on Bloomberg Originals. Meanwhile,
Speaker 3: that does it for this edition of Bloomberg Tech Ed.
Speaker 2: Yeah, strong starts of the week. Hero has made it
Speaker 2: through the storm to the studio and there's a lot
Speaker 2: more to come. Recap on the podcast. You know where
Speaker 2: to find it on the Bloomberg platforms, Apple, Spotify, and
Speaker 2: iHeart Online.
Speaker 4: Stick with us this week This Is Bloomberg