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Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: Live from New York Home.
Speaker 3: Caroline Hyde and I'm Jackie Devallis in San Francisco.
Speaker 4: This is Bloomberg Technology. Coming up.
Speaker 5: Apple to spend five hundred billion dollars in the US
Speaker 5: and boost hiring as it seeks relief from Trump's tariffs.
Speaker 2: Plus Microsoft cancels some leases for US data center capacity.
Speaker 5: According to td count analysts, has the company's AI.
Speaker 2: Computing strategy changed.
Speaker 5: We discuss and a look at how Elon Musk's of
Speaker 5: federal worker orders to justify their jobs as dividing the
Speaker 5: Trump administration. But first we check in on markets that
Speaker 5: once again full we were down hard on Friday. We
Speaker 5: continue on the lower side of by nine ten percent,
Speaker 5: bouncing off our lows, but still near the inter day
Speaker 5: woes of the day on the Nasdaq one hundred. Dig
Speaker 5: into what's the point higher and the drags. More broadly,
Speaker 5: Apple has been bouncing around on the back of its
Speaker 5: news that we're currently up six tens percent on the
Speaker 5: juggernaut that is going to be investing five hundred billion
Speaker 5: dollars here in the United States, and they deed adding
Speaker 5: twenty thousand jobs, but less than forty billion per year
Speaker 5: increase on previous spending habits.
Speaker 2: Is this all that new we're going to discuss.
Speaker 5: But Microsoft really the watchword of the day when it
Speaker 5: comes to a point stragger off by more than a
Speaker 5: percentage point. This is as Microsoft is potentially in an
Speaker 5: oversupply position coming to its data center capacity. A Friday
Speaker 5: note from Tdcawen via Channel checks they say they're avoiding
Speaker 5: leases in the US totally a couple of hundred megawatts.
Speaker 5: They're checking on the fact that there might be a
Speaker 5: pullback and converting certain statements of qualification and note today
Speaker 5: they say they may be shifting workloads, reallocating from the
Speaker 5: US from abroad. Microsoft has thus far declined to comment
Speaker 5: on this particular note, but they do reiterate their spending target.
Speaker 5: Let's talk it through with one of the analysts on
Speaker 5: those notes, TD Cowen's Michael Elliots. It is great to
Speaker 5: have you on, Michael and short to us about the
Speaker 5: nuance you have been speaking to potential suppliers here and
Speaker 5: with channel checks what for you discovered, Yes.
Speaker 6: So I flagged for you that going back to September
Speaker 6: of twenty twenty four, we started to identify i's like
Speaker 6: pullback on the part of Microsoft related to activity that
Speaker 6: they had in certain markets in the US that continued
Speaker 6: in October of twenty twenty four, and as we highlighted
Speaker 6: in a report that we published in January, we really
Speaker 6: did see Microsoft take a step back from the market
Speaker 6: in a more meaningful way related to Davis on leases
Speaker 6: that they were in process on, not things that had
Speaker 6: been fined, but things that they.
Speaker 7: Were working on. You know, this is a continuation of that.
Speaker 6: You know, we're seeing them pair bad on some of
Speaker 6: the incremental leasing activity that they previously were contemplating.
Speaker 7: But I really want to emphasize here. You know, as
Speaker 7: we think about the.
Speaker 6: Activity levels of the Microsoft, what we're seeing is we're
Speaker 6: still seeing them being active.
Speaker 7: It seems like we're.
Speaker 6: Seeing a shift in the location in which they're looking
Speaker 6: to take capacity. You know, there's been a talk from
Speaker 6: the Microsoft CEO around inference and the need for to
Speaker 6: generate revenue, and we're seeing them look for capacity in
Speaker 6: and around.
Speaker 7: Their existing cloud availability zones.
Speaker 6: Now I'll leave it to you to interpret, you know
Speaker 6: what that could potentially mean.
Speaker 7: But I want to emphasize that we are still seeing them.
Speaker 6: Be active in the market and in areas where we've
Speaker 6: seen signed leases be impacted.
Speaker 7: It really has more to do.
Speaker 6: With power delays at the facility level rather than a
Speaker 6: wholesale pullback from leases that they had found.
Speaker 3: Michael, our own Bloomberg intelligence analyst, noted this morning that
Speaker 3: this report, along with such Jinadella's comments on a podcast
Speaker 3: last week, suggested that perhaps they're shifting the strategy more
Speaker 3: toward renting rather than building from scratch. How do you
Speaker 3: view this strategy?
Speaker 7: Can you hear me?
Speaker 4: Yes? How would you view the strategy?
Speaker 8: You know?
Speaker 6: So, what I would say to you is that historically
Speaker 6: we've seen a mix of data center leafing and self
Speaker 6: builds be done. It's the two of them are part
Speaker 6: of the go to market around data centers. You know,
Speaker 6: we've seen more leasing historically out of the third party
Speaker 6: data center operators with Microsoft, and we have historically and
Speaker 6: I think that's a function of the accelerated demand needs
Speaker 6: associated with AI. Now, over time, do we think that
Speaker 6: Microsoft could shift more to a self build strategy? There's
Speaker 6: a potential for that certainly as a.
Speaker 7: Bank and accelerate the development pipeline. But one of the.
Speaker 6: Messages that I want to be clear here for your
Speaker 6: views is that we're still seeing broad demand strength in
Speaker 6: terms of overall data center demand. Right we see Microsoft
Speaker 6: is in the market, will be it to a lesser
Speaker 6: degree we're seeing or will be very active, particularly on
Speaker 6: the Hills of Stargate project. We're seeing in terms of Google,
Speaker 6: they're ramping their demands, same with Meta, while Amazon is
Speaker 6: said all in all, we're seeing very strong data center demand.
Speaker 3: That's td Cowan analyst Michael Elias, thank you so much
Speaker 3: for joining us. Now, let's look at other stories today.
Speaker 3: Apple planning to hire twenty thousand new workers and produce
Speaker 3: AI service here in the US. That's along with a
Speaker 3: five hundred billion dollar domestic investment over the next four years.
Speaker 3: Bloomberg Intelligence analysts and Agrana joins us now to discuss
Speaker 3: arak break down what Apple's plans are for this investment.
Speaker 9: So when you look at it, unlike the other big
Speaker 9: tech companies, Apples not ramped up its CAPEX so far
Speaker 9: because they're really in the you know, they believe in
Speaker 9: going out and renting some of this stuff from other
Speaker 9: cloud providers, you know, whether that's Aws or Google Lord,
Speaker 9: you know, you know, the other vendors that are out there.
Speaker 9: What it seems to me now that because of the
Speaker 9: importance of AI for their products and services, they want
Speaker 9: to do some of this in house. They talked about
Speaker 9: AI servers, so we anticipate that to be an area. Second,
Speaker 9: we think it could be the AI models itself. They
Speaker 9: could spend a lot of money on R and D
Speaker 9: over there. And the third is, you know, semiconductor manufacturing,
Speaker 9: not manufacturing, but designing, and then you know, use those
Speaker 9: designs to get those ships manufactured with TSFC for example.
Speaker 5: The crop say for many Anna Rag is how much
Speaker 5: things have changed or not. Can you just give us
Speaker 5: a view whether this is as certain analysts would know,
Speaker 5: once again Tim Cook being a rather good politician, or
Speaker 5: is this a general change in direction for Apple.
Speaker 7: I think this is a little bit of both.
Speaker 9: I think the bigger dollar amount is a bit staggering,
Speaker 9: to be frank. Now, some of that would go into
Speaker 9: a fund, They'll go into some R and D initiatives,
Speaker 9: so some of them may not actually fall down to
Speaker 9: the capex line. The way you know, a financial analyst
Speaker 9: would look at it because it could be an operating
Speaker 9: expense for example. But the AI server part will definitely
Speaker 9: hit CAPEX, and these guys generate about one hundred billion
Speaker 9: of them, so there is an impact on the free
Speaker 9: cash flow line for investors. But I think it's a
Speaker 9: mix of both. There is a need for more high
Speaker 9: tech stuff to being in the US, but it'd be
Speaker 9: very difficult to do the lower and stuff in the
Speaker 9: US in my view. But you know, AI servers and
Speaker 9: A related investments are of importance.
Speaker 3: Aneron do you have a sense of how much this
Speaker 3: is just lip service to kind of fend off perhaps
Speaker 3: some of the threat of tariffs for the company.
Speaker 9: I think it's from an AI side of it.
Speaker 7: They are behind.
Speaker 9: I think I don't think anybody would would say that
Speaker 9: Apple has any of the you know, leading large language
Speaker 9: models or even small language models. Right now. They have
Speaker 9: said okay, they're going to use open ai for their
Speaker 9: particular products. When it comes to you know your crea question,
Speaker 9: it goes to open ai. We think down the road
Speaker 9: they would use other models as well. It's possible they're
Speaker 9: going to use Google's model, but there should be you
Speaker 9: know they should be making an effort to put their
Speaker 9: own models in there as well. Now that's not easy.
Speaker 9: You can understand, you know how much money it's taken
Speaker 9: Opening Eye to come up with these models over the
Speaker 9: last several years. So I think, you know, if they
Speaker 9: are serious about AI on the in their products, you
Speaker 9: know they'll have to spend some money.
Speaker 5: Braybag Intelligence Anna a grana, We thank you. Let's get
Speaker 5: all of this and the context of ongoing tariff concerns
Speaker 5: in the market. Epec Oskodeskia is with US senior market
Speaker 5: analyst at Swiss Code. Look, we analyze the Apple spending
Speaker 5: here in the US in the context of US China relations.
Speaker 2: We think about AI spend.
Speaker 5: What's happening over in China and Ali Baba in the
Speaker 5: context of China and US relations epech How much of
Speaker 5: this is a concern going forward?
Speaker 2: Well right now, we obviously do.
Speaker 10: How a world that has shifted its focus on geopolitical tension,
Speaker 10: so the technology war is just going to get for
Speaker 10: more heated from this from this point on. Especially, we
Speaker 10: thought last year that the Chinese delay was a cum
Speaker 10: but this year, with China coming back on the international
Speaker 10: platform with new AI models, and there is going to
Speaker 10: be some potential in this chip war and the trade
Speaker 10: war and the geopolitical attentions to take in other turn.
Speaker 10: Now for Apple, we actually think that is it looks
Speaker 10: in the actual context of things that it looks like
Speaker 10: more of a political decision to us, and we believe
Speaker 10: that the geopolitically led motivations and business investments could eventually
Speaker 10: destroy long term, medium to long term value for a
Speaker 10: company like Apple.
Speaker 4: In fact, what does.
Speaker 3: This mean for earnings coming up next? I mean this
Speaker 3: week and video major infrastructure player chip making. Now you
Speaker 3: have tariffs as part of another added layer of uncertainty.
Speaker 4: What are you expecting on that front later this week?
Speaker 10: Well, you know what, we expect mb to Nvidia to
Speaker 10: post strong earnings later this week. And we actually believe
Speaker 10: that the high concentration of big technology names in Nvidia's
Speaker 10: client book is going to be a hedge, is going
Speaker 10: to turn into something positive for Nvidia, at least in
Speaker 10: the short term and in the context of geopolitical tensions.
Speaker 10: Because Nvidia has made around fifty percent of its revenues
Speaker 10: from big US technology companies that actually pledge to continue
Speaker 10: to spend big on AI. So we think that Nvidia
Speaker 10: is in quite a protected position from this geopolitical tensions
Speaker 10: point of view.
Speaker 3: The video was hit pretty hard earlier this year when
Speaker 3: deep Sea came out too the scene. How much of
Speaker 3: those concerns have actually died off at this point.
Speaker 10: Well, we were talking about deep Seek a lot, actually,
Speaker 10: and it comes down to the same thing that I
Speaker 10: just said. The concentration of big technology shucks an Nvidia's client,
Speaker 10: but could eventually turn into a positive thing that could
Speaker 10: protect Nvidia's revenues from well cheaper options like deep Seak
Speaker 10: is pretending to have. This being said, Deep Sek also
Speaker 10: said or DeepC is also believed to have used cheaper
Speaker 10: models of Nvidia chips in order to build his own model,
Speaker 10: which means that Nvidia is not necessarily well hits negatively
Speaker 10: Biden News.
Speaker 2: It is just that is.
Speaker 10: Most premium chips could see their own demand plateau. But
Speaker 10: even that in the short one, we think that the
Speaker 10: big technology companies in the.
Speaker 2: US has got the MVS back covered.
Speaker 10: This being said, in the medium to long run, these companies,
Speaker 10: these big technology companies from the US are working on
Speaker 10: their own custom made chips and that is a respector.
Speaker 5: Apeg it feels as though the pressure on in Vidia
Speaker 5: spills over from Fridays when we're worried about ultimately compute
Speaker 5: capacity demand. The note coming from TV care and the
Speaker 5: issues of whether we're thinking that Microsoft is in some
Speaker 5: sort of overcapacity state here just weigh in on whether
Speaker 5: Wednesday and the numbers out of Nvidia might put that
Speaker 5: to rest or not.
Speaker 10: Well, we believe that earning are going to be strong.
Speaker 10: We estimate that the revenues are going to be between
Speaker 10: thirty eight to forty billion US dollar range, closer to
Speaker 10: the top range to closer to forty billion US dollars
Speaker 10: on the launch of black Wild chips and on strong
Speaker 10: AI demand from the big technology clients.
Speaker 2: We also think.
Speaker 10: Actually that the forecasts are going to be optimistic due
Speaker 10: to the Stargate projects and the new pledges from the
Speaker 10: big technology companies to continue spending on AI. This being said,
Speaker 10: the overall market conditions start looking less favorable right now
Speaker 10: than they did last year, and in the sense the
Speaker 10: investors might become a little pickier on the profit margins,
Speaker 10: on the concentration of for big technology clients, on competition,
Speaker 10: but also on the supply chain and capacity constraints.
Speaker 5: So where are you going to fall further? The nasda's
Speaker 5: currently training in the lowest in February. The third, if
Speaker 5: you're looking the nast that one hundred, it feels as
Speaker 5: though China and compute capacity is just going to keep
Speaker 5: pushing pressure on these valuations.
Speaker 10: Definitely. We also think that the investors now start seeing
Speaker 10: potential in Chine, and with high valuations in the US
Speaker 10: technology stocks and this valuation gap, there is potential for
Speaker 10: more funds to feed into the Chinese technology stocks, even
Speaker 10: more so as two major risks for the Chinese technology
Speaker 10: big technology companies.
Speaker 2: Has paid it.
Speaker 10: The first one is the fact that the chip war
Speaker 10: has delayed the AI progress of the Chinese technology companies
Speaker 10: but hasn't stopped it. And the second is the waning
Speaker 10: risk of government where she Jimpin actually showed his support
Speaker 10: to the Chinese big technology leaders.
Speaker 3: What's kind of the time horizon that investors should keep
Speaker 3: in mind if we're really going to start seeing signs
Speaker 3: of China really starting to catch up to American AI players.
Speaker 10: I mean in terms of efficiency and most efficient models.
Speaker 10: I think that we are not there just yet. We
Speaker 10: need to wait at least a few quarters. I will
Speaker 10: say two to three quarters in nord to see what
Speaker 10: the Chinese AI models are worse. But in terms of
Speaker 10: business and the revenues, it's not the best model, most
Speaker 10: efficient models. They are going to make the biggest revenues.
Speaker 10: It is how these AI tools are going to feed
Speaker 10: into services. And in the sense the Chinese technology giants
Speaker 10: like earlybud By intens and they do have huge platforms,
Speaker 10: they do have a huge reach within China and beyond
Speaker 10: China that could eventually turn their AI tools into profits
Speaker 10: without them being as efficient as US peers.
Speaker 3: That's ipek Oscar dish Kaya, thanks so much for joining us.
Speaker 5: El Musk has sent emails to over two million federal
Speaker 5: workers over the weekend asking them to defend their work
Speaker 5: or risk losing their job for the deadline to respond
Speaker 5: by today.
Speaker 2: Now, this order is.
Speaker 5: Actually facing pushback from other powerful figures within the Trump administration,
Speaker 5: with several agencies telling their employees to refrain for responding
Speaker 5: on the email commoes. MaTx Chafkin weighs in for more.
Speaker 5: Who is pushing back here.
Speaker 11: We're seeing pushback from a number of federal agencies, the
Speaker 11: FBI being one of them, and the Department of Defense.
Speaker 11: We've also seen some agencies like the Social Security Administration
Speaker 11: say yeah, you should respond to this email.
Speaker 4: You know, if you need any guidance, let us know.
Speaker 11: So this is I'd say this is probably the pushback
Speaker 11: that we're seeing where where certain agencies are saying don't
Speaker 11: do this. Meanwhile, Musk is tweeting very loudly all weekend
Speaker 11: about how easy it is to respond to this email,
Speaker 11: how reasonable it is. I'd say this is one of
Speaker 11: the more significant fissures we've seen with Elon Musk and
Speaker 11: other figures within the Trump administration.
Speaker 3: Max el Or Musk did this before at Twitter, as
Speaker 3: we've been mentioning on the show for the last couple weeks.
Speaker 3: There is a lot that we can draw from how
Speaker 3: he handled that situation when he did this back then.
Speaker 3: Did he actually consider the responses he was getting back
Speaker 3: from employees or did he just go ahead and fire
Speaker 3: them anyway, Well.
Speaker 11: This is like a slogan that he used to challenge
Speaker 11: people at Twitter. Most memorably, he used it in a
Speaker 11: tweet at the then CEO of Twitter, Prague Argowall, who
Speaker 11: was sort of trying to push back gently against Musk.
Speaker 4: He said, what have you done this week?
Speaker 8: Now?
Speaker 2: Now it's become this kind.
Speaker 11: Of like I said, it's almost like a slogan, and
Speaker 11: Musk has made clear it doesn't seem like he even
Speaker 11: so much cares.
Speaker 2: What people say.
Speaker 11: In fact, he was suggesting that employees use a large
Speaker 11: language model chatbot to respond to the note. It's like
Speaker 11: it's like he wants them to know that he is
Speaker 11: running his Twitter playbook, and that Twitter play book involves
Speaker 11: mass layoffs and also this kind of super aggressive, chaos
Speaker 11: driven let's attack the previous regime and we're seeing all that.
Speaker 11: You can also see why if you're Cash Pattel, the
Speaker 11: new director of the FBI, you might not love some
Speaker 11: other person kind of stirring the pot.
Speaker 2: In this way. But also there's the element of risk.
Speaker 5: The FBI does really important and secret work that perhaps
Speaker 5: they shouldn't be having to vindicate all distribute on a note.
Speaker 11: Right, I mean, the email did say please, don't you know,
Speaker 11: reveal any classified information, So I suppose on some level
Speaker 11: Elon Musk thought about that. But yes, one of the
Speaker 11: reasons we've seen from agencies and sort of people in
Speaker 11: government and a management perspective for saying don't respond to
Speaker 11: this is the risk that you send something that you
Speaker 11: shouldn't have said that. You know, many jobs in the
Speaker 11: federal government deal with sensitive or even secret or top
Speaker 11: secret information, and so yes, that would be a concern
Speaker 11: as well.
Speaker 2: Again it does it.
Speaker 11: It's super unclear what the goal here is beyond just
Speaker 11: creating a pretext to let more people go. And that
Speaker 11: is the thing that Elon Musk has said over and
Speaker 11: over again. It's what he wants to do.
Speaker 3: That's Bloomberg, Max Chaffin, thanks so much for joining us.
Speaker 3: Let's get to DC for more on Musk's impact, this
Speaker 3: time on the Consumer Financial Protection Bureau. The agency is
Speaker 3: one of Musk's first targets where hundreds of workers have
Speaker 3: already lost their jobs. Bloomberg's Tyler Kendall joins us. Now
Speaker 3: this blitz at the CSPB is well under way, Tyler,
Speaker 3: what kind of response has this generated from Republican lawmakers? Well,
Speaker 3: Republican lawmakers, of course, have long targeted the CFPV, saying
Speaker 3: that it poses undo of regulations that they would like
Speaker 3: to see more streamedline. And we should note that there's
Speaker 3: new Bloomberg News reporting that there also seems to be
Speaker 3: some concern among the acting head of the CFPB the
Speaker 3: current OMB director rus Vot Bloomberg News, saying that he
Speaker 3: appears to be voicing some concerns that this process might
Speaker 3: be happening a little too quickly here and that.
Speaker 4: That could open this up to legal scrutiny.
Speaker 8: Which at the end of the day, if it's not
Speaker 8: upheld in court, that could mean none of these changes
Speaker 8: end up being enacted. We should note that a spokesperson
Speaker 8: for Vote does say that no such tensions exist, but
Speaker 8: it doesn't mean that there aren't still legal questions moving
Speaker 8: forward here, particularly considering we're not quite sure what legal
Speaker 8: basis Elon Musk has considering his role as an advisor
Speaker 8: to President Trump to enact such widespread job cuts, although
Speaker 8: it does appear that he does have the backing from
Speaker 8: the White House, considering that just last month, President Trump
Speaker 8: suggested that he wouldn't mind if the CFPB was eliminated.
Speaker 5: Whether or not there are indeed a word about the
Speaker 5: haphazard nature in which they're trying to take down and
Speaker 5: shut off the CFPB. There is a note in that
Speaker 5: same story that the Cato Institute is pointing out here
Speaker 5: that basically, you're taking away the police of Wall Street,
Speaker 5: You're taking away the police of big tech. How is
Speaker 5: woll Streem responding, Because I know you've spoken to Jamie
Speaker 5: Diamond on this.
Speaker 4: Right, Thanks Caroline.
Speaker 8: While I caught up with him on Capitol Hill a
Speaker 8: couple of weeks ago, and I asked him what his
Speaker 8: message to consumers would be if there is no CFPB
Speaker 8: in place, and he said that ultimately he feels that
Speaker 8: other regulators would pick up the slack, whether that be
Speaker 8: the SEC, the OCC, or the FED, and that ultimately
Speaker 8: he supports a holistic approach to restructuring financial regulators. But
Speaker 8: we should say on the other side of this, of course,
Speaker 8: there is big criticism, such as Senator Elizabeth Warren, the
Speaker 8: ranking member on Senate Banking. This is largely considered to
Speaker 8: be her brainchild. She tomorrow is hosting a panel a
Speaker 8: forum to we'll get the way forwards here to see
Speaker 8: what sort of remedies they could implement in order to
Speaker 8: protect consumers.
Speaker 2: We should not.
Speaker 8: She did invite Elon Musk to appear at the forum,
Speaker 8: but we are not expecting him to be in attendance.
Speaker 5: Tyler Kendall, we thank you from Washington. Now coming up
Speaker 5: process agrees to buy.
Speaker 2: Just to Eat in an all cash deal.
Speaker 5: The Dutch tech investor is on a path to become
Speaker 5: a food delivery giant. More on that next, but first,
Speaker 5: just check out what's happening in the world of crypto.
Speaker 5: It's affecting a lot of the single names that are
Speaker 5: related to the space. We're currently at ninety four thousand,
Speaker 5: five hundred dollars let's call it. That is well off
Speaker 5: our one hundred and six thousand dollars highs. We're currently
Speaker 5: trading at the lowest since the start of January, got
Speaker 5: Robin Hurd, falling, MicroStrategy, some of the other crypto related
Speaker 5: names under pressure today. That's, of course, as the rest
Speaker 5: of the market remains concerned around China.
Speaker 2: This is BlueBag.
Speaker 5: Technology time now for Talking Tech and first Up Process
Speaker 5: is said to buy just Deep for four point three
Speaker 5: billion dollars in an all cash deal, making the fourth
Speaker 5: largest food delivery company. Globe Versus CEO for BC Fluency
Speaker 5: is looking for new sources of growth. He spoke about
Speaker 5: the deal earlier on Brimberg.
Speaker 12: Many of the technology companies in Europe, they should be
Speaker 12: valuing more and they should be investing more.
Speaker 7: So I think this is the right.
Speaker 12: Price for the Just Teach shareholders because we're paying a
Speaker 12: good premium. But at the same time, as I just
Speaker 12: told you, the leader company in China is one hundred
Speaker 12: billion dollar company. The leader company in US is one
Speaker 12: hundred billion dollar company. We are invested in just it
Speaker 12: at the right price based on DCF, this is the
Speaker 12: right price to create a real, big, global leader plus.
Speaker 2: Data based company.
Speaker 5: Mongo dB says it's acquiring Voyage AI for two hundred
Speaker 5: and twenty million dollars and the cash and stock deal
Speaker 5: is meant to help Mongo DEBI customers build artificial intelligence
Speaker 5: powered applications deploy them for high states uses. And Tesla
Speaker 5: is preparing a software update for customers over in China
Speaker 5: that will offer driver assistance similar to a full self
Speaker 5: driving future in the United States and will let tesl
Speaker 5: owners who have paid sixty four thousand and one for
Speaker 5: FSD well they can use driver assisted features on the
Speaker 5: city streets.
Speaker 4: Jackie coming out.
Speaker 3: Victoria Spinell from the Business Software Alliance will join us
Speaker 3: to talk about AI regulation under Trump and Warren.
Speaker 4: This is Bloomberg.
Speaker 2: Welcome back to Bloomberg Technology.
Speaker 3: I'm Caroline Hide in New York and I'm Jackie Devalas
Speaker 3: in San Francisco A quick check.
Speaker 5: On these markets because they are under pressure again from
Speaker 5: the NASDAK broader perspective.
Speaker 2: But we dig into some of the key points. Movers
Speaker 2: underneath a.
Speaker 5: Herd Apple on the higher side, committing five or a
Speaker 5: billion dollars over the next four or five years, We're
Speaker 5: going to be getting twenty thousand.
Speaker 2: New York jobs in the United States.
Speaker 5: Yes, this does really focus on the server building side
Speaker 5: of things.
Speaker 2: BI really showing that this.
Speaker 5: Is a shift and focus, even if perhaps it's just
Speaker 5: only a little uptick from previous investment rounds. You're looking
Speaker 5: at Microsoft down one point two percent. Are we seeing
Speaker 5: over capacity in data center? Her capacity for the Microsoft?
Speaker 5: More broadly, that is what TD Cowan asserts Microsoft saying
Speaker 5: they are committed to that eighty billion dollar spend or
Speaker 5: under pressure. Move on to the individual names that also
Speaker 5: keep an eye on. When it comes to Palenteer now
Speaker 5: trading its lowests back at the beginning of February, we're
Speaker 5: down seven percent. It's still trades at one hundred and
Speaker 5: seventy one times future earnings.
Speaker 2: This is an extraordinary valuation.
Speaker 5: But with cuts coming at the Department of Defense, is
Speaker 5: Palenteer more broadly under pressure the market thing, so in
Speaker 5: video off by quarter percent.
Speaker 2: Remember their numbers come on Wednesday.
Speaker 5: Can they indicate the AI compute demands that are really
Speaker 5: being questioned in the market. Let's talk about AI demands,
Speaker 5: and let's talk about Ali Baba. The Chinese company is
Speaker 5: pledging more than fifty three billion on AI infrastructure over
Speaker 5: the next three years. The goal marks one of China's
Speaker 5: biggest AI infrastructure budgets. Ali Baba looks towards becoming a
Speaker 5: leader in the space. Bloomberg Intelligence analyst man Neet Singh
Speaker 5: showing a big sell off. Look, fifty three billion, it
Speaker 5: seems peanuts and comparison to Microsoft and.
Speaker 2: The others, but it is notable in China.
Speaker 13: Yeah, and look, when you look at a company like
Speaker 13: Ali Baber, cloud business is about a six billion dollar
Speaker 13: run rate, So compare that to Microsoft around eighty billion
Speaker 13: and Amazon AWS said over one hundred billion. So it's
Speaker 13: still relatively small, but it's heading in the right direction
Speaker 13: in terms of growth rates. So remember cloud growths had
Speaker 13: decelerated across the board in the case of Alibaba is
Speaker 13: picking up and it's driven by AI. So it's not
Speaker 13: surprising that Ali Baba and I expect Tenson to do
Speaker 13: the same in terms of ramping up Capex because they've
Speaker 13: seen the playbook in the West in terms of companies
Speaker 13: investing in Capex and that translating into cloud growth.
Speaker 3: Mandy, it's not just about cutting a check. Talk to
Speaker 3: us about some of the challenges that Ali Baba could
Speaker 3: face as it undertakes such a significant investment.
Speaker 13: I mean, look when it comes to you know, Ali
Speaker 13: Baba and tens and there's always that overhang in terms of,
Speaker 13: you know, what could happen in terms of the CCP
Speaker 13: and you know, change in regulation. So clearly that threat
Speaker 13: is there. But I look at you know, the Capex
Speaker 13: opportun unity they have in terms of ramping up their
Speaker 13: cloud business, and it's pretty obvious there is a lot
Speaker 13: of demand from local companies like deep Seak to consume
Speaker 13: you know, cloud compute, and I think that's why this
Speaker 13: trend probably is one of the probably one of the
Speaker 13: earliest innings if I can think of, you know, if
Speaker 13: you go back in time in terms of how Microsoft
Speaker 13: and Amazon and Google have seen their cloud growth accelerate
Speaker 13: over the past four quarters, I would expect something similar
Speaker 13: for from these companies.
Speaker 5: But they can get access to the most powerful, most
Speaker 5: expensive chips, and Ali Barba look at the move today
Speaker 5: on the back of what Trump is announcing, wanting to
Speaker 5: curtail even further Chinese ability to buy technology to be
Speaker 5: able to push into chips.
Speaker 8: Yeah.
Speaker 13: Look, I think if they're investing in Capex, they are
Speaker 13: looking to source whatever compute they can get. They may
Speaker 13: not get the latest Blackwall chips, but whatever compute they
Speaker 13: can get to big that to build that big cluster
Speaker 13: and really ramp that up, because ultimately, your companies are
Speaker 13: going to use open source models, they are going to
Speaker 13: leverage AI and what you need is compute. So as
Speaker 13: a cloud business, I think you're somewhat insulated at least
Speaker 13: from what's going on at the geopolitical level, and you
Speaker 13: know there could be restrictions, but they are the best
Speaker 13: position to build that large sized cluster in order to
Speaker 13: satisfy the needs of the companies.
Speaker 3: That's Bloomberg Intelligence analysts Man Deep saying thanks for joining us.
Speaker 3: The Trump administration's focus on trade continues to impact tech companies.
Speaker 3: Apple is seeking relief from President Trump's tariffs on goods
Speaker 3: imported from China with more investments in the US. Trump
Speaker 3: also signed a memorandum on Friday to counter digital services taxes.
Speaker 3: Some countries impost on US tech giants.
Speaker 4: All of this.
Speaker 3: As the US is competing to lead the way in
Speaker 3: AI and quantum computing. Here to unpack the impact of
Speaker 3: these developments is Victoria Espadel, CEO of the Business Software Alliance. Victoria,
Speaker 3: it's pretty clear that President Trump has declared himself pro innovation,
Speaker 3: pro technology, but what do you make of the way
Speaker 3: he's going about it?
Speaker 14: So, as you say, I think the administration has been
Speaker 14: really transparent about what their goals are in terms of
Speaker 14: innovation and competition, and it's interesting to see them approaching
Speaker 14: it in a variety of different ways. Some are focused
Speaker 14: on trying to promote US industry, some are trying to
Speaker 14: are focused on trying to protect US industry, But you're
Speaker 14: seeing this across trade. I think you're going to see
Speaker 14: it in the AI Action Plan that the administration is
Speaker 14: going to be working on soon. We are hoping that
Speaker 14: quantum competitiveness will be part of what the White House
Speaker 14: is focused on. So I think you're going to be
Speaker 14: seeing this in a number of areas.
Speaker 5: Your whole role is advancing enterprise software companies, leadership, and
Speaker 5: global policy, So how much are they having their voices
Speaker 5: heard when we see the latest impact on Digital Services Act.
Speaker 5: But then also what's happening with China and the impact
Speaker 5: that has on an Apple for example.
Speaker 2: So it's you know, you.
Speaker 14: Raise a Digital Services Act. It's true that that's an
Speaker 14: act that has more of a focus on social media companies,
Speaker 14: for example, rather than enterprise software. There are, but there
Speaker 14: are so many impacts that the attrump of administration can have,
Speaker 14: I think, including many in a positive way on enterprise software.
Speaker 14: Some of the issues that are front of mind are
Speaker 14: not ones that are going to be impacted by enterprise
Speaker 14: so for example, speech issues. You know, there's a lot
Speaker 14: that's happening that's really positive from AI enterprise and AI
Speaker 14: software that's not.
Speaker 4: Going to be impacted by those.
Speaker 14: But on the other hand, I think the administration has
Speaker 14: a real opportunity to lead in terms of digital trade.
Speaker 14: I think you have a real opportunity to lead in
Speaker 14: terms of AI adoption. And you know, there's so much
Speaker 14: there's so much focus and attention to building the large
Speaker 14: LM models, and of course that's important, but what we
Speaker 14: really need to have the broadest positive economic impact is
Speaker 14: AI adoption across a wide range of industries, and that
Speaker 14: is something that I think there's real potential for the
Speaker 14: administration to take the lead on.
Speaker 5: And companies have been trying to think of Microsoft and
Speaker 5: really focusing in on the consumer applications with the mastaff
Speaker 5: as Soony when High for example, and proportion of him Victoria.
Speaker 5: What is it then that the companies that you're talking with,
Speaker 5: and that companies currently are trying to navigate and maybe
Speaker 5: be politicking as we see with Tim Cook, What do
Speaker 5: they really want? Is it clarity or is it actually
Speaker 5: that they do want change here?
Speaker 14: So let's talk about AI and what's happening in AI
Speaker 14: regulation And I would say, you know, speaking for enterprise software,
Speaker 14: I think there are at a broad level, there are
Speaker 14: three things that we want. First, we are pro regulation.
Speaker 14: We think it makes sense to have regulation. What we
Speaker 14: don't want is bad regulation. And what I would characteris
Speaker 14: bad regulation is regulation that's unworkable, regulation that is addressing
Speaker 14: the wrong issues.
Speaker 4: So I think that's important.
Speaker 14: Second, there needs to be clarity. One of the hindreds
Speaker 14: is the innovation we have right now is there's so
Speaker 14: much churn the system. Is regulation coming is it not?
Speaker 14: Who will it apply to who will it want, and
Speaker 14: that is an enormous drag on a company's ability to
Speaker 14: innovate and plan forward. And then the third thing that
Speaker 14: we need is consistency. The thing that is even worse
Speaker 14: than lack of clarity is inconsistency across different laws being
Speaker 14: passed by the US States, different laws being passed by
Speaker 14: other countries that are in conflict for on one another.
Speaker 14: And that is even more of a problem if you
Speaker 14: are a small company that is going to have even
Speaker 14: more difficulty dealing with those. So no bad regulation, clarity
Speaker 14: and consistency are three things that are critical if we
Speaker 14: are going to continue to move forward.
Speaker 3: Victoria, you mentioned the small players. A lot of the
Speaker 3: headlines come from the big tech giants, But what do
Speaker 3: some of the policies that you're thinking about. How would
Speaker 3: that affect perhaps some of the smaller technology companies. Would
Speaker 3: it only benefit the large incumbents.
Speaker 14: No, I think actually, in many cases, the biggest positive
Speaker 14: impact will be on the smaller companies, so they won't
Speaker 14: be held down by, for example, unworkable or inconsistent regulation.
Speaker 4: I mean, there's so.
Speaker 14: Much happening in the AI policy space, but here are
Speaker 14: two things that I would emphasize, and I think these
Speaker 14: will have an impact on all companies, including and perhaps
Speaker 14: in particular small companies. One is at the federal level,
Speaker 14: So in terms of what's happening here in Washington, DC,
Speaker 14: a focus on promoting AI adoption is something that we're
Speaker 14: expecting to see and there's been support for that in
Speaker 14: the past, but we're expecting a lot more activity this
Speaker 14: year coming year on AI adoption. But the second thing
Speaker 14: I would say is that any company that wants to
Speaker 14: understand what is happening in AI regulation right now has
Speaker 14: to be looking at what is happening in the states.
Speaker 14: The US States, there's a tremendous amount of activity there.
Speaker 4: We're very focused there.
Speaker 14: You had Colorado pass the first comprehensive AI law last year,
Speaker 14: but now you have Texas, Connecticut, Virginia, California.
Speaker 4: They all want to be next and that the states
Speaker 4: are going to move legislation and regulation.
Speaker 14: So when you're talking about all companies, but in particular
Speaker 14: small companies trying to deal with this the regulation that's
Speaker 14: coming and trying to deal with inconsistencies that we may
Speaker 14: see there, that if that comes to path, that is
Speaker 14: going to be a big drag on innovation.
Speaker 2: Great points.
Speaker 5: Victoria Espinel from the business Software Airlines, thanks so much
Speaker 5: for joining us. Coming up, Steve Jang of kind Adventures
Speaker 5: joins us to discuss how AI policies impacting investment opportunities.
Speaker 5: This is really at an early stage company focus. This
Speaker 5: is bringing back technology.
Speaker 3: On today's VC Spotlight, we take a look at the
Speaker 3: shifting AI land escape as players like deep Sea demonstrate
Speaker 3: potentially cheaper approaches and as the Trump administration focuses on
Speaker 3: US competitiveness in the sector. Steve John from Kindred Ventures
Speaker 3: is here for more. Steve, there's a lot of signaling
Speaker 3: of support, but help us understand what you're seeing from
Speaker 3: your perch to the cap table. Is this all talk
Speaker 3: or is this actually trickling through to some of the
Speaker 3: companies that you're seeing.
Speaker 15: Yeah, I think the big question right now in the
Speaker 15: industry overall is open source versus closed source. And this
Speaker 15: is the overarching theme not only in model pre training
Speaker 15: and availability, but it's also a huge issue across the planet.
Speaker 15: So there's this inevitable movement that's happening where sovereign AI
Speaker 15: is a consistent theme in Asia, Middle East, EU, in
Speaker 15: the US and China. Right and China sits separately from
Speaker 15: a lot of the East Asian countries which are a
Speaker 15: little bit more aligned and open to US models. So
Speaker 15: I think this overall trend that we're saying right now
Speaker 15: is trickling down into who can use these models and
Speaker 15: applications in industries in different sectors that are important and
Speaker 15: critical to each country and region.
Speaker 3: What do you make of who is advising the president
Speaker 3: when it comes to AI policy? David Sachs obviously being
Speaker 3: the AI zar along with Crypto, he is a fan
Speaker 3: of open source. Do you think we could see potential
Speaker 3: action on that front where it can benefit some of
Speaker 3: those open source players here in the US?
Speaker 15: Yeah, And I think you know, regulation in AI especially
Speaker 15: is a double edged sword. You want to promote open
Speaker 15: source to compete with closed source models, and the reason
Speaker 15: why is competition breeds progress, and that trickles down to
Speaker 15: consumers to businesses that use these models. So that's good
Speaker 15: overall for everyone, But by the same token, there's also
Speaker 15: an issue with putting some guardrails around that so that
Speaker 15: there's some safety in alignment for national interests, for mission
Speaker 15: critical industry interests like healthcare, transportation, defense, and things like that.
Speaker 15: So it's a double edged sword for now, and I
Speaker 15: think David Sachs and his team have a good handle
Speaker 15: on that balance and are weighing that. But I think
Speaker 15: that we want to promote open source models, we want
Speaker 15: to promote developer access to these models, but we also
Speaker 15: want to have some level of safety when it comes
Speaker 15: to these mission critical industries.
Speaker 5: Are you okay with therefore? People accessing deep seeks are
Speaker 5: one model?
Speaker 2: For example? Where do you think we are in the
Speaker 2: geopolitics of it all?
Speaker 15: Yeah, And I think there's a lot of political bluster
Speaker 15: and fear that's kind of coursing around media, But really
Speaker 15: what it comes down to is deep Seek is an
Speaker 15: open source model from China that you can download today.
Speaker 15: The weights are exposed, so you can change the weights,
Speaker 15: you can remove all the censorship quote unquote alignment aspects
Speaker 15: of that, and you can host it on US data centers. Perplexity,
Speaker 15: one of our portfolio companies is doing was the first
Speaker 15: company to do that and to provide APIs to developers
Speaker 15: that are a safer version of deep seek that doesn't
Speaker 15: have these issues. North Flank is another company out of
Speaker 15: the UK that is offering within thirty minutes for you
Speaker 15: to download and deploy your own deep Seek version of
Speaker 15: the model on AWS, GCP and Azure within thirty minutes.
Speaker 15: So open source can be problematic if it's coming from
Speaker 15: a country or a region that you don't identify with.
Speaker 15: But the good thing about open source, the strength of it,
Speaker 15: is that you can download it and you can modify
Speaker 15: it and make it safe for your own purposes.
Speaker 3: Another one of your portfolio companies was humane Ai, and
Speaker 3: we talk a lot about the models, the algorithms, but
Speaker 3: what went wrong here? This is kind of one of
Speaker 3: the few consumer applications you can feel in touch.
Speaker 4: What went wrong from your perspective.
Speaker 15: Yeah, Look, I think hardware is hard, and it's hard
Speaker 15: for many reasons that we well understand today. One is
Speaker 15: that it's capital intensive. Number two, you're dependent upon a
Speaker 15: lot of the software development that happens in real time
Speaker 15: while you're developing a much slower, longer cycle hardware and
Speaker 15: operating system roadmaun really big ideas, really you know, game changing,
Speaker 15: see change platforms. To compete with Apple, to compete with Samsung,
Speaker 15: to compete with the existing operating systems requires a long,
Speaker 15: long journey, requires a lot of capital. And these things
Speaker 15: are hard and These are the moonshot bets that venture
Speaker 15: capital is built for and we embrace. So we want
Speaker 15: to see more companies, We want to see more founders
Speaker 15: take those moonshot bets and go for it.
Speaker 5: Ken Inventure his managing partner, it's great to have you.
Speaker 5: Steve Jang an embrace of open source AI models. What
Speaker 5: is helping fuel interest in a cloud platforms such as Lambda.
Speaker 5: The companies just raised four hundred and eighty million dollars
Speaker 5: in its Series D funding round for investors such as
Speaker 5: in Video and arc invest Please to say the CEO,
Speaker 5: Stephen Valavan, joins us now four on eighty million. You're
Speaker 5: building out infrastructure, you're offering software tools to how do
Speaker 5: you spend this money?
Speaker 16: Well, Caroline, thank you so much for having me. I mean,
Speaker 16: we're going to be spending this to continue to build
Speaker 16: out our infrastructure. As a company. We've got over a
Speaker 16: billion dollars of Nvidia powered systems deployed in our data
Speaker 16: centers across the world. We've invested over one hundred million
Speaker 16: dollars in our cloud platform. We're going to continue to
Speaker 16: invest in those two areas, but we've started to expand
Speaker 16: above the stack, so we've got an amazing AI powered
Speaker 16: software platform that allows us to host all the open models.
Speaker 16: We've got hosted deep Seek, We've got hosted Lama uncensored
Speaker 16: deep Seek fine tunes that remove some of the censorship
Speaker 16: and sort of make it more aligned towards Western values.
Speaker 16: And really what we've done is, you know, it also
Speaker 16: hosted that as part of what we call land the Chat,
Speaker 16: which is our hosted open source models. It's an AI
Speaker 16: chat assistant.
Speaker 12: Anyone can go to.
Speaker 16: Land dot Chat and basically get access to our one.
Speaker 5: Okay, so help bring us and our audience clarity on
Speaker 5: where we are in terms of capacity, over capacity, undercapacity,
Speaker 5: it comes to data sentence, when it comes to compute,
Speaker 5: because you've got Microsoft some analyst at td con really
Speaker 5: well getting the market wandering about this once again.
Speaker 16: Yeah, So this is the largest technological revolution we've seen
Speaker 16: in our lifetime, and it is completely fundamentally reshaping the
Speaker 16: way humans interact with computers. And so it's a really
Speaker 16: big deal. It's replacing all the traditional software that's been
Speaker 16: developed over the last fifty years and replacing it with
Speaker 16: a hybrid sort of human and neural software hybrid, and
Speaker 16: that is a big deal. We're going to continue to
Speaker 16: see massive investments. You know, a couple hundred megawatts of
Speaker 16: data center contracts being pulled out, you know, roughly speaking.
Speaker 16: To put that in context for the viewership, it's been
Speaker 16: four and five billion dollars of let's say, equipment capex
Speaker 16: that you're looking at, and that is, you know, not
Speaker 16: really as significant if you look at every single one
Speaker 16: of these companies looking at eighty billion, fifty three billion,
Speaker 16: you know, all these hundreds of billions of dollars that
Speaker 16: are being invested over the next couple of years every year,
Speaker 16: it's I don't think it's as significant as of a story.
Speaker 4: Stephen.
Speaker 3: This is a really big check for you guys, but
Speaker 3: it is getting harder to raise as a late stage startup,
Speaker 3: even when you are in the hottest sector in town.
Speaker 3: How is that affecting your roadmap? Do you see going
Speaker 3: public as the next step or partnering up with a
Speaker 3: different company, a larger incumbent player down the line.
Speaker 16: We are building a long lived, iconic company that is
Speaker 16: going to be here for the next one hundred years.
Speaker 16: That's what we're that's our goal at LAMBDA, and what
Speaker 16: we're trying to do is really focus in on building
Speaker 16: a strong fundamental business.
Speaker 15: You know.
Speaker 16: So last year we shipped over four hundred million dollars
Speaker 16: of top line revenue. We are profitable, that is to say,
Speaker 16: we have a positive operating cash flow, positive EBITDA and
Speaker 16: so I think it's as back to basics. You know,
Speaker 16: all that matters is you build a heavy business. Right
Speaker 16: In the short term, the market is a voting machine,
Speaker 16: and a long term it's a wave machine. So build
Speaker 16: a heavy business and just focus on delighting the customer.
Speaker 16: It's pretty simple.
Speaker 3: Let's talk about talent, because there are some concerns that
Speaker 3: cut to the National Science Foundation kind of broader implications
Speaker 3: on the pool that tech giants and also startups like
Speaker 3: yourself draw from. Jan Lacun mentioning on a post on
Speaker 3: social media this weekend.
Speaker 4: That he was pretty concerned about it. What are your
Speaker 4: thoughts there?
Speaker 16: Well, I think it's really good for us as a
Speaker 16: country to continue to welcome in the best and the
Speaker 16: brightest people from all around the world. I think that
Speaker 16: as a company, you exist within the environment that's set
Speaker 16: up for you, the rules and frameworks that asslp you
Speaker 16: by your sovereign entity around you. And so you know,
Speaker 16: we're just like every other company in the world going
Speaker 16: to be folks faith fased with like whatever the reality
Speaker 16: ends up being.
Speaker 5: From your perspective, what does the landscape of compute look
Speaker 5: like in five years time.
Speaker 16: I think that what we're going to see is with
Speaker 16: these models today it is just starting to crack open
Speaker 16: what I call one shotting, a pretty difficult computer programming problem.
Speaker 16: If you flash back, maybe just two years ago, right,
Speaker 16: you could generate a very basic application. It would have
Speaker 16: some bugs in you'd have to debug it. As a
Speaker 16: software engineer today, I can ask it to generate a
Speaker 16: full video game. I can ask it to generate, for example,
Speaker 16: the land of chat iOS application, and it generates it
Speaker 16: in one shot with no errors. And so to me,
Speaker 16: it's applying that to every piece of software.
Speaker 12: In the world.
Speaker 5: We thank you for coming on, and I'm the CEO,
Speaker 5: Stephen benavan On a big fundraise and that does it
Speaker 5: for this edition of Boomberg Technology.
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Speaker 5: You can find it on the terminal as well as
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Speaker 2: This is Bloomberg