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Speaker 2: All right, and what can be I guess another one
Speaker 2: of these circular financing deals in Vidia Corporation today and
Speaker 2: announce it's vested an additional two billion dollars in core
Speaker 2: Weave cloud computing firm and key customer to speed up
Speaker 2: an effort to add more than five gigawats of AI
Speaker 2: computing capacity by twenty thirty. There's a lot going on there.
Speaker 2: Let's check in with anaag Rana. He's a technology analyst
Speaker 2: to Bloomberg Intelligence. An Rok, thanks so much for joining
Speaker 2: us here. What's your reaction to this additional investment buy
Speaker 2: in Nvidia into core Weave.
Speaker 3: Yeah, if you go back in history and see when
Speaker 3: Gorviv was going public, it was having a hot time
Speaker 3: getting a good pricing, and then in Vidia kicking and said,
Speaker 3: you know, we're going to be a part of this
Speaker 3: particular ripo. And I think what's happening here?
Speaker 4: Is this.
Speaker 3: In Vidia is creating the chips, and code Weeve is
Speaker 3: helping them sell the computing using those chips. Two different
Speaker 3: public that's out there now. At this time, Codevieve has
Speaker 3: a massive backlog of orders, but it you know, needs
Speaker 3: to get funding done in order to convert that into
Speaker 3: data centers and then capacity. Now you know, in Vidia
Speaker 3: isn't giving them money straight away, but it's basically saying,
Speaker 3: you know, we have confidence in this in this company,
Speaker 3: and it would help then Code Weeve go out and
Speaker 3: raise capital from outside. So I think it's a little
Speaker 3: bit more like spreading the Nvidia ecosystem, is what that's
Speaker 3: happening right now.
Speaker 2: Looking at your research note, note that corew've has fifty
Speaker 2: billion dollars in remaining performance obligations. What does that mean?
Speaker 3: Yeah, basically it's this is kind of the contracted revenue
Speaker 3: they have on hand, which means, you know, Microsoft has said,
Speaker 3: you know what, I'm good for ten turn out of that.
Speaker 3: For example, Meta has a deal with them, so they
Speaker 3: have this backlog of all these orders. But you know,
Speaker 3: unlike other companies, you just can't go out and fulfill
Speaker 3: the demand. You have to create a very large data
Speaker 3: centers using a radio chips. It then starts to work
Speaker 3: out or runs and then you realize that fifty billion
Speaker 3: into revenue over the next several years.
Speaker 2: So what's the gating issue here for Coreweve? Is it
Speaker 2: more access to more data centers? What's kind of the
Speaker 2: gating issue for them to fulfill that revenue?
Speaker 3: Multiple gating factors. One is actually the data center itself.
Speaker 3: For that, you need land, you need power. You know,
Speaker 3: the chip side is okay at this point because in
Speaker 3: radio is there. But then also you need capital. I
Speaker 3: mean code Weave is not a company like Microsoft or
Speaker 3: Amazon that has unlimited capital to create these data centers.
Speaker 3: It has to go in the market and raise capital.
Speaker 3: Before they went public, I mean their cost of capital
Speaker 3: was north of ten percent. Right now after they went public,
Speaker 3: I mean the cost of capital has gone down to
Speaker 3: about eight percent. But the entire new clouds are in,
Speaker 3: whether it is code we or whether it is Nebus,
Speaker 3: really depends on private credit lending or lending by other
Speaker 3: banks to really come up with the funding to create
Speaker 3: these data centers.
Speaker 2: So I also see in the news here today that
Speaker 2: Microsoft unveil's latest AI chip to reduce reliance on in
Speaker 2: video what's going on there.
Speaker 3: So this is something that's going on with all hyper
Speaker 3: scale cloud providers, you know, whether that's Google with its CPUs,
Speaker 3: Amazon with its chip, and now Microsoft launching. I mean,
Speaker 3: they have one chip, but the first generation was not
Speaker 3: you could say, did not do that well in terms
Speaker 3: of you know, reception from customers. What Microsoft is hoping
Speaker 3: here right now is, you know, for training, they'll still
Speaker 3: use the more powerful in video chips, but for you know, running,
Speaker 3: let's say a copilot, they could get around and use
Speaker 3: less powerful chips and big band. If they do that,
Speaker 3: they actually save.
Speaker 5: A lot of money.
Speaker 3: You know, in our math, we think if if Microsoft
Speaker 3: is going to spend you know, somewhere north of one
Speaker 3: hundred and forty billion dollars this year, more than fifty
Speaker 3: of that is going to go just buying chips, and
Speaker 3: so you know, it's it's a very big ticket for
Speaker 3: them and they everybody needs to be doing this frankly
Speaker 3: in house.
Speaker 2: So what's the next thing we should be looking for?
Speaker 2: We get earnings coming up this week. An Aaraj just
Speaker 2: gives a little preview kind of what you think the
Speaker 2: market's keying on this time around.
Speaker 3: The biggest thing we want to know is where are
Speaker 3: the use cases, what kind of AI adoption we are
Speaker 3: seeing across different sectors, And that's I think was going
Speaker 3: to probably be the most important thing for us. We
Speaker 3: have already seen that infrastructure spending is very high. Everybody
Speaker 3: has that big AI factory in place, but is the
Speaker 3: demand coming from you know, non LLLM customers to deploy
Speaker 3: those And that's really I think that one of the
Speaker 3: biggest focus areas for us going into this earning season
Speaker 3: and probably all of twenty twenty six.
Speaker 2: So what's the what do you think is the best
Speaker 2: positioned kind of the big tech names that you follow
Speaker 2: for twenty twenty six year, because there's probably as much
Speaker 2: concern in the marketplace that this could be a year
Speaker 2: where the AI story begins to disappoint.
Speaker 4: Perhaps.
Speaker 3: Yeah, I mean, if you think about it, the three
Speaker 3: companies that are probably most i mean better position than
Speaker 3: the others are really Microsoft, Google and Amazon, because not
Speaker 3: only do they have an emerging AI infrastructure business, but
Speaker 3: they also have a legacy cloud business. And one of
Speaker 3: the ways you deploy this technology is using cloud. So
Speaker 3: if you're building an application using one of the lllms,
Speaker 3: you're hosting it in one of these cloud providers, and
Speaker 3: we've already seen that and improvement in growth rates for
Speaker 3: Microsoft and Google, and I think this year we see
Speaker 3: that improvement coming in for Amazon as well.
Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this.
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Speaker 2: Let's redrive into your little healthcare here we can check
Speaker 2: in with Sam Fizzelli joins us in Bloomberg Intelligence. He's
Speaker 2: over there in London covering all the healthcare stuff for us. Sam,
Speaker 2: what's front of mine as you go into earning season
Speaker 2: this season for investors in some of the biotech and
Speaker 2: big cap big farmer companies.
Speaker 6: Yeah, so, Paul, I think what people hope to hear
Speaker 6: and expect to hear is that all that MFN stuff
Speaker 6: is behind us, All the negotiations have happened. They're not
Speaker 6: worried about any any talk of it anymore. And of
Speaker 6: course what people are also looking for is what farmer
Speaker 6: is doing. Looking into twenty eight twenty nine thirty with
Speaker 6: some patent expiies. How good does their pipeline looking? Are
Speaker 6: they still solidly behind it? It's a tid have any
Speaker 6: negative things to day the pipeline and also listen out
Speaker 6: for m and A right MNA is what there this
Speaker 6: solution to some of these issues they might have with
Speaker 6: their patents are and thatfore that's what biotech investors are
Speaker 6: looking for in terms of what are the kinds of commentary.
Speaker 6: Remember or we just had this up and down yo
Speaker 6: yo with Revolution Medicine share price where there was a
Speaker 6: rumor that Merk might be wanting to buy them, and
Speaker 6: a JP Morgan they said, look, we got tens of
Speaker 6: billions of dollars to put to work. And of course
Speaker 6: that's a sort of number that people were thinking about
Speaker 6: Revolution Medicine and apparently they've walked away from each other.
Speaker 6: So we've done a lot of analysis on that. But
Speaker 6: that's the sort of thing people are going to be
Speaker 6: looking for.
Speaker 5: I didn't realize that Mark was this price sensitive.
Speaker 7: I mean, how how much more particular how much more
Speaker 7: price sensitive are these big tech not big tech sorry
Speaker 7: there In a way they're kind of like tech companies,
Speaker 7: big pharmer companies going to be at this stage of
Speaker 7: M and A.
Speaker 6: Yeah, I mean there's price and price though, right. I mean,
Speaker 6: what we calculated here is that at about a thirty
Speaker 6: billion dollar value for Revolution Medicines. The only way it
Speaker 6: would have worked is if you had the largest number
Speaker 6: that we might be out there already with in terms
Speaker 6: of sales going out to twenty thirty five, and assume
Speaker 6: a massive cash generation out of that, something in the
Speaker 6: region of sixty seventy eighty percent cash conversion doable. Novel
Speaker 6: had a few years of having like almost one hundred
Speaker 6: percent cash conversion. The point is that doesn't usually work
Speaker 6: a in a standard farmer company. So we just thought
Speaker 6: that number was too much, and it turns out to
Speaker 6: be what the company came out, not too much, but
Speaker 6: too hard to justify. I mean, Revolution Medicine is a
Speaker 6: classy company, it's got a great pipeline. Probably it's got
Speaker 6: to change the fate of many people with pacreatic cancer.
Speaker 6: We'll have to wait and see the data. So there's
Speaker 6: a lot going for them, but price sensitivity, and we've
Speaker 6: thirty billion dollars a small amount of money.
Speaker 2: M and A in twenty twenty six am so we
Speaker 2: expect it to be another robust year in the healthcare space.
Speaker 6: Yeah, yeah, yeah. I mean biotech was pretty good last
Speaker 6: year in terms of farmer buying them and some biotech
Speaker 6: buying each other. We had gen Map buying mirrors, so
Speaker 6: I think that would be still the case. Whether this
Speaker 6: stal happens or not, whether it happens at one hundred
Speaker 6: and ten dollars a share or whatever, or never happens.
Speaker 6: There's plenty of food assets out there. What also we're
Speaker 6: looking at for twenty twenty six is IPOs. We've had
Speaker 6: a couple already holding above the issue price, and I
Speaker 6: think people are hoping maybe we get twenty to twenty
Speaker 6: five IPOs in twenty twenty six.
Speaker 5: Stay with us.
Speaker 2: More from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am easterne on Apple, Cocklay and Android
Speaker 1: Otto with the Bloomberg Business app. Listen on demand wherever
Speaker 1: you get your podcasts, or watch us live on YouTube.
Speaker 7: David Wu has been one of my favorite guests for years.
Speaker 7: He was the head of inter interest rates and Economic
Speaker 7: research at BAVA for many many years. One of our
Speaker 7: long term guests, and then he retired. He had told
Speaker 7: me even before he retired that he was planning to
Speaker 7: write a book. And this book is now about to
Speaker 7: be published.
Speaker 5: So David Wu joins us right now.
Speaker 7: He is a founder of strategist of Unbound Retail on
Speaker 7: his new book, Mary Go Round Broke Down, a novel
Speaker 7: of guilt, greed and globalization.
Speaker 5: David, good to speak with you.
Speaker 7: You now live in Israel, You've written this book, it's
Speaker 7: about to be published. Except the world is very different
Speaker 7: than what it was when you first started writing this book.
Speaker 5: What stage of globalization are we at right now? Isn't
Speaker 5: it just deglobalization?
Speaker 4: I think, you know, honestly, Scarlett, I think is as
Speaker 4: dead as Dodo actually. And the way I look at
Speaker 4: this is that I'm just hoping and I know it's over.
Speaker 4: I'm just hoping that, you know, we're not going to
Speaker 4: throw out the baby with the bath water. And this
Speaker 4: is the reason why I wrote the book, by the way,
Speaker 4: because I now want to basically take the war the
Speaker 4: battle organization to the general public. This is why I
Speaker 4: wrote it as a novel as opposed to another policy book,
Speaker 4: because I want to basically explain I want to basically
Speaker 4: make accessible the story of globalization to every person in
Speaker 4: the stry, regardless their background, so that we can make
Speaker 4: a decision about which part we want to keep and
Speaker 4: which part we want to part with. So that that's
Speaker 4: really the purpose of the book, because I think, you know,
Speaker 4: to be honest with you, I think for the world
Speaker 4: to be a better place, there's never been more important
Speaker 4: for everybody. I'm talking about everybody to understand the workings
Speaker 4: of the world.
Speaker 2: So David, to the extent that globalization is at the
Speaker 2: very least losing prominence in global trades, some people would
Speaker 2: say the ear of globalization is over. I don't know
Speaker 2: what's changed in the last several years, because it really
Speaker 2: seemed to be on a post World War two pretty
Speaker 2: solid trajectory, right.
Speaker 4: I think for the most part, I think, you know,
Speaker 4: the honest truth is if you look at what's going on, right,
Speaker 4: I mean, we all knew the US has not only
Speaker 4: been the guaranteur of the root based global order that
Speaker 4: it's been in place for whatever seventy years, let's call
Speaker 4: it dapts, right, and the US has also been, you know,
Speaker 4: the biggest beneficiary. Now, so the question is why all
Speaker 4: of a sudden, the US wants to walk away from
Speaker 4: this root based order. I think the answer is pretty obvious,
Speaker 4: which is that the US was the main beneficiary as
Speaker 4: long as the US economic and military domination was total,
Speaker 4: and it's become very clear that this is no longer
Speaker 4: the case. And therefore the US decided that, you know what,
Speaker 4: we want to be able to reposition ourselves in a
Speaker 4: competitive way. This is why we want to basically do
Speaker 4: away with the rules. And this is why, in a way,
Speaker 4: you know, the I mean, the whole Medora's extraction from Venezuela,
Speaker 4: it was not about the US is trying to go
Speaker 4: down to Venezuela to promote democracy. I mean, this is
Speaker 4: really about an oil grab. It's about the US. I mean,
Speaker 4: it's China no longer the US that is the dominant
Speaker 4: trading partner for South America, the biggest sovereign lender, and
Speaker 4: then US decided that's it, that's what we're going to do.
Speaker 4: So I think, not point of view, this is what
Speaker 4: it is. I mean, it's not about globalization or not.
Speaker 4: It's about the global you know. I mean, I think
Speaker 4: it's about the group based international order that has come
Speaker 4: to an end. I mean, I'm sympathetic to the view
Speaker 4: of you know, Mark Karney, who declare it this thing.
Speaker 5: Is over right.
Speaker 7: And to the US's credit or to President Trump's credit,
Speaker 7: he never pretended that this was about promoting democracy in Venezuela. Right,
Speaker 7: It was always about oil, and he was pretty upfront
Speaker 7: about that. So in your book, David Merry, Go Around,
Speaker 7: Broke Down, you have a number of different characters to
Speaker 7: really tell the story of globalization from their perspective. There's
Speaker 7: a director of a failing factory in China, a trader
Speaker 7: in London, a Japanese housewife who learns and.
Speaker 5: Perfects the yen carry trade.
Speaker 7: A Mexican artist who becomes an undocumented worker in the US.
Speaker 7: Which is your favorite first of all to write about,
Speaker 7: Which is the one that you think can survive in
Speaker 7: this next stage of globalization slash d globalization?
Speaker 4: You know, the honest truth is and I'm embarrassed to
Speaker 4: say this is of course the hedgeflon manager.
Speaker 5: I knew it said in a way it's very sad.
Speaker 4: It's very sad. I mean, this is what we have
Speaker 4: a K shape economy right now. You know, people the
Speaker 4: world could be going to para shape, but somebody is
Speaker 4: gonna make some money basically on their way down. And
Speaker 4: that's what it is. I mean, this is why, like
Speaker 4: you know, I think, not put of view, it's actually
Speaker 4: the financialization of a global crisis that's making a lot
Speaker 4: of people very rich. And I'm not just talking about obviously,
Speaker 4: you know, the hedge funds, whatever. I mean, everybody's trying
Speaker 4: to milk this cow because what is really going on.
Speaker 4: Also part of this is that ironically, you know, as
Speaker 4: Trump tries to dismantle the order his the only thing
Speaker 4: that he cannot dismantle is the stock market. That's the
Speaker 4: honest true. This is why talk is taking Trump less
Speaker 4: and less time to taco and because at the end
Speaker 4: the day, for him to go out there and win
Speaker 4: trade wars, he needs the U s stock market to cooperate.
Speaker 4: I mean, the honest truth is if the US economy
Speaker 4: would have gone into a recession last year if it
Speaker 4: hadn't been for the stock market. So not put of view, like,
Speaker 4: that's just what it is. And so people get it.
Speaker 4: People get it. This is why every everybody and their
Speaker 4: grandmother's overweight stocks. Everybody in the grandmother's overweight goal, so
Speaker 4: basically buying stocks and buying gold has become the Trump
Speaker 4: traits of basically a second term, and it's about how
Speaker 4: he's going to dismantle the world, but he has to
Speaker 4: tackle when the stock market even has a little basically
Speaker 4: coughing context.
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