Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hyde and New York
Speaker 1: and ed Lo Loow in San Francisco.
Speaker 2: This is Bloomberg Tech coming up. SpaceX pitches a twenty
Speaker 2: eight point five trillion dollar opportunity from AI to Mars
Speaker 2: ahead of an all time blockbuster IPO. We break down
Speaker 2: the S one plus and video fails to reignite the
Speaker 2: AI trade as CEO Jensen Wang pushes to diversify the
Speaker 2: chip maker, saying AI is set to go mainstream and
Speaker 2: another major IPO on the horizon Open AI preparing for
Speaker 2: a filing which could come as soon as tomorrow. Let's
Speaker 2: get straight to our top story. SpaceX has publicly filed
Speaker 2: for an IPO, and in the process this closed billions
Speaker 2: of dollars in losses along with a super voting share
Speaker 2: structure that would give Elon Musk sweeping control over the company.
Speaker 2: The ticker will be sp c X. The filing also
Speaker 2: underscores just how ambitious SpaceX believes its future could be.
Speaker 2: Today's big number twenty eight point five trillion dollars the
Speaker 2: total addressable market. The company says it's pursuing according to
Speaker 2: the documents. So let's get more on SpaceX's IPO and
Speaker 2: on Starship at the heart of it. Bloomberg Managing editor
Speaker 2: for space Benedict Cammell, Bloomberg Deals reporter Ryan Gord Benny,
Speaker 2: I start with you. We learned a lot about the
Speaker 2: reality of where SpaceX's business is right now, So let's
Speaker 2: start there. The numbers that jumped out of you as
Speaker 2: we poured through the document and went through it with
Speaker 2: a fine tooth comb.
Speaker 3: Yeah, I mean you've already mentioned some of them, and
Speaker 3: the one that really was a Bonker's number, let's say
Speaker 3: it is the total addressable market. The market they're targeting
Speaker 3: just shy of ninety twenty nine trillion, And so that's
Speaker 3: one number that I think everyone sort of gulped at.
Speaker 3: But also on the other sort of end of the spectrum,
Speaker 3: the sales and the loss are actually not that great.
Speaker 3: So you've got a company here with quarterly sales of
Speaker 3: just shy of five billion and with a loss that's
Speaker 3: not that dissimilar. So for a company with those kind
Speaker 3: of numbers to seek a valuation of two trillion, that
Speaker 3: is obviously pretty steep. We then saw what Musk is
Speaker 3: trying to sort of retain the control he's trying to control.
Speaker 3: He wants to retain in the company about forty one
Speaker 3: percent of a control that he wants to keep, so
Speaker 3: that obviously gives them a really hard sort of control
Speaker 3: of the company. So he's the man in charge and
Speaker 3: he will remain so going forward.
Speaker 2: The debt pile twenty nine billion dollars. I want to
Speaker 2: get into how this IPO is going to work, Ryan,
Speaker 2: What do we confirm about the banks, whose lead left,
Speaker 2: whose lead, and who's behind? But also like the because
Speaker 2: if this is going to be the biggest IPO of
Speaker 2: all time, dollars raised or valuation doesn't matter in your world,
Speaker 2: it does matter who's trying to pull it off.
Speaker 4: It does.
Speaker 5: And you know, there's been so much said and written
Speaker 5: over the past what two, three, four, five months around
Speaker 5: who's actually going to be quote unquote leading this deal.
Speaker 5: I mean, if you look at the s one Goldman
Speaker 5: Sex is in that plum left position to the right
Speaker 5: of them, and Morgan Stanley, Bank of America's City Group
Speaker 5: and JP Morgan that the last three sort of in
Speaker 5: alphabetical order as it were. But you know, I think
Speaker 5: if you're Goldman Sex, You're looking at this and saying,
Speaker 5: this is a great marketing win for us. You know,
Speaker 5: we are the preeminent franchise for IPOs and technology on
Speaker 5: the street. And then you're Morgan Stanley, who maybe is saying, well,
Speaker 5: you know, we've done a lot of work for Elon
Speaker 5: Musk over the years, what does that mean for us? Well,
Speaker 5: if you actually dig down into the final you can
Speaker 5: see that Morgan Stanley does have that stabilization agent role,
Speaker 5: which I will say, you know is not something to
Speaker 5: you know, really pass over. The stabilization role is crucial
Speaker 5: to trading that very first day flow and in some
Speaker 5: cases that could be up to twenty to thirty percent
Speaker 5: of that flow on day one, and they're obviously going
Speaker 5: to take a certain cut of that revenue. So you know,
Speaker 5: it comes down at the end of the day to
Speaker 5: sort of marketing vesus economics. I mean, our understanding is
Speaker 5: that the economic structure in terms of who's getting the
Speaker 5: fees is roughly equal. But if you're goldm and Sex,
Speaker 5: you're able to go out to your investors and say, oh,
Speaker 5: your shareholders and say, you know, we are leading the
Speaker 5: biggest IPO of all time.
Speaker 2: And that's clearly huge, and we got the reporting that
Speaker 2: David Solomon Goldman CEO slid into us DMS to get
Speaker 2: that win. Benny. The other important thing is who controls
Speaker 2: this company? What do we learn about Elon Musk's voting power.
Speaker 3: Yeah, so he retains absolute control over the company overall,
Speaker 3: just north of forty percent. Some other interesting investors in there.
Speaker 3: We're not quite sure what the role of Google is.
Speaker 3: They're obviously an early investor in this, but this is
Speaker 3: a company that will mint lots of billionaires and possibly
Speaker 3: the first trillion there if Musk gets his way, if
Speaker 3: the pricing turns out as hoped, and he could really
Speaker 3: get into a very different stratusphere altogether, if he gets
Speaker 3: those bonus shares. That's something that was also teased yesterday.
Speaker 3: If you managed to actually put people on Mars, if
Speaker 3: you managed to inhabitate Mars with a colony.
Speaker 4: I know this all.
Speaker 3: Sounds deeply science fiction, but if he does that, and
Speaker 3: if he takes the valuation of the company to a
Speaker 3: certain level, he stands to gain another one billion and
Speaker 3: bonus shares, so again, that will sort of lift an
Speaker 3: already very wealthy man into a very different stratosphere.
Speaker 2: Bloombergs, Benedict camaon Wrangel, thank you very much. The SpaceX
Speaker 2: prospectus ask investors to believe in three things AI in space,
Speaker 2: a million people on Mars, and Elon Musk's ability to
Speaker 2: make it all happen. But that's also what great IPO
Speaker 2: storytelling is supposed to do, sell the investors on a
Speaker 2: future that doesn't yet fully exist. Joining us now is
Speaker 2: Lauren Webster, Piper Sandler's head of investment banking. Just stay
Speaker 2: off the bat. You know, Piper Sandler is not involved
Speaker 2: in this IPO, but you know this industry, you know
Speaker 2: how an IPO works, and this will be the biggest
Speaker 2: IPO of all time. When you read that document as
Speaker 2: far fetched and out of this world as it was,
Speaker 2: what were you thinking?
Speaker 6: I was certainly thinking aspirational visionary. But let's unpack for
Speaker 6: starters the TAM that you spoke about.
Speaker 2: Okay, so you have this document and you have to
Speaker 2: say something, yes, and what you say is we see
Speaker 2: a world where the market ahead of us is twenty
Speaker 2: eight point five trillion dollars, but twenty six point five
Speaker 2: trillion is just AI.
Speaker 4: Yep.
Speaker 7: Yeah, So two observations.
Speaker 6: First, I think every prospectus has a very lofty TAM
Speaker 6: in it, so.
Speaker 7: This is not out of the ordinary. It truly is
Speaker 7: par for the course.
Speaker 6: The second one is every company going public wants to
Speaker 6: be able to tell investors we have multiple ways to
Speaker 6: win in multiple tams to be able to touch So, yes,
Speaker 6: huge numbers. We can kind of quarterback Monday morning, quarterback,
Speaker 6: what's right, what's wrong in there? But it is saying
Speaker 6: to investors we have multiple paths here to really meet
Speaker 6: that growth outlook that you're investing us to achieve.
Speaker 2: Is it believable the term number any of it.
Speaker 6: I don't know if I've fully truly believed any tam
Speaker 6: put in a prospectus, and I've always been able to
Speaker 6: poke holes in it. I think probably the one that
Speaker 6: was the biggest gap for me is really that enterprise
Speaker 6: application Wedge right, So you saw.
Speaker 7: A very sort of rational stare step.
Speaker 6: The enterprise application one needs a lot of unpacking, but
Speaker 6: I think that's part of the story here, is that
Speaker 6: there are really three core pieces and each of these
Speaker 6: are going to be foundational to the future of how
Speaker 6: enterprises deliver services to their customers.
Speaker 2: I think what SpaceX is arguing through Xai, which is
Speaker 2: part of the story it owns Xai is that they
Speaker 2: are going to take on your open Ais anthropics googles
Speaker 2: in the market for agentic AI talk about how white
Speaker 2: collar work will be transformed. But is the TAM even
Speaker 2: from a potential investors perspective, calculable, whether you believe it
Speaker 2: or not. You know, there has to be some math
Speaker 2: involved on how SpaceX we get into that market.
Speaker 6: Yeah, look, I think I think they're already delivering in
Speaker 6: some of those areas, certainly on let's just take the
Speaker 6: Xai piece and what they're doing with the Colossus data
Speaker 6: centers and now having Anthropic come in as a key
Speaker 6: customer there. But that is a market that we are
Speaker 6: going to hear over and over again throughout this year.
Speaker 6: You mentioned open Ai IPO coming up potentially really large
Speaker 6: TAM numbers because it really does touch every part of
Speaker 6: the enterprise ecosystem and then flowing down into consumer daily life.
Speaker 2: We maybe should have started here, But why does the
Speaker 2: preliminary prospectus matter? What is it that needs to happen,
Speaker 2: you know, in convince and seeing the market to participate
Speaker 2: in this IPO.
Speaker 6: Yeah, so a good question. In a few areas where
Speaker 6: it's really really critical. One is the storytelling, and I
Speaker 6: think unpacking that story, there's three core parts that we've
Speaker 6: talked about in terms of what are you investing in.
Speaker 6: You're investing a core space business, really the foundation of
Speaker 6: SpaceX launch rocket, where they have a tremendous leg up
Speaker 6: on the competition and have really bent the cost curve
Speaker 6: associated with the future space economy. Two is really telling
Speaker 6: the story around autonomy and connectivity for that autonomy at
Speaker 6: the edge with Starlink, and that we as Starlink are
Speaker 6: going to be able to empower power the connect to
Speaker 6: be required for everything we're going to do with autonomous
Speaker 6: vehicles robots go down the list. And then three is
Speaker 6: really the aipiece. So that's the storytelling. And then of
Speaker 6: course you also have the numbers behind that, risks associated
Speaker 6: with it and informing investors of what they're getting into.
Speaker 7: But first inform I was telling that story prior.
Speaker 2: To the offering. Elon Musk has eighty five point one
Speaker 2: percent voting power based on the structure of the shares.
Speaker 2: Historically in big IPOs, how has that been a factor.
Speaker 6: Yeah, so you've certainly seen across the tech industry these
Speaker 6: you know, dual share classes where founders retain significant, if
Speaker 6: not nearly total control.
Speaker 2: In terms of what spep of voting share class exactly.
Speaker 6: I think for Musk in particular, he has a very
Speaker 6: long leash with investors in terms of capital intensive projects,
Speaker 6: in part because what he's delivered with Tesla, what he's
Speaker 6: been able to do in the space economy today. And
Speaker 6: so while you know there is some potential caution, it's
Speaker 6: not unexpected that he would retain this type of control.
Speaker 6: And we've certainly seen it in prior tech IPOs.
Speaker 2: And we just have about a minute left. What do
Speaker 2: you think is going to happen? How do you think
Speaker 2: this is going to go?
Speaker 6: Drawing your experience, Yeah, yeah, So a few things I'm
Speaker 6: really looking forward to the Starship launch this evening is that.
Speaker 7: I think it is important. It is not binary.
Speaker 6: What it does is you're we're already seeing tremendous investor
Speaker 6: enthusiasm around the SpaceX IPO. I think that enthusiasm holds
Speaker 6: even if Starship doesn't go. Musk and SpaceX have primed
Speaker 6: us to understand there is failure when you're doing big things.
Speaker 6: But if it goes well this evening, I think that
Speaker 6: creates even greater enthusiasm and sort of creates the crescendo
Speaker 6: around this opportunity, which is of course what he's hoping for.
Speaker 2: Lauren Webster of Pipe Sandler Post SPACEXS one terrific. Now
Speaker 2: coming up. By the way, the world's biggest company, most
Speaker 2: valuable company, reported earnings last night. You may not be aware,
Speaker 2: but we got Toro Prices Tony one to break down
Speaker 2: in Vidia's earnings results and get a real investors reaction.
Speaker 2: That's next. This is Bloomberg Tech reality check for Nvidia
Speaker 2: shares now down two percent. We've been flat for most
Speaker 2: of the pre market. We kind of had choppy trading,
Speaker 2: swinging between modest gains and modest losses early in this
Speaker 2: Thursday session after actually a strong forecast and a pitch
Speaker 2: that Nvidia is diversifying from the data center giants. Gens
Speaker 2: One said on a conference called Analysts that from robots
Speaker 2: to row of taxis and every kind of startup in between. Quote,
Speaker 2: we got it all covered, but investors have become harder
Speaker 2: to impress. Joining us to break it all down. Tony One,
Speaker 2: portfolio manager of the t row Price science and technology
Speaker 2: funding across the firm in different guises. You know, trow
Speaker 2: a big investor of in videos. Okay, let's start ninety
Speaker 2: one billion dollars plus or minus two percent in the
Speaker 2: second quarter. It was like almost the whisper number the
Speaker 2: cell side and the buy side, but not enough, you know,
Speaker 2: and why is that?
Speaker 8: Hey, Look, I think that the growth at this scale
Speaker 8: is just unprecedented. I don't think the market's ever seen
Speaker 8: anything like it. And I think you think about traditional
Speaker 8: semi investors, you know, the playbook is to sell this
Speaker 8: type of growth, right because it's not sustainable.
Speaker 4: You know, the margins are peaked.
Speaker 8: But I think if you really look at what's going
Speaker 8: on at the driver of the driver, like what's going
Speaker 8: on in the end demand, I think it's like really
Speaker 8: phenomenal in terms of agentic AI really taking off. The
Speaker 8: time of work or like time of task is expanding.
Speaker 8: Instead of being one shot or the you know, the
Speaker 8: agent working for a few minutes, I think we're going
Speaker 8: to go towards like months of work and that's requires
Speaker 8: like a lot of compute to have an agent go
Speaker 8: off and like complete a task and think and be persistent.
Speaker 8: And then this other thing is I think that scaling
Speaker 8: laws continue to hold like the frontiers are getting better.
Speaker 8: The more compute throw at it, the better they get.
Speaker 8: And you actually save money by being on the frontier
Speaker 8: because it doesn't go through so many rabbit holes in
Speaker 8: terms of trying to.
Speaker 4: Complete your task.
Speaker 8: So I think if you look at like the end
Speaker 8: of Man, it's actually very encouraging, and I think we're climbing.
Speaker 4: A wild worry here as a result.
Speaker 2: So the thing that I was trying to digest throughout
Speaker 2: the call is with the data points that Jensenmong and
Speaker 2: collect Cress put forward as evidence of that, right, the
Speaker 2: scaling laws and the dollar pot token, and they go
Speaker 2: to this one trillion dollar figure, which I think they
Speaker 2: clarified is Blackwell Rubin and it's for calendar year twenty
Speaker 2: twenty five to twenty twenty seven, and it's basically a backlog, right,
Speaker 2: But the main overarching point is that they would argue
Speaker 2: that in Nvidia's own growth is trending ahead of even
Speaker 2: the hyperscale capex growth. How do you model for that? Like,
Speaker 2: is that the math that you would do.
Speaker 4: Yeah.
Speaker 8: One of the things that was really encouraging I think
Speaker 8: of the quarter is that I actually broke out like
Speaker 8: hyperscale versus the prize and sovereign and so, you know,
Speaker 8: I think the baarrecase is that, you know, in Nvidia
Speaker 8: can't outgrow the hyper hyperscale CAPEX numbers, but there's all
Speaker 8: this new tam that's emerging that's not hyperscale, and you know,
Speaker 8: I think they continue to do well in hyperscale, but
Speaker 8: there's also new areas of a gentic enterprise adoption.
Speaker 4: I think you look at.
Speaker 8: Talks to financial services firms, they're adopting a lot of
Speaker 8: a lot of this end demand that in Nvidia is producing.
Speaker 8: And so I think that plus robotics that's on the
Speaker 8: on the to come in the future, I think that
Speaker 8: you know, allows them to see you know, not just
Speaker 8: not bet bracketed in this like hyperscale kind of compute,
Speaker 8: you know, paradigm here.
Speaker 2: A tiny, slightly unusual situation. But I spoke to Jensen
Speaker 2: at some length for Monday prior to earnings, but actually
Speaker 2: a lot of what he said about the demand supply
Speaker 2: equation was very prescient salient. Just listen to what he said.
Speaker 4: We have the largest supplied chain in the world.
Speaker 9: Our partners have done a great job securing supply for
Speaker 9: and so all of the pieces go together, the silicon,
Speaker 9: photonics is lined up, everything is all lined up. It's
Speaker 9: just that the demand is much greater than the overall
Speaker 9: capacity of the world.
Speaker 2: If you are a student of technology history, finding yourself
Speaker 2: in a situation where demand is vastly outpacing your ability
Speaker 2: to supply, even in a world where supply chains are
Speaker 2: doubling or quadrupling panon, which is what he went on
Speaker 2: to say, that's been an enviable position. But right now
Speaker 2: it's not moving the needle for this stock.
Speaker 8: Yeah, I mean I think that you know, the market
Speaker 8: is looking at relative earnings growth and where the bottlenecks are,
Speaker 8: so capital's flowing there. But at some point, you know,
Speaker 8: you look at the multiple for nvideo, it's like really attractive.
Speaker 8: And in addition, like there's there's a point where, you know,
Speaker 8: for the growth it is like tremendous looking at the
Speaker 8: peg ratio of the expectations. So if the growth is durable,
Speaker 8: you know, I think you can see multiple expansion actually
Speaker 8: from the levels and that's pretty exciting for holders. And
Speaker 8: in addition that it is the platform that a lot
Speaker 8: of this AI infancing is going to be built on.
Speaker 8: I think infancing is going to be much bigger than training,
Speaker 8: and training is also still growing because of scaling loss.
Speaker 8: In addition, I would say that like at this valuation,
Speaker 8: you know, they are doing a capital return program. And
Speaker 8: so I covered Apple and in Nvidia for t ROW
Speaker 8: and I was super lucky to get that. I saw, like,
Speaker 8: you know what Apple did with the return program. You know,
Speaker 8: it didn't like you know, re rate the stock from
Speaker 8: day one, but over time, consistent capital turn at that
Speaker 8: evaluation really expand the multiple. I think within Vidia it
Speaker 8: could be a similar story where it becomes less cyclical
Speaker 8: more durable as a result. So I think it's you know,
Speaker 8: they're doing the right things here with the disclosure as
Speaker 8: well as, like you know, with the capital turn program.
Speaker 4: I think just a matter of time here.
Speaker 2: I think right now in videos trading it like twenty
Speaker 2: two times forward twelve months earnings, right, I think I'll
Speaker 2: double check it. Something you just is really interesting, which
Speaker 2: is basically use of capital. So the frustration with Apple
Speaker 2: is like do something. And maybe that story is changing
Speaker 2: with Apple in the handover to John Turnus, but in
Speaker 2: Nvidia has gone out there and invested in the ecosystem
Speaker 2: in small increments. Two billion here, two billion dollars there.
Speaker 2: How does Tony Wong read that strategy of investing.
Speaker 4: I think it's really smart.
Speaker 8: I mean, I think that when you're at the frontier
Speaker 8: of technology, you have to build the ecosystem and bring
Speaker 8: up the supply chain, bring up the partners. And you know,
Speaker 8: Video has been really smart in terms of using their
Speaker 8: free cash flow to extend that it also builds their
Speaker 8: ecosystem as well as further's the you know, the technology frontier.
Speaker 4: So I think it's it makes a lot of sense.
Speaker 8: And you look at the deals they've done in the
Speaker 8: private markets, they've been pretty good, so like great for shareholders,
Speaker 8: great for building the ecosystem, and they have excess cash still,
Speaker 8: so I think that just goes back to like they
Speaker 8: are like this single architecture platform and there's tremendous leverage
Speaker 8: on it and you see where the margins are gone,
Speaker 8: and so that's been their whole whole you know, bed
Speaker 8: from like day one, I think is that they're an
Speaker 8: ecosystem company, and I think you're seeing it play through
Speaker 8: here as they build it out continuously.
Speaker 2: We actually have a VC on later in the program
Speaker 2: whose portfolio companies you know, are so tied to in video,
Speaker 2: and we'll have that conversation just to close the loop.
Speaker 2: By the way, in video does trade twenty two times
Speaker 2: forward earnings, but historically it's like nearer to thirty four.
Speaker 2: Jensen has this equation, more compute equals more tokens equals
Speaker 2: more revenues. Do you see those revenues coming out the
Speaker 2: other side for all of Nvidia's customers.
Speaker 4: Absolutely, yeah, definitely.
Speaker 8: I know you look at like the cloud demand, you
Speaker 8: look at pricing for GPUs, I mean these are all
Speaker 8: GPUs pricing is holding up phenomenally well. And you know
Speaker 8: you look at like the enterprise demand inflection that's happening,
Speaker 8: and you see it. You know, we see in our
Speaker 8: own company we're developing AI solutions and it's eating up
Speaker 8: a bunch of tokens where you know, we see the promise.
Speaker 8: Obviously there's experimentation. I think you're seeing that like come
Speaker 8: through then just real.
Speaker 2: Quick, like on on on the socials. That's what people
Speaker 2: just go nuts over right h one hundred, h one
Speaker 2: hundred pricing right now? Like are you tracking that?
Speaker 4: Oh?
Speaker 8: Yeah, yeah, I mean I think you think about the barcase.
Speaker 8: You know, twenty four months ago it was that like oh,
Speaker 8: like the obsolescence of video GPUs is like three or
Speaker 8: four years. Well, well, first of all, the warranty on
Speaker 8: these things are three or four years, and then also
Speaker 8: you know, you have that depreciation and so you're able
Speaker 8: to like adjust the pricing, you know. But even so,
Speaker 8: like the demand's been so good that you know, we're
Speaker 8: seeing more value coming out of the older GPUs and
Speaker 8: even a one hundreds if you were using.
Speaker 2: Them, even a one hundreds, if you're out there running
Speaker 2: workloads on a one hundreds, give me a call. I
Speaker 2: want to know turny one with trow price back on
Speaker 2: b Tech. Thank you so much. Now coming up, we're
Speaker 2: gonna hear from airbnbc O Brian Chesky actually on the
Speaker 2: company's use of AI models from China. That's next. This
Speaker 2: is Bloomberg Tech. The CEO of Airbnb has defended his
Speaker 2: company's use of open source AI models from China. Last month,
Speaker 2: the Congressional Committee asked Airbnb for more information about its
Speaker 2: use of these models as part of a broader investigation.
Speaker 2: The committee says it has concerns about the implication for
Speaker 2: Airbnb's American customers. Here's what Brian Chesky told me in
Speaker 2: response to that yesterday.
Speaker 10: We are not a customer of those companies. We're using
Speaker 10: a variety of different open source models. I just want
Speaker 10: to say a few things about this matter. Number One,
Speaker 10: data in privacy is most important to Airbnb. I think
Speaker 10: anyone who knows knows we have an outstanding track record
Speaker 10: on data security and privacy. Number two, all of our
Speaker 10: data is vaulted. No company has access to our data.
Speaker 10: It is vaulted in Airbnb. Number three, the Congressional Committee
Speaker 10: has reached out to us.
Speaker 4: They said they have some questions.
Speaker 10: We said, we want to coroborate, and so we're in
Speaker 10: direct contact, in cooperation with them.
Speaker 2: Airbnbco Brian Chesky in a conversation yesterday, how's everyone doing
Speaker 2: out there. Let's take a quick check on the markets,
Speaker 2: and it's taken a little bit of time to kind
Speaker 2: of find the story now as that one hundred is
Speaker 2: now down half a percentage point, the socks is basically
Speaker 2: flat in Nvidia is now firmly lower down two percent.
Speaker 2: But actually, funny enough, Walmart in its earnings is the
Speaker 2: biggest points drag at least on the Nasdaq one hundred.
Speaker 2: We have a lot more to come in the program
Speaker 2: about Nvidia, about the historic SpaceX S one and a
Speaker 2: whole lot more. Stay with us because it's halftime in
Speaker 2: the program, and this is Bloomberg Tech.
Speaker 9: The world is rebuilding computing for agentic EI, in robotic
Speaker 9: physical EI.
Speaker 7: Nvidia sits at the center of these transitions.
Speaker 2: Welcome back to Bloomberg Tech. That was in Vidia CEO
Speaker 2: Jensen Wong speaking on the earning score from fiscal second
Speaker 2: chord of financial year twenty seven earnings. One of the
Speaker 2: big takeaways from Nvidia's earnings was the rise in demand
Speaker 2: beyond the hyperscalers, Bloomberg Intelligence writing that it was a
Speaker 2: more important signal for the future than in Vidia's signature
Speaker 2: beat and raise. The author of that research, Bloomberg Intelligence
Speaker 2: is congensabani here with us. What is the world outside
Speaker 2: of the hyperscaler? What are we talking about? You know,
Speaker 2: some people would say, oh, this is about companies big
Speaker 2: and small building on prem right, and the Nvidia is
Speaker 2: going to have this whole new customer list that is
Speaker 2: that of that size. It's hard to see. Give me
Speaker 2: the full thesis.
Speaker 11: Yeah, you know that second segment is vial fragmented, but
Speaker 11: people keep missing because it's very diverse. So, first of all,
Speaker 11: it has sob in right, which is itself driving billions
Speaker 11: of dollars of revenue all of the AI neo clouds.
Speaker 11: So when we look at the space in the AI
Speaker 11: neo clouds, that keeps on growing higher and higher, and
Speaker 11: they are becoming now a significant spender of CAPEX, which
Speaker 11: does not get captured in most of the CAPEX discussions
Speaker 11: from the public clouds that we hear. You have all
Speaker 11: of your AI labs up and coming, enterprise and industries
Speaker 11: deployment of on prem AI as well as these data
Speaker 11: center you know, guys who run the data centers are
Speaker 11: now becoming much more high GPU based AI data center
Speaker 11: cloud renters. So this fifty percent, which is expected to
Speaker 11: grow faster than the top hyperscaler segment, by the way,
Speaker 11: is getting more and more significant, especially for n Media,
Speaker 11: because this is where you have the least competition. The
Speaker 11: A six and the TPUs and the traineums don't compete
Speaker 11: in this segment, so it's purely monopolistic for Nvidia, and
Speaker 11: Media gets the highest stack attached to it means they
Speaker 11: can sell a lot more of their networking and their
Speaker 11: other components here and they get the best margins in
Speaker 11: this segment.
Speaker 2: I think during the call there was an attempt to
Speaker 2: clarify that that kind of mysterious one trillion dollar figure.
Speaker 2: So it runs calendar twenty five to the end of
Speaker 2: twenty seven. It is Blackwell and Reuben Systems, but it
Speaker 2: excludes Veri CPU and some of the other networking components
Speaker 2: you were just talking about. I always come to you.
Speaker 2: You always have your feet on the ground, right, It
Speaker 2: doesn't really matter what the number is that hits on
Speaker 2: the second quarter, ninety one billion pus minus two percent.
Speaker 2: That number, the one trillion, give me your kind of
Speaker 2: like base level understanding of it.
Speaker 11: Yeah, all it includes is just the black Bell and
Speaker 11: the Vera rubin the full stack that is going to
Speaker 11: start ramping in three Q.
Speaker 2: That's all it includes.
Speaker 11: It does not include, like you mentioned, that twenty billion
Speaker 11: CPU stand alone that they mentioned, right for twenty six
Speaker 11: and twenty seven. It does not include the grap based
Speaker 11: LPX server. It does not include the new launch of
Speaker 11: their storage based CPX servers and a few other networking components.
Speaker 11: So a lot of good, creamy revenues are not included
Speaker 11: in that. The one trillion number, by the way, based
Speaker 11: on our estimate, is rising so we think now it
Speaker 11: will be an upside to one trillion plus all these
Speaker 11: other list of items that are outlisted could be an
Speaker 11: upside to.
Speaker 4: That for revenues.
Speaker 2: Congensubarnie from Blueberg Intelligence. Your research is always the go
Speaker 2: to man. Thanks so much. That's far deeper into the
Speaker 2: Nvidia story. But also like the market reaction with Anna Rathmann,
Speaker 2: founder and CEO Agred of Deller Advisory, you know what
Speaker 2: we get ourselves into these frenzies. Well, like the Nvidia earnings,
Speaker 2: they're gonna hit, and they hit right, and you get
Speaker 2: the red headline on the Bloomberg and it's ninety one
Speaker 2: billion dollars plus or minus two percent, and then everyone
Speaker 2: goes But it doesn't even matter what the number is.
Speaker 2: It's everything else you're in the markets. Why do we
Speaker 2: behave like that?
Speaker 7: It's lonely at the top.
Speaker 12: I mean, when you're the largest company in the world,
Speaker 12: I don't think there's anything you can do to surprise
Speaker 12: investors to the upside. So you've become a company that
Speaker 12: needs to defend itself. And Vidia hit it out of
Speaker 12: the park in many ways, in almost all the ways
Speaker 12: that we expected them to, not only in the top
Speaker 12: line and earnings, but also you know, networking business growing
Speaker 12: as well as diversifying its customer base. Everything we've asked for,
Speaker 12: they've given us. But I think there are other things
Speaker 12: like is the growth actually slowing? Is the growth what
Speaker 12: we've been expecting for the last two or three years?
Speaker 12: And that's the question that I don't think and Video
Speaker 12: was able to answer. And the dividend increase, to me,
Speaker 12: was a big signal that what the investors had been
Speaker 12: worrying about might be coming true.
Speaker 2: Okay, I actually I apologize to my team in the
Speaker 2: control room. I'm going to do the opposite of what
Speaker 2: I just said. Okay, let's linger, then, let's linger on
Speaker 2: the shareholder returns.
Speaker 4: What were you.
Speaker 2: Getting at there? Give me a little bit more.
Speaker 12: Yeah, so you know, the buybacks, it's not that big,
Speaker 12: because if you're a multi trillion dollar company, eighty billion
Speaker 12: isn't that huge. See, it was really the dividend side
Speaker 12: of it. When a company starts to return to events,
Speaker 12: that's a multi year commitment, right. So that means while
Speaker 12: maybe we're not going to be finding other areas to
Speaker 12: invest in, we're just going to be returning some cash
Speaker 12: to the investors and that's a signal for growth companies
Speaker 12: that says, Okay, maybe we're not going to be growing
Speaker 12: as fast as you had anticipated. So that was a
Speaker 12: small signal. We'll see what happens. I still think in
Speaker 12: video is going to continue to grow because of this
Speaker 12: massive ecosystem there at the center of but it was
Speaker 12: definitely a signal, maybe a small one, but a certain one.
Speaker 2: We're sharing this image on the screen, right, and we
Speaker 2: went into this earnings prior to them hitting saying two things.
Speaker 2: Everyone expects a beaten raised situation, but also it doesn't
Speaker 2: really matter historically what in Vidia says that data. I
Speaker 2: appreciate there's a lot there is how the S and
Speaker 2: P five hundred trades in the days and months that
Speaker 2: follow in Nvidia earnings even when they beat big and
Speaker 2: there's no guarantee that the market is going to sort
Speaker 2: of respond with euphoria, you know, does that matter anymore?
Speaker 2: This kind of story that the index level, given in
Speaker 2: Vidia's size and scale, that was kind of what we
Speaker 2: were all bracing for.
Speaker 12: Yeah, I mean it matters because of its size, right,
Speaker 12: the largest company behaving this way is going to have
Speaker 12: an impact on the index. Now, this reminds me of
Speaker 12: how Apple used to behave about ten plus years ago.
Speaker 12: There is nothing that Apple could do to satisfy investors.
Speaker 12: The market would actually punish them for it. So I
Speaker 12: think this is just what happens when you are at
Speaker 12: the top and you have high investors have high expectations
Speaker 12: of you, and if you happen to have a high
Speaker 12: concentration in the index, you can take everyone down with you.
Speaker 2: It's really really tempting always to look at how a
Speaker 2: stock trades in the moment and try and find the story.
Speaker 2: But what I would also say is that, you know,
Speaker 2: if you think about last Friday, Monday Tuesday, when the
Speaker 2: President of the United States returned from China, in Vidia
Speaker 2: and in the sector, the socks were close to correction territory,
Speaker 2: you know we're down again now post learnings on video.
Speaker 2: What lesson would you learn from that?
Speaker 7: You know, there are two things.
Speaker 12: I think the reaction today really is about Nvidia itself.
Speaker 12: It's not even about the AI industry.
Speaker 7: It's about Nvidia.
Speaker 12: Friday was a huge disappointment, and since then we've learned
Speaker 12: that China actually banned the gaming chips while Jensen Huang
Speaker 12: was there. So when we're looking at China and Nvidia.
Speaker 12: It's not a reliable market as much as is the
Speaker 12: market that we would like to be in. So it
Speaker 12: is I think right for Jensen Wang to sort of
Speaker 12: pay attention to other areas in which they can expand
Speaker 12: think about sovereign ais outside of China really and I
Speaker 12: think China would be sort of a and upside optionality
Speaker 12: if it happens, But that if is a very big if.
Speaker 2: Nana Rathban, founder and CEO of Grenada Advisory, thank you
Speaker 2: very much. Now coming up, we're going to be joined
Speaker 2: by Saragwark from Conviction to drill down on kind of
Speaker 2: the impact of Nvidia on a much broader ecosystem of startups.
Speaker 2: These are companies of all sizes that use the compute
Speaker 2: or the library of data and models themselves. Can't wait,
Speaker 2: this is Bloomberg Tech. Let's get back to video earnings.
Speaker 2: A part of Jensen Wong's latest message to investors in
Speaker 2: video isn't just selling chips to big tech anymore. It's
Speaker 2: applying the picks and shovels for an AI goal rush,
Speaker 2: where startups are building everything from AI agents to humanoid robots, robotaxis,
Speaker 2: everything in between. But on in video compute joining us.
Speaker 2: One of the key backers of that ecosystem, Seragwark, founder
Speaker 2: of Conviction, an AI native venture firm, And I think
Speaker 2: that's true, right. I think the best place I think
Speaker 2: to start with you is think about all your portfolio companies.
Speaker 2: Many of them come on the show and we say, Okay,
Speaker 2: what's the biggest constraint on you right now? Where are
Speaker 2: you most focused? And oftentimes it is compute And they're
Speaker 2: sometimes super proud that they are working on in video gear.
Speaker 2: But are they accessing that compute through the cloud provider
Speaker 2: or are they able to get the cluster themselves direct control?
Speaker 13: It depends on what they're trying to do, right. We
Speaker 13: have companies that are you know, building at the infrastructure layer,
Speaker 13: building at the model layer, building at the application layer.
Speaker 13: One of the first things we did when we started
Speaker 13: the fund was go buy compute for our companies, just
Speaker 13: because we can take the timing risk as a venture
Speaker 13: fund and we conclude it exactly what you just described,
Speaker 13: which is they're all going to need it, right and.
Speaker 2: What did that look like, Sarah? Sorry to interrupt you,
Speaker 2: but like maybe literally.
Speaker 13: We went and bought you know, h one hundreds at
Speaker 13: the time a bunch of nodes cloud. But the point was, like,
Speaker 13: you know, the market is gone through different shortages and
Speaker 13: now people are predicting a lot of ongoing constrained supply,
Speaker 13: and we were worried about access for startups in that
Speaker 13: period of time, which is why we did it. But
Speaker 13: our companies, to your actual question, if almost all of
Speaker 13: them want want to do experimentation and they all start
Speaker 13: with frontier performance, which is in vidio chips today, right,
Speaker 13: because that allows you to do new things. And then
Speaker 13: as these companies mature, they tend to post train smaller models,
Speaker 13: think about cost, think about how to be able to
Speaker 13: even just being able to use more tokens on the
Speaker 13: same task allows you to change the user experience. But
Speaker 13: everybody wants to start with current generationships.
Speaker 2: The state of play that Jensen describes is demand vastly
Speaker 2: outpacing Nvidia, but also in aggregate the industry's ability to
Speaker 2: supply on the other side of the table. Would you
Speaker 2: say that that state of play is true for the
Speaker 2: founders that you're trying to help, right, It's.
Speaker 13: Probably been a two quarters of increasing stress in the
Speaker 13: ecosystem about access to supply at different scales. Wow, and
Speaker 13: so I, you know, have spent a good amount of
Speaker 13: time with the leaders of companies that you know, serve
Speaker 13: in video chips, in cloud asking to buy one hundred
Speaker 13: million dollars of a time of compute. And I've never
Speaker 13: been in that scenario before. We're trying very hard to
Speaker 13: pay somebody a lot of money with a multi year commitment. Yeah,
Speaker 13: and it just speaks to the shortage dynamics. I think
Speaker 13: it's very hard to get on demand small scale compute
Speaker 13: right now, which is what many starts are starting with,
Speaker 13: as you we're describing, And so I think the shortage
Speaker 13: dynamic is real. And what is more interesting to me is,
Speaker 13: you know, in Nvidia have this amazing outperformance on the
Speaker 13: earning side, and Jensen will repeatedly tell people demand is parabolic.
Speaker 13: Humans struggle to consume that. And you know, it's hard
Speaker 13: to feel bad for Jensen, Juan Jensen's winner in all
Speaker 13: of this, but you know he's like, yeah, yeah, but
Speaker 13: like and his amazing leader. But he's like, I'm telling you,
Speaker 13: honestly the reality of what I project repeatedly, and you
Speaker 13: just keep not believing me. Yeah, right, And I'd say,
Speaker 13: like I believe him. From the demand side, because what
Speaker 13: I expect will happen is this, you know, massive exponential
Speaker 13: growth that shows up in things like Claude code revenue
Speaker 13: is really because you have long horizon agents that people
Speaker 13: are using in this one use case already. But the
Speaker 13: world is not just code, right, and so if there's zero,
Speaker 13: not zero, but small scale a few billion to forty
Speaker 13: billion of revenue and a very small number of months
Speaker 13: because we figured out how to use the models more
Speaker 13: productively on long horizon agent tasks. We're going to do
Speaker 13: that for lots of different functions in the knowledge economy.
Speaker 2: While you here, if you don't mind, like SPACEXS one.
Speaker 7: Wow, yes, wow, it's inspiring.
Speaker 2: You have a big event today right where I believe
Speaker 2: like some of the cursor guys will be there, and
Speaker 2: so we learn a little bit about that. But there's
Speaker 2: this number total addressable market for AI twenty six point
Speaker 2: five trillion dollars super focused on enterprise. You know they
Speaker 2: literally label it as such in the in the deck
Speaker 2: go ahead, I mean.
Speaker 13: Yeah, I think it's it's a it's a funny number.
Speaker 13: And then like a funny you know diagram when you
Speaker 13: visualize the tan because it's like starlink. And then enterprising Yeah, yeah, yeah,
Speaker 13: and you know, much of what we invest in is
Speaker 13: enterprise AI. My friend Andre Carpathi described this well, which
Speaker 13: is the simplest way to think about the use of
Speaker 13: AI is automation. Right, there's automation of tasks we already do, right,
Speaker 13: And if we give these models the tools and the
Speaker 13: harness such that they can do these tasks, they can
Speaker 13: take over things for us. And so I do think
Speaker 13: that the the opportunity.
Speaker 2: Is as big as does Elon believe the opportunity or
Speaker 2: is this him trying to justify why SpaceX took XAI.
Speaker 13: I think it's interesting that you know, what you put
Speaker 13: in the S one is a choice, right, And he
Speaker 13: could have easily just said, you know, like something broader
Speaker 13: or you know, focus on other parts of the SpaceX
Speaker 13: tam overall. But he is making a commitment that we
Speaker 13: are going to go make you know, our offerings relevant
Speaker 13: in enterprise AI. And so I think he's very committed
Speaker 13: to Yes, so.
Speaker 2: No, you think he will pull it off.
Speaker 13: So there's a question about whether the value is infrastructure
Speaker 13: models or applications. And see this in the you know,
Speaker 13: Anthropic deal and the Cursor deal as well.
Speaker 7: They have the infrastructure.
Speaker 13: The infrastructure and the capability to build more is extraordinarily valuable.
Speaker 13: And I think the question will be, like, I think
Speaker 13: he's going to make money on that. No matter what
Speaker 13: the question is, do they also need to own the
Speaker 13: model and the application layer?
Speaker 2: To Sarah's point, yes, one said the Anthropic would pay
Speaker 2: SpaceX one point two five billion dollars per month through
Speaker 2: twenty nine for compute ceregor of conviction across every part
Speaker 2: of it. Thank you very much. All right, a lot
Speaker 2: more to come still in the malts of the program,
Speaker 2: we'll be breaking down two blockbuster IPOs on the docket too,
Speaker 2: SpaceX and Open AI. Maybe this is Bloomberg Tech, Let's
Speaker 2: get back to SpaceX. In addition to the company's blockbuster
Speaker 2: IPO filing, investors are also closely watching tonight's highly anticipated
Speaker 2: starship launch. The mission marks SpaceX twelfth major starship test flight,
Speaker 2: a critical milestone as the company pushes to advance its
Speaker 2: next gen rocket program while preparing for what could become
Speaker 2: the biggest IPO in history. Bloomberg Suna passion kar joins
Speaker 2: us now and you're probably sick of me, right, Sana,
Speaker 2: because how many times did I post in the blog
Speaker 2: Starship is central to all of this. It said it
Speaker 2: in the s one could not be more clear. Let's
Speaker 2: start with tonight's test. What are we expecting, what does
Speaker 2: it look like? How long does it run for? Right?
Speaker 14: So today, you know, Starship is slated to take off
Speaker 14: from the launch pad at Starbase, Texas at around six
Speaker 14: thirty pm ET five thirty pm Texas time. It's going
Speaker 14: to take off, ignite it's Raptor engines, and lift off
Speaker 14: into space. It is debuting an upgraded version of the vehicle,
Speaker 14: it's called Version three that has upgraded engines. It's supposed
Speaker 14: to have improved power and capability. It's going to yeah,
Speaker 14: lift off into space, lap around the globe, and then
Speaker 14: eventually splash down into the Indian Ocean. And you know,
Speaker 14: as you were mentioning ed, this is a really crucial
Speaker 14: test for this vehicle. That is just you know, so
Speaker 14: important for all of Elon Musk's ambitions for SpaceX and
Speaker 14: you know the valuation of the company for the coming IPO.
Speaker 2: So let's talk a little bit about those ambitions, right.
Speaker 2: The idea is that Starship is capable of carrying a
Speaker 2: much greater payload to orbit. So I think starlink, think
Speaker 2: space based data center and humans getting to Mars. Explain
Speaker 2: it to us.
Speaker 14: Yeah, yeah, totally. So you know, Starship has kind of
Speaker 14: the payload capacity that will enable something, let's start with
Speaker 14: orbital data centers. It will enable an orbital data center
Speaker 14: of you know, as many as one million spacecraft orbiting
Speaker 14: the Earth, which is what you know SpaceX has said
Speaker 14: they want to do. You can't do that to scale
Speaker 14: as well with the Falcon rockets. There are current rockets.
Speaker 14: You really need much larger vehicle that can carry sixty
Speaker 14: satellites to space, and so you know it will they
Speaker 14: will need Starship to effectively build these orbital data centers
Speaker 14: at a timeline and a pace that really makes sense
Speaker 14: and could actually lead to a profit one day to
Speaker 14: get humans to Moon, to the Moon and mariners. You
Speaker 14: will also need, you know, that type of capability, that
Speaker 14: type of thrust. Starship is advertised as the most powerful
Speaker 14: rocket ever Bill and you know, Starship is so important
Speaker 14: to SpaceX's ambitions, but it's also key to America space
Speaker 14: ambitions because Starship has a contract. SpaceX has a contract
Speaker 14: with NASA for Starship to land humans on the mod.
Speaker 2: Bloomberg Senta passion card, Thank you very much. Fresh off
Speaker 2: a courtroom win over Elon Musk, the race for the
Speaker 2: trillion dollar AI mega ipo is on. Did you have
Speaker 2: this on your bingo cards? Sources say Open AI may
Speaker 2: make a confidential filing as soon as this Friday, joining
Speaker 2: us now with the details Bloomberg Sharen Gafari yesterday afternoon.
Speaker 2: It's the last thing anyone needed was to see that
Speaker 2: headline here. But the timing is interesting. What do we
Speaker 2: know about an Open AI path to an IPO?
Speaker 15: That's right, So an opening filing would be a confidential filing,
Speaker 15: could come as soon as Friday or in the coming weeks.
Speaker 15: That would obviously put it in a close competition with Anthropic,
Speaker 15: which is also expected to potentially file this fall, as
Speaker 15: well as SpaceX, which is already out there with the
Speaker 15: S one listing.
Speaker 2: Yeah, I'm going to let us put SpaceX to one
Speaker 2: side for a second. So let's say it's a race
Speaker 2: open Irononthropic for September October. What do we know about
Speaker 2: about that timeline? But also the numbers involved? Right, do
Speaker 2: we have a sense of valuation or whatever company wants
Speaker 2: to raise?
Speaker 15: That's right, So the valuations are already you know, nearing
Speaker 15: a trillion right. Open Ai was last value valued it
Speaker 15: over eight hundred and fifty billion just earlier this spring.
Speaker 15: Anthropic similarly also you know, in talks to raise ad
Speaker 15: up to nine hundred valuation, as we've reported. So when
Speaker 15: we're thinking about an IPO months out, you can only
Speaker 15: you know, you would hope that for these companies at
Speaker 15: least they're thinking they want to go further north of that,
Speaker 15: getting us closer to potentially that trillion mark.
Speaker 2: There's an idea that when Elon Musk was told by
Speaker 2: the jury and judge he's not allowed to perceive as
Speaker 2: his suit, it removed an overhang to open Ai, let
Speaker 2: them kind of proceed their ambitions. But why does open
Speaker 2: Ai want to go public? I know it seems silly,
Speaker 2: but do they need money? Is it the public perception thing?
Speaker 2: Is it always been in the plans.
Speaker 15: It's a good question because on the one hand, these
Speaker 15: companies like open Ai in Anthropic can command these massive
Speaker 15: private bidancing rounds that we've never seen before and precedented
Speaker 15: levels of cash. However, access to public markets allows them
Speaker 15: to do that with much more ease frequency. It also
Speaker 15: allows everyday people to get in on the AI boom
Speaker 15: or bust, which is a risk right if it does change,
Speaker 15: But that also, you know, then potentially is allowing a
Speaker 15: larger group of sort of retail investors to have a
Speaker 15: stake in the company, but really large pools of capital
Speaker 15: being more easy to access without all the funding round
Speaker 15: song and Dance I think helps them.
Speaker 2: Biver shrin Gafari all over the open AI and the
Speaker 2: anthropic story and will be for the rest of this year.
Speaker 2: That does it for this edition of Bloomberg Tech. That's
Speaker 2: what markets look like. Not too much going on at
Speaker 2: the index level, basically flat. Nvidia is down a half percent,
Speaker 2: but in the background there's still this idea that the
Speaker 2: big one is coming SpaceX's IPO. This is Bloomberg Tech