Speaker 1: Bloomberg Tech is live from the heart of Silicon Valley
Speaker 1: with Ed Ludlow in San Francisco.
Speaker 2: This is Bloomberg Tech coming up from chips to servers
Speaker 2: to software. AI spending is rippling across the tech stack.
Speaker 2: What earnings from Broadcom, Snowflake and HPE tell us about
Speaker 2: the strength of the AI boom? We'll discuss with the
Speaker 2: CEOs of Snowflake and HPE later this hour. Plus, NVIDIA
Speaker 2: has agreed to acquire Hugging Face in a transaction valued
Speaker 2: about $ 13 billion. We speak with Hugging Face co-founder... Thomas
Speaker 2: Wolfe about the deal and self-driving tech startup Wave reaches
Speaker 2: a deal with Uber to offer robo taxis in London
Speaker 2: with a human in the driver's seat. Wave CEO later
Speaker 2: this hour. This is what technology stocks are doing high
Speaker 2: on the Nasdaq 100 modestly six tenths of one percent.
Speaker 2: It is earnings from software to chips to other parts
Speaker 2: of the infrastructure stack that we're focused on. In Snowflake's case,
Speaker 2: this is a blowout. The stock is on track for
Speaker 2: its best day since May and trading at a 2021 high.
Speaker 2: AI is translating into faster growth. The revenue outlook up
Speaker 2: to $ 6 billion for the year. HPE, strong AI server demand,
Speaker 2: but not as strong as Dell. And there wasn't the
Speaker 2: read-through from that name. We're going to speak to the
Speaker 2: CEOs of Snowflake and HPE later in the hour. Then
Speaker 2: there's Broadcom. Huge AI chip growth ahead. Doubling in fiscal 27.
Speaker 2: Doubling again in fiscal 28. but not huge enough for
Speaker 2: this market. And that's where I want to start today's show.
Speaker 2: Let's get more with Bloomberg's Dina Bass. Broadcom is a
Speaker 2: custom silicon story, right? And they posted some big numbers
Speaker 2: in terms of what's going to come, but it just
Speaker 2: wasn't enough for this market. It was a high bar.
Speaker 3: Sure.
Speaker 4: First of all, their forecast for the current quarter, their
Speaker 4: fiscal fourth, was pretty lackluster in terms of both regular
Speaker 4: sales and AI chip sales. And so it That came
Speaker 4: out initially right after the bell and the stock headed downward.
Speaker 4: Then we got into the call and CEO Hock Tan
Speaker 4: gave the forecast that you just repeated about AI chip
Speaker 4: growth for fiscal 27 and 28 doubling each year, which
Speaker 4: You know, again, seemed to at the time, please, investors more.
Speaker 4: The stock started coming back. But this morning it's back
Speaker 4: down again. And, you know, there are some concerns. One,
Speaker 4: in light of NVIDIA's blowout quarter last week that neither
Speaker 4: the Q4 numbers nor perhaps the forecaster may be good
Speaker 4: enough compared to that. Two, some of this was priced
Speaker 4: into the stock already. There's also concern being raised about
Speaker 4: where that AI chip growth is coming from. You know,
Speaker 4: Tan basically said that most of it is coming from
Speaker 4: Anthropic and OpenAI, who are set to become the company's
Speaker 4: number one and number two customers in 27 and 28, respectively.
Speaker 4: So there's some concern about those two as the customers.
Speaker 2: The stock's down 6% right now, pretty much on track
Speaker 2: for its biggest drop since the first week of June.
Speaker 2: $ 115 billion in fiscal 27 on AI chips, $ 230 billion
Speaker 2: in fiscal 28. Those are big numbers, but like NVIDIA
Speaker 2: is doing now $ 100 billion of revenue overall in a quarter.
Speaker 2: Is there any sense that this custom chip game is
Speaker 2: chipping away at NVIDIA's lead in that market, that they're
Speaker 2: gaining market share on Broadcom's side?
Speaker 4: It does seem to be chipping away at pieces of it.
Speaker 4: We've had a lot of discussion from OpenAI over the
Speaker 4: last couple of weeks about the ways in which they
Speaker 4: are going to use the custom chip that they're building
Speaker 4: with Broadcom. But also at the same time, OpenAI will
Speaker 4: talk about how much NVIDIA they're using. So there is that.
Speaker 4: The other issue for Broadcom is that even in the
Speaker 4: custom chip market, they're facing greater competition. Google TPU had
Speaker 4: been their largest customer, or it still is, but is
Speaker 4: set to be replaced by Anthropic. And Google just signed
Speaker 4: a deal with Broadcom's competitor, Marvell. Also more competition for
Speaker 4: Broadcom for MediaTek. Both of those companies are backed by NVIDIA.
Speaker 2: Bloomberg's Dean Abbas, thank you very much indeed. Stay with Bloomberg.
Speaker 2: We're going to break down the other earnings. We're going
Speaker 2: to speak with the Snowflake CEO, Sridhar Ramaswamy, and the
Speaker 2: HPE CEO, Antonio Neri, later this hour. By the way,
Speaker 2: when we came to air, there were some headlines on
Speaker 2: the Bloomberg terminal about chatbot outages. Curiously, the headlines all
Speaker 2: hit at the same time. DownDetector is saying that users
Speaker 2: are reporting issues with open AI platforms and SpaceX AI
Speaker 2: is saying that Grok is experiencing issues and is investigating
Speaker 2: the outage. And Anthropic is saying all within the same
Speaker 2: time span, it's investigating Claude errors and working on a fix.
Speaker 2: Those all hit the Bloomberg terminal literally at the same
Speaker 2: time before the show started. We're trying to work out
Speaker 2: what's going on. with all of the chatbots around the world.
Speaker 2: Let's get back to the AI story. Our next guest
Speaker 2: says we're seeing strong evidence of AI adoption and broadening
Speaker 2: from hardware to select software at the infrastructure layer. That's
Speaker 2: clear evidence of it as AI becoming increasingly integrated into
Speaker 2: business models. Alliance Bernstein, Somatic Innovation Equities, Chief Investment Officer
Speaker 2: Lei Chu is back with us on Bloomberg Tech. The
Speaker 2: common theme across all of those earnings we outlined, Lei,
Speaker 2: is that AI demand seems very strong. Is that what
Speaker 2: you see?
Speaker 5: Yes.
Speaker 6: In fact, we continue to see AI solidly moving into
Speaker 6: the adoption phase. And at this moment, when you look
Speaker 6: across the board, the general trend actually is demand is
Speaker 6: outstripping supply. So when you see companies actually from the
Speaker 6: commentary versus the numbers, the common theme what we are
Speaker 6: seeing is that Demand is so strong that supply simply
Speaker 6: cannot keep up. And that's not just for this year,
Speaker 6: but it's for multiple years to come, whether it's at
Speaker 6: the chip level or other parts of the infrastructure as well.
Speaker 2: I want to go back to NVIDIA last week just
Speaker 2: as an illustrative example, because they said that they would
Speaker 2: have top line growth of 70 percent in the next
Speaker 2: fiscal year. But that was a forecast modeled on supply,
Speaker 2: their ability to supply, not growth modeled on demand. I
Speaker 2: found that math very interesting. How did you interpret it?
Speaker 6: Yes, and then so this is actually we're at a
Speaker 6: very interesting moment and then that moment where you're seeing
Speaker 6: some volatility in the market as well. The market by
Speaker 6: and large, we often, generally speaking, we reward bid and
Speaker 6: raises and we want to see estimate revision, particularly in
Speaker 6: technology sector and fast growing sectors. But currently, we're in
Speaker 6: this really interesting dynamic where the demand is so strong,
Speaker 6: but we simply do not have enough supply to support that.
Speaker 6: So we're in this interesting transition phase where for the
Speaker 6: near term, you don't see as much estimate revision, even
Speaker 6: though the demand outlook is extremely strong. But that just
Speaker 6: means we just have to look at everything in the
Speaker 6: context of valuation as well, and then in the context
Speaker 6: of horizon. You know, when we think about long term
Speaker 6: durability of growth and profitability and combine that with a
Speaker 6: reasonable valuation. And that's when you find the best performing stocks.
Speaker 6: And that's what we are really focused on.
Speaker 2: We started the conversation with your writing about how this
Speaker 2: is broadening out.
Speaker 7: Right.
Speaker 2: Basically from chips to other layers of the stack. How
Speaker 2: do changes in portfolios reflect that right now?
Speaker 6: I think we are in the adoption phase. So when
Speaker 6: you're in the adoption phase and then you look back,
Speaker 6: we started simply at the physical infrastructure layer. But as
Speaker 6: we move to adoption phase, and you've already seen it,
Speaker 6: we went from the broadening out, even at the infrastructure layer,
Speaker 6: we have gone from simply GPU to TPU to CPU
Speaker 6: to the networking layer. But now we're in the phase
Speaker 6: where you're also seeing as enterprise and consumers starting to
Speaker 6: use more AI, you will see opportunities at the infrastructure layer,
Speaker 6: at the software layer. at the cybersecurity layer and many
Speaker 6: other areas as well. And actually, I also think we're
Speaker 6: starting to see evidence of AI being adopted in some
Speaker 6: of the industries. So if you look so far, what
Speaker 6: we have seen is Some industries, such as infotech, financials,
Speaker 6: or healthcare, these are historically some of the fastest adopters
Speaker 6: of new technology. And we do believe that AI is
Speaker 6: once-in-a-lifetime transformative technology. Whoever uses it to their advantage will
Speaker 6: be able to increase their profit pool, accelerate their growth.
Speaker 6: And we're actually seeing early evidence of that. So you
Speaker 6: see the portfolio naturally transition following along this type of
Speaker 6: transformation and along the curve of adoption.
Speaker 2: Alliance Bernstein, Sphematic Innovation Equity, CAI, Laichu, back on the show.
Speaker 2: Thank you very much indeed. Coming up, NVIDIA is going
Speaker 2: to acquire Hugging Face in a transaction valued at about
Speaker 2: $ 13 billion. We're going to speak with Hugging Face's co-founder,
Speaker 2: Thomas Wolff, about the deal. This is Bloomberg Tech. NVIDIA
Speaker 2: has agreed to acquire Hugging Face in a transaction valued
Speaker 2: at about $ 13 billion, confirming earlier Bloomberg reports. Here to
Speaker 2: discuss is Hugging Face co-founder Thomas Wolff, back on Bloomberg Tech.
Speaker 2: There's a piece of this that's really interesting, that Hugging
Speaker 2: Face continues to be Hugging Face, right Thomas? Owned by NVIDIA,
Speaker 2: but is an open platform. Could we start with the
Speaker 2: mechanics of that? How Hugging Face is going to run
Speaker 2: under the proposal that you and Clem and the others agreed?
Speaker 2: Do you and Clem stay with Hugging Face and the
Speaker 2: specifics of how you're going to structure this?
Speaker 7: Yeah, of course.
Speaker 8: So, I mean, the first thing to say is we
Speaker 8: are staying indeed, like all the three co-founders are staying.
Speaker 8: You know, we're doubling down with six years at least
Speaker 8: retention at Hugging Face and the idea is all the
Speaker 8: team is going to join. And the goal is really,
Speaker 8: as Jensen said it in his tweet and interview this morning,
Speaker 8: and as you can read it on the blog post
Speaker 8: as well, is to keep an open, independent, compute agnostic
Speaker 8: platform and infrastructure for Hugging Face. So practically for our user,
Speaker 8: this is going to change. really very little. The main
Speaker 8: difference is we'll have the backing, this power of NVIDIA
Speaker 8: to be able to double down and to accelerate our work.
Speaker 2: What is it that Hugging Face is going to be
Speaker 2: able to do now, Thomas, like either scaling or in
Speaker 2: the speed of movement that you just wouldn't have otherwise
Speaker 2: been able to do independently?
Speaker 8: I think we've been extremely efficient along our journey. We've
Speaker 8: been able to, we've raised a very minimal amount if
Speaker 8: you compare to any AI company nowadays. We've raised less
Speaker 8: than half a billion dollars. I think we've been able
Speaker 8: to achieve amazing results with that. We scaled to 3
Speaker 8: million models on the hub, like 18 million users. We
Speaker 8: have a We have 200,000 companies using us. And I
Speaker 8: think the idea is now what we realized this year
Speaker 8: was that, on the one hand, open source was having
Speaker 8: a huge moment, like open source was really on the rise.
Speaker 8: And also, when we were attacked, you remember earlier this summer,
Speaker 8: we realized that open source was actually critical for safety
Speaker 8: and critical for many aspects. Happy to dive into that
Speaker 8: from safety to company being able to do research to technology.
Speaker 8: basically a company be able to own their data. And
Speaker 8: we thought, okay, we have a few choice here. Either
Speaker 8: we raise more money and we double down or we
Speaker 8: find someone who share our value, share our mission very
Speaker 8: deeply and we partner with them. We were very lucky
Speaker 8: that Jensen was active receptive to this discussion.
Speaker 2: So it sounds like, you know, Hugging Face looked at
Speaker 2: a strategy for the future and approached NVIDIA or Jensen
Speaker 2: and NVIDIA approached Hugging Face?
Speaker 7: Yeah, we approached him. Very open discussion. I think everything
Speaker 7: was on the table.
Speaker 8: We often have, you know, this offer to invest, to
Speaker 8: basically raise more money. And the discussion was, OK, where
Speaker 8: should we go? And at some point we were, you know,
Speaker 8: we're so aligned. There is so many things we can
Speaker 8: do here that let's go all the way.
Speaker 2: What was interesting, as outlined by Jensen in his various communications, like,
Speaker 2: for example, a blog post on LinkedIn, is that the
Speaker 2: Hugging Face community will still have the same choices, right?
Speaker 2: Including the cloud platform backing, the inference platform. In other words,
Speaker 2: there is no mandatory requirement to use NVIDIA Compute. Was
Speaker 2: that something that you guys on your side insisted on,
Speaker 2: or what's the backstory to that?
Speaker 7: Yeah, I mean, we'll talk about that.
Speaker 8: But the idea really here is Jensen believed like us
Speaker 8: in the power of community, the power of collaboration. You know,
Speaker 8: he wrote this great letter about open source model. He
Speaker 8: thinks really widely. We have this same, you know, wide
Speaker 8: scope of thinking. We think there is a huge collaboration
Speaker 8: that we think actually open source models have to be
Speaker 8: built through collaboration that transcends normal competition. So here also
Speaker 8: there is a very big alignment in how we think
Speaker 8: about these problems. Now the exact specifics will be defined
Speaker 8: very soon.
Speaker 2: This is a slight tangent or an aside, but last
Speaker 2: week you were on the show with me and we
Speaker 2: were talking about your robotics business. How does the robotics
Speaker 2: business transfer with NVIDIA? Because you had massive demand for
Speaker 2: Microdot quite quickly. NVIDIA's got massive scale. They are a
Speaker 2: hardware company as well. Explain the opportunity there.
Speaker 8: Yeah, I think you're also the same, you know, you've
Speaker 8: seen Jensen on stage with some ducks, you know, there
Speaker 8: was this Disney, not really ducks, but what they were
Speaker 8: called BDX robot last year, GT. We know Jensen also
Speaker 8: love robotics. We love robotics as well. We see here
Speaker 8: also it's very, you know, it's something that we can
Speaker 8: keep developing very similarly to how we've been building it
Speaker 8: at Hugging Face. I think the surprising news for us
Speaker 8: was that this robotic release almost eclipsed or even, you know,
Speaker 8: was even more successful than some rumors about.
Speaker 7: The join, the acquisition.
Speaker 8: And so it's, I think, a good indication of, you know,
Speaker 8: how we'll be able to manage these different things going
Speaker 8: on forward in the future.
Speaker 2: Thomas, this is a deal, right? $ 13 billion, $ 1 billion
Speaker 2: of which is tied to employee retention through stock. How
Speaker 2: did this discussion go around regulation, antitrust? How do you
Speaker 2: think that your competitors, NVIDIA's competitors, will view this deal?
Speaker 2: And what level of confidence or concern is there on
Speaker 2: this passing through the regulatory process with ease?
Speaker 8: Yeah, all of that is a bit early to tell
Speaker 8: your answer, right? We announced this just today, Ed. I
Speaker 8: think it's a process we'll see. We're quite confident. We think,
Speaker 8: you know, there is a really nice path where basically
Speaker 8: Hugging Face continues to operate as this independent, open platform
Speaker 8: that's been in the past. We think this is a
Speaker 8: very good direction.
Speaker 7: It makes a lot of sense.
Speaker 8: Now, you know, I'm not yet to be to be
Speaker 8: answering really like deep regulation questions right now.
Speaker 2: Okay, so I appreciate that. Very quickly, what do Hugging
Speaker 2: Face staff feel about this? What's the response internally then?
Speaker 8: I mean, ecstatic, you know, you maybe saw the picture
Speaker 8: we shared on Twitter, you know, Jensen joined our old hands.
Speaker 8: For a lot of the team members, it was kind
Speaker 8: of a once-in-a-lifetime opportunity, basically, to talk with Jensen. I
Speaker 8: think the whole team is really very excited about this
Speaker 8: new direction.
Speaker 7: Everyone is ready to.
Speaker 8: Go 10 years again, like building to the next step
Speaker 8: of open-source models. We think this is a great chance
Speaker 8: for the whole open-source model ecosystem, to be honest.
Speaker 7: We think it's kind of incredible.
Speaker 2: Thomas Wolfe of Hugging Face, back on the show a
Speaker 2: week later after the confirmation that NVIDIA has acquired Hugging
Speaker 2: Face for about $ 13 million. Thank you so much. Coming up,
Speaker 2: we're going to go to London. London riders are about
Speaker 2: to get robo-taxi access through the UK capital.
Speaker 7: I'm going to talk to the CEO of Wave.
Speaker 2: About a deal with Uber that's making that possible. This
Speaker 2: is Bloomberg Tech. Self-driving technology startup Wave has reached a
Speaker 2: deal with Uber to offer robotaxi rides in London with
Speaker 2: a safety driver. It's the latest move in the global
Speaker 2: race to commercialize autonomous ride hailing. Wave CEO Alex Kendall
Speaker 2: is back with us on Bloomberg Tech. You know, Alex,
Speaker 2: in covering this industry, I know that this is a
Speaker 2: source of frustration. But the first question is always, what's
Speaker 2: the path for the safety driver coming out of the vehicle?
Speaker 2: Take that and explain the London case study to us.
Speaker 3: Hi, Ed. Well, firstly, as you know, London is an
Speaker 3: incredibly difficult place to drive. It's a 2,000-year-old city. It's
Speaker 3: full of narrow roads, frequent pedestrians and cyclists. And so
Speaker 3: I'm delighted that we've been able to bring our technology here.
Speaker 3: We've been learning to drive here for a decade, and it's,
Speaker 3: I think, one of the hardest places in the world
Speaker 3: to learn to drive. But we're starting with a supervised
Speaker 3: service this week with safety operators. And the path to
Speaker 3: launch a driverless service is really three things. The first
Speaker 3: one is to move to a scalable vehicle platform. Our
Speaker 3: business model works with automakers so that they build the
Speaker 3: robot taxis, no retrofits or built-in mass production hardware. Second,
Speaker 3: of course, validating the safety metrics we need for driverless operation.
Speaker 3: And third, We've got a permit today for supervised operations,
Speaker 3: and we're working with regulators towards a driverless permit. So
Speaker 3: those three things, which we're working on very quickly over
Speaker 3: here in London.
Speaker 2: At the same time, you know, you have multiple projects
Speaker 2: in parallel, right? There is the driverless platform of Nissan,
Speaker 2: for example, where there's a future in London, but other
Speaker 2: cities come into play in the R & D of that.
Speaker 7: Explain that relationship.
Speaker 3: Yeah, that's right. We've... We've looked to build a business
Speaker 3: where we want to provide intelligence across anyone who wants
Speaker 3: to build intelligent machines. And uniquely, we've got an AI
Speaker 3: that can scale from consumer vehicles to robo-taxis. So we
Speaker 3: are deploying our AI in consumer vehicles with a number
Speaker 3: of leading automakers like Nissan and Stellantis. And of course,
Speaker 3: as of today, starting robo-taxi services today in London. And
Speaker 3: by the end of the year, we'll be scaling this
Speaker 3: to Tokyo. And we've agreed with Uber to take it
Speaker 3: to 10 cities beyond that as well.
Speaker 2: It's amazing. Alex, it's been almost 10 years since I
Speaker 2: left London and moved to SF. What's your relationship like
Speaker 2: with that city, with the mayor? But also, you know,
Speaker 2: under a new government with Andy Burnham, is there a
Speaker 2: pathway for sort of comprehensive framework regulation for your industry
Speaker 2: in the UK and other UK cities?
Speaker 3: One thing people might not realize is that earlier this year,
Speaker 3: the UN published a technical regulation that allows for a
Speaker 3: global framework for high levels of autonomy and consumer vehicles
Speaker 3: and robot taxis. And many countries around the world, UK, Europe, Japan,
Speaker 3: all sign up to these regulations. And they also provide
Speaker 3: a basis for in the US as well. So this
Speaker 3: is fantastic. And then the UK itself has been adopting these.
Speaker 3: There was an act passed in 2024, and we've been
Speaker 3: working with Transport for London and government here to bring
Speaker 3: this into fruition. So we're pretty happy with how this
Speaker 3: is growing. And London is one of Uber's five largest
Speaker 3: markets by revenue. So it's a really important market to
Speaker 3: bring autonomy into. I think Londoners are going to love
Speaker 3: this service. And what we've got is a safe and
Speaker 3: responsible plan to bring this technology, introduce it to Londoners
Speaker 3: and people through the UK with regulators here.
Speaker 2: You know, the Uber relationships, key to underscore, right, it's
Speaker 2: through the Uber app. You said a moment ago that
Speaker 2: there's a plan for 10 cities with Uber going forward.
Speaker 2: Are any of those cities in the United States, Alex?
Speaker 3: We will be bringing it globally, including to the US.
Speaker 3: We haven't announced any other specific cities yet, but stay tuned.
Speaker 3: I'll give you a call when we do, Ed.
Speaker 2: Real quick, how are you guys doing on the funding side?
Speaker 2: There was reports that some Wave staff sold off stock
Speaker 2: on the Pisces exchange, for example. Is that an employee
Speaker 2: liquidity thing? Are you out there doing secondaries? What's going on?
Speaker 3: Yeah, we're well funded. We've raised almost $ 3 billion of cash.
Speaker 3: We just did our second employee liquidity round. We've got
Speaker 3: a great global team. And actually, one of the things
Speaker 3: I think we're well set up to do is to
Speaker 3: really continue with our frontier embodied AI science. We've been
Speaker 3: the first team to build vision language action models and
Speaker 3: world models for robotics, and now bring this new contrarian
Speaker 3: approach to the technology to market, as well, of course,
Speaker 3: continuing to grow in production applications like in consumer vehicles
Speaker 3: all around the world and for robo-taxi services. So it's
Speaker 3: full steam ahead. It's been a phenomenal year for our
Speaker 3: team so far, and this is a pretty proud moment
Speaker 3: for us.
Speaker 2: Alex, just very quickly, what you just said, world models,
Speaker 2: remind the audience what Wave's core competence is.
Speaker 3: What we've built is an end-to-end AI driver. So it's
Speaker 3: a single neural network that's capable of reasoning and making
Speaker 3: decisions in real time. It can generalize across any vehicle
Speaker 3: we work with, small, large vehicles all around the world.
Speaker 3: We're the first company to have driven this technology in
Speaker 3: over 500 cities, zero shot. So no high-definite maps. It's
Speaker 3: an AI that's capable of driving any vehicle all the
Speaker 3: way around the world.
Speaker 2: Alex Kendall, Wave CEO, back on the show. It's great
Speaker 2: to have you now deployed modestly in London. Coming up,
Speaker 2: snowflakes earnings, beating analyst estimates, a big move in the stock.
Speaker 2: We're going to speak to the CEO, Sridhar Ramaswamy. That's next.
Speaker 2: Halftime here in the city of San Francisco. And this
Speaker 2: is what markets look like. This is Bloomberg Tech. Welcome
Speaker 2: back to Bloomberg Tech. The NASDAQ 100, really tech-heavy index,
Speaker 2: pushing up to session highs, a gain of more than 1% now.
Speaker 2: A lot of what's happening in the market is Fed
Speaker 2: speak and what the Fed will or won't do in
Speaker 2: terms of the outlook for rates. But earnings is also
Speaker 2: a very big part of this story. Elsewhere, what is
Speaker 2: happening in the release of different generations of AI model,
Speaker 2: also massively important. Meta's up 4%. This one was a
Speaker 2: big news item this morning. It's launched its latest and
Speaker 2: most powerful AI model to date, with the company's chief
Speaker 2: AI officer hailing it as, quote, competitive with Anthropix model and, quote,
Speaker 2: better than OpenAI's GPT 5.6 Sol, particularly when it comes
Speaker 2: to coding. Bloomberg's Riley Griffin's with us. Yeah, I did
Speaker 2: a double take at the screen right on the stock
Speaker 2: move because I was like, is there a direct causal
Speaker 2: relationship here? But very simply, Meta is out with a
Speaker 2: powerful model. They're talking it up, and the market seems
Speaker 2: to believe them. What do we need to know?
Speaker 1: Yeah, Chief AI Officer Alexander Wang and I spoke yesterday,
Speaker 1: and he's saying this is the biggest performance jump to date,
Speaker 1: putting it on par with competitors like OpenAI and Anthropic,
Speaker 1: performance improvement for coding and agentic capabilities. Notably, this is
Speaker 1: not the highly anticipated model from Meta called Watermelon. Yes,
Speaker 1: you got that right, Ed.
Speaker 7: It is Watermelon.
Speaker 1: It's still coming. Alex wouldn't speak to when, but that's
Speaker 1: gonna be the big model release. Some have said towards
Speaker 1: the end of the year. This is not that, but
Speaker 1: it's a big improvement.
Speaker 2: Okay, so like the business model for meta is so interesting.
Speaker 2: With OpenAI, you have ChatGPT. With Anthropic, you have Claude
Speaker 2: and the coding tool. How does meta charge or get people,
Speaker 2: everyday people, businesses to use these powerful AI models?
Speaker 1: Yeah, so they are charging this as a closed model.
Speaker 1: That means developers can't just download those building blocks and
Speaker 1: build upon it. It's going to cost as much as
Speaker 1: the prior version, MuseSpark 1.2. Developers can access it via
Speaker 1: its API platform. That's essentially a way to use Meta's
Speaker 1: services via Meta. This is not the open source kind
Speaker 1: of technology that Mark Zuckerberg has developed. preached in his
Speaker 1: most recent manifesto, that 6,500 word document that he put
Speaker 1: out in which he promoted open source. So that's kind
Speaker 1: of notable here. They need to show a return on
Speaker 1: investment for the billions upon billions that they're spending to
Speaker 1: try to catch up.
Speaker 2: Bloomberg's Riley Griffin on Meta, which is up 4%, more
Speaker 2: than 4% in the session. Thank you so much. Snowflake
Speaker 2: reported its second quarter earnings yesterday after the closing bell,
Speaker 2: beating analyst estimates and raising its full year forecast for
Speaker 2: product revenue. Shares right now up almost 20% on track
Speaker 2: for their best day since late May and trading at
Speaker 2: their highest level since December of 2021. What's going on?
Speaker 2: Let's speak to Snowflake CEO, Sridhar Ramaswamy. You've had three
Speaker 2: straight quarters of accelerating product revenue growth. And it seems
Speaker 2: a strange question, Sridhar. Good morning to you. Welcome to
Speaker 2: the show. How much of that is AI? Hi, good morning.
Speaker 3: Yeah, indeed.
Speaker 7: This quarter was pretty amazing for us.
Speaker 5: $ 1. 49 billion in product revenue, up 37% year on year.
Speaker 5: We are doing this while also expanding operating margin by
Speaker 5: 400 basis points to 15%. About half of the beat,
Speaker 5: the overperformance came from AI. And what's nice about this
Speaker 5: moment is that AI is actually driving a nice feedback
Speaker 5: loop because more customers are bringing data onto Snowflake using
Speaker 5: our AI products, Cocoa and Cowork, to get things done,
Speaker 5: which in turn is driving consumption.
Speaker 7: On the platform.
Speaker 5: Which sets up this very nice flywheel of people wanting
Speaker 5: to do more with Snowflake. And it's an effect that's
Speaker 5: pretty profound. It also gives us confidence about where we
Speaker 5: are headed. That's why we raised the full year guidance
Speaker 5: by 5% to 36% for the year.
Speaker 2: What is Cocoa?
Speaker 5: Cocoa is a coding agent for data. It comes as
Speaker 5: part of Snowflake. I've used it to write software as well.
Speaker 5: But what it specializes in is any job that you
Speaker 5: want to do with Snowflake goes five to ten times
Speaker 5: faster using Cocoa.
Speaker 2: Yeah, I know the answer. I was reading so much
Speaker 2: because the surprise that jumps out off the page, right,
Speaker 2: is the momentum. 2,000 accounts added in that quarter. The
Speaker 2: overall usage is really high in a market that is competitive.
Speaker 2: There are many coding agents out there. Why do you
Speaker 2: think that Coco is standing out, Sridhar?
Speaker 5: Because it's the easiest sell for Snowflake as a company.
Speaker 5: I literally go to our customers and say, if your
Speaker 5: data team uses Cocoa, you can make things go five
Speaker 5: to ten times faster.
Speaker 7: And we publish benchmarks on this. We are good at
Speaker 7: what we do.
Speaker 5: Compared to off-the-shelf models and even harnesses from the foundation labs,
Speaker 5: Cocoa is just a lot more effective on Snowflake jobs
Speaker 5: because it understands so much about Snowflake.
Speaker 7: And that's really the magic.
Speaker 5: Plus, we don't have things like per-user subscriptions. And a
Speaker 5: lot of the other products do. Cocoa is included for.
Speaker 7: Free with Snowflake. It's a consumption model.
Speaker 5: And it just makes this a very, very compelling product
Speaker 5: for every data team on the planet.
Speaker 2: That business model is interesting. So if you added 2,000
Speaker 2: accounts in one quarter, where does that show up or
Speaker 2: translate into revenue growth?
Speaker 5: First of all, it shows up in AI revenue because
Speaker 5: people that are using Cocoa consume tokens.
Speaker 7: That's the first starter effect.
Speaker 5: But the bigger effect is that they are doing all
Speaker 5: kinds of things on Snowflake. They are bringing more data
Speaker 5: into Snowflake. They are optimizing and debugging their pipelines. They
Speaker 5: are setting up things like interactive tables that can power dashboards.
Speaker 5: They're creating agents that go into cowork and can get
Speaker 5: deployed to business users. It's the second and third order
Speaker 5: effect of COCO that's most interesting for Snowflake.
Speaker 2: Remaining performance obligations, RPO, came in below at least Wall
Speaker 2: Street's consensus estimates and expectations. How would you ask the
Speaker 2: market to interpret that figure, or what kind of emphasis
Speaker 2: would you put on it?
Speaker 7: I wouldn't put a lot of emphasis on it.
Speaker 5: We are seeing this trend where the bigger renewals are
Speaker 5: getting pushed.
Speaker 7: Out by a quarter to the latter part of this year.
Speaker 5: We are pretty confident that RPO will increase, especially in Q4,
Speaker 5: by a lot. Revenue is the leading indicator that drives everything.
Speaker 5: And as you know, that's very, very healthy.
Speaker 2: We talked about Cocoa in the context of the other
Speaker 2: coding platforms that are out there. Generally speaking, a lot
Speaker 2: of the analysts ask about Databricks, right? And Databricks is
Speaker 2: talking about, you know, it's 80% growth. it's crossing $ 7
Speaker 2: billion in ARR. Where are they doing well against you?
Speaker 2: Where do you feel you're doing well against them?
Speaker 7: It's a big market, first of all.
Speaker 5: Our strength has always been in the context of a cohesive,
Speaker 5: easy to use, trusted data platform. Their heritage is more
Speaker 5: that of catering to developers, wide open code bases, sprawl
Speaker 5: of data, and not as much attention paid to things
Speaker 5: like governance and disaster recovery. And Snowflake is the place
Speaker 5: where enterprises have put their most valuable data, the one
Speaker 5: that they use to run their business, which is what
Speaker 5: sets us up super well to move upstream. Yes, technology
Speaker 5: is important, but I have so many meaningful conversations with
Speaker 5: our customers about how we can transform how their sales
Speaker 5: teams operate or how we can help them optimize their
Speaker 5: supply chains. I would say that we are leveraging AI
Speaker 5: to do the kinds of things that we honestly would
Speaker 5: not have imagined possible three years ago.
Speaker 7: I'm very happy with where we are headed.
Speaker 5: Snowflake is becoming a lot more than a tech provider
Speaker 5: that's largely invisible. We are able to drive real outcomes
Speaker 5: for our customers.
Speaker 2: Sridhar, I like that. AI is clearly driving more usage
Speaker 2: of Snowflake. So slightly differently, what can a customer do
Speaker 2: today with their data within Snowflake that they weren't able
Speaker 2: to do even a year ago?
Speaker 5: Yeah, if you look at customers like United Rentals or Indeed,
Speaker 5: which is among the world's biggest job sites, Indeed has
Speaker 5: rolled out COCO and COWORK to their employees in over
Speaker 5: 60 countries and 28 languages. Ready access to data, ready
Speaker 5: access to reasoning, Ready access to being able to do
Speaker 5: anything else that the data team wants to do on
Speaker 5: top of Snowflake that simply would not have been possible
Speaker 5: a year or two ago. That represents the frontier of
Speaker 5: what is possible with AI and data today.
Speaker 2: Snowflake CEO Sridhar Ramaswamy, the stock up 20% on track
Speaker 2: for its best day since May, highest level since December 2021.
Speaker 2: Thank you so much. A piece of news that we
Speaker 2: broke this morning. 137 Ventures' early bets on SpaceX are
Speaker 2: proving worthy with the 2020-14 vintage fund of SpaceX now
Speaker 2: worth more than eight times the money that investors originally
Speaker 2: put into it. That's net of fees and other charges.
Speaker 7: Investors.
Speaker 2: received back or were distributed $ 2. 5 billion worth of the
Speaker 2: space company shares last quarter by 137. And a source
Speaker 2: says the venture firm's total assets under management is now
Speaker 2: over $ 20 billion, which includes investments in Anduril and Cognition.
Speaker 2: You'll remember 137 was one of the big sort of
Speaker 2: winners of the SpaceX IPO that we covered on the
Speaker 2: show at the time. A quick update on what's going
Speaker 2: on with various AI model outages that we started the
Speaker 2: show with. OpenAI is now saying it's applied mitigation and
Speaker 2: is monitoring recovery of its platforms. And Fropic has just
Speaker 2: said several of its models have recovered after experiencing errors,
Speaker 2: but the companies continue to work to address disruptions, particularly
Speaker 2: with its Opus 4.8 and Opus 5 offerings. Grok, the
Speaker 2: chatbot from Elon Musk's SpaceX AI, said, is also confronting outages.
Speaker 2: That's according to the company's status page. Coming up, HPE
Speaker 2: shares are falling despite booming AI demand and a raised outlook.
Speaker 2: We're going to speak with HPE's CEO, Antonio Neri. This
Speaker 2: is Bloomberg Tech. HPE shares under a little pressure despite
Speaker 2: a strong quarter and an even better outlook. Revenue jumped 34%
Speaker 2: fueled by demand for AI infrastructure, but was still a
Speaker 2: little short of Wall Street's expectations that were very high.
Speaker 2: Joining us now is HPE CEO Antonio Neri. Actually, for me,
Speaker 2: you raised forecasts a lot. What were the reasons behind that?
Speaker 2: What's changed?
Speaker 9: Well, good morning, Ed, and thanks for having me. First
Speaker 9: of all, we are incredibly proud of the results we posted.
Speaker 9: And the results are a reflection of the exceptional demand
Speaker 9: we see and the excellent execution by our teams, which,
Speaker 9: you know, if we think about the underlying drivers of that,
Speaker 9: the strong demand in networking, strong demand in traditional servers,
Speaker 9: and expanded profitability. But what we are doing is raising
Speaker 9: the demand on the confidence on that durability which gave
Speaker 9: us the confidence not only to raise, once again, our
Speaker 9: guy for 26, but also the guy for 2027 on
Speaker 9: a bigger base. So for us, it's to continue to
Speaker 9: stay focused on that. And the stock reaction is day one,
Speaker 9: but look, it takes some time. for investors to digest it.
Speaker 9: But we are not worried about that. Generally, it tends
Speaker 9: to recover very, very quickly.
Speaker 2: Yeah. Right now, the stock's down 6%, which would be
Speaker 2: its biggest drop since late June. But it had been
Speaker 2: down 12%, which would have been the biggest drop since
Speaker 2: April 2025. You talked about a specific contract with an
Speaker 2: unnamed hyperscaler. This is a market where people want the details.
Speaker 2: So I ask you, Who is that hyperscaler? But what
Speaker 2: is significant about that arrangement that the market should be
Speaker 2: excited about it?
Speaker 9: Well, there were two news yesterday that I think the
Speaker 9: market should be very excited about it. One is the
Speaker 9: strategic expansion with Oracle, which will allow us to actually
Speaker 9: build a gigawatt scale infrastructure as Oracle continue to grow
Speaker 9: their AI footprint. And that will include all our HP
Speaker 9: Juniper products, meaning scale-out QFX switches and scale-across, which are
Speaker 9: PTX routers. That demonstrates the level of innovation and time
Speaker 9: to market with the latest technology. So we're very proud
Speaker 9: about that. And that's a driver into the future. And
Speaker 9: even in that business, we have not even considered yet
Speaker 9: the yet-to-be-released Helio stack, which will include our scale-up switches.
Speaker 9: On the Cloud and AI, your reference to that multi-billion
Speaker 9: dollar deal with a hyperscaler, we cannot.
Speaker 7: Share because of you.
Speaker 9: It's a server contract. Yeah, it is a traditional server contract.
Speaker 9: But interestingly enough, it's going to be used internally. So
Speaker 9: think about the hyperscaler as an enterprise customer who is
Speaker 9: going to use our servers to do their own AI
Speaker 9: inferencing for their own needs. And that's, again, another proof
Speaker 9: point that we have the technology to support any customer
Speaker 9: in any use case. So we are excited about both.
Speaker 9: And that's why it points to durability of the demand,
Speaker 9: because the other trend that we have seen is huge
Speaker 9: growth in enterprise on adoption of AI.
Speaker 2: Antonio, I don't know if it makes it any easier
Speaker 2: for you, but I did ask Jensen Wong about circular
Speaker 2: financing earlier this week on the show. In the Oracle arrangement,
Speaker 2: Oracle gets warrants, and so inevitably the questions are raised,
Speaker 2: is this or is this not circular financing?
Speaker 9: The warrants we are providing actually scale with the amount
Speaker 9: of infrastructure we're going to build. So as more infrastructure
Speaker 9: gets deployed, the warrants come with it, which means it
Speaker 9: strengthens the partnership between the two companies to grow together.
Speaker 9: And so we both will benefit. It's not the circular
Speaker 9: financing you're referring to, but it's about incentives on both
Speaker 9: sides to grow together.
Speaker 2: Let's get away from the numbers and just ask what's
Speaker 2: the story here with what's happening in AI build-out, right?
Speaker 2: When NVIDIA had its earnings last week, they gave a
Speaker 2: growth forecast that was modeled with supply, their ability to
Speaker 2: supply the market. And the status of demand running ahead
Speaker 2: of supply is quite well known. What is the situation
Speaker 2: for HPE? Is it such that you can say, okay,
Speaker 2: here is what we can comfortably supply or confidently supply
Speaker 2: to the world, but it would be greater were supply
Speaker 2: chains improved?
Speaker 9: That is the same story, actually. It is exactly the
Speaker 9: same framework. So if you think about Q3 results on
Speaker 9: revenue and the demand, obviously demand significantly outpaced revenues, and
Speaker 9: that revenue growth was 34% in the quarter. And underneath that,
Speaker 9: if you think about networking, we grew 10%, but order
Speaker 9: demand grew 36%, so three and a half times faster.
Speaker 9: But as you go forward now, You know, look, I
Speaker 9: have done 35 quarters as a CEO. Normally, we put
Speaker 9: guides that we want to not only achieve, but beat.
Speaker 9: And that is the confidence that we factor in our
Speaker 9: supply chain ability to deliver on that number. So related
Speaker 9: to Q4, we're going to grow revenue almost $ 2 billion
Speaker 9: quarter over quarter. And then on the bigger base, we're
Speaker 9: going to grow 14% to 17% because we have negotiated
Speaker 9: multi-year agreements with our suppliers that actually brings the capacity
Speaker 9: that we need to deliver against that number. But the
Speaker 9: reality is that demand will continue to outpace supply, and
Speaker 9: that's a good thing because what we're doing with customers
Speaker 9: and working with them, we're interlocking when the supply becomes
Speaker 9: available and the timing to deliver that revenue and obviously
Speaker 9: the technology for them.
Speaker 2: HPE CEO Antonio Neri, thank you so much for your
Speaker 2: time this morning on the earnings beat. Now coming up,
Speaker 2: Blue Origin turns to another Jeff Bezos venture for its talent.
Speaker 2: Really interesting story next. This is Bloomberg Tech. A framework
Speaker 2: for light touch regulation of AI has been agreed to
Speaker 2: by the members of the G20 out of a tech
Speaker 2: and innovation summit held in North Carolina. The so-called Carolina
Speaker 2: Principles call for nations to apply sector-specific approaches to rulemaking.
Speaker 2: avoid creating new regulatory bodies for AI governments, and urge
Speaker 2: closer collaboration between governments and private industry. Here's Commerce Secretary
Speaker 2: Howard Lutnick on the need to embrace the AI build-out.
Speaker 10: Basically, if your community embraces data centers, you're going to
Speaker 10: have great economics, you'll have more power will be built,
Speaker 10: and the price of power in your community will go down,
Speaker 10: and you'll have the economic power of their paying taxes.
Speaker 10: and they're making your community better. So if your community
Speaker 10: doesn't embrace a data center, some other community will.
Speaker 2: A quick look at Tesla shares, up more than 7%.
Speaker 2: That puts them on track for their best day since
Speaker 2: late June, trading at their highest level since mid-July. Not
Speaker 2: really clear why. We know there's a big cyber cab
Speaker 2: event in Texas, 5.45 p.m. Eastern Time, according to some
Speaker 2: Tesla staff that posted about it on X. We know
Speaker 2: that we're going to get a closer look at cyber cab.
Speaker 2: They have a really limited... robo-taxi footprint right now in
Speaker 2: the city of Austin. Maybe we'll learn more. But for
Speaker 2: one reason or another, the stock is really soaring this Thursday.
Speaker 7: This is a big one.
Speaker 2: Jeff Bezos' Blue Origin is turning to another one of
Speaker 2: his companies for talent. Over the last year, dozens of
Speaker 2: veterans of the Amazon Leo satellite venture have moved to
Speaker 2: Blue Origin. That's according to their LinkedIn profiles. Bloomberg's Spencer
Speaker 2: Soper joins us with the story. I mean, in some ways,
Speaker 2: It's only natural, isn't it, that some alumni, some veterans
Speaker 2: of one Bezos space-focused enterprise would jump to the other one?
Speaker 2: Or is it a surprise?
Speaker 7: Yeah, I don't think it.
Speaker 11: Would be a big surprise. I think what it highlights
Speaker 11: is if you look at the differences between Amazon founder
Speaker 11: Jeff Bezos and Amazon's current CEO, Andy Jassy, Bezos definitely
Speaker 11: has a reputation for having a long term vision, an
Speaker 11: insatiable curiosity and a commitment to projects, to funding projects
Speaker 11: through their, you know, through their entirety. Whereas Jassy has
Speaker 11: a reputation as being more of a financial steward. He's
Speaker 11: going to watch the watch the outflow, watch the investments grow.
Speaker 11: And he's going to be very mindful, like, when are
Speaker 11: we getting a return on this? And if it's not
Speaker 11: showing a return, he's going to cut it. So I
Speaker 11: think that if you're a space engineer, you're just going
Speaker 11: to see Bezos as a more stable company. You know, Bezos'
Speaker 11: Blue Origin is a more stable place to be, whereas Amazon,
Speaker 11: you're going to feel like, you know, a piece of
Speaker 11: a disposable appendage.
Speaker 2: The other sort of leadership factor here is Dave Limp, right?
Speaker 2: So he was the devices chief at Amazon. He's now
Speaker 2: the CEO of Blue Origin. How wide does this sort
Speaker 2: of Amazon alumni network reach at Blue?
Speaker 11: Yeah, I mean, Amazon casts a long shadow and there's
Speaker 11: a lot of people and Seattle is still a fairly
Speaker 11: small town, especially when you get into the field of
Speaker 11: rocket science. You're talking tens of thousands of people in
Speaker 11: this Profession nationally. So it's it is fairly small and
Speaker 11: there's connections. But I really think that Bezos is going
Speaker 11: to Bezos versus Jassy is going to be a much
Speaker 11: bigger factor in people calculating their career choices than than
Speaker 11: than any kind of subordinates further down the right down
Speaker 11: the management chain.
Speaker 2: Bloomberg Spencer Soper, thank you very much indeed. That does
Speaker 2: it for this edition of Bloomberg Tech. A few late
Speaker 2: minute additions, a lot going on. And later today, we're
Speaker 2: going to speak with OpenAI CEO Sam Altman.
Speaker 3: 3.30 p.m.
Speaker 2: Eastern, 12.30 p.m. Pacific time. Do not miss it. Recap
Speaker 2: the show on the podcast. You can find it on
Speaker 2: the terminal as well as online on Apple, Spotify, and iHeart.
Speaker 2: This is Bloomberg Tech.