Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast, with Caroline Hyde in New York
Speaker 1: and Eva Low in Sent Francisco.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: Meta agrees to deploy millions of Nvidia processors over the
Speaker 3: next few years, reinforcing its ties with the AI chip giant.
Speaker 3: Plus Meta's CEO Mark Zuckerberg is set to take the
Speaker 3: stand later today in a landmark social media addiction trial
Speaker 3: in Los Angeles. And we discussed some news in software
Speaker 3: and energy tech with the CEOs of Autodesk and heron
Speaker 3: later this hour.
Speaker 2: Welcome to Bloomberg Tech.
Speaker 3: The story right now in public markets when it comes
Speaker 3: to tech is we are rebounding a little bit then
Speaker 3: as that one hundred up more than a percentage point.
Speaker 3: Largely that's on strong or positive economic data. But I
Speaker 3: put the Philadelphia Semiconductor Index in there or socks because
Speaker 3: actually movements in chips and the mag seven is the
Speaker 3: news driver, the catalyst in some of what's happening at
Speaker 3: the index level. That manifests in a deal between Meta
Speaker 3: and Nvidia for millions of invidious processors over a number
Speaker 3: of years. But this is clearly a driver of markets,
Speaker 3: at least in Vidia's case up almost three percent. Meta
Speaker 3: had been lower is now modestly higher. Let's get the
Speaker 3: details of bloombogs Ian King, who leads our coverage of semiconductors.
Speaker 3: So the reality is Meta is already the number two
Speaker 3: customer for Nvidia. But this is an agreement over time,
Speaker 3: millions of chips, and we're not just talking Blackwell GPU,
Speaker 3: We're talking later generation Rubin and then the CPUs in
Speaker 3: each case. What are the kind of facts that we
Speaker 3: need to know?
Speaker 4: Yeah, and networking as well. I mean, the frustrating part
Speaker 4: about it it is we don't have a definitive time period.
Speaker 4: But if we sort of back it out a million chips,
Speaker 4: their average selling price for in video of one GPU
Speaker 4: for the data center is about fifteen sixteen thousand dollars,
Speaker 4: probably as much as twice as that for a leading
Speaker 4: edge one. So you're already talking as much as Meta
Speaker 4: spends on in video gear in a year in just
Speaker 4: the GPUs. Add on top of that the networking, add
Speaker 4: on top of that the CPUs, and obviously it feels
Speaker 4: like an extension, It feels like a bigger commitment to
Speaker 4: in video but they wouldn't say for sure.
Speaker 3: You had a discussion with one of in Video's leaders
Speaker 3: in the data center and Infrastructure group, and part of
Speaker 3: the discussion was, this is the first big example of
Speaker 3: in Vidia selling the Grace CPU to market as a
Speaker 3: kind of standalone product.
Speaker 2: Simple questions like.
Speaker 3: What would you use a Grace CPU for other than
Speaker 3: you know, what's happening in AI. And that is why
Speaker 3: the number is probably tens of billions over that that
Speaker 3: time period.
Speaker 4: Right, Yeah, I mean, it's definitely a step forward for them.
Speaker 4: It's definitely a market expansion for them. You remember Jensen
Speaker 4: told us this a while ago. He dropped a strong
Speaker 4: hint that this was coming. And here it is the key.
Speaker 4: The key thing to look at is all this is
Speaker 4: Intel's territory, this is Amb's territory, the general purpose processor
Speaker 4: for a data center that there's a lot of the
Speaker 4: general computing task. What in Video is saying, Hey, we've
Speaker 4: got this CPU that was buried in the middle of
Speaker 4: all of this gear, but you can just use it
Speaker 4: on its own as well. That's a market extension for
Speaker 4: them if we see widespread adoption. Obviously, MATA is a
Speaker 4: good adoption case.
Speaker 3: One of the other movers in the market this morning
Speaker 3: is AMD, which was to the downside.
Speaker 2: I guess not surprising. The biggest story is in Vidia.
Speaker 3: Kind of keeps rolling on and dominating the spend of
Speaker 3: the hyperscaler's plus Meta, which is not a hyperscaler, but
Speaker 3: that has the data center footprint of one. I was
Speaker 3: interested to go into the terminal and see, like Meta
Speaker 3: about nine percent of revenues from video, but Microsoft's number one,
Speaker 3: you know, double that. But the big picture is there
Speaker 3: right in video it seems dominant.
Speaker 4: Yeah, I mean, you know, the background here is Microsoft, Meta, Amazon.
Speaker 4: They're all making their own CPUs. They're all trying to
Speaker 4: make their own accelerators. Any commitment to either in video
Speaker 4: or indeed AMD for exactly those parts is obviously something
Speaker 4: that investors want to see and is a strong sign
Speaker 4: for the chip makers themselves.
Speaker 3: Bloomberg's Ian King on a story that again news driven
Speaker 3: catalyst for markets this morning. Investors are looking also to
Speaker 3: scoop up beaten down names after a stretch of choppy
Speaker 3: AI driven volatility. Morgan Stanley says the recent sell off,
Speaker 3: especially in software and services, was largely indiscriminate, with some
Speaker 3: companies hit harder despite strong fundamentals. Here's breakdown the AI
Speaker 3: impact across all sectors is Morgan Stanley Gooble Research director
Speaker 3: Katie Huberty. I mean, it's such a detailed report that
Speaker 3: looks across stocks with a very wide lens. But in
Speaker 3: the here and now I want to go to that
Speaker 3: word indiscriminate and just that parag off of the report
Speaker 3: where you summarize the last few weeks, what do you
Speaker 3: think was happening right right?
Speaker 5: So I think it's important on the back of the
Speaker 5: announcement that you just discussed to understand that we're in
Speaker 5: the very early innings of what is likely to be
Speaker 5: a ten trillion dollar CAPEX investment cycle. That investment cycle
Speaker 5: is underwritten by a productivity story.
Speaker 6: As the technology diffuses into.
Speaker 5: The market, there is real productivity acceleration, which is important
Speaker 5: because the last two decades we've been running at labor
Speaker 5: productivity that is half of normal levels. Because we knew
Speaker 5: this adoption story was going to be critical and it
Speaker 5: was going to touch all sectors of the market. We
Speaker 5: have now five times over map the thirty six hundred
Speaker 5: stocks that we cover to understand rate of change, exposure, materiality, pricing, power,
Speaker 5: and it's on the back of that data that yes,
Speaker 5: we've been able to identify where there are companies that
Speaker 5: have been sold indiscriminately and there's a real opportunity. We
Speaker 5: see that in software and services. In research, we're a
Speaker 5: heavy adopter of AI technology, and the conversations we're having
Speaker 5: right now with large language models is how do we
Speaker 5: connect those models to the applications and data that we
Speaker 5: use every day to unlock the real potential. And so
Speaker 5: you can see that the list that we published last week,
Speaker 5: the thread across the software and services companies are where
Speaker 5: there is a data mode, whether that's credit or it's
Speaker 5: market data or its systems of record in financials or
Speaker 5: customer data.
Speaker 3: This is the fifth time you've kind of done this
Speaker 3: exercise mapping global AI stocks, right, and you list margin
Speaker 3: expansion as the leading piece of evidence and so of
Speaker 3: ROI I'm thinking back to earlier in earning season when
Speaker 3: we had names like Salesforce Service Now and that part
Speaker 3: of the research report I flagged at the beginning fundamentals.
Speaker 3: You know, they didn't really get the benefit of the
Speaker 3: doubt from the market. They showed actually quite a lot
Speaker 3: of real well deployment of that technology, but something you
Speaker 3: know isn't quite believed by the street.
Speaker 2: What is that?
Speaker 5: So what's really important in this data set is tracking
Speaker 5: rate of change.
Speaker 6: So if you go back two.
Speaker 5: Years ago, the big rate of change in exposure materiality
Speaker 5: was energy and utilities. That sector outperformed the most in
Speaker 5: twenty twenty four. Last year it was financials. At the
Speaker 5: beginning of twenty twenty five we highlighted as the biggest
Speaker 5: rate of change. Financials by many accounts, even outperformed parts
Speaker 5: of the technology sector last year. Right now, of the
Speaker 5: rate of change is actually greatest in non tech categories,
Speaker 5: particularly in consumer and apparel, endurable goods, in autos and
Speaker 5: so Yes, we see areas of software that have been
Speaker 5: sold indiscriminately where there is a data mode and there's
Speaker 5: an opportunity, but it's broader than just technology. What we
Speaker 5: see in the data is that the AI adopters are
Speaker 5: experiencing margin expansion that's double the market indices, double the
Speaker 5: MSCI World Index, double the S and P five hundred,
Speaker 5: and so we believe that there's a regime shift happening
Speaker 5: in the market away from a purely tech and specifically
Speaker 5: AI enabler leadership to now broadening of AI adoption and
Speaker 5: leadership not just in technology, but across all sectors.
Speaker 2: Katie tied to this.
Speaker 3: One of the big moments of last year was Morgan
Speaker 3: Stanley launching its private companies coverage, going much deeper on
Speaker 3: private companies who are so active in this world. Right,
Speaker 3: have you shifted existing analysts from public to private companies?
Speaker 3: Are you onboarding specific private analysts on specific domains?
Speaker 2: We just have thirty seconds.
Speaker 5: Right, So we believe that that the domain experts that
Speaker 5: cover the public companies are typically and best positioned to
Speaker 5: also cover private sectors. But there are areas of thematics,
Speaker 5: think humanoids and AI where we have shifted analysts from
Speaker 5: stock coverage to covering those thematics where there will be
Speaker 5: a lot of private company innovation, But most of the
Speaker 5: time that coverage comes from our existing public company domain experts.
Speaker 3: Katie Ubertim Morgan Stanley, it's great to have you on
Speaker 3: Bloomberg Tech.
Speaker 2: Thank you very much. Now, coming up on the show,
Speaker 2: we're going to.
Speaker 3: Speak with Andrew and Egnost, Autodesk president and CEO. That
Speaker 3: conversation's next. This is Bloomberg Tech. Autodesk is leaning into
Speaker 3: the AI powered physical world. The company announced a two
Speaker 3: hundred million dollars strategic investment in AI research firm World Labs,
Speaker 3: its largest startup investment to date. Here to discuss Autodesk
Speaker 3: President and CEO Andrew and Egnouse.
Speaker 2: Very interesting, Good morning to you. We've been looking at it.
Speaker 3: We've been looking into this idea a lot, you know,
Speaker 3: through the beginning of twenty six, particularly in the context
Speaker 3: of industrial manufacturing, the future role of humanoid robots, how
Speaker 3: they come to learn the environment that they're in. People
Speaker 3: sometimes say digital twins, you have chosen what you believe
Speaker 3: to be the best player right for the sort of
Speaker 3: AI and software underpinning.
Speaker 2: Of that thought. Why World Labs.
Speaker 7: Yeah, Well, there's a couple of really important reasons. You know, First,
Speaker 7: we kind of share a common ethos. We believe that
Speaker 7: AI can enhance and expand human ingenuity, not replace it,
Speaker 7: and that's something that both World Labs and auditors share
Speaker 7: in common. But more importantly, you know, FAI, fe Lee,
Speaker 7: Autodesk others believe that the next frontier are world models.
Speaker 7: This is the ability to simulate, predict, and react to
Speaker 7: real world constraints and virtual changes in world world constraints,
Speaker 7: virtual changes of design constraints within a virtual environment.
Speaker 6: That means you really have to partner with.
Speaker 7: Someone that's got deep expertise and spatial reasoning for AI.
Speaker 6: That's why we're working.
Speaker 7: With world Labs, and they picked us because we have
Speaker 7: deep expertise and deep data knowledge of what happens in
Speaker 7: a design and make process.
Speaker 3: The technical challenge is to apply the physics of the
Speaker 3: real world into the virtual world, particularly when you're trying
Speaker 3: to simulate. I'm assuming that beyond the investment, there is
Speaker 3: a commercial arrangement here right where you're able to do
Speaker 3: something with World Labs technology. How does that manifest?
Speaker 7: Yeah, so we're going to be working together with using
Speaker 7: world Labs technology with our tools. They're also going to
Speaker 7: get access to some of the proprietary models that we've
Speaker 7: built so that we can help them expand and create
Speaker 7: their ability to do deep spatial reasoning. So you'll see
Speaker 7: us initially lean into the media and entertainment space, but
Speaker 7: you know, as you said, this is much more expansive
Speaker 7: than that and Autodesk. We're really interested in the mid
Speaker 7: market manufacturing space and mid market factories, small and mid
Speaker 7: sized factories in particular. This is going to be a
Speaker 7: high growth area, and these factories are going to need
Speaker 7: to be able to operate like the biggest factories in
Speaker 7: the world, but at a much smaller scale, and they
Speaker 7: need technology from US and technology from World Labs to
Speaker 7: do that.
Speaker 3: You put out the announcement about the two hundred million
Speaker 3: dollar part of the strategic investment. Actually, later in the morning,
Speaker 3: world Labs confirmed they did a one billion dollar fundraise overall,
Speaker 3: so you're a big portion of it. What was the
Speaker 3: valuation that World Labs was assigned.
Speaker 6: In that You'd have to talk to World Labs about that.
Speaker 7: I'm not going to discuss what their valuations were, but
Speaker 7: you can reach out to that team.
Speaker 3: The question is when does this become a real commercial
Speaker 3: opportunity for you then, Andrew, you know, when is it
Speaker 3: that you're going to be able to say in an
Speaker 3: earnings report this is something that resulted from that strategic investment.
Speaker 7: You know, it's important ed for us to recognize that
Speaker 7: in our space, AI is already returning value. I know
Speaker 7: there's a lot of hype out there, especially with the
Speaker 7: infrastructure build up and what's happened with large language models,
Speaker 7: but a lot of software companies, particularly Autodesk, have been
Speaker 7: investing in AI incrementally for a decade, so we're already
Speaker 7: delivering value today around the ability to simulate certain things
Speaker 7: like flooding, lighting lighting studies, the ability to simulate air
Speaker 7: and wind and noise studies using AI, the ability to
Speaker 7: build preliminary models with AI that take into account structural
Speaker 7: constraints or the need to remove structural costraints, and helping
Speaker 7: people make better decisions the construction cycle. So AI is
Speaker 7: delivering value in our space today and regardless of what
Speaker 7: happens out there in the world, We're going to continue
Speaker 7: to invest over the next two, three, four, five years,
Speaker 7: so you'll see us continue to roll out incremental real value.
Speaker 6: So it's happening now.
Speaker 7: This is only going to allow us to accelerate deeper
Speaker 7: value into additional areas and into deeper parts of the
Speaker 7: design and make life cycle.
Speaker 3: That's where I want to end it. You know, a
Speaker 3: lot of people ask what's the net result of all
Speaker 3: of this. We focused a lot on digital twins, virtual worlds.
Speaker 3: We discussed that is the result that you know, big facilities,
Speaker 3: manufacturing sites, plants get built quicker, the people inside them
Speaker 3: get trained more quickly. Humanoid robots are deployed in the
Speaker 3: real world more quickly.
Speaker 7: Here's the big story in our space, Eddie. There is
Speaker 7: a massive capacity problem. There is not enough money, people
Speaker 7: and materials to build and rebuild everything in the world
Speaker 7: right now. Right now, people are building lots of data centers,
Speaker 7: a lot of infrastructure that serves day to day people
Speaker 7: in their lives, road rail, all sorts of things.
Speaker 6: Doesn't get built while that's getting built.
Speaker 7: We need to execute more projects with the same amount
Speaker 7: of people in the same capacity we have today, and
Speaker 7: we need to do it at an accelerated rate. That's
Speaker 7: something that's very unique about the design and build world,
Speaker 7: this fundamental capacity problem.
Speaker 6: AI is going to be enabled to unlock that.
Speaker 3: Andrew Anagnus autodes CEO, really appreciate your time on bloo
Speaker 3: Bow Tech.
Speaker 2: Thank you.
Speaker 3: In other earnings news, Palo Alto Network shares plunging having
Speaker 3: a difficult day after the cybersecurity company released a forecast
Speaker 3: for adjusted earnings that was weaker than anticipated, though it
Speaker 3: also boosted It's for your forecast for other key metrics,
Speaker 3: including revenue and remaining performance obligations. CEO nikesha Ora told
Speaker 3: us why he thinks the market is wrong about its
Speaker 3: reaction to the earnings.
Speaker 1: This is this.
Speaker 8: I think the market is not paying attention to our
Speaker 8: numbers carefully. We just complete We did our largest acquisition
Speaker 8: in cyber Arc.
Speaker 2: We had a great quarter.
Speaker 8: Our numbers are across every known consensus metric. The market
Speaker 8: is not understanding that our guidance for the next two
Speaker 8: quarters includes cyber Arc. If you take the consensus of
Speaker 8: cyber Arc and ours, who are actually getting above the
Speaker 8: collective consensus. But the market hasn't understood the dilution of shares,
Speaker 8: so I think they have it wrong.
Speaker 3: Coming up, Apple Fast Tracks AI wearable devices, we have
Speaker 3: the Bloomberg recording.
Speaker 2: Next, this is Bloomberg Tech.
Speaker 3: Jeff Bezos Space Dot Up Blue Origin has shifted resources
Speaker 3: from space tourism to lunar projects. CEO Dave Limpz like
Speaker 3: with Bloomberg's and Marie Harden about the move while at
Speaker 3: the Defense Tech Summit.
Speaker 9: Where it's such a pivotal moment around where space is
Speaker 9: and there's never been more demand, you know, the We
Speaker 9: have years worth of demand for our launch business, as
Speaker 9: does everybody that's launching. We're very constrained as a country
Speaker 9: in terms of the number of launch vehicles that we
Speaker 9: have right now, and our adversaries around the world are
Speaker 9: not standing still. They're putting hundreds of billions of dollars
Speaker 9: into launch and into space, and especially as it relates
Speaker 9: to the Moon, which we haven't been on the Moon
Speaker 9: for fifty years. We think it's really important for Blue,
Speaker 9: for the country, and it just made prudent sense from
Speaker 9: our standpoint to take the brilliant people that we're working
Speaker 9: on New Shepherd, pause that for a while we're planning
Speaker 9: for at least two years, and then repurpose them to
Speaker 9: even further accelerate our efforts in lunar and launch.
Speaker 10: There was all this excitement I think about New Shepherd,
Speaker 10: especially because Katie Perry went to space and for civilians
Speaker 10: who maybe want to have that moment like.
Speaker 2: Mark Bezos had. So do you think you'll go back
Speaker 2: to that at some point? Is it really just a pause?
Speaker 9: I think we will. I think there's still you know,
Speaker 9: we had multiple years of backlog and that it was
Speaker 9: the easiest ticket to sell, was that, And so I
Speaker 9: think we'll likely go back into that business. But again,
Speaker 9: at the moment in time right now, it just makes
Speaker 9: more sense to focus on the Moon.
Speaker 2: So it really is a space race, right now I
Speaker 2: don't you know.
Speaker 9: I'm very much pro America and a capitalist, but I
Speaker 9: don't think we want another Spotnik moment. And we were
Speaker 9: the first to put boots on the moon, and I
Speaker 9: really feel like we want to put you know, we
Speaker 9: want to put boots on the moon. And this time
Speaker 9: the name of our group inside of Blue is Lunar Permanence,
Speaker 9: So we're not only racing to the moon to get
Speaker 9: there back again for the first time, but we want
Speaker 9: to keep people on the moon.
Speaker 3: Blue Origin CEO Dave Limb speaking with Bloomberg's a Marie
Speaker 3: Horder and in other news, it's time for talking tech
Speaker 3: and first start or On Buffett's Berkshire Halfaway cut its
Speaker 3: Amazon steak by seventy five percent in the fourth quarter,
Speaker 3: reducing it to about two point three million shares, according
Speaker 3: to a regulatory filing. At the same time, it built
Speaker 3: a new position in The New York Times with five
Speaker 3: point one million shares and continued trimming. According to the
Speaker 3: thirteen and a half document, its other holdings in Bank
Speaker 3: of America and Apple plus Uber and plans to invest
Speaker 3: more than one hundred million dollars to expand fast charging
Speaker 3: infrastructure for autonomous.
Speaker 2: Evs in the US.
Speaker 3: The company will build high capacity charging hubs in San Francisco,
Speaker 3: Los Angeles, and Dallas, the same market where it's preparing
Speaker 3: to roll out a public ROBOTAXI service. And Apple is
Speaker 3: breaking away from its tech pits. Bloomberg data show the
Speaker 3: iPhone maker's forty day correlation with the NASDAQ one hundred
Speaker 3: has dropped to its lowest level since two thousand and
Speaker 3: six as it largely sits out the AI arms rates,
Speaker 3: with rivals pouring money into AI related capex. Some investors
Speaker 3: are starting to see Apple as an healing alternative. Let's
Speaker 3: power on and stay with Apple. The company's fast tracking
Speaker 3: work on three new wearables as it races to compete
Speaker 3: with AI powered hardware. Sources say the tech giant is
Speaker 3: developing smart glasses, a pendant, and AirPods with expanded AI capabilities.
Speaker 3: Bloomberg Consumer Tech and Apple managing editor Mark gum And
Speaker 3: break the story and it's with us. Okay, three distinct products,
Speaker 3: three distinct categories.
Speaker 2: Let's go through what you've learned from sources.
Speaker 11: Yeah, you know, Apple, they are sitting out the AI
Speaker 11: race in a way, but they're going to enter in
Speaker 11: an Apple way, and that means hardware blended with AI,
Speaker 11: blended with software, blended with services. And they're going to
Speaker 11: get there if they're able to pull off this new series,
Speaker 11: which I believe they will before the end of the year.
Speaker 11: And so three hardware products. One is smart glasses. These
Speaker 11: are going to be quite significant. They're going to compete
Speaker 11: with the metal product. They're likely going to be a
Speaker 11: bit pricier. They're going to have dedicated cameras, one for
Speaker 11: media capture, one for computer vision. In terms of functionality,
Speaker 11: you'll get things like if you're taking a walk and
Speaker 11: you have turned by turn directions on.
Speaker 12: Instead of it telling you make a right in four
Speaker 12: hundred and fifty.
Speaker 11: Feet, it might say make a right at the gray building,
Speaker 11: becacause it sees your surroundings, or make a right past
Speaker 11: the white car. AirPods with cameras very similar AI functionality
Speaker 11: without the media capture functionality built into the earbuds that
Speaker 11: you know people already know and love. And then the
Speaker 11: pendant that's really an alternative product that is an accessory
Speaker 11: for the phone, your eyes and ears for the phone.
Speaker 12: For AI in a sense similar functionality to the glasses.
Speaker 11: And the AirPods, but not everyone wants to wear smart glasses,
Speaker 11: and so if Apple wants to provide that eyes and
Speaker 11: ears to the world, it's going to need some o
Speaker 11: their product, and that's what the pendant's for.
Speaker 12: People aren't going to have AirPods in their ears at
Speaker 12: all times.
Speaker 11: People aren't going to want to put glasses on their
Speaker 11: face in all cases, especially if they don't have vision
Speaker 11: correction needs.
Speaker 12: So you need some sort of hand or necklace. So
Speaker 12: that's what they're developing as well.
Speaker 3: Just fifteen seconds, Mark literally, but do these come this year?
Speaker 3: When do they get released?
Speaker 11: I would expect the glasses and the pendant to be
Speaker 11: released next year in the air pods as early as
Speaker 11: this year.
Speaker 3: The most Mark German, who leads all our consumer tech coverage,
Speaker 3: thank you very much. This is some interesting stuff going
Speaker 3: on in private markets, and actually the team at Bloomberg
Speaker 3: News do a really good job at going into those markets,
Speaker 3: looking at the documents and finding out stuff that actually
Speaker 3: all markets want to know. Sally Bakewell leads our finance team,
Speaker 3: and in this case, the reporting is about what we
Speaker 3: know from sources from some of those private names in
Speaker 3: software who are coming to us a little bit earlier
Speaker 3: than normal and saying here's what's under the hood, here's
Speaker 3: what we're learning.
Speaker 2: Just explain the reporting to us.
Speaker 13: Yeah, that's exactly right. So these are private firms. They
Speaker 13: are owned by private equity firms which obviously borrowed in
Speaker 13: order to buy them. So these are company software firms
Speaker 13: that have bonds and loans outstanding. Now, a lot of
Speaker 13: debt tied to software has sold off in recent weeks,
Speaker 13: particularly software as a service, because investors are very worried
Speaker 13: about the threat of AI disruption potentially supplanting some of
Speaker 13: those tasks. So we have seen billions of dollars of
Speaker 13: loans tied to US software and US tech slipping into
Speaker 13: distressed territory. Now, amid all of this concern we have
Speaker 13: had a couple of private software firms actually opening their
Speaker 13: earnings books a little bit early to investors in a
Speaker 13: bid to calm nerves to say that our earnings and
Speaker 13: our revenue are trucking along just fine. So we had
Speaker 13: the likes of McAfee, which showed that it's fourth quarter
Speaker 13: revenue held steady at about six d and twenty six
Speaker 13: million compared to the year earlier. We had Rocket Software,
Speaker 13: which actually saw a five percent increase in twenty twenty
Speaker 13: five revenue, and we had Perforce Software which actually saw
Speaker 13: a slight decline, but it was just a slight decline.
Speaker 13: So the aim here is to say with software firms,
Speaker 13: but we are actually benefiting or we are handling, or
Speaker 13: we're dealing with.
Speaker 9: At the AI threat.
Speaker 3: Just for we start the conversation, the team in New
Speaker 3: York indulge me really going to the treasury market. This
Speaker 3: is quite an interesting opportunity to go to corporate credit
Speaker 3: and some of the unsecure bonds tied to those case
Speaker 3: studies because there's some reaction, right, like the companies tell
Speaker 3: them something we don't normally do this.
Speaker 2: But how the bomb market react right?
Speaker 13: Well, I mean a lot of this debt is actually
Speaker 13: senior secured, which means it is it is backed by collateral,
Speaker 13: it is high in the repayment line. They would have
Speaker 13: to see really significant impairment to experience any losses, so
Speaker 13: or significant losses. So this is one of the arguments
Speaker 13: that the private credit industry is coming out with at
Speaker 13: the moment in defense of software saying, you know, our
Speaker 13: software loan books look good. In fact, Blue Out Capital
Speaker 13: said it wasn't seeing let alone red flags. It wasn't
Speaker 13: even seeing yellow flags in its software loan portfolio. And
Speaker 13: we've had the same sort of sentiment from a number
Speaker 13: of them. And what's the saying that it's a bit
Speaker 13: too early to see any degradation in software right now?
Speaker 3: Bloomberg Sally Bakewell, thank you very much. We've spent a
Speaker 3: lot of time on the impact of AI on specific stocks.
Speaker 2: What about the macro picture.
Speaker 3: San Francisco FED president Mary Daily says, monetary policy makers
Speaker 3: need to be open to signs pointing to how the
Speaker 3: new technology could be changing the US economy.
Speaker 14: Listen to this in productivity numbers, especially when they're happening
Speaker 14: in what I would think of as real time. It's
Speaker 14: very challenging to assess or draw it back to exactly
Speaker 14: what the factors are that have shaped it.
Speaker 15: You know.
Speaker 14: In fact, people still don't agree on what happened in
Speaker 14: the nineties all the time if you look at research.
Speaker 14: So it's just something to keep in mind. So then
Speaker 14: what you do would any good economist or person, any
Speaker 14: industry person would do is they'd say, well, what am
Speaker 14: I seeing? What am I seeing? And so right now,
Speaker 14: while we can't find it in the macro studies that
Speaker 14: would do very sophisticated empirical econometrics and ask the questions
Speaker 14: how much this is AI. We still can see that
Speaker 14: there's something going on there. The question is it happening?
Speaker 14: The question is how long will it persist? And so
Speaker 14: clearly something's happening in the economy. But if you make
Speaker 14: a series to go back to your question about productivity,
Speaker 14: if you make a series of one time adjustments, so
Speaker 14: say you automate a production line or you use AI
Speaker 14: to help in loan application process, you save money once.
Speaker 14: You don't save money forever. I mean, you keep saving
Speaker 14: that money, but you don't get growth out of that.
Speaker 14: You don't get productivity growth. You get one time adjustments
Speaker 14: to the level of productivity of your employees or your process.
Speaker 14: So what we're looking for is a technology to give
Speaker 14: us consistently good changes in productivity so that all industries
Speaker 14: at scale get better, industries figure out new ways to
Speaker 14: generate revenue, new ways to do product design, new ideas
Speaker 14: to come and shape the economy. That's the thing that
Speaker 14: has a sustained productivity growth parts. So it's undeniable. Productivity
Speaker 14: growth has gone up. What's not as clear is how
Speaker 14: long will that last that.
Speaker 3: Was San Francisco FED president Mary daily. Aber W's MGX
Speaker 3: is pouring billions into its AI bets with no plans
Speaker 3: of slowing down. Since it's launched in twenty twenty four,
Speaker 3: the fund has already invested in AI startups, chip makers,
Speaker 3: and data centers, with plans to raise an additional thirty
Speaker 3: billion dollars for infrastructure. Although fears of potential AI bubble rise,
Speaker 3: the fund and its investment chief remain unfazed. Here with
Speaker 3: the details, Bloomberg Senior Tech editor Mike Shephard, We've been
Speaker 3: taking a very close look at the golf generally, but
Speaker 3: but MGX is an example, and in part our reporting
Speaker 3: is based on a conversation with that investment chief.
Speaker 2: What do we need to know? Well, let's rate.
Speaker 15: Our colleagues, Mark Bergen and Dineshire sat down and this
Speaker 15: was really the first of its kind interview with their
Speaker 15: AI investment chief Ali Yasma and their chief strategy officer
Speaker 15: David Scott, and they got a look at the inner
Speaker 15: workings of this firm, MGX, whose name is really showing up.
Speaker 2: More and more.
Speaker 15: Ed with all these AI related deals that we've been
Speaker 15: talking about, Let's go to anthropic MGX was a co
Speaker 15: lead investor in the latest fundraise. The company has also
Speaker 15: invested and taken stakes in xai and open Ai, really
Speaker 15: giving it, in a way, the triple Crown of AI investing.
Speaker 15: And there's more. They've also put money into the big
Speaker 15: Stargate AI data center venture here in the US, and
Speaker 15: also taken a stake in the new TikTok that we've
Speaker 15: spent so much time talking about. So MGX is really
Speaker 15: a player in so many of these different areas. And
Speaker 15: one thing that struck me ed during the interview and
Speaker 15: reading the big take on this was that David Scott
Speaker 15: likened their approach not to a private equity firm or
Speaker 15: a venture capital fund, but really to Invidio, which you
Speaker 15: and I have seen from the the conference here in
Speaker 15: Washington in October, just how much Nvidia has tried to
Speaker 15: take stakes in cloud computing and software companies that tried
Speaker 15: to feed the ecosystem of artificial intelligence. And this is
Speaker 15: just a sign of how Abu Dhabi, whose sovereign wealth
Speaker 15: fund bax MGX, is really trying to diversify its economy
Speaker 15: away from just energy and try to seize on the
Speaker 15: AI wave.
Speaker 2: Now that's Abu Dhabi.
Speaker 3: The other news headline of the morning was Saudi Arabia's
Speaker 3: Humane disclosing that it had participated in XAIS Series E round,
Speaker 3: which predated the merger of SpaceX.
Speaker 15: What do we need to know there, Well, this is
Speaker 15: another key tie up between Humane which got had start
Speaker 15: just last year the Saudi's unveiled Humane, which is backed
Speaker 15: by the Public Investment Fund. Again we have state backed
Speaker 15: golf money going into this new Ai venture. It was
Speaker 15: announced just as President Donald Trump arrived in the Middle
Speaker 15: East for a high profile visit, high stakes visit with
Speaker 15: golf leaders, and they are now deepening this partnership. Already
Speaker 15: in November, Human announced with Xai that would develop a
Speaker 15: five hundred megawatt data center in Saudi Arabia, and this
Speaker 15: just furthers that partnership and as a result, as a
Speaker 15: result of this investment, of course, they end up now
Speaker 15: with a stake in the much larger combined SpaceX, which
Speaker 15: now counts XAI as a subsidiary. And Human is also
Speaker 15: looking to deploy more of Xai's technology, including the Grock chatbot,
Speaker 15: across Saudi Arabia, giving Elon Musk access to a key
Speaker 15: market that it could see develop going forward and of course,
Speaker 15: possibly more access to funding as his larger combined venture
Speaker 15: moves forward.
Speaker 2: DEMX Mike Sheppard, thank you very much.
Speaker 3: Now coming up, Drew Bagino, CEO of herom Power, joins
Speaker 3: us talk about the energy startup's latest funding round. He
Speaker 3: may be a familiar face and a familiar name, of course,
Speaker 3: long time Tesla executive now in a new domain.
Speaker 2: That's next. This is bloom Bug Tech.
Speaker 3: Heron Power, the energy startup founded by former Tesla executive
Speaker 3: Drew Baglino, has raised a one hundred and forty million
Speaker 3: dollar Series B. The company makes advanced electrical equipment for
Speaker 3: delivering power faster and more efficiently to projects like AI
Speaker 3: data centers. Drew us with us now here in San Francisco.
Speaker 3: We have been tracking Heroin since its earlier days. This is,
Speaker 3: you know, a quick Series B, maybe in succession to
Speaker 3: the fundraising you did already, but importantly you bring Andreson
Speaker 3: in through the American Dynamism Fund, a new investor.
Speaker 2: Let's start with that. Why go there?
Speaker 10: First of all, thanks Ed for having me again on
Speaker 10: the program. I'm super proud to represent her and Arnor's
Speaker 10: major milestone today.
Speaker 2: Yeah.
Speaker 10: Well we're focused on building new technology and manufacturing in
Speaker 10: the United States, and that's really aligned with A sixteen
Speaker 10: Z's thesis through their American Dynamism Fund, and we just
Speaker 10: found alignment on our future vision of how we can
Speaker 10: revolutionize the electricity sector in the US.
Speaker 5: Together.
Speaker 3: In the time that I've known you, but particularly since
Speaker 3: you've been working on Heroin, you know you've been pretty transparent.
Speaker 3: You know, what you're trying to do is rethink a
Speaker 3: technology essentially and where it fits into modernizing grades, data center,
Speaker 3: the big energy capacity.
Speaker 2: Build out, which we'll get to.
Speaker 3: Is there something more than just the capital that the
Speaker 3: A sixteen Ze can help you with there.
Speaker 10: They're an amazing firm. They've got resources across recruiting, in finance,
Speaker 10: in policy. They're great thought partners for us along with
Speaker 10: our existing investor team as we set off on this
Speaker 10: ambitious adventure.
Speaker 3: So you kind of still an R and D phase
Speaker 3: right now. Maybe just explain what Heroin is and what
Speaker 3: Heroin does and then we can go from that.
Speaker 10: Sure, what Hearn's trying to do is take really four
Speaker 10: decades of innovation and power semiconductors that have happened in
Speaker 10: parallel to like the More's law, improvement in transistors that
Speaker 10: are in compute and bring them to the core of
Speaker 10: the grid. Right now, the grid is using largely mechanical
Speaker 10: devices that were invented like a century ago, and that
Speaker 10: is still what's underpinning everything in the power distribution sector.
Speaker 10: But at the same time, we've leveraged amazing improvements in
Speaker 10: power transistors truly like orders of magnitude, capability and cost
Speaker 10: reductions that have enabled all the innovation at the grid's edge. Compute,
Speaker 10: you know, consumer electronics, it communications. We're bringing that to
Speaker 10: a sector that hasn't seen much change, which is the
Speaker 10: electricity sector itself.
Speaker 3: You have made some commercial progress basically, you know, even
Speaker 3: if you're in R and D phase. One of the
Speaker 3: case we talked about previously is with Crusoe, which right
Speaker 3: is in the AI date center context. Yeah, but just
Speaker 3: in Layman's terms, where would Heron fit in in the
Speaker 3: buildouts of a new data center?
Speaker 10: Absolutely, So, what Heron is doing is really three things
Speaker 10: for a data center developer. First, we're offering them like
Speaker 10: an alternative supply, like right now they're waiting for equipment
Speaker 10: that's largely produced overseas potentially two or three years. And yeah,
Speaker 10: we're building it at home, and we're building it with
Speaker 10: completely different supply chain that's way more scalable, no more
Speaker 10: steel and oil, replacing it with silicon and software. Second,
Speaker 10: we're simplifying what they need to build out. You know,
Speaker 10: we're moving seventy percent of the gear on the way
Speaker 10: from the grid to the chip. That means less labor
Speaker 10: to find in the field, less time in the construction schedule.
Speaker 10: And the third thing we're doing is reducing the losses
Speaker 10: from grid to chip by a factor of four, which
Speaker 10: means for the same power interconnection, which as we know
Speaker 10: it could be difficult, you can produce that many more
Speaker 10: tokens very quickly.
Speaker 2: What is the go live date? You know, when is
Speaker 2: this going to be foid commercially?
Speaker 10: Do you think, Yeah, we're going to deploy ourselves this
Speaker 10: year with early customers with revenue units in early twenty seven,
Speaker 10: and then mass production in late twenty seven.
Speaker 2: Data center gets a lot of the focus.
Speaker 3: The other big story, which I think you'll appreciate, is
Speaker 3: what is happening with energy generation energy storage right Elon
Speaker 3: Musk has this one hundred gigawatts solar goal. Yeah, you
Speaker 3: ran that business on the energy side at Tesla for
Speaker 3: a long time. You understand the reality of that number.
Speaker 3: Please also feel like, you know, to jump in where
Speaker 3: heron would fit in with that. But what do you
Speaker 3: make of that goal?
Speaker 2: Oh? I think it's fantastic.
Speaker 10: I mean, globally we saw over half a terrot lote
Speaker 10: five hundred gigwats of solar installed last year and that
Speaker 10: number isn't going to go down anytime soon. Really, the
Speaker 10: electricity sector is at a pivotal moment. You know, electricity
Speaker 10: has meant prosperity and growth for people all over the
Speaker 10: world for the past decades. But now it's at this
Speaker 10: juncture right. We've got AI that needs way more power
Speaker 10: and electricity abundant renewable electricity can be a path to
Speaker 10: an all sustainable, all electric energy economy. And to do
Speaker 10: that we need more renewable energy and we need more electricity.
Speaker 2: Is one hundred giga? What's in the United States like achievable?
Speaker 5: Oh?
Speaker 10: I mean, of course, you know, if you put your
Speaker 10: mind to something, no matter how difficult it is, you
Speaker 10: can accomplish it. I can say that from two decades
Speaker 10: of experience scaling new technologies from nothing to you know,
Speaker 10: millions of units.
Speaker 2: Yeah, like I think it's possible, and that would be
Speaker 2: an addressable market for Heroin one hundred percent.
Speaker 10: Yeah, we're going after solar, We're going after batteries, data centers,
Speaker 10: really anywhere where you need to go from DC to
Speaker 10: medium voltage AC. That's what hearn Link is for.
Speaker 3: Three bagging, you know, CEO of heron formerly of course
Speaker 3: it tests like great to have you back here on
Speaker 3: Bloomberg Tech. Meta CEO Mark Zuckerberg is set to take
Speaker 3: the stand later today in a trial alleging his company's
Speaker 3: products and Google's YouTube We're designed to addict young people
Speaker 3: claims that both companies deny. Social media platforms, including Meta,
Speaker 3: are actually facing thousands of similar cases. That's in addition
Speaker 3: to claims brought by various state attorneys general alleging that
Speaker 3: these products cause harm in some way to users.
Speaker 2: Let's discuss with Sasha Howe.
Speaker 3: She's the executive director of the Tech Oversight Project and
Speaker 3: advocacy group that urges reducing the power of big tech.
Speaker 3: And like from me off, you're very much on the
Speaker 3: side of the alleged victims in this case, right. I
Speaker 3: think that's important to set out early and there has
Speaker 3: been this criticism of big tech, but particularly the social
Speaker 3: media platforms for.
Speaker 2: A long time.
Speaker 3: In the context of this trial today where mister Zuckerberg
Speaker 3: will testify later in the day, what's different this time.
Speaker 16: Well, this is, as you alluded to earlier, big Tech's
Speaker 16: big tobacco moment. It's the moment that tech accountability organizations
Speaker 16: like mine as well as countless parents who have been
Speaker 16: touched in some way by the harms that social media
Speaker 16: addiction have caused. Where we are going to see Mark
Speaker 16: Zuckerberg raised his right hand, take an oath before a
Speaker 16: judge and a jury of his peers, and for the
Speaker 16: first time explain to a court of law why his
Speaker 16: company knowingly developed products that targeted children to get them
Speaker 16: hooked and then continue to feed them algorithmic content that
Speaker 16: did irretrievable harm. And what's different because he's also told
Speaker 16: that to Congress. But he's going to have to explain why,
Speaker 16: despite telling us the public as well as members of
Speaker 16: Congress that their products were safe for kids, why he
Speaker 16: systematically buried internal research and data showing there is a
Speaker 16: connection and showing they did know that their products were addictive,
Speaker 16: and showing they did know that their products were harmful.
Speaker 16: So for many parents. This is the first step to
Speaker 16: hold big tech executives like Mark Zuckerberg accountable.
Speaker 2: And what you just said, Sasha.
Speaker 3: Meta's response to this particular lawsuit is we strongly disagree
Speaker 3: with these allegations that are confident the evidence will show
Speaker 3: our long standing commitment to supporting young people. Mark Zuckerberg
Speaker 3: is going to testify later today. Why is his testimony
Speaker 3: specifically significant and what is it that the Tech Oversight
Speaker 3: Project would hope he's asked about during that process.
Speaker 16: Well, the evidence has already shown that there have been
Speaker 16: many internal surveys, again conducted by Meta and in some
Speaker 16: cases partnering with external companies survey firms such as Nielsen,
Speaker 16: to uncover whether there was a connection between social media overuse,
Speaker 16: social media addiction, or as the Instagram executives uphemistically referred
Speaker 16: to as problematic use and you know, harmful behavior, and
Speaker 16: there was After about a week of not using social media,
Speaker 16: users reported that they feel better about themselves, they didn't
Speaker 16: have this compulsive need to pick up their phone, their
Speaker 16: mental health improved. Instead of alerting the public to this
Speaker 16: potential health threat, they buried the research and never let
Speaker 16: it see the light of day, which is why Mark
Speaker 16: Zuckerberg can testify before Congress claiming that the research is inconclusive.
Speaker 16: Another study that Adam Masi, the CEO of Instagram, had
Speaker 16: to explain the other day when he testified was something
Speaker 16: called Project myst which surveyed over one thousand teens and parents,
Speaker 16: again showing that the parental controls which big tech executives
Speaker 16: point to as one of the reasons why their products
Speaker 16: are safe for kids to use, essentially useless.
Speaker 3: I appreciate summary of the events of the trials, so
Speaker 3: I far. My question is why significant that Mark Zuckerberg
Speaker 3: testifies later today and what is it that you hope
Speaker 3: he has asked in that process.
Speaker 16: Well, it's significant because this evidence has never before been
Speaker 16: seen and he is not going to be able to say, hmm, Senator,
Speaker 16: I don't recall. Let let my office get back to
Speaker 16: your office about that, and then walk away and never
Speaker 16: have to think about it again.
Speaker 2: This is a judge and jury.
Speaker 12: This is a court of law.
Speaker 16: The law comes for everyone. And if you have created
Speaker 16: a product that is unsafe for kids, that actually has
Speaker 16: been shown to kill kids, and you've lied about it
Speaker 16: to the public and buried research when you could have
Speaker 16: been warning us to the dangers, You're going to be
Speaker 16: held accountable. So that's why it's significant he's never before
Speaker 16: had to answer to that. As far as the outcomes,
Speaker 16: I really hope that we see lasting policy change because
Speaker 16: of this.
Speaker 2: These are individual.
Speaker 16: Harms cases and so the individual outcomes might differ, but
Speaker 16: I hope that the US Congress is compelled to act
Speaker 16: after these trials conclude.
Speaker 3: Executive director of the Tech Overside Project, Thank you very much.
Speaker 3: That does it for this edition of Bloomberg Tech, And
Speaker 3: what an addition it's been. There is a bit more
Speaker 3: calm in the market right now. There is a lot
Speaker 3: driving the markets in terms of newsflow, and we got
Speaker 3: through a lot of that in the program. So recap
Speaker 3: it on the podcast. You know where to find it.
Speaker 3: It's on the Bloomberg terminal as well as online on iHeart, Spotify,
Speaker 3: and on Apple. This is Bloomberg Tech.