WEBVTT - Deep Dive: $9 Billion AI Deal

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news, The Stock Movers podcast,

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<v Speaker 1>your roundup of companies making moves in the stock market

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<v Speaker 1>harnessing the power of Bloomberg Data.

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<v Speaker 2>Let's take a look at some of the stocks on

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<v Speaker 2>the move today. I'm Paul Sweeney alongside Lisa Matteo.

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<v Speaker 3>I want to take us to honorad Rona. He is

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<v Speaker 3>Bloomberg Intelligence technology analyst Core Weed buying Core Scientific. It's

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<v Speaker 3>an all stock transaction, anurag. I want to bring you

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<v Speaker 3>in and talk about this. For core Weed, what is

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<v Speaker 3>the benefit from this, What do they gain from this?

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<v Speaker 4>And think about it that they have capacity to process

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<v Speaker 4>ex summer of transactions, all the backlock that they have

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<v Speaker 4>with this particular deal, they are expanding their infrastructure. I

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<v Speaker 4>mean it's a very simple deal as if you know,

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<v Speaker 4>they're just buying more factories to produce what they do.

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<v Speaker 4>So it's as simple as that.

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<v Speaker 2>Tell us what Core we've is, what do they do

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<v Speaker 2>and why are they shouting out nine billion dollars to

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<v Speaker 2>get bigger?

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<v Speaker 4>I guess so in the rest of pure reforms, they

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<v Speaker 4>are just renting computing resources to anybody that wants to

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<v Speaker 4>run an AI infrastructure. They are a very big Nvidia shop.

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<v Speaker 4>They basically buy GPUs from Nvidia, they create a network

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<v Speaker 4>or an infrastructure, and they give it to people to

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<v Speaker 4>go out and experiment or do whatever they need to

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<v Speaker 4>do on that infrastructure. It's no different than what AWS does,

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<v Speaker 4>but very heavy focus on GPUs rather than the CPO.

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<v Speaker 4>So that's really the big difference between a pure play

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<v Speaker 4>provider like Corevive versus Amazon Web Services.

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<v Speaker 3>Now, if you can dig into some of the background,

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<v Speaker 3>what kind of challenges has Core We've had in the past.

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<v Speaker 3>I mean, didn't they have a pretty dismal IPO.

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<v Speaker 4>Yeah, I think that's really the most important thing is,

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<v Speaker 4>you know, they everybody thought when they're going to come

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<v Speaker 4>out as the first pure play you know AI infrastructure IPO,

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<v Speaker 4>it's going to be extremely popular, but it didn't happen.

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<v Speaker 4>And the reason for that is because they need a

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<v Speaker 4>large amount of upfront capital to build these data centers

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<v Speaker 4>and then the workload comes in over the next several years.

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<v Speaker 4>There's a lot of questions about whether there's going to

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<v Speaker 4>be sustainability of this GPU demand going forward several years out.

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<v Speaker 4>So that's why you were right. The IPU came at

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<v Speaker 4>forty in a few days it was down to thirty five.

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<v Speaker 4>But now we're seeing you know, the stock croser who

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<v Speaker 4>won sixty before this deal was announced, so I you know,

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<v Speaker 4>we have talked about it before that. You know, why

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<v Speaker 4>aren't they doing a secondary when it's like one hundred

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<v Speaker 4>and sixty bucks stock of What they did instead is

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<v Speaker 4>they use their stock to go out and buy another

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<v Speaker 4>competitor I shouldn't say competitor, but you know, another company

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<v Speaker 4>in that space, so that it expands their capacity. And

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<v Speaker 4>you know, I think they're doing the right thing by

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<v Speaker 4>using stock at this point.

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<v Speaker 5>Are there more core weaves out there on a run

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<v Speaker 5>kind of more pure play AI stories, maybe the kind

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<v Speaker 5>of the sausage of AI, if you will, the guts

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<v Speaker 5>that somebody could take public.

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<v Speaker 4>There are multiples of them there, but they are much

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<v Speaker 4>smaller size in korby the I would say there would

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<v Speaker 4>be hundreds of them at this point, because you know,

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<v Speaker 4>you go out, you buy the GPU, you go out

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<v Speaker 4>and start renting it out in the in you know,

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<v Speaker 4>in a long time ago, this high powered computing was

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<v Speaker 4>used for bitcoin mining, and then you know, and that's

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<v Speaker 4>not in favor. These guys are renting out their infrastructure

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<v Speaker 4>for other reasons. So there are other plays out there,

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<v Speaker 4>but almost all of them are much smaller than core

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<v Speaker 4>Viv from a you know, pure play point of view.

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<v Speaker 3>Now we digged into Corewey, what about Core Scientific, what's

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<v Speaker 3>the attraction to them?

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<v Speaker 4>I mean, it's just they're expanding the number of you know,

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<v Speaker 4>the capacity that they have to process the transactions in

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<v Speaker 4>a sense that coreviev has a massive backlog right now.

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<v Speaker 4>They have people wanting to use their services, and then

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<v Speaker 4>these guys have to go out and lease it from

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<v Speaker 4>you know, other companies like Core Scientific. In this case,

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<v Speaker 4>they said, you know, they have an agreement with them

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<v Speaker 4>to lease their facilities. They just said, you know, we'll

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<v Speaker 4>buy it out and expand their size. And I think

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<v Speaker 4>that's as simple as that.

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<v Speaker 2>And I think I have to point out Lisa core

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<v Speaker 2>Weave based in Livingston, New New Jersey. Yeah, so folks,

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<v Speaker 2>a little history lesson. Before there was Silicon Valley, there

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<v Speaker 2>was New Jersey, there was Central Jersey, the Institute for

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<v Speaker 2>Advanced Study, Princeton University, Menlo Park, New Jersey. Before there's

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<v Speaker 2>a Menlo Park, California, Menlo before there's a sand Hill

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<v Speaker 2>Road in Silicon Valley, there's a Sandhill Road in Jersey.

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<v Speaker 2>There's all these Jersey guys went on New Jersey's office.

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