Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: Meta agrees to a series of electricity deals to power
Speaker 3: data centers, making it the biggest fire of nuclear power
Speaker 3: among the hyperscalers plus Minimax, one of China's largest generative
Speaker 3: AI startups.
Speaker 2: Goes public in Hong Kong.
Speaker 3: For that means with China's AI ecosystem and Snowflake plans
Speaker 3: to buy Observe, an AI powered observability platform. We're going
Speaker 3: to discuss the move with Snowflake's c EO. Let's get
Speaker 3: right to it and what's happening in the markets. Later
Speaker 3: in the program, we're going to go big on Intel. Lipbutan,
Speaker 3: Intel CEO has spent the last twenty four hours in Washington,
Speaker 3: d C. In the White House with the President and
Speaker 3: with Howard Lutnik, the Commerce Secretary. Glowing remarks from President
Speaker 3: Trump about Litbutan's leadership of Intel, but also the progress
Speaker 3: that the US government's made in taking a steak in
Speaker 3: the chip maker.
Speaker 2: More to come.
Speaker 3: Then there's the big one investing in a multi gigawatt
Speaker 3: deal with some big names in nuclear energy. Opkloat up
Speaker 3: fourteen percent on that deal. Of course backed by some
Speaker 3: outman district corps. Up thirteen percent, Meta up eight ten
Speaker 3: to one percent. We said at the top of the program.
Speaker 3: This puts them among the biggest energy buyers, among the hyperscalers,
Speaker 3: and we remind ourselves Meta is not technically a hyperscaler.
Speaker 3: That's get the blue most Riley Griffin details here really
Speaker 3: important size of the deal, how many gigawatts, but also
Speaker 3: the structure.
Speaker 2: Please.
Speaker 4: Yeah, So three different agreements and they actually are different
Speaker 4: in form and functions. So this is about supporting up
Speaker 4: to six point six gigawatts in nuclear energy, but it
Speaker 4: is both about ensuring that existing nuclear power plants continue
Speaker 4: to thrive and investing in future nuclear power. Meta's head
Speaker 4: of global energy told me last night that they heard
Speaker 4: that there's real concern about the amount of energy that's
Speaker 4: out there. As you know ed, there's an insatiable demand
Speaker 4: for energy, and this cements their low carbon play.
Speaker 3: I'll find this fascinating because while Meta is not a
Speaker 3: hyperscale or a hyperscale of being a cloud computing company
Speaker 3: that basically leases capacity, Meta is doing this on its
Speaker 3: own behalf right. It has been aggressive in in securing
Speaker 3: the supply of energy it needs for its own data centers,
Speaker 3: which principally I use for training and inference of its
Speaker 3: own activity in AI. What else has it done and
Speaker 3: where does this bring them to date?
Speaker 4: Well, I want to note that you made a really
Speaker 4: important important point there. Prometheus and Hyperion. These are two
Speaker 4: of their biggest AI plays. Prometheus actually is in Ohio
Speaker 4: and these agreements are in Ohio and Pennsylvania. So some
Speaker 4: of this energy presumably is going to go to the
Speaker 4: Prometheus data center cluster, which is one of their biggest plays.
Speaker 4: But we're also seeing Meta turn with Hyperion to natural gas.
Speaker 4: At least three natural gas plants are being fired up
Speaker 4: just for that single facility, So it's not like nuclear
Speaker 4: is the only strategy that Meta is employing here.
Speaker 3: We're going to get to the sort of available energy
Speaker 3: sources around the world in a little bit. There is
Speaker 3: an interesting point you co reported this with Will Wade,
Speaker 3: who's just been really on top of the nuclear side
Speaker 3: of the story. There does seem to be some anxiety
Speaker 3: from the technology companies that the existing NUCLEME infrastructure that
Speaker 3: does exist in America, limited as it may be, is
Speaker 3: also at risk at being shut down. Is this kind
Speaker 3: of future proofing a little bit.
Speaker 4: Absolutely, that is what I'm hearing from metas head of
Speaker 4: Global Energy. They started back a December two years ago
Speaker 4: and they were looking into what nuclear needed to keep going,
Speaker 4: and they heard we need investment now into plants that
Speaker 4: could potentially shutter. So this is a future proofing, as
Speaker 4: you say.
Speaker 3: Bloomberg's Riley Griffin leading our coverage of Meta with a
Speaker 3: must read, Thank you very much. Access to power has
Speaker 3: been top of mind in AI. We spoke about that
Speaker 3: with Nvidia CEO Jensenmong earlier this week.
Speaker 5: In order for our new industry to emerge, you need energy,
Speaker 5: and so I think it's safe to say that we
Speaker 5: wish we had more energy in the United States. Your
Speaker 5: wis should have more energy. I think the world all
Speaker 5: wish we have more energy, and so we have to
Speaker 5: invest in all sorts of different forms of energy.
Speaker 2: Let's bring in Paul Meeks for more.
Speaker 3: He's managing director and head of Technology research of Freedom
Speaker 3: Capital Markets. And when I was reading your research last night, Paul,
Speaker 3: A little bit relieved coming up this morning when I
Speaker 3: saw the Meta headline, because you're very focused on the
Speaker 3: real terms footprint of data centers. That's what we're talking
Speaker 3: about here. You heard Riley's reporting on the specifics of
Speaker 3: what Meta has done to secure future capacity. How much
Speaker 3: of a bottleneck is that to your mind right now?
Speaker 2: For this sector?
Speaker 6: It is absolutely critical of all the bottomnecks. It is
Speaker 6: the most important. I like what Meta is doing here,
Speaker 6: but folks need to realize that if you ramp up
Speaker 6: nuclear capacity, we're not going to really see power generation
Speaker 6: until twenty thirty earliest, maybe even not until twenty thirty two.
Speaker 6: So what do we do for the next four to
Speaker 6: six years? So the immediate draw is probably that gas.
Speaker 6: But when I look at all of these companies and
Speaker 6: we cover the AI hyperscalers and the neo clouds and
Speaker 6: everybody adjacent to them, we are looking for their availability
Speaker 6: for power, their capacity to find power, because it's not
Speaker 6: a demand issue, it is a supply issue focused on
Speaker 6: this particular metric.
Speaker 2: You know, pool.
Speaker 3: I played you just just some of the interview that
Speaker 3: we conducted with Jensen Wong earlier this week, and when
Speaker 3: I was sitting in front of him, you don't really
Speaker 3: get any sense of anxiety from him, right Think about
Speaker 3: the mechanics of how this transaction works and video brings
Speaker 3: GPUs actually that's probably not fair. Increasingly they bring more
Speaker 3: of the content of the server, but there is an
Speaker 3: acknowledgment that something needs to change, principally in America. He
Speaker 3: did go on to talk about the differences between Europe,
Speaker 3: Asia and the United States and where we're sourcing energy.
Speaker 3: Do you get a sense from your research that the
Speaker 3: companies you cover acknowledge the severity of that deficit right now?
Speaker 6: So when they are public facing, particularly somebody like Jensen Wong,
Speaker 6: who is essentially the spokesperson for the entire industry, they
Speaker 6: have to exude optimism. However, behind the scenes, particularly when
Speaker 6: I'm talking to companies about my financial models, which of
Speaker 6: course the revenues and then the follow on cash flow
Speaker 6: and earnings come from.
Speaker 7: Do you have the power?
Speaker 6: Yes, they are anxious, and I think they're actually very anxious.
Speaker 3: There will be people watching Bloomberg Tech that work at
Speaker 3: Meta or in the AI industry. There will be Meta
Speaker 3: investors watching this program, and some of these people may
Speaker 3: never have heard of an outclow.
Speaker 2: Have you had to.
Speaker 3: Change the remit and breadth of your coverage if you
Speaker 3: say I cover AI data center to include future sources
Speaker 3: of electricity supply, Yeah.
Speaker 6: It's really interesting, ed that years ago, you know, nobody
Speaker 6: in my line of work covering tech sector like I
Speaker 6: have for decades, would be interested in any utility company.
Speaker 6: It's the antithesis of tech. They are boring, regulated, slow
Speaker 6: growth businesses. However, now they've come to the four and
Speaker 6: of course these are not just your regular utilities, you know,
Speaker 6: they're your new era utilities. But yes, if you are
Speaker 6: a good analyst, you have to cover the entire supply chain,
Speaker 6: the entire ecosystem. And because demand is so robust, we're
Speaker 6: focusing on supply absolutely critical. And it's not just the power.
Speaker 6: There are physical constraints here, like simply pouring the cement
Speaker 6: to build the next data center, which can't be a bottleneck,
Speaker 6: even though it sounds, you know, so old school in
Speaker 6: a new school business. But yes, these are some factors
Speaker 6: that are very, very interesting that people didn't even conceive
Speaker 6: of a couple of years ago.
Speaker 3: Pol is there an adequate federal level framework regulation to
Speaker 3: support the energy requirements of the AI industry in this country?
Speaker 6: You know, there is not. And here is my problem.
Speaker 6: We are still suffering from a lack of solid regulation
Speaker 6: for the Internet because even today in the US the
Speaker 6: Internet is operating under nineteen ninety six legislation when Bill
Speaker 6: Clinton was president, and so I'm hoping that we're not
Speaker 6: too restrictive.
Speaker 1: Right.
Speaker 6: We need to embrace our entrepreneurial companies and give them
Speaker 6: room to roll, but we need to have some guards
Speaker 6: else on everything AI because what happened last time is
Speaker 6: we end up abdicating the legislation to the EU because
Speaker 6: we didn't have the will to do it ourselves. So
Speaker 6: we missed that opportunity in the Internet. Here is the
Speaker 6: next wave. We need to embrace it and at least
Speaker 6: come up with some guardrails that are going to guide
Speaker 6: all this because there are some important decisions on the
Speaker 6: federal level to be made.
Speaker 3: In your research pro it's very interesting to see you
Speaker 3: approach data center from the perspective of yes, you know,
Speaker 3: energy supply, but also real estate. The reats right, and
Speaker 3: what you want to ask you is away from the GPUs,
Speaker 3: where are the frailties in that industry? Is it literally
Speaker 3: the folks building the tin can around the outside of
Speaker 3: the data center, the labor, the concrete.
Speaker 6: Yeah, we've seen some hit in short term revenues because
Speaker 6: a couple of the number or a few of the
Speaker 6: players have subcontractors. Now this is not them, this is
Speaker 6: their subcontractors.
Speaker 7: That are delayed.
Speaker 6: What we call building a powered shell. So it's more
Speaker 6: than a quandset hut that you might find the army in.
Speaker 6: These powered shells are a little bit more sophisticated. But
Speaker 6: one company I cover had a one hundred and fifty
Speaker 6: million dollars revenue deferral from twenty five to twenty six
Speaker 6: because at one of their forty one data centers someone
Speaker 6: couldn't pour concrete because it was raining. And so yes,
Speaker 6: all these things come into play, and it's interesting that
Speaker 6: they may not necessarily be technical bottlenecks, but old school
Speaker 6: physical including construction bottlenecks. In addition to the power.
Speaker 2: I just go back from Vegas.
Speaker 3: With all the attention on artificial intelligence in the digital world,
Speaker 3: we have an industry that's getting hit by a rainstorm.
Speaker 3: Pool meeks, buckets, unbelievable. It's great to have you on
Speaker 3: Bloomberg Tech. A lot more to come and coming out
Speaker 3: an exclusive interview with the co founder and COO of
Speaker 3: Minimax after the company just went public in Hong Kong,
Speaker 3: and that's the debut trade.
Speaker 2: And this is Bloomberg Tech.
Speaker 3: Minimax, one of China's largest generative AI startups, backed by
Speaker 3: Ali Barber and Abadavi Sovereign Well Fund, is now public.
Speaker 3: Shares surge in Hong Kong after an IPO that raised
Speaker 3: six hundred and nineteen million dollars, closing up one hundred
Speaker 3: and nine percent in its Friday debut trading. Bloomberg Stephen
Speaker 3: Engel spoke exclusively with co founder and COO Yee Yun
Speaker 3: about growth and expansion plans as Minimax faces hot AI
Speaker 3: competition both locally and globally.
Speaker 8: We really focus out that capital efficiency caused the efficiency,
Speaker 8: so we had always spent a round five hundred media
Speaker 8: USC in the in total, probably only one or two
Speaker 8: percent of the biggen suspending, So we did all the organization,
Speaker 8: mad creativity innovations on.
Speaker 9: The h How do you compete though, if you're going
Speaker 9: to go global, how do you compete with an open
Speaker 9: AI or others that are throwing lots of capital at
Speaker 9: their business?
Speaker 2: Is it viable and what is the.
Speaker 9: Technology gap looking like in the next few years.
Speaker 8: Actually, I don't think it's a competition. It's more about
Speaker 8: all the top talents across all the world. They bring
Speaker 8: the technology break through to the society, to the end users.
Speaker 8: So you will see each models have pros and accounts,
Speaker 8: so we focus more resources on building the models, building
Speaker 8: the best product experience to a more and more uses
Speaker 8: from all the world.
Speaker 4: To use it.
Speaker 9: We're hearing as well, the Chinese government might approve in
Speaker 9: Vidia's H two hundred for China in this quarter. Perhaps
Speaker 9: is that something you need to look at importing more
Speaker 9: advanced accelerators for your training.
Speaker 1: And the like.
Speaker 8: I think in every industry with a really high growth
Speaker 8: when the new technology comes here, so you will see
Speaker 8: every startups, all the companies. This please resources comestring probably
Speaker 8: chief constring computing constring is only one of the challenges.
Speaker 8: So in the past you will see our model performers
Speaker 8: and our product performers, so our resources is stable. We
Speaker 8: can get access to all of them, so we focus
Speaker 8: more on our R and D and foundation model. So
Speaker 8: we just use whatever chiefs who make sense for us
Speaker 8: at that specific stage.
Speaker 9: Is your goal to stay indigenously with your chips locally
Speaker 9: made chips or would you buy nvidio chips as well?
Speaker 8: It doesn't matter what kinds of chiefs it is. It's
Speaker 8: more about which chiefs can give us best ROI, which
Speaker 8: can help us to achieve our mission to make the
Speaker 8: best technology too accessible to all of the users across
Speaker 8: the world.
Speaker 9: So when does the emphasis turn from efficiency to profitability
Speaker 9: and also getting that steady revenue growth that will then
Speaker 9: justify a higher stock price valuation.
Speaker 8: So we put loss of R and D resources and
Speaker 8: innovations on the efficiency part. You will see our API
Speaker 8: we have the enterprise business and you will see the
Speaker 8: gross profit margin of our API is more than sixty
Speaker 8: five percent, which is probably already one of the highest globally.
Speaker 8: So we focus more on make the best technology and
Speaker 8: the best the user experience that people would love to
Speaker 8: pay for the best performers models for their use cases.
Speaker 9: You've also come out of a price war essentially a
Speaker 9: race to the bottom some have called, because of you're
Speaker 9: trying to keep costs down and you want to survive
Speaker 9: as well. There was a battle of survival and you
Speaker 9: have been one of the survivors. But at the same time,
Speaker 9: the startups are not the only ones. The big players
Speaker 9: Ali Baba, by Dads, tens and others. How do you
Speaker 9: compete with them at a low cost basis?
Speaker 8: Actually it's not. I don't think that's a press word.
Speaker 8: It's more about the performers the competition, So you need
Speaker 8: to make your model best. And the people I mean
Speaker 8: and the user are interpress customers. They don't choose your
Speaker 8: model because of its cheap or expensive. It's more about
Speaker 8: its performers. So that's the key. As you said, I
Speaker 8: think it's not about the competition between like all these
Speaker 8: big chenz, but it's more about some of them. They
Speaker 8: are like our cloud providers and some of their products
Speaker 8: you see our models, So it's more about the collaborations.
Speaker 8: All this company brings the foundation models to all the world.
Speaker 3: Many Max co founder and COO Yaun speaking exclusively with
Speaker 3: Bloomberg Steven Engel. Public listings in Hong Kong are hot
Speaker 3: right now. Chinese industrial robot maker in Events is now
Speaker 3: also considering a second listing in Hong Kong, according to sources.
Speaker 3: Let's get out to Bloomberg Executive Tech editor Peter Elstrom.
Speaker 2: To discuss this.
Speaker 3: But also like this growing trend of more of China's
Speaker 3: sort of post chat gbtai firms going public. The team
Speaker 3: that you lead out in Asia busy right now. In
Speaker 3: Events's case, what are the details in our reporting that
Speaker 3: we need to know about.
Speaker 10: Yeah, there are a lot of these IPOs that we're seeing,
Speaker 10: and we're seeing a much more forward move into the
Speaker 10: public markets for a bunch of these companies and events
Speaker 10: has already gone public in the mainland and Shenjen now
Speaker 10: it's looking at an IPO in Hong Kong.
Speaker 11: Two.
Speaker 10: That's partly a reflection of how hot demand is from
Speaker 10: investors for these kinds of companies. When you're talking about
Speaker 10: Minimax in particular, they went public, as you mentioned, their
Speaker 10: shares more than doubled in the debut. The founder of
Speaker 10: the company is very fascinating. These are some people called
Speaker 10: them the AI tigers, some people the AI dragons. But
Speaker 10: these are startups that really have very very different strategies
Speaker 10: for how they're approaching the market. Compared with some of
Speaker 10: the US competitors, Like in open Ai, they tend to
Speaker 10: be much lower cost models. They tend to be much
Speaker 10: more aggressive about implementing the technology with their customers, with
Speaker 10: corporate customers, and giving them very low cost, very low,
Speaker 10: very efficient models that they can use and they can
Speaker 10: actually deploy more quickly than some of the US counterparts.
Speaker 3: PETE in the world of technology or in financial market's
Speaker 3: like a term like an AI tiger or AI dragon.
Speaker 2: You know, it's kind of commonplace. We bandy it around.
Speaker 3: But for those watching Bloomberg Tech that are saying, what
Speaker 3: are you talking about? How do we define the AI tiger?
Speaker 3: What are we talking about here?
Speaker 10: Well, we're talking about a whole series of companies coming
Speaker 10: out of China. In Stevens interview with the Minimax COO,
Speaker 10: they talked about the competition there. We've of course heard
Speaker 10: a lot about Deep Seek and how good their model is,
Speaker 10: how technically good it is, but also how low cost
Speaker 10: it is. Behind Deep Seek, you have a whole bunch
Speaker 10: of other companies like Minimax, like Jipou, which just went
Speaker 10: public on Thursday. So yeah, the IPO of Geepoo on Thursday,
Speaker 10: mini Max on Friday investors showed a lot of demand
Speaker 10: for those shares. And what these companies have been able
Speaker 10: to show is that with a very low cost model,
Speaker 10: they're out there in the market competing. It's not clear
Speaker 10: that they're going to be able to compete directly with
Speaker 10: Open AI or Anthropic, but they have very innovative models.
Speaker 10: I mean, first of all, the US models are not
Speaker 10: going to be let into the China market. But these
Speaker 10: companies are also going out very aggressively and competing in
Speaker 10: some other parts of the world. We've written about how
Speaker 10: much traction Deep Seek is getting in Africa in particular,
Speaker 10: because their companies are sensitive to costs. They're sensitive to
Speaker 10: how much power, how much computer resources they need to
Speaker 10: be able to deploy these models. So they are having
Speaker 10: some successes. We're going to see a lot of competitive
Speaker 10: clashes in the months ahead.
Speaker 2: Bloomberg's executive editive for Tech, Peter Alstrom. Great to catch
Speaker 2: up with you, Thank you so much. Now coming up
Speaker 2: on the.
Speaker 3: Program, Love Musks Grock image generation tool faces backlash after
Speaker 3: reports that's generated thousands of undressed women and children.
Speaker 2: Go more on that data. Next, this is Bloomberg Tech.
Speaker 3: Elon Musk's AI startup Xai is burning cash quickly. The
Speaker 3: company spent almost eight billion dollars in the first nine
Speaker 3: months of the year. That's according to internal docs that
Speaker 3: Bloomberg's viewed. Though revenue has nearly doubled quarter over quarter
Speaker 3: to one hundred and seven million dollars, Xai's losses have
Speaker 3: been mounting on costs to build data centers, recruit talent
Speaker 3: developed software and to build AI that is self sufficient,
Speaker 3: and according to Bloomberg's reporting, the plan is to use
Speaker 3: that AI to eventually power Tesla's humanoid.
Speaker 2: Robots in the Optimus program.
Speaker 3: Right Sticking with XAI, the company has limited access to
Speaker 3: Grock's image generation tool for most users, following widespread criticism
Speaker 3: that the feature was producing thousands of explicit images of
Speaker 3: women and children. Bloomberg reporter Cecilia Deannastasio broke, the story
Speaker 3: has been tracking the developments, Cecilia, that we just summarized
Speaker 3: the issue, right think, let's start with the methodology, how
Speaker 3: we went about looking at the data, how we got
Speaker 3: the data, and we'll go from that.
Speaker 1: Thank you for having me. Bloomberg worked as a researcher
Speaker 1: who scraped thousands of images produced by groc and published
Speaker 1: to the platform X between the period January fifth and
Speaker 1: January sixth. The researcher analyzes images to determine what percent
Speaker 1: of them were sexualized and neudifying, and found that every
Speaker 1: hour during that twenty four hour period, X was publishing
Speaker 1: about six thousand, seven hundred images identified as such, and
Speaker 1: just for a comparison, websites that are dedafied dedicated to
Speaker 1: publishing deep faked images AI generated images of women who
Speaker 1: are sexualized neudified. Those top five websites out there published
Speaker 1: together eighty images per hour. So GROC is one of
Speaker 1: the biggest deep fake producers on the Internet today.
Speaker 2: Where are these images showing up?
Speaker 3: You know, to the uninitiated people may not know the
Speaker 3: sort of interconnects between XAI the AI company, and x
Speaker 3: the social media platform, for example, but they are now
Speaker 3: kind of one entity as they combine last year.
Speaker 1: Well, that connection is exactly why x has become one
Speaker 1: of the biggest deep fake websites on the internet. Anybody
Speaker 1: can well not anybody now, now you have to pay
Speaker 1: to do this, But over the last couple of days,
Speaker 1: anybody could just at rock on the X platform and say,
Speaker 1: put this woman in a bikini under an image that
Speaker 1: a woman had post on the internet. And a lot
Speaker 1: of women women primarily are the victims of this, took
Speaker 1: to complaining to GROC directly and arguing with GROC in
Speaker 1: their comments.
Speaker 7: GROC would apologize for posting.
Speaker 1: These images, but then continue posting them and not take
Speaker 1: down Many of the images that the women felt were violating.
Speaker 3: Succeed That did X or XAI respond to our reporting,
Speaker 3: engage with us on it.
Speaker 1: X has not responded to our numerous requests for comment
Speaker 1: over the last couple of days. Elon Musk himself, in
Speaker 1: a reply to a post on X said anybody using
Speaker 1: groc to make illegal con tent will suffer the same
Speaker 1: consequences as if they upload a legal content, and Musk
Speaker 1: there was referring to allegations we believe of child sexual
Speaker 1: abuse material that's been posted to X using the croc app.
Speaker 3: Okay, Bloomberg's the CID Danna Slasio important reporting.
Speaker 2: Read the story on the Bloomberg terminal on bloombuw dot com.
Speaker 2: Thank you.
Speaker 3: Now, coming up from the program, we're going to speak
Speaker 3: with Snowflake CEO Shrida Ramaswami. Is the company enters into
Speaker 3: an agreement to buy AI powered platform observe. We'll get
Speaker 3: his observations on that piece of M and A that's
Speaker 3: coming up next. You're halfway through the program, and this
Speaker 3: is Bloomberg Tech. Welcome back to Bloomberg Tech. I've been
Speaker 3: using the power of my Bloomberg terminal. It's been a
Speaker 3: long week with cs and Las Vegas. The power of
Speaker 3: my brain is dwindling. But it tells me that Apple
Speaker 3: is down for an eighth straight session, which matches the
Speaker 3: run of declines that Apple saw in May of twenty
Speaker 3: twenty five.
Speaker 2: Now using more of the power of the Bloomberg terminal.
Speaker 3: If Apple was full for a ninth day, we think
Speaker 3: that would be the longest run of decline since the
Speaker 3: early nineties. And obviously we are only nine days into
Speaker 3: twenty twenty six. But so far year to date, this
Speaker 3: is a stock that's down five and a half percent.
Speaker 3: You saw the letter from Tim Cook to shareholders talking
Speaker 3: up the company's progress of late and last year, but
Speaker 3: right now that stock heading down and will continue to
Speaker 3: track it. We had some M and A in the
Speaker 3: last twenty four hours, but it's actually in the AI
Speaker 3: and software space. Snowflake has agreed to buy Observe, an
Speaker 3: observability platform and AI powered observability platform. Observability something that's
Speaker 3: come up a lot recently, particularly in the context of AGENTICAI.
Speaker 3: When I've been around the table, particularly on the engineering side.
Speaker 3: Why this piece of M and A? Why now that's
Speaker 3: sorts of Snowflake CEO Treda Ramaswami. Those are the reasonable questions,
Speaker 3: right SHREDA I do want to get to defining observability
Speaker 3: and why it's important.
Speaker 2: But it's an interesting deal. Why do you do it?
Speaker 12: Hey?
Speaker 7: Great to see you.
Speaker 12: Snowflake's acquisition of Observe is a game changer for our customers.
Speaker 12: As you pointed out, observability is basically looking at applications, websites,
Speaker 12: AIA agents to make sure that they are functioning properly.
Speaker 7: It's a diverse and messy problem. It's a big data problem.
Speaker 12: And because observer is built right on top of Snowflake,
Speaker 12: they are able to use our very efficient storage as
Speaker 12: well as computer platform to help customers find problems ten
Speaker 12: times faster, often at three to four x less cost.
Speaker 12: Take a company like Top Golf, it's a customer of
Speaker 12: a Observe. I go to Top Golf all the time
Speaker 12: with my team, not much of a golfer, so I'm
Speaker 12: playing an angry Bird's game or something like that. Top
Speaker 12: Golf used to struggle when these games went down because
Speaker 12: they collected everything in a central place but could not
Speaker 12: identify that a particular booth had problems. They're able to
Speaker 12: do that with Observe in a matter of a few seconds,
Speaker 12: send out a tech team to go fix that problem
Speaker 12: and have happy customers.
Speaker 7: That's the power of this acquisition.
Speaker 12: Increasingly, capabilities like observability are going to be a core
Speaker 12: part of a platform like Snowflake. And we have great
Speaker 12: customers folks like Barclays, Capital One, Commonwealth Bank of America,
Speaker 12: and we're super excited to bring this to over ten
Speaker 12: thousand plus customers on Snowflake SHREDA.
Speaker 3: Let's get it out the way if we can. The
Speaker 3: report saw that it's about a billion dollar deal. What
Speaker 3: was the structure of the deal and the financials on it?
Speaker 2: Please?
Speaker 12: We can comment on the structure of the deal it is,
Speaker 12: you know, some of it will come out in the
Speaker 12: some of it will come out in the filing.
Speaker 3: Signal that there might be some more pieces of M
Speaker 3: and A, particularly on that layer that you sit on
Speaker 3: right you know, as you know very well you were
Speaker 3: there on Monday at the video event Jensen talks about
Speaker 3: the five layer cake and one of the layers you occupy.
Speaker 3: But as observability evidence is, there might be pieces of
Speaker 3: competency missing. How are you going to use M and
Speaker 3: A to plug those gaps.
Speaker 12: We've been pretty open that we want to be an
Speaker 12: end to end data platform for our customers from the moment.
Speaker 12: Data is barn when you interact with an application, for
Speaker 12: example two, bringing it in for analysis, analyzing it, and
Speaker 12: then acting on it increasingly with AI agents. We've been
Speaker 12: systematically going through this process of both acquiring customers and
Speaker 12: building up.
Speaker 7: Functionality from within.
Speaker 12: Things like observability or data clean rooms are adjacent functionality
Speaker 12: that sit on top of a data layer. You will
Speaker 12: continue to be super act about both spinning up new
Speaker 12: projects internally and acquiring companies. I think the environment is
Speaker 12: right for that, and honestly, our customers want that because
Speaker 12: they're spending entirely too much time just stitching things together,
Speaker 12: and we make it seamless and easy to use for that.
Speaker 2: How competitive is that m and a environment right now?
Speaker 3: Because when I look at Observe and what it's offered, you,
Speaker 3: you know, the analysts looked at that deal and said
Speaker 3: completely logical that Snowflake would do it. But one would
Speaker 3: imagine that there would be others in the market for
Speaker 3: a name like Observe as well.
Speaker 2: Well.
Speaker 12: There are many things that we're going for this particular deal.
Speaker 12: As I said earlier, Observer is built on top of Snowflake,
Speaker 12: which means that we didn't have to deal with a
Speaker 12: long integration cycle. The products are super tight. We've been
Speaker 12: collaborating closely with the team as partners for a very
Speaker 12: long time. I've actually gone and visited the Observed team
Speaker 12: multiple times in their location in San Mateo. We felt
Speaker 12: like this was a natural extension of who we were
Speaker 12: as a platform, and we think that Observed, by using
Speaker 12: both their technical capabilities and now also being part of Snowflake,
Speaker 12: can offer an incredibly cost competitive solution. Cost has been
Speaker 12: a big factor in the world of observability, especially with
Speaker 12: things like AI agents, which are complicated pieces of software
Speaker 12: that generate enormous amounts of essentially telemetry information.
Speaker 7: We think this is a good combination that's.
Speaker 3: Worth some academic debate, you know, should I'm not a
Speaker 3: computer scientist or an engineer, right, so so take that
Speaker 3: into account. But the thing that we argue about with
Speaker 3: a truly autonomous AI agent is that it's exactly that
Speaker 3: it is supposed to act. With autonomy and observability raises
Speaker 3: the question of if a human is required at some
Speaker 3: point in the process to check.
Speaker 2: In, what's your point?
Speaker 12: You know, well, it becomes a matter of how many
Speaker 12: people you need in order to accomplish a problem. So
Speaker 12: I live and breathe agent Kai. I mean, I really
Speaker 12: mean that I use these products every single day. And
Speaker 12: the leverage that you get is the game changer. Used
Speaker 12: to be that a support ticket would come and a
Speaker 12: person had to go read the text of what that
Speaker 12: case was, copy and paste that text into multiple tools,
Speaker 12: figure out what is going on, and then perhaps send
Speaker 12: a Slack message over to somebody in order to answer
Speaker 12: a problem.
Speaker 7: A lot of this, as you know, is low value work.
Speaker 12: Copying information from one screen or one app to another
Speaker 12: is just tedious, it's no fun. I think the power
Speaker 12: here with Agentic systems is going to be all that
Speaker 12: boring stuff is going to be automated, so that when
Speaker 12: a problem comes in, you go reach out to the
Speaker 12: ten tools that you need to collect information from, you
Speaker 12: analyze it, and then you show that somebody to that
Speaker 12: person who decides what action to take.
Speaker 7: But furthermore, if they have to go write.
Speaker 12: Some custom gode to solve a new problem, they'll do
Speaker 12: it two three times and turn that into a skill
Speaker 12: that can be used by everybody else. I think it
Speaker 12: leverages people enormously. I can tell you again from personal
Speaker 12: experience that I can get stuff done in a matter
Speaker 12: of a couple of hours on top of Snowflake building
Speaker 12: things that would honestly have taken me two to three
Speaker 12: weeks just last year to get done.
Speaker 3: That's the game changer that's here treat us. Snowflake rose
Speaker 3: forty two percent last year. What are the goals that
Speaker 3: you're holding you and the team to for twenty twenty
Speaker 3: six and the things that you want to achieve this
Speaker 3: year in AI?
Speaker 12: As you know ed, it's important to focus on the
Speaker 12: things that you can control. What we're super excited for
Speaker 12: twenty twenty six is making agent ki.
Speaker 7: Come alive for all our customers.
Speaker 12: Snowflake Intelligence is our agentic data product and it's been
Speaker 12: a game changer again for me to do things like
Speaker 12: do research on customers before I meet with them. This
Speaker 12: is the fastest product in terms of customer adoption and
Speaker 12: revenue in Snowflake's history. We want to make sure that
Speaker 12: we drive adoption of these products, and in turn, what
Speaker 12: this does is it enhances and makes the power of
Speaker 12: data more and more visible to future customers. I expect
Speaker 12: this AI to be a strong pull that makes data
Speaker 12: modernization much much more relevant part every customer and future
Speaker 12: customer of Snowflake.
Speaker 3: It is really that in and yang that I'm super
Speaker 3: excited about. We started the week together in Las Vegas
Speaker 3: at the Nvidia keynote. We end the week together talking
Speaker 3: about the roadback from part four the Snowflake. Snowfake CEO
Speaker 3: Shreeta Ramaswami. Great to have you back on Bloomberg Tech.
Speaker 2: Thank you.
Speaker 3: Now coming up, we're going to take a look at
Speaker 3: the state of media mergers as one of brows sticks
Speaker 3: with its buyout by Netflix and it's trying to shake
Speaker 3: off that paramount takeover.
Speaker 2: We have the details. Next, this is Bloomberg Tech.
Speaker 3: Lairs of Netflix have tumbled nearly twenty eight percent since October,
Speaker 3: but the streaming giant stock still appears to be too
Speaker 3: expensive to many investors. Here of more is Bloomberg Stock Reporter,
Speaker 3: All Things Terminal, authoring Squawk Police Morantz.
Speaker 2: This is a really important write up.
Speaker 3: Right there is so much hype and a lot of
Speaker 3: headlines around what's happening with Warner Brothers Discovery.
Speaker 2: And you do what you needed it.
Speaker 3: You go back to basics, look at the fundamentals, look
Speaker 3: at the stock to must read on the Bloomberg Tamila
Speaker 3: dot com. But just I guess give us the top
Speaker 3: line of the reporting.
Speaker 13: The top line is that this stock has really plunged
Speaker 13: since investors started questioning whether this deal was a good
Speaker 13: idea or not.
Speaker 7: You have questions about cost, You have integration risk as.
Speaker 13: Netflix doesn't have much experienced swallowing large deals, and you
Speaker 13: also have a big regulatory fight that's looming. So there's
Speaker 13: not a lot of extreme enthusiasm about the stock right now.
Speaker 7: In fact, it's down.
Speaker 13: You can see it's down about two percent today on
Speaker 13: an update for the S.
Speaker 7: And P five hundred.
Speaker 3: The people you speak to it in the piece, you know,
Speaker 3: one of the anecdotes is like Netflix is not screaming
Speaker 3: by right now. Right But you also, I guess, look
Speaker 3: at multiples, current multiples and historic multiples and compare them.
Speaker 2: What would that tell us?
Speaker 7: So there are various different kinds of multiples.
Speaker 13: But if you look at a basic price to earnings ratio,
Speaker 13: the stock is not expensive historically, but Nora is it
Speaker 13: very cheap.
Speaker 7: It's training a.
Speaker 13: Bit below its historic norm, but not enough to really
Speaker 13: grab people.
Speaker 3: Bloomberg's police morans is awesome and it's been great to
Speaker 3: have you back on bloombog take this Friday.
Speaker 2: Thank you very much. I want to get deep. You're welcome.
Speaker 2: Let's get deeper into that deal.
Speaker 3: Part the future of streaming the Warner Brothers Discovery Saga
Speaker 3: and then the two bids Matthew Dolgan, morning Star Senior
Speaker 3: around equity and this covering communication services.
Speaker 2: Felice did a good job right going over the stock.
Speaker 3: But there's a piece of the deal that I asked
Speaker 3: the team to find someone to dig in with us on,
Speaker 3: which is do we value the cable networks part of
Speaker 3: Warner Brothers Discovery at zero?
Speaker 2: Which paramount?
Speaker 3: When it reaffirmed it's thirty dollars a share bid came
Speaker 3: out with your take on that.
Speaker 14: No, we don't think it should be valued at zero. However, well,
Speaker 14: first of all, there is a risk that it could be.
Speaker 14: We don't think that that's right. But this is going
Speaker 14: to be a very heavily debt laiden company and that
Speaker 14: leads to more risk, and so it's possible that zero
Speaker 14: it would be in the future. We don't think that's
Speaker 14: the most likely thing, but there is question of whether
Speaker 14: it's worth two dollars a share or three dollars a
Speaker 14: share or more and that matters because that is what's
Speaker 14: making up the difference between what Netflix offered for the
Speaker 14: portion of Warner Brothers Discovery that it wants versus what
Speaker 14: Paramount offered for the your company. And so there are
Speaker 14: a few different moving parts as you compare the deals,
Speaker 14: which are not apples to apples. But it doesn't have
Speaker 14: to be zero. If it's one dollar, like Paramount has
Speaker 14: said previously, and this week with versants trading, that adds
Speaker 14: another potential new data point, but it can be definitely
Speaker 14: less than what the thirty is combined.
Speaker 3: So I'm just going to recap for the Bloomberg Tech audience.
Speaker 3: Here's where we stand. Netflix has offered twenty dollars twenty
Speaker 3: seven dollars a share for the streaming and the studios
Speaker 3: and would plan to spin out the legacy cable networks.
Speaker 3: And as we've said for five days in a row
Speaker 3: on Bloomberg Tech, Paramounts Guidance want the whole enchilada, all
Speaker 3: of it, but at thirty dollars a share, saying that
Speaker 3: they assume a zero dollar value for that cable network.
Speaker 3: You're covering the space, and you're covering these names, and
Speaker 3: you're covering the deal. It's actually a very reasonable question
Speaker 3: of what happens next. Because Warner Brothers board sent a
Speaker 3: letter reject the Paramount offer and explained why. The next
Speaker 3: day Paramounts guidence reaffirm that offer. We just continue in
Speaker 3: that cycle.
Speaker 2: Well, we continue in that cycle for a little bit.
Speaker 14: Yes, January twenty first is a critical date that we
Speaker 14: should circle on our calendars. That's when the tender offer
Speaker 14: for the Warner Brothers Discovery shares by Paramount is currently
Speaker 14: set to expire. So we'll see what happens at that point.
Speaker 14: It doesn't appear that right now Paramount is likely to
Speaker 14: get a sufficient number of shares by that date, but
Speaker 14: they can extend it, extend the date, and they can
Speaker 14: also well at any time. But that's when we would
Speaker 14: expect potentially they would look at increasing their offer to
Speaker 14: beyond thirty dollars a share. And so, yes, we do
Speaker 14: kind of wait and see the next development. I don't
Speaker 14: really expect anything until close to the twenty first as
Speaker 14: far as new information. But at this point we'll see
Speaker 14: where Paramount is on the shares that are being tendered,
Speaker 14: and then the ball is kind of it's kind of
Speaker 14: in its court as far as whether it wants to
Speaker 14: do something else in the interim before later this spring
Speaker 14: or summer, when Warner Brothers Discovery shareholders are likely to vote,
Speaker 14: and that Netflix deal that the Warner board has recommended.
Speaker 3: We spend a lot of time this week talking about
Speaker 3: the Warner Brothers Discovery rationale for rejecting Paramoun's guide on
Speaker 3: so we included debt. It included a discussion either negative
Speaker 3: or positive about Larry Allison being the bank stop on
Speaker 3: the deal, and it talks about the restrictive covenants on
Speaker 3: Warner Brothers not being able to make major investments what
Speaker 3: in this interim period. But the question actually I have
Speaker 3: is who would get the most out of those assets HBO, Max,
Speaker 3: the catalog and then the studios, Like which company would
Speaker 3: be better at getting them out into the real world
Speaker 3: to your mind?
Speaker 14: Well, we think Paramount is the company that I guess
Speaker 14: needs them more and probably would benefit from them more.
Speaker 14: As far as getting them out into the world, that well,
Speaker 14: arguably would be more Netflix a side with the business
Speaker 14: they already have in place in the streaming service and
Speaker 14: subscribers they already have in place. But if you're looking
Speaker 14: from a business and an operating point of view, we
Speaker 14: think Netflix has far less to gain as it does
Speaker 14: that than Paramount would, which really needs the scale and
Speaker 14: has I think a better combined type of offering, whereas
Speaker 14: Netflix incrementally is sure it adds quite a bit to
Speaker 14: it as far as incrementally on how much more revenue
Speaker 14: that bring in, whether they're cannibalizing some of the profits
Speaker 14: that Warner takes in with some of its licensing. The
Speaker 14: reasons why we think that from a business standpoint, Netflix
Speaker 14: doesn't benefit quite as much as Paramount would. That's of
Speaker 14: course a maybe different question than what the consuming public
Speaker 14: and how they benefit from the content and the availability
Speaker 14: and the pricing for that.
Speaker 2: It's out there.
Speaker 3: You heard Felice's reporting on the stock why very quickly
Speaker 3: we just have thirty seconds? Has that sentiment with Netflix
Speaker 3: soured since the deal first kind of got announced.
Speaker 14: As far as the deal goes, I think there's been
Speaker 14: some fear that Netflix would even pay more. There's also
Speaker 14: some fear they've overpaid with what they've agreed to already,
Speaker 14: so that may not be worth it. I also think
Speaker 14: it's maybe just brought to light some things that we
Speaker 14: had been thinking about for some time, even apart from
Speaker 14: what's going on with Warner, which is the growth is
Speaker 14: set to slow at Netflix, and therefore the multiples that
Speaker 14: it had historically aren't necessarily justified today. And so if
Speaker 14: it is at lower motiles now, which it certainly is
Speaker 14: where compared where it's been historically, that's probably justified. Being
Speaker 14: the growth outlook now versus in the past.
Speaker 2: We got to leave it there.
Speaker 3: But that brings us a nicey full circle to what
Speaker 3: police was talking about at the start of the block.
Speaker 2: Matthew Dog in the morning, so thank you very much.
Speaker 3: Now coming up, Intel CEO was at the White House
Speaker 3: to deliver a progress report on its activities. The US
Speaker 3: government is its big shareholder that it's being accounting to.
Speaker 3: Bit more on that next, as the Bloomberg Tech for
Speaker 3: Talking Tech first up, Vodafone Idea is considering raising debt
Speaker 3: financing to accelerate growth.
Speaker 2: That's according to sources.
Speaker 3: This comes after Delhi decided to cap annual payouts for
Speaker 3: past spectrum fees, forerring a lifeline to the country's third
Speaker 3: place carrier that's out in India. Plus compensation for Apple
Speaker 3: CEO Tim Cook held steady at a cool seventy four
Speaker 3: million dollars last year. Just three million of that comes
Speaker 3: from salary, though the rest is in the form of
Speaker 3: stock awards. You may remember a few years ago Cook
Speaker 3: was criticized for pay packages close to one hundred million
Speaker 3: dollars apiece, prompting him to request a compensation reduction, and
Speaker 3: TSMC provided an upbeat sales forecast. The company reported a
Speaker 3: roughly twenty percent rise in the December quarter revenues based
Speaker 3: on calculations off monthly figures. The company reports full quarterly
Speaker 3: earnings next week. All this coming after chip makers projected
Speaker 3: optimism for AI demand at cs this week. Now, sticking
Speaker 3: with Chips, shares of Intel up today in a big way.
Speaker 3: Of the company's CEO delivered a progress report on its
Speaker 3: company's U line of processors. At the White House, Libutan
Speaker 3: met with President Trump and Commerce Secretary Howard Lutnik. After
Speaker 3: the meeting, Trump praised Intel and said the government was
Speaker 3: proud to be a shareholder.
Speaker 2: For more.
Speaker 3: Let's get out to Bloomberg's Ian King, who of course
Speaker 3: leads our coverage of Chips. Actually, where I wanted to
Speaker 3: start in is the President in his post talked about
Speaker 3: the result of the government's investment in Intel, yielding I
Speaker 3: think said tens of billions of dollars for the American people.
Speaker 3: It's important probably to do the math on what the
Speaker 3: actual return would be at this stage.
Speaker 2: Please.
Speaker 11: Yeah, no, I mean, as taxpayers, we own currently about
Speaker 11: eleven billion dollars worth of Intel stock, and that's a
Speaker 11: nice return, roughly twice what we owned when we made
Speaker 11: the investment as a nation last year, and not in
Speaker 11: the tens of billions. For that to happen, obviously Intel's
Speaker 11: share price would have to go up a lot more,
Speaker 11: and or some ex extra kind of arrangements that exists
Speaker 11: would have to be bigger.
Speaker 3: All the same that there has been some stock performance
Speaker 3: here since lit Bhutan kind of had this improvement in
Speaker 3: relationship with the president. What do we know about yesterday's
Speaker 3: meeting and kind of where Intel's focus right now in
Speaker 3: what it's trying to tell the US government.
Speaker 11: Yeah, I mean, you know, the fact that he's in
Speaker 11: the White House is important because that is basically drawing
Speaker 11: attention to the fact that this investment that we saw
Speaker 11: last year from the US government from in Nvidia, from
Speaker 11: SoftBank has really stabilized Intel's kind of balance sheet, and
Speaker 11: so it's in a much stronger position than it was.
Speaker 11: But where we are and where we really need to
Speaker 11: be is to have much better operations and much better
Speaker 11: performance from the company, and that is going to take
Speaker 11: new products. You and I were at CES this week
Speaker 11: and we saw Intel come out and say, hey, here
Speaker 11: are our new chips. These are the ones we promised.
Speaker 11: These are the ones that they are going to deliver. Obviously,
Speaker 11: three or four days into that launch, we don't know
Speaker 11: how well they're going to do yet, but at least
Speaker 11: in terms of the specs, way better than the position
Speaker 11: that Intel has been in.
Speaker 3: And again a large portion of the government's ownership of
Speaker 3: Intel is contingent on performance of those goals. Bloomberg Z
Speaker 3: and King, Happy Friday to you and thank you very much.
Speaker 3: That does it for this edition of Bloomberg Tech in
Speaker 3: what's been a monster week. Frankly, just back from Las
Speaker 3: Vegas and see yes and the headlines keep coming, particularly
Speaker 3: in the world of AI. Great place to recap the show,
Speaker 3: the week, the interviews and the reporting is on the podcast.
Speaker 3: You know where to find it online, Apple, Spotify, iHeart
Speaker 3: and all the Bloomberg platforms.
Speaker 2: Happy Friday. This is Bloomberg