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- [00:00]
A
This episode is brought to you by Qualcomm. Qualcomm is bringing intelligent computing everywhere. At every technological inflection point. Qualcomm has been a trusted partner helping the world tackle its most important challenges. Qualcomm's leading edge AI, high performance, low power computing and unrivaled connectivity solutions have the power to build new ecosystems, transform industries and improve the way we all experience the world. Can AI's most valuable use be in the industrial setting? I've been thinking about this question more and more after visiting IFS's Industrial X Unleashed event in New York City and getting a chance to speak with IFS CEO Mark Muffett. To give a clear example, Muffett told me that IFS is sending Boston Dynamics spot robots out for inspection, bringing that data back to the IFS nerve center, which then with the assistance of large language models, can assign the right technician to examine areas that that need attending. It's a fascinating frontier of the technology and I'm thankful to my partners at IFS for opening my eyes to it. To learn more, go to ifs.com that's ifs.com Anthropic looks unstoppable as a $10 billion funding round turns into 20. Big tech earnings are in and there's no margin for error. And SpaceX has an IPO date and is may be acquiring XAI2. That's coming up on a Big Technology Podcast Friday Edition right after this. Welcome to Big Technology Podcast Friday Edition where we break down the news in our traditional cool headed and nuanced format. We have a great show for you today. We're going to talk about the numbers getting even bigger for Anthropic and OpenAI as they attempt to raise their latest funding rounds. We're also going to look at big tech earnings and ask whether there's any room for error anymore, especially with Microsoft having one of its worst days in years. And then as we close, we'll talk about SpaceX and whether that IPO is going to come this year and whether it will include xai. It's going to be a great show. And joining us today is San Francisco Bureau Chief of the Financial Times, Stephen Moore. Stephen, great to see you again. Welcome.
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B
Yeah, great to be back on. Thank you.
- [02:07]
A
Okay, so let's start with the big tech, not the big tech. Let's start with the AI labs. Last week we talked about how OpenAI was in the middle of this historic fundraise and whether there would still be money left or how much money could they could possibly raise after this? Well, news showed up that Anthropic is actually also on the fundraising path. And it's like these companies are always fundraising and they were actually going out for a $10 billion round and then they ended up raising or doubling that round to 20 billion. Here's, here's the Financial Times story. Anthropic is set to raise about $20 billion from venture capitalists and other investors, double the amount it had targeted and a sign of surging investor enthusiasm for the high profile AI startup. The fundraising deal, which is close to being finalized, would value the company at $350 billion. So a little less than half than open AI. But anthropic is clearly having a moment, so I'd love to hear your perspective, especially since the FT has done the reporting here about just how intense the interest has been in Anthropic and why you think that's the case.
- [03:14]
B
Well, as you say, like Dario Amade, his sister, the whole company, they're really having a moment in AI. You know, people have always been very loyal to Claude. You know, they've liked its style. But it's had multiple hit products coming out of this AI research startup, not least Claude Code, Claude Workspace. And as a result, we're really seeing a huge amount of demand from investors of all stripes all around the world to be associated with this company. As you mentioned, we put out a story this week that they've doubled their latest funding round. They initially went out to raise 10 billion, they're actually going to raise around 20. And they had demand for five to six times five to six times that amount, which is a crazy amount of money, right? Because this is just one of multiple AI startups in Silicon Valley raising at the moment, not least Xai and OpenAI as well. And I think what this proves, like 350 billion valuation is of course above Elon Musk's XAI at 250, but as you said, like far below the rumored 750 billion valuation of OpenAI. But it really shows that they're able to keep pace at least in fundraising and compete on COMPUTE with their slightly larger peers. And we're in a situation now where people want to be associated with the name. Like when we're reporting out these stories, we're finding finding it quite easy to add extra names to the list of VC and sovereign wealth fund backers. And interestingly as well, we're even seeing companies that had initially bet on their rivals like Microsoft and Nvidia putting money into Anthropic as well. Now that's partly through self interest. They're big customers. But it's also because I think these big tech companies, at least when I speak to them, they think it's good for the ecosystem. You don't just want to have one, two or three companies. Elon Musk, Google and Open Eye taking it all. Having Anthropic is a very good buffer, you know, for the whole sector and, and the whole world.
- [05:09]
A
Now Dario, when he goes and gives his public talks, he likes to say, he always says this, that, that Anthropic went from a million, what, no, 10 million to 100 million in revenue. No, they went from, sorry, 100 million to a billion and a billion last year to 10 billion. So they've 10x their, their revenue year after year. Uh, do you think, I mean how, thinking through the exponential, do you think that they could do that again? I mean, I think they got close to 10 billion last year. They didn't quite 10x but they got close. Do you think they could get in the range of a hundred billion? Because as these numbers get bigger, the task to 10x becomes harder. It's not like an easy thing to do.
- [05:53]
B
They're certainly on the right track to get there. You know, they, they've got a lot of interest. They've embedded themselves in both very big corporations, but they also have like a, you know, ded fans in like, you know, the developer community and like individuals. So if you think about the revenues of some of the big tech companies now, you know, Google's not far off generating that much net profit in, you know, half of that in a quarter. Right. So if you believe that OpenAI and Anthropic are the next, you know, you know, the next members of the Magnificent Seven or the Magnificent Nine, there's no reason why they can't get to 100 billion in annual revenue. Now of course, what has to happen for them to be viable companies long term is that their costs have to come down. Because remember, these startups don't actually make any money at the moment. And if they are going to go for IPOs this year or next, you know, and they're hiring advisors, bankers and lawyers to do so, eventually, you know, the whole of their balance sheet will be laid bare and people will be able to take, take a better, take a better look under the hood and determine whether they're viable long term businesses. But certainly Anthropic is going about things in the right way to secure its funding, like lock in, lock in more strategic partners long term. So yeah, I mean I think it's feasible. But you know, this is, remember this is these companies are, have really only been in the public sphere and have been in, have captured the imagination for two years. So we just don't really have that much data to see the trajectory of this.
- [07:14]
A
Right. And when you say they don't make any money, they're not just not making profit like these companies are losing.
- [07:19]
B
Oh, they make money, they generate revenue. What they don't have is earnings.
- [07:23]
A
Correct. And one more thing that really struck me about this story, I mean of course we know that like as you mentioned, Claude, cowork cloud code are really driving, you know, at least the conversation that these investors pay attention to. Nuts, which is really the conversation on X. Right. And the question is like who does that? Who, who would you sort of rope in because of that buzz? And you would think that if you have such an oversubscribed rounds, it's like the traditional Twitter VCs that would come in. But it's not, I mean, maybe it's some of that. But the thing that really struck me is that it looks like Microsoft and Nvidia, this is according to your story, have committed to invest a total of up to 15 billion in the company. You know, that's not Google, that's not Amazon, it's Microsoft and Nvidia. To me that's, you know, people usually when they talk about the OpenAI universe, they talk about three companies, they talk about Microsoft, they talk about Nvidia and they talk about Oracle. And now Anthropic seems like it's attracted some of the biggest backers of OpenAI, which is interesting because I think you'll remember that the rumor was in the latest funding round, Sam Altman was saying if you invest in any of our competitors, you're not going to be able to participate in future rounds. And now clearly, maybe Nvidia and Microsoft got a waiver or maybe they don't need one because of their size. But, but the fact that they're going to come in with such power and back anthropic to me is remarkable.
- [08:54]
B
Yeah, it's extraordinary the way that the landscape has changed over the last 12 months. A story we wrote the Financial Times about Sam Altman threatening to cut off investors that invested in rivals actually ended up in a lawsuit that Elon Musk brought against the company for anti competitive practices. Now, Sam Altman said that he didn't say he'll cut you out of the funding round. He just said we won't share any advanced data on our financials or give you our tech roadmap in case you share it with our rivals. But it looks like since Microsoft renegotiated its relationship with OpenAI that all of this exclusivity is breaking down. Remember, Amazon and Google have had the longest standing cloud and investing partnerships with Anthropic. They're now adding Microsoft Azure to that mix. They also do work with the Oracle. So we're really seeing the whole sector like diversify and become more strongly intertwined as the prevailing thought is now that these models aren't all just going to commoditize and converge on the same thing, but they're going to specialize and they're going to be good for different things. And what Anthropic has really been able to show is, is very good for developers and it's very good for enterprises. I mean, it's, it's probably already lost the kind of consumer app battle to OpenAI with Google, you know, making some small inroads in that, but not really for a company of its size. But in San Francisco, I'm sure you hear it in the bubble chamber, you know, if you follow an account called Overheard San Francisco, there's a joke going around. It's like one person walking down the street says, oh, you know, Rome wasn't built in a day. And the other person shoots back and says, oh, well, they didn't have clock code.
- [10:27]
A
Yeah, no, it definitely shows up in the data because I have some data from Aptopia that I'm looking at right now. And in June 2025, so six, seven months ago, the average time spent on the, on the mobile app of Claude was about 10 minutes. Today, in January 26th, it's above 30 minutes. So time spent per user on Anthropics Claude has tripled in six months. And to me, what's remarkable about that is it's the mobile app, right? And you would say, okay, maybe it's because these developers are spending all this time in, you know, Claude code. But that's, I think often that's desktop. So the fact that there's, there's something going on, I've definitely seen, you know, I've had these moments where I've gone back and forth between chatbots like Ranjan and I. We joke that we used to be clotheads and then we became, I think we called it chat chaps. But I don't know if I think there's nod to your, to the, you know, the, the British audience. But I think we need a better.
- [11:32]
B
Yeah, maybe chat term isn't isn't something you want to say too much.
- [11:39]
A
But, but I'm saying that like I've now gone back to Claude for a lot of my work related uses and I'm seeing these numbers and I'm not surprised.
- [11:48]
B
No, they, they're definitely capitalizing on their moment. And also, you know Dario Amade, the, the, the founder, he's very visible. Right. I'm not sure if you managed to read all 20,000 words of his essay that he put out last week. I think a best good use of Claude would be to put it in there and crunch it down a little bit into the most salient bullet points. But he's also asserted himself into kind of like the cultural, the social, the legislative moment here that we have for AI, being obviously leading research at one of the, one of the top startups, but also warning about a potential economic apocalypse and dangers from unleashing this technology, which he believes will come truly transformational in the next two years. So they kind of have that going for them as well. And we were both at Davos last week or the week before and there was a lot of sniping going backwards and forwards between these different companies. I'm sure you picked it up. You had Demis Atabas of Google saying, oh well, you only need to look at what's coming out of these different AI labs, look at what the ones run by scientists. And by this, he was actually on stage with Dario at the time.
- [12:53]
A
I thought Dario was the one that said that, that, oh, my apologies.
- [12:57]
B
It was Dario that said that. And then, and then Demis kind of agreed and then they said, look at what's coming out of these companies that are run by like VC and like social media people. Like a not too veiled shot at Meta and OpenAI later in the week. Demis couldn't resist of Google, couldn't resist having a shot at Sam Altman for putting apps in GPT. He said, well, if we're so close to AGI, money and the stock markets will all become irrelevant in two years time, so why do you even need adverts? So as the competition heats up for users and funding and kind of space in the public consciousness, so are the barbs flying backwards and forwards between these, you know, between these very, very wealthy but still very competitive people.
- [13:41]
A
Right. And so last week we talked a little bit about how OpenAI was trying to raise 50 billion and the headline there was that Sam Altman was in Saudi Arabia and some other Gulf states trying to raise that round. And I was basically raising my hands and being like, how, how many more times can they do this? And then eventually they have to go public and then certainly the numbers are going to matter. Then you would imagine. Well, it turns out that 50 billion wasn't the ambition. It looks like it's actually much larger because we've gotten a bunch of news in the back half of this week that OpenAI is looking to raise much more than that. I'll start with the Wall Street Journal report, then we'll move to the FT report because this came out, you know, shortly, shortly before we're speaking. So here's this, here's the headline. It is Amazon is in talks to invest up to 50 billion in OpenAI. The ChatGPT maker is seeking up to 100 billion in new capital from investors around that could value it as much as at as much as 830 billion. Andy Jassy, Amazon's chief executive, is leading the negotiations with OpenAI CEO Sam Altman. The shape of the deal, should one be reached, could still change by the way. So comment on two things for us if you could. First of all, like, it's a jaw dropping moment, is it not that they're actually going to potentially raise this amount of money. I think the largest VC round in history was a couple billion dollars up until a few years. Now we're looking at $100 billion round. And then talking again about the, the accesses around these companies. Now the same thing, you know, Amazon has long been an anthropic partner. They have, you know, marched, marched people around their, you know, their new facility that they've built with their Trainium chips. Talking about how they are, you know, deep partnership with Anthropic has been what's enabled them to build this data center. And now they're going to go and put, you know, an absurd amount of money into OpenAI. What are the implications?
- [15:38]
B
Well, as we're saying, the interconnections between the sector are becoming more and more confused, intertwined. Nobody is looking for exclusive agreements anymore. Microsoft has broken with OpenAI. Amazon is seemingly on the break, seemingly about to break with its pure backing of anthropic. 50 billion is obviously an extraordinary amount of money. I don't think we can call it a venture capital round anymore when you have a company as large as Amazon committing for that. And of course as always with these figures, you know, such as the 500 billion Stargate project which was announced this time last year by Oracle and OpenAI, the devil will be in the detail A lot of the way these deals are structured, are actually very circular, you know, they will be in the form of compute credit. So the money that Amazon is putting into OpenAI will come back for using their AWS data center services. And it'll be interesting to see how, when the details come out of this fundraising, which one imagines would be very soon, exactly what the terms of these contracts are. It's not just Amazon writing a huge check. Microsoft's going to put a few, a few billion in, we hear, but, you know, not too much more because obviously they already own 27% of the restructured company. Nvidia are putting more money in, but also SoftBank, the big Japanese conglomerate, they're talking about writing another $30 billion check to finance this. They sold off a lot of their holdings of Nvidia, they've pulled out of a few other deals. So whilst OpenAI has lost a little bit of its momentum, it's lost a little bit of its sheen. You may be hearing a little bit more noise about Gemini or noise about Claude. This funding round really shows that they are still able to compete out compete their rivals, at least their startup rivals in fundraising. And this is going to be a blunt force improvement of models by using more compute. OpenAI is very much still out on the lead, but it sets up a really interesting 2026 and 2027 because they're all hiring advisors. You know, one of the the talk of Davos were bankers and lawyers buzzing around trying to win lead roles on all of these deals. Not just them, but also Elon Musk, companies like SpaceX. And eventually you're right, these pots of money will be tapped out. Investors will hit concentration limits, sovereign wealth funds might get cold feet. There could be another deep seat moment where everyone gets slightly panicked about, you know, closed models and the rate of development. But at the moment it seems to be full steam ahead. But in 2027, I can't, I can't see these checks of these sizes being written again unless you go to the public markets and you start giving retail, your retail shareholders and big institutional pension funds, things like that, access to try and finance their colossal ambitions for like data center and inference.
- [18:22]
A
Yeah, so I checked. The largest IPO in history raised $30 billion for Saudi Arabia last week. I said 40 billion. It's actually 30 billion. So the check from Amazon alone, maybe it's a check, maybe it's AWS credits, we don't know, would almost double the size of that round. And so, I mean, so you think 2027 is where this ends because there's Not, I just don't think there's enough money in the world is there to continue this cycle.
- [18:49]
B
There's, well, there's two sides to it, right? There's, there's a finite amount of private capital or institutional, institutional by institutional, like you know, big tech money that you can attract in, but there's also a finite amount of money available on public markets. As you pointed out, the biggest IPO in history was Saudi Aramco, 29 point something billion in 2019. If you have Anthropic coming to market, you have value at 350 privately, maybe optimistically double that on the public markets. You have SpaceX, which we'll talk about later, looking at a 1 to $1.5 trillion valuation. You have OpenAI looking at over a trillion as well. You can throw other companies like databricks, Snowflake Stripe, all of them might choose to come to market and list a portion. Is there enough money in the public markets around the world to absorb all of this? A banker I was speaking to, you know, a few weeks ago was like, I actually don't think there is. You know, so they can't really all go at the same time because they risk kind of like hamstringing each other and their ability to fundraise. So I think there does have to be like a certain cadence to the this. And also if you talk to people inside OpenAI and Anthropic, these are still very young companies. They're still sorting out their corporate governance structures. OpenAI in particular has a number of like pretty severe looking outstanding lawsuits from, from everything from Elon Musk trying to block their conversion away from a nonprofit, to the New York Times suing them for like basically copyright theft. There's a lot to be ironed out before these companies can go on a roadshow, show some confident financials and really persuade people that they are, you know, going to be the next, you know, Google or Meta.
- [20:26]
A
Yeah. And before we go, you know, I just want to talk about one application that's sort of, I would say emblematic of the hype and maybe potential in this space. And it came up in our discord this week. It's something that used to be called claudebot. It had to change its name because Anthropic wrote them a letter. But here's the story. What is cloudbot and why is everybody so obsessed with it? It's an open source messaging first AI assistant that connect to chat apps can connect to chat apps like WhatsApp, Telegram, Mess, iMessage, Slack, Discord, etc Remember context over time, send proactive nudges and trigger automation on a machine where it runs. Think of cloudbot as a personal AI gateway that you talk through. You talk to through messaging. You text it like a colleague, it replies in the same thread. Your phone and laptop and tablet all day stay in sync because the conversation lives in the messaging layer. Then the service connects with your computer and can go and use it and accomplish tasks for you. Things like fetching data, generating summaries, running routines and automating repetitive work. People have gone absolutely nuts over cloudbot this past week. What is your thought on cloudbot? Is it real and what do you think it says about the moment we're in?
- [21:36]
B
Well, it shows that, you know, a developer sat over in Austria in a very short period of time, Vibe coding can come up with a really interesting app that gains traction largely through word of mouth and through GitHub. GitHub and can like show that AI can be used.
- [21:53]
A
Totally. This was totally Vibe coded. This is what they, the person said. They didn't even check their code. They just put it out there, which is, I'm like, I'm not letting it use my machine if it's just, if it hasn't, the code hasn't been checked. But the fact that it was vibe coded and is taking off like this is somewhat remarkable.
- [22:07]
B
Yeah, I mean it just shows you that this, the field is really wide open for like the next killer app or use case for this. And you know, whilst I think quite rightly all the AI labs are focusing on, you know, consumer users who are, most of whom are just using this as a replacement for Google Search at the moment. Right. But also the power users are using it to code. But the real money, like the stickiness is getting these big multi year 10 to $100 million contracts with, you know, existing public companies, you know, to go in there and like replace a lot of the stuff, the SaaS software that they already have in there from like Workday or Salesforce, that's like like the biggest prize at the moment. But that doesn't really capture the imagination. Right. Of anyone but an investor looking for like better air. If you, if you're just an ordinary person on the street, you're probably more interested in the video generation capabilities. And then suddenly Claudebot or actually what's it called, Maltbot now the strongly worded message from, from Anthropic clearly had its effect. You know, that can come in and like suddenly send messages and people are willing to take a gamble on it. Even though it might have slightly janky code. And I just think it's really interesting that, you know, these things can come out of nowhere and hopefully, hopefully for the guy it'll work out and you know, he'll gain some traction rather than just kind of disappearing or be copied by the, by the more major labs. But it's fun, right? It just shows. You wouldn't really understand that the contours of this new technology yet.
- [23:31]
A
Yeah, people are definitely having a field day talking about it. And the memes are really interesting. I think they're telling this. One person on X, Kevin Zhu said, gave claudebot access to my portfolio. He said, trade this, trade this to 1 million. Don't make any mistakes. 25 strategies 3,000 reports, 12 new algorithms. It scanned every expos, charted every technical, traded 24, 7. It lost everything. But boy, it was beautiful. I spent 15 minutes on claudebot and saved me 15 on my car insurance. There's a little GEICO joke. This other person said, set up Claudebot to text my wife good morning and good night every day. Also casual how are you? Messages during the workday 24 hours. It was having full on conversations without me even being involved. This is absolutely insane tech. I haven't talked to my wife for at least two days and she seems happier than ever. I mean I think that these memes are telling in that there is a, it's a very interesting, very interesting moment. There is a desire among people to trade, to trust these applications with sometimes even more than they even know they.
- [24:37]
B
Should and just play around with it and experiment and have a bit of fun. You know, I don't think the big technology podcast is advising that anyone outsource their relationship to a chatbot quite yet. But you know, maybe it might, it.
- [24:50]
A
Might help some of you.
- [24:51]
B
Yeah, it might help some people who have bad texting form. Yeah. But you know, if it, if it can automate those little annoying parts of your day, you know that you, that just like, especially for those of us with like kids and busy jobs, you know, those, those, those precious, those minutes saved can be very precious.
- [25:09]
A
Exactly. Well, another very interesting thing happened this week and I want to get into that in depth, which is that Microsoft and Meta both beat earning expectations. They beat on profit and they peed on, beat on revenue. Meta's stock shot up double digits and Microsoft's dropped double digits. And I think it is very telling in what it says about the state of technology today. So we will talk about that when we come back right after this. Did you know your Credit card points and miles can lose value to inflation. Credit card companies often reduce the redemption value of your points and miles. Now imagine a credit card with rewards that can grow in value. With the Gemini credit card, you can earn Bitcoin or one of over 50 other cryptos instantly with no annual fee. Every swipe at the store or gas pump earns you instant rewards deposited straight to your account. Visit gemini.com card today. Check out the link in the description for more information on rates and fees. Again, if you're looking to invest in Bitcoin but don't know where to start, the Gemini credit card makes it easy. Issued by Webbing, this is not investment advice and trading. Crypto involves risk. Check Gemini's website for more details on rates and fees.
- [26:21]
B
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- [26:50]
A
Here on Big Technology Podcast with Stephen Morris, the first San Francisco bureau chief at the Financial Times. Stephen, you couldn't have come on on a better week, to be honest, because we're in the thick of big tech earnings and you know, while these earnings are typically like a good opportunity to check in on profit and loss among these companies, we actually have like a pretty interesting story developing. So as I mentioned before the break, Meta Meta had record sales. It jumped 10%. Microsoft also beat on revenue and profitability and it dropped the market crushed it. I think it's down 11 on Thursday, which is when we're recording. Yes, we're recording Friday edition on Thursday today. But I think it still works. Anyway, the thing about the thing that caused Microsoft to drop, people are saying, is that Azure revenue didn't grow as fast as they expected. There was some expectation that Azure revenue would grow something like 40%. It's only growing 37 or 38%. Both Microsoft and Meta's capital expenditures are going to go up. Meadows went from like A predicted like 110 billion on the year to something like close to 135 at the top range. I think this is notable because it just shows that there's so little room for error in this world that if you get, you know, if you, if you get anything wrong, the market will Interpret that they are going that you're going to have some serious problems when it comes to AI. What do you think?
- [28:24]
B
Yeah, I mean it's, it's every quarterly earnings that come out from these big tech companies. It's sort of a lottery. Like you look at the numbers initially and you're like, wow, those are big beats on revenue, big beats on profit. Like we're seeing a 30, a 39% growth in Azure and huge increase in bookings and yet the shares plunge. Microsoft, Microsoft gets absolutely killed in the market. And there are always games played by Wall Street. Right. People don't just want to see you beat the analyst estimates, they want to see you beat the beat. Right. And so Microsoft has found itself in this very strange situation where a 1 percentage point miss in its azure revenue momentum causes it wipes hundreds of billions off its share price. And then people are also. There are also several other things going on at Microsoft. There are some very interesting things disclosed about OpenAI but also its capex like Microsoft is on track to spend 140 billion this fiscal year, which their fiscal year is a bit weird. It runs from to June instead of to December and that's pretty much with on track with what they spent in, in the last quarter of, of last year, which was, you know, 37 billion. But people are questioning this. This is 66% more than they spent in the same period the year before. These are vast jumps. And then the other thing that caught people's eye was they had to disclose their relationship with OpenAI in a slightly different way now that OpenAI's restructured as a for profit company from a nonprofit. And they revealed that they booked 10 billion cash gain from the amount of cash OpenAI has on its balance sheet due to all these like huge fundraisings that they're doing. But they also said that 45% of their future Azure contracts were based on OpenAI. So immediately on the earnings call all the analysts are like I was about to say holy s there but I should say, oh my God, you know, 45% of your revenue is tied to OpenAI. Remember this is a company, as we said before, it makes a lot of revenue, but it doesn't make that, it doesn't make any profit. That's for a company the size and age of Microsoft to be that reliant on a single customer is a big red flag. A single customer that has a lot of noise around it and increasingly has competition for from Google and Elon Musk and Anthropic. So the CFO spent Most of the call trying to say, oh, well, you know, maybe 45% of it is OpenAI, but that means that 55% isn't. And that's still 350 billion in revenue. But as you can see, the shares were down 7% at that point. When I woke up this morning, they were down 11%. So I don't think Amy Hood, the CFO of Microsoft, did a very good job persuading everybody. But it plays back into what we were saying before about this diversification. Like Microsoft to spend a long time locking OpenAI down to lots of exclusive contracts with it, both for its technology and being and to be its main compute provider. It's then spent the last 18 months trying to get out of those. And that's why it's investing in Anthropic. That's why it's investing. People miss this. It's investing a lot in Mistral, the French AI house, because it believes that Europe is not going to let its AI be run entirely by a bunch of west coast tech companies and Elon Musk. So Microsoft is now all about the diversification. Before, it was taking credit for turning a 14 billion investment into OpenAI, into whatever the hell that will be worth many multiples more when the company goes public. Now, it doesn't want to talk about OpenAI, it wants to talk about Anthropic. It wants to talk about Mistral. It wants to talk about its own models and its own chips. And I think that's a new story that it's trying to tell the market, which is why we saw a share squad hit. And then as you said, matter is this whole other story.
- [31:48]
A
This is my perspective here. I think we're just so early on in the AI game that the market is looking for any signal for where this is going. And it's like, oh, like it's a little bit of a slowdown in growth. Microsoft's going to lose the AI game. Meanwhile, we're so early in the build out, we have no idea what's going to happen. We have no idea what's going to happen with Meta's super intelligence based off of this quarter's revenue. So it's all extrapolation based off of limited data.
- [32:13]
B
Exactly. And you look at the quarterly, the short term, quarterly reaction to the quarterly earnings, right? They're down 8%. Remember two quarters ago we were talking about how matter had 200 plus billion wiped from its valuation in a matter of minutes. Now we're talking about how it had 300 billion added in a matter of minutes. But if you look at the long term trajectory of all of these tech stocks, it's like this, you know, there, you know, Google is now worth more than 4 trillion. Microsoft is, you know, lost. Its actually Google has bolted, it's leapfrogged it in the kind of market cap race. Microsoft is still 3.6 and we've got Nvidia way out ahead of everyone at 5 trillion. The general trend is still upwards, but we just have this skittishness in the market as anyone's looking for any signs of weakening demand, the bubble contracting or even popping. But if it was just about spending, Meta Double is going to double this year. Its capex so like spending on data centers and chips and servers and everything that goes into supporting that upgrading power structure, it's going to Double it to 135 billion from 72 billion the year before. And that's not all that Zuckerberg is spending on over there. He's also spending hundreds of millions of on compensation packages to try and attract staff, you know, from other leading AI labs to try and rebuild their own llama model, which of course felt fallen badly behind has been a huge embarrassment for them to this point. But Meta was crucially able to show that AI is improving their ad targeting and their ad revenue and their counterparties love this. You know, whether it's on Instagram, WhatsApp threads, Facebook and so the market rewarded that. They're like okay, you're going to double capex but you're actually also showing us like some tangible impacts from AI on AI improving your advertising revenue because that's what matter is just a big advertising business. Microsoft hasn't done that. You know, Microsoft has made a great early bet on OpenAI but it hasn't proven that it's like Office suite of products. It have been meaningfully improved by integrating AI and you know, by and if they can meaningfully improve it, that means that they can charge more for it and they can increase their margins. That's the big game now for Microsoft because it's a software business and a data center business and I think the former has quite a lot of question marks about how it's integrating the various models into it.
- [34:28]
A
But here's my big point. I don't think we can read anything into what's happening already. I mean we're still in the build out phase, we're still in the picks and shovel phase. We're not anywhere near the point where economic activity tied to AI is exceeding the amount of money being spent on infrastructure yes, Meta has done some things with like, you know, generative, like generative AI being used for creative optimization. Yes. They've done some things on using, you know, standard machine learning to better optimize their platforms. But there's no way that what Meta is doing today will have any bearing on whether its AI program succeeds, because that's all about this personal intelligence thing. And so, you know, and Microsoft too, like, we'll see what happens with Microsoft. But, you know, they're, you know, it seems to me like all the jockeying has been, like, you mentioned, so much of their revenue is going to be coming from OpenAI, not end users who are deploying, you know, AI solutions. And so I think the market is like blindfolded right now, swinging around, trying to be like, who's winning AI, who's not? Whereas, like, we won't know even, you know, who is leading for a couple of years.
- [35:38]
B
Yeah. And who is leading or having a good moment is anthropic at the moment. It could be Google again next. Maybe OpenAI knocks the lights, you know, blows the lights out with like an incredible new model with, you know, something that really captures, captures the public imagination or is indispensable to, you know, Fortune 500 companies. Everything is so fluid and flexible. That's why it's so much fun to cover as journalists. Right. But it's also pretty exhausting as well. And we haven't even gotten to Elon Musk yet.
- [36:06]
A
Oh, yeah, that's coming. Ben and I, I did hear that GPT6 might be coming in the second quarter this year. So maybe as soon as, you know, this spring, which would be interesting. All right, one more company to touch on with earnings and then we can get into. Oh, shoot, we have so much to discuss. Let's talk about Apple quickly. And then the Amazon layoffs, if we have a moment, and then we'll get into Elon. So first of all, Apple, my prediction has been that Apple's going to have the best year, you know, of its history, maybe, you know, in the past and going forward, because it's in this moment where, like, there's no AI device and it's selling like crazy. I'll just give one note from your story about Apple's earnings, by the way. Blowout earnings. They did it. They beat on revenue. They beat on earnings. The iPhone revenue grew 23% to 85. 80. 85.3 billion compared with the prior year. I think the estimation was it was going to grow something like 14. No, 16%. No, 14%. It grew 23%. This is a company that's been struggling to post double digit iPhone growth for a long time. To me, it just seems that Apple is kind of in the driver's seat in 2026. No AI device, no killer AI consumer app yet, but the iPhone is selling like hotcakes. What do you think?
- [37:23]
B
Well, the next iPhone was supposed to be the first AI enabled one. Siri was going to be overhauled. It was going to become your de facto like personal assistant. And that just didn't happen. I mean, I'm sure we've, you've spoken about this on the podcast multiple times before, but what we have seen is the iPhone 17 was a blockbuster product. You know, it drove a huge upgrade cycle really interestingly in China as well, which, you know, shows the tightrope, the tightrope that that CEO Tim Cook has been walking between Trump and China. You know, he's, he's still on it. You know, despite claims to the contrary, conspiracy theorists say that the, the new OS update, Liquid Glass performs so badly on the 14 backwards. And I have one of those and I can verify that. Yeah, it's pretty janky.
- [38:12]
A
That's amazing.
- [38:13]
B
Could be you make an operating system that's so complicated to run. The old iPhones feel slow and annoying, so you upgrade in order to, you know, for it to look slightly nicer. But you know, after all these, these reports that, you know, Apple, Apple had lost, you know, the, the smartphone market in China, it had bungled the AI opportunity. I mean, this quarter did answer a lot of those questions, right? People are still buying the iPhone above almost any other device. Geopolitics haven't disrupted its supply chains. It hasn't enjoyed, sort of like hasn't suffered from a de facto ban in China because of the, because of the trade war that's been going on. And you know, they're not spending the hundreds of billions that their rivals are on building data centers and investing or investing in startups or building models. They've just signed a deal with Google, Gemini, much like their search deal to put, to make Gemini improve Siri. So they're kind of outsourcing a lot of this AI stuff, stuff and they're just focusing on being the main device through which most people will experience it. And you know, maybe long, long term over the next 10 to 20 years that'll be a bad bet. But certainly in the short term they're saving a lot of money and still selling a lot of phones.
- [39:27]
A
Yeah, they seem like they're going to be in good shape. For a while. And you're right, I think it is a long term liability but it's going to look really nice in the short term as all the spending happens and Apple just kind of sits there partners, sells a ton of phones, you know, maybe ships another bad design and then makes more people upgrade. They have the fold coming this year. I really think that this is, this could be the, the, the year of Apple preceding the lost decade. That's my opinion at least.
- [39:56]
B
And they're going to, they, they bought a very secretive Israeli startup today where the technology analyzes micro changes to in facial expressions which they sort of say means you can communicate without talking. But I do think it shows that Apple is as matter and Google are as well looking very closely at like wearables but in particular like glasses I guess another big tail risk for Apple is this. Johnny I've designed new device, screenless device that OpenAI is helping finance which we hear is a big part of the reason why Apple decided to go with Google Gemini instead of OpenAI and chatgpt to power Siri because you're like, okay, your pixel's not really a competitor to the iPhone. It's proved that over a number of years now. But whatever this new Jony I've device is could potentially be quite threatening. So there's a lot of moving parts but Apple still looks pretty healthy. I mean I have an iPhone 17 myself. But I did go to a, I did go to a Halloween party down in Palo Alto and the house I went to is next door to Steve, Steve Jobs, his wife and she hosts an absolutely enormous Halloween party there. We're talking animatronics. Like dozens of actors, people come from miles around to see it. The queue goes around the block. So I chose not to take my daughters into it. But I realized if you stood in that queue for an hour, at the end they were giving everyone a bright orange Halloween themed iPhone 17. So maybe I don't think she was, she was giving them away. Right. So those probably don't count towards the sales figures but you know people were absolutely delighted by this device and I can testify that looks pretty cool.
- [41:38]
A
I All right, I got to go to her party next time. That sounds amazing. I, I'm going to say first of all an interesting thing. Speaking of, you know, we talked a little bit at the beginning of Anthropic having a moment here actually Apple wanted to go with Anthropic first and they wanted to use Claude. This is according to Mark Gurman said it this week. Turns out Anthropic you know, was basically trying to charge them a lot of money, and then they eventually went with plan B, which was Google. So that's an interesting wrinkle, I have to tell you. I don't think the device is going to threaten Apple at all, at least for the next couple, at least for the next couple years. I, I really think that these AI devices are going to be a big letdown in the near term.
- [42:17]
B
Another humane pin.
- [42:20]
A
I, I mean, it, you know, it's funny. We joke about the humane pin and we think, by the way, created by, I think, a couple of people who worked on the iPhone, and we think that, of course, Apple will come up with a much better idea than the humane pin, whereas maybe the interaction layer just sucked. And I think that's not taken into account as often as it should be.
- [42:39]
B
It didn't help that it also overheated and exploded.
- [42:43]
A
Well, listen, I mean, you never really want that in your device. But, you know, we've seen, we've seen companies get over that in the past. Yeah, look, it was, they, Everything that they could have done wrong, they did wrong. The product wasn't great. There were some issues with the safety side of things, and they, they gave, they rolled it out with this very weird, like, emo video.
- [43:04]
B
Yeah, that's right.
- [43:05]
A
Not, not exactly a great rollout. But also, that's what I'm saying. Like, you know, maybe all those things were the problem or maybe the form factor was the problem. And I think we're going to find out pretty soon what the answer is. All right. Speaking of, of companies that try lots of different versions of products with AI inside, we have Amazon, and Amazon did not report earnings this week, but they are laying off 16, 000 people this week. This is from Business Insider. Amazon started notifying impacted employees Wednesday morning as part of its plan to cut 16,000 corporate jobs. The head of HR, Beth Galetti at Amazon, wrote this. I have important but difficult news to share with you. After a thorough review of our organization, our priorities, and what we need to focus on going forward, we've made the hard decision to eliminate some roles across Amazon. Unfortunately, your role is being eliminated as part of the changes and your employment will end after a notification period. She also wrote, basically, like, I, you know, I know that there's some indication that there's a new rhythm, or some of you might think there's a new rhythm where we announce broad reductions every few months. Because I think, what is this, the 4th Mass layoff that they've had over two years and she said that's not our plan. Amazon is a company that's like already operating with somewhat paranoid employees, so this isn't going to make things much better. What's your main takeaway about the workforce reduction here and do you think it's a good or a bad sign for the company?
- [44:31]
B
There are two things I think that's going on. One is they hired a lot of people during the pandemic, you know, when, when delivery surged and they really needed, they needed to surge in their own workforce to cope with this. And I think we're seeing a correction on some of that now as, as your online commerce, you know, normalizes somewhat. But we're also seeing is a company which, you know, 50 billion going into OpenAI plus a lot more into anthropic. I think this is a company preparing for an era of AI, whether that's both in its white collar jobs, but also blue collar jobs like working in the factories. I mean, it's already one of the most automated companies in the world. And if nothing else, Amazon is relentlessly focused on the bottom line. Anywhere it can cut costs, in particular permanently, it will try and do some.
- [45:19]
A
So.
- [45:20]
B
So it's a very uncomfortable situation for you to be if you are an Amazon employee. So working at Amazon is uncomfortable by design. Right? They want to keep you right on the edge to make sure that you're constantly as productive and aggressive as you can be. But what we're seeing here, I think is a company that's, that's getting ready for what it believes to be a completely different era of E commerce, but also, you know, working in factories and producing some of the, you know, running and producing some of the technology behind its various websites. It just doesn't think it's going to need as many people in the future. I know the HR chief is trying to calm everyone down by saying this is not the new normal, but I would be very surprised as if this, this is, if this is the last mass layoff as Amazon we see in the next 12 months.
- [46:06]
A
So one, one more question about this. Do you think this is AI related? As in do you think AI is like automating Amazon employees jobs, or do you think this is a financial decision that might make room for some of the AI investment?
- [46:21]
B
I think it's a little bit of both. I mean, it always is. They talked about thinning out layers of bureaucracy, as every company does when they make cuts, but I also think that they're seeing some of the employees that have been able to integrate AI into their daily work life and become more productive. I think they're kind of looking ahead at that. We don't have the exact demographic data of who they've let go, but I think a probably be more heavily weighted into the older employees that are maybe less able or less willing to adapt to this new AI powered way of working. And certainly if you look well, we get Amazon results next week. But there's no slowdown in momentum of the company's growth. So without, even though they've been taking all these employees out of the company, you see a short term hit because you have to pay all of them severance, but longer term your cost base comes down dramatically.
- [47:09]
A
Yeah, Amazon has, this has a number of leadership principles that the company runs by. And one of them is called invent and simplify. And what you think that means is like you, you sort of put technological solutions into place and simplify processes and generative AI sort of puts that on overdrive where like you can just simplify, you know, invent and simplify your own job. And that has sort of been a calling card and something that Amazon employees have been proud of for a long time. As they invent, they simplify and they go and they move on to something else. And I don't, I wonder if that leadership principle will maintain the prominence that it's had within that organization and the, and the support it's at, among the employee base. If they realize that at the end of simplify, it can be leave, it has to be invent, simplify and then invent again. If it's invent, simplify and leave, then that spirit of invention and efficiency within the company could really suffer.
- [48:05]
B
Yeah, that's true. I mean if it's innovate yourself out of a job, it's, it's a difficult thing to get your head around.
- [48:12]
A
Yeah, and that used to be something they used to be proud of because they would get another job. But when that doesn't, when that security isn't there, that's a problem.
- [48:19]
B
Okay, let's talk about. Well, that's sort of what Dario was, Dariamade was talking about in his 20,000 word opus the other day. You know, we're going to see he predicts at least a lot of job losses. You know, as you know, fewer people are able to do so much more work or even a completely automated out of the process once they really start to get AI powered like co workers working to a degree that they don't constantly have to be checked.
- [48:47]
A
Okay, very briefly, let's talk about SpaceX looks like an IPO is coming pretty soon. People are thinking it's going to be in June, which will coincide with Elon Musk's birthday and some planetary alignment where on June 8th and 9th, Jupiter and Venus. This is going again to the Financial Times. Thanks for the great reporting this week. Jupiter and Venus will be within little more than one degree of each other in the sky, about the width of a thumb held at arm's length. Your thoughts?
- [49:18]
B
I mean, it's. It's just another day in the. Elon Musk, Inc. Isn't it? You know, reporting on this man is fascinating, but also extremely difficult because you often can't tell whether he's joking or not. But he has gone out there, told investors that he wants. He thinks an IPO in June would. Would fall on an auspicious state. As you said, the. The conjunction of Mercury, sorry, Jupiter and Venus, which is then on the 8th to 9th, which is then joined again by Mercury in a few days later. His birthday is obviously in that month. 28th of June is a Sunday, though. So, of course, course you can't hold an IPO when markets are closed on a Sunday. But he's thrown out this idea. He likes to light a fire under people. Everyone's saying you can't do an IPO in particular of this scale on that time, you know, in that time frame. But you know, Musk, Musk's first principles, right? You question everything and you force people to just work hard and get it done. There are other things that you've got to take it with a pinch of salt. You know, this has been a big story in Europe at least over the last few weeks. He got into a bit of an online spat with Ryanair, which is like a budget European airline, over them refusing. You know, they're notoriously cheap. Like you have to pay for everything if you don't want to sit on the wing. And they were refusing to put Starlink on the planes. And obviously Elon wants Starlink on the planes because it earns more money and they were arguing about drag. So he threatened to buy the company, fire the CEO, a guy called Michael o'. Leary. He's quite a big figure in the uk. And replace him with somebody called Ryan. This is how, of course, the Twitter acquisition started him threatening to buy it as a joke for. So you never know where it ends up. But, you know, we're hearing the June timeline, despite the planetary alignment angle, is a real thing. But then just today, you. You get all these other stories coming out that he might have ambitions to merge it with one or more of his other companies. And, and you know, that very well could be the case. I mean we haven't heard anything solid about it yet, but those are the rumors out there.
- [51:14]
A
Yeah, I think the rule with Ryanair is in the jurisdiction that it's in, a American or a non European cannot be the owner. So that sort of idea is out the window.
- [51:23]
B
But I'm sure it's not beyond Elon to set up a, set up a European subsidiary, staff it with one of his people and buy it that way. Yeah, it wasn't made to be broken for Elon.
- [51:33]
A
That could happen. The, the company that you referenced that people have been talking about. Yeah. SpaceX merging with IS. IS X AI, which would be really interesting I think. Not a great combination if you ask me. Especially you know, SpaceX is highly regulated. It's a government contractor. Xi recently was, you know, bikini fing people on, on Twitter. I don't think that's, I think that's some sort of risk. There's. But I am, I so, so actually I am curious to hear your perspective. What is the sort of most logical reason for why those two companies would combine?
- [52:11]
B
The most logical reason is that SpaceX, one of the reasons that have been given, you know, privately to investors for wanting to IPO SpaceX is that it needs to raise money so that it can develop and build data centers in space. They argue that it's very cold when you're facing away from the sun, so you don't need to pay for cooling. He already has a network by he, I mean Elon Musk. A network of 9,000 Starlink satellites all linked and coordinated by lasers. So you've got kind of like the communications infrastructure out there and you have unlimited solar energy. Not, not a flex. You're not affected by the atmosphere. So I know it sounds like crazy sci fi stuff, but this is what SpaceX has constantly been based around. I don't think anyone thought the largest rocket in the world would be the booster stage, would be caught by giant mechanical arms just a few years ago. But he's proven that that was a technological challenge that was surmountable. So the argument is you put them together. Xai, obviously you builds the models X, which of course was another musk company which was merged I think last March with xai. That's the distribution that Grok goes out under and that's how Musk is going to win in AI. Like his models might not be as good. He doesn't have the same revenue You. But what he can do is win the data center race, you know, you know, and, and have these up in space before anybody else. And he's not the only person looking at doing this. Google's also looking at it. Jeff Bezos is looking at doing it through you, through his Blue Blue Origin rocket company. So that's kind of the bull case. That's the rational case. The conspiracy theory is that, you know, Xai is worth 250 billion, but has, you know, a tiny multiple of that in terms of revenue. It hasn't gained that much traction despite relentless promotion through X and on social media. And that, like a lot of Elon's very wealthy friends, are invested in Xai. And the easiest way to make sure their investment is protected, just like how he made everybody who invested in his acquisition of Twitter whole, is to merge it with a more successful company that's the undisputed leader in its field, which would be SpaceX. So you put them together, everyone enjoys the upside, nobody loses money, and you crucially invest in the next Musk fundraising, knowing that he'll always have your back and make you whole.
- [54:21]
A
Yeah, the training in space thing is fascinating. I mean, the stuff that people think of, and I know Google is also thinking of doing something similar. So that, to me, thank you for offering that. That is the most logical explanation. All right, let's end on this. This IPO, SpaceX IPO, when it happens, it's going to be massive. I mean, is this, you know, in some ways a test for. Because it will be, I, I imagine it'll be the biggest IPO ever. Is this going to be a test case for what it will look like, even though it's completely different industry for what it look, what it will look like when the AI companies decide to go public?
- [54:54]
B
Yeah, I mean, we're hearing 50, potentially raising 50 billion at a 1.5 trillion valuation. It'll be a real test whether the global markets can absorb this. I mean, what are the. People are desperate to invest in all these hot private companies like stripe and SpaceX X and anthropic, and you can kind of get exposure to it by hook and by crook. But the real game changer would be if Elon's army of online fans who have propped up the Tesla share price for years, become SpaceX fans as well, because then you just have access to, you know, pools of liquidity and capital so much larger than what they've ever had access to, you know, in the past. So I think if Musk can show through the SpaceX IPO that there's huge retail demand out there through, you know, either pension funds, but also Robinhood or Revolut or however else you can invest your personal cash. That could be a real game changer because that would give the rest of these, the startups that are less mature companies the confidence that they're not going to go out there and have a real disaster. Because remember, there are a few things worse than listing seeing your stock price decline, having all of your staff demoralized because they thought, they thought their stock was worth this and it's in fact worth that. And then be out there, you know, with klieg likes being shown on your balance sheet like it's a, it can be a very comfortable thing to be private before you really have established net income. So we'll see. I mean, it's gonna, if it does go ahead in June, you know, which we're led to believe, or, you know, have, have reported out that it will be, it's going to be an absolutely blockbuster summer.
- [56:26]
A
Yeah, it'll be fascinating to watch. All right, Stephen, tell people where they can find your work and work of your team.
- [56:32]
B
Well, the Financial Times is obviously, you know, one of these legacy media instruments. We do print a new newspaper. It's salmon pink, very recognizable. But you should go to ft.com we're all over Instagram X wherever. We got a great team here in San Francisco. So I hope you have a lot of subscribers watching this show.
- [56:49]
A
All right, well, love it. I, I always love reading your work and it's really great to be able to speak with you again here on the show. So, Stephen Morris, thank you so much for coming on.
- [56:57]
B
Thank you for having me.
- [56:58]
A
All right, everybody, thank you for listening and watching and we will see you next time on Big Technology Podcast. Did you know your credit card points and miles can lose value to inflation? Credit card companies often reduce the redemption value of your points and miles. Now imagine a credit card with rewards that can grow in value. With the Gemini credit card, you can earn Bitcoin or one of over 50 other cryptos instantly with no annual fee. Every swipe at the store or gas pump earns you instant rewards deposited straight to your account. Visit gemini.com card today. Check out the link in the description for more information on rates and fees. Again, if you're looking to invest in Bitcoin but don't know where to start, the Gemini credit card makes it easy. Issued by webbing. This is not investment advice and trading. Crypto involves risk. Check Gemini's website for more details on rates and fees.