Jack Dorsey’s Block Slashes Nearly Half Its Staff in AI Bet

Summary

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Bloomberg Businessweek: "Jack Dorsey’s Block Slashes Nearly Half Its Staff in AI Bet"

Date: February 26, 2026
Hosts: Carol Massar & David Westin
Notable Guests:

• Emily Mason (Bloomberg News fintech and crypto reporter)
• Chris Miller (Author, "Chip War"; Professor at Tufts)
• Stephen Dickens (CEO & Principal Analyst, Hyper Frame Research)
• Jamie Tarrabee (Bloomberg News national security reporter)

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Episode Overview

This episode dives into three intertwining themes affecting today's economic and tech landscape:

1. Block's Massive Layoffs and AI Strategy – Jack Dorsey’s fintech company, Block, cuts nearly 50% of its staff, signaling a bold bet that artificial intelligence can dramatically reshape labor productivity.
2. AI & Semiconductor Industry Trends – Sector experts discuss the chip industry’s explosive growth, unique supply challenges, and the pivotal role of AI investments.
3. Ongoing Fallout of Jeffrey Epstein Investigations – A report on Congressional developments involving high-profile testimonies, records, and political implications.

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Section 1: Block’s Layoffs — Jack Dorsey’s AI Gamble

[03:04–07:47]

Main Discussion Points

• Block’s Workforce Cut: Block (formerly Square), led by Jack Dorsey, announces a stunning layoff of 4,000 employees—nearly 50% of its workforce.

  • The move sent Block’s stock up 23% in after-hours trading.
  • Major rationale: Integrate internal AI tools, like their proprietary “Goose” system, to increase productivity and cut costs.

• Nature and Impact of AI Tools:

  • Goose is the centerpiece AI tool enabling operational streamlining. Block hasn’t disclosed if it relies on a particular model (OpenAI, Anthropic, etc.).
  • Likely the company will continue adapting to “whatever works best for the moment,” as AI tech is evolving fast.
  • Jack Dorsey remains “hands-on” with AI strategy; believes AI can enable leaner teams and faster product iterations.

Quote – Emily Mason [03:54]:
“Jack is a technologist…He clearly has a thesis about how he can build the best products, and he thinks that he can do it with fewer people leaning on tools like Goose.”

• Layoff Details & Broader Trends:
  • The cuts appear to span across the organization, though more information is awaited from upcoming earnings calls.
  • Echoes tech industry trends, notably Elon Musk’s drastic staff reductions at X (formerly Twitter), Dorsey’s previous company.
  • Block’s move seen as “proactive,” potentially setting a precedent for broader adoption if successful.

Quote – Emily Mason [06:36]:
“They are kind of saying…we think other companies are going to have to do this and we would rather do it proactively and on our own terms…”

• Investors’ Reaction:
  • Investors reacted positively to the cost-cutting, with Block’s stock spiking.
  • Raises the question: Will other companies, under pressure to boost productivity, follow suit?

Quote – David Westin [07:02]:
“He says right in the letter he believes many companies will ultimately have to make similar moves due to AI…we'll have to watch and see.”

Notable Segment Timestamps

• 03:04 — Breaking news of Block’s layoffs
• 03:42 — Emily Mason explains the company’s AI focus
• 04:51 — Discussion on Block’s recent struggles and previous restructuring
• 06:36 — Parallel to Musk’s Twitter layoffs & potential industry-wide implications
• 07:47 — Summary: Investors approve, but long-term impact still uncertain

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Section 2: AI, ROI, and the Chip War (with Chris Miller)

[10:12–20:45]

Key Insights

• AI’s Transformative Pull on Semiconductors
  • AI has triggered record spending on data centers and chips—Nvidia benefits most, but demand ripples through the supply chain.
  • The industry faces both explosive growth and familiar supply chain vulnerabilities (notably, its continued reliance on Taiwan/Asia).

Quote – Chris Miller [11:01]:
“…the industry is supercharged, its size growing faster than ever, but dealing with some of the same supply chain choke points that it had a decade ago.”

• Cycles vs. Step Changes
  • While chip industry cycles remain, AI is causing a “step change”—a much higher baseline need for compute moving forward.
  • Historic analog: the smartphone boom and its effect on chip demand.

Quote – Chris Miller [12:10]:
“…a huge increase in just the baseline amount of chips that we're going to need for data centers driven by AI.”

• Will AI Deliver ROI?
  • AI’s returns already evident: ChatGPT and similar models are performing tasks impossible three years ago.
  • But investments must be strategically scrutinized: Are companies overspending or positioning themselves to lead the next wave?
  • Most big tech companies are betting heavily, with significant CapEx justified by the profitable margins of current AI inference businesses.

Quote – Chris Miller [13:08]:
“We've already had so much new capability generated…it's an absurd question to ask, will [AI] deliver? It already has in a lot of ways…”

Quote – Chris Miller [15:23]:
“There's no doubt that we're going to have AI as a layer that's embedded into all technology that we use.”

• Geopolitics & Industrial Policy
  • US dependence on TSMC and Taiwan remains a strategic vulnerability.
  • Policy measures—tariffs, subsidies—only slowly shift production location; no quick fix for decades-old industry dynamics.
  • Restricting advanced chips to China is likened to an “arms race” to maintain US tech advantage.

Quote – Chris Miller [18:40]:
“Yeah, I think arms race is not a bad analogy…they’re struggling to get access to all the computing power that they need…”

Quote – Chris Miller [19:55]:
“…it's just not going to move fast. And so if you want to slowly change the structure of where chips are produced, you've got a plan for years…”

Notable Segment Timestamps

• 10:12 — Chris Miller joins about the chip landscape and AI’s impact
• 11:34 — Cyclical vs. structural change in chip demand
• 13:08 — Discussion of AI’s real business impact
• 15:23 — Will every company need an AI layer?
• 18:05 — US restrictions on chip exports to China
• 19:55 — US support for Intel/TSMC: Industrial policy challenges

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Section 3: The Next Cloud Frontier — Neo Clouds and Nvidia Dependency (with Stephen Dickens)

[23:08–29:39]

Main Points

• Beyond the Hyperscalers
  • While hyperscalers (Amazon, Microsoft, Google, Oracle) still dominate, "Neo cloud" providers like CoreWeave, Volta, Lambda Labs, and Cumulus AI are rapidly expanding.
  • Neo clouds focus on “GPU-as-a-service,” catering to surging demand for AI compute not just from big tech, but an array of AI startups and Fortune 500s.

Quote – Stephen Dickens [23:48]:
“There’s also about 150 what we’re now calling neo cloud providers…building out primarily GPU as a service…”

• CoreWeave in Focus: Growth, Risks, Customer Concentration

  • Investor interest hinges on CoreWeave’s CapEx spend AND diversification of customer base (concern over concentration, especially heavy reliance on Microsoft—67% of revenue).
  • Future growth hinges on expanding into managed services and reducing revenue dependence on a few mega customers.

• Can Neo Clouds Become Hyperscalers?

  • Some, like Volta, are evolving toward hyperscaler scale and service breadth.
  • Over time, expect consolidation: “150 net down to maybe 20,” with leading Neo clouds broadening offerings and possibly joining the hyperscaler ranks.

Quote – Stephen Dickens [27:24]:
“…over time we’re going to see probably 150 net down to maybe 20 and they’re going to build out a bigger portfolio.”

• Market Outlook: Early Innings
  • Despite the hype, structured AI deployment is still rare: “first innings of a seven game World Series.”
  • Focus will shift from AI model "training" to "inference" as the market matures.

Quote – Stephen Dickens [28:51]:
“…78% of enterprises say AI strategically critical, only 37% have a structured deployment process. We’re still really early...”

Notable Segment Timestamps

• 23:08 — Analysis of Neo clouds/core weavers vs. hyperscalers
• 25:02 — The capex race and investor eyes on customer diversity
• 27:24 — Will Neo clouds supplant or join the hyperscaler cohort?
• 28:51 — Survey findings: companies say AI is vital, but few have a solid deployment process

---

Section 4: Political Spotlight — Congressional Testimony on Jeffrey Epstein

[31:51–41:11]

Key Details

• High-Profile Subpoenas and Depositions
  • Hillary Clinton testifies (behind closed doors) before a House committee probing connections to Jeffrey Epstein.
    • She maintains never having met Epstein—calls the hearings "a sideshow" and politically motivated.
  • Bill Clinton scheduled to testify next.
  • Democrats press for Donald Trump to face similar questioning, citing frequent mentions in Epstein-related files.

Quote – Jamie Tarrabee [34:33]:
“She basically had said that she'd sent a sworn statement in January that she had never met Jeffrey Epstein…this was just basically a sideshow to distract from President Donald Trump.”

• Demands for Transparency & Frustration
  • Ongoing battle over missing or withheld files related to Epstein’s investigation—a flashpoint of partisan and public intrigue.
  • Frustration over lack of broader arrests or legal repercussions in the US, and opacity around records.

Quote – Jamie Tarrabee [39:23]:
“If these files haven’t been released en masse, unredacted, then why is that?...because of the lack of transparency, for people who, if you're looking for a conspiracy, you're going to find one.”

• Political Divisions
  • The situation has stoked divisions, especially in the MAGA camp, and is likely to remain a source of political conflict and skepticism.

Notable Segment Timestamps

• 31:51 — Hillary Clinton’s testimony & context
• 34:33 — Contentious political narrative over depositions
• 36:39 — Trump’s connection, Democrat demands for testimony
• 39:23 — Broader implications, transparency, and endgame questions

---

Final Takeaways

• Block's Layoffs are a Marker in Tech: If Dorsey’s bet pays off, other companies may soon replicate the extreme, AI-driven workforce reductions.
• AI and Chips: Inseparable Futures: Investment in AI and compute will reshape industries and nations—for anyone betting against tech, the risk of missing out is high.
• Neo Clouds Rise: GPU-based infrastructure providers may soon disrupt the cloud market, but face risk from customer concentration and service diversification.
• Epstein Fallout Remains Political, Opaque: Hearings and missing files fans conspiracy—and highlight frustrations about the lack of public accountability.

---

Notable Quotes

• Emily Mason [03:54]:
  “Jack is a technologist…He clearly has a thesis about how he can build the best products, and he thinks that he can do it with fewer people leaning on tools like Goose.”

• Chris Miller [13:08]:
  “We've already had so much new capability generated…it's an absurd question to ask, will [AI] deliver? It already has in a lot of ways…”

• Stephen Dickens [28:51]:
  “…78% of enterprises say AI strategically critical, only 37% have a structured deployment process. We’re still really early...”

• Jamie Tarrabee [34:33]:
  “She basically had said that she'd sent a sworn statement in January that she had never met Jeffrey Epstein…this was just basically a sideshow to distract from President Donald Trump.”

---

For further details: Read Emily Mason’s reporting on Bloomberg.com and catch all interviews live on Bloomberg Businessweek.

Transcript

[Chris Miller]

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[Carol Massar]

Shares of Block, the company formerly known as Square, Jack Dorsey's company, up more than 23% after hours this after the news that it's cutting 4,000 employees, it's reducing its workforce by nearly half. The fintech firm is placing a bet on AI changing the future of labor productivity. Emily Mason is Bloomberg News fintech and crypto reporter. She wrote the story. She joins us here in our Bloomberg Interactive Brokers studio. I got to tell I was left speechless when I saw this headline because as I said on air earlier, you see announcements of 6%, 8%, maybe 10%, 40%, who is getting let go and why?

[Emily Mason]

Yeah, I mean, Block has invested in kind of their internal AI tools. So, like, Goose is one of the things that they're really touting.

[Carol Massar]

Is it run on? Is it run on? Do we know if it's run on anthropic or open air? Or is it.

[Emily Mason]

They haven't shared that.

[Carol Massar]

They haven't shared.

[Emily Mason]

Yeah. I imagine what they're doing, which is what a lot of companies is doing, is probably plugging it into whatever works best for the moment and, like constantly reevaluating that. But Jack is a technologist, right? So he clearly has a thesis about how he can build the best products, and he thinks that he can do it with fewer people leaning on, on tools like Goose.

[David Westin]

So does this mean that he's already been playing around with it and he's seeing the impact and so he's just saying, I can let go of these folks?

[Chris Miller]

Absolutely.

[Emily Mason]

He's definitely, like, hands on using it, and he must think that he can make this work. And I think one of the things that they're trying to communicate at this moment, which you can take with a grain of salt, as you always have to, is that this is kind of coming from a position of strength. Like, they're really proud of their financial performance.

[David Westin]

Well, what's interesting too, though, I mean, this is a Stock that's down 80% since August of 2021. So it's been under pressure, right, to do something. Is this enough in terms of cost cutting to keep this company going forward amid safe to say, an environment that has changed a lot.

[Emily Mason]

They've made a ton of changes. I think one of the concerns that people watching them had was like, they weren't shipping fast enough. Like, their products were kind of evolving, like, more slowly than people would have liked. So they've made a ton of changes. Like they've reorganized, like how people report up in the business. They've kind of done rolling layoffs. Some of them were tied to performance reviews. And then they're coming out with a really bold move. And I think I'm hoping that they don't have to let any other people go because it's never great when a company has to let people go. But we'll see if this is enough.

[Carol Massar]

And as far as who is affected by these layoffs, again, I mean, we're talking about human beings here, right? Like, getting laid off is not great. And, you know, people being out of work is obviously a challenge for those people. Are they people who are also technologists? Are they programmers whose jobs can be done with LLMs? Do we know who they are? Is it across the organization?

[Emily Mason]

I would expect that it's likely across the organization. But I am waiting to get more details on the earnings call.

[Carol Massar]

I mean, I don't know what you found in your reporting, Emily, but for me seeing this headline, reading your story and thinking, well, if this is successful for Block, and you know, Mandeep made the point of Singh of Bloomberg Intelligence, who's on our. He made the point that, hey, look at what Elon Musk did at X when he bought it formerly Twitter Jack Dorsey company. He said it was. The engineering team was over, was bloated. He cut, you know, 70% of its workforce or whatever. And it's still around. The site is still around say about it. You know, say what you will about it and look at the ad revenue and whatever, but it's, it's a private company now, so we don't have those details. But if this works for, for Block, does that mean that other companies are going to do this?

[Emily Mason]

I mean, that's certainly their thesis. Like, they are kind of saying like, we think other companies are going to have to do this and we would rather do it proactively and on our own terms instead of waiting for a moment where we have to, you know, maybe other companies do this. I think you've seen some companies implement like caps. Like they'd be like, okay, we're not going to hire more people. We can do a lot more with the people we already have. I think cutting such a significant amount of people is a pretty dramatic step.

[David Westin]

Well, it's, I mean, he says right in the letter he believes many companies will ultimately have to make similar moves due to AI doesn't just say companies in his space. He's just saying that the majority of companies will reach the same conclusion and make similar structural changes. And I guess, you know, we'll have to watch and see. Like you do wonder is this a sign where other, you know, CEOs are going to go back and be like, wait, if this is what these guys are doing, like, are we going to be doing the same? All right, I think we have to wrap. I feel like there's going to be a lot more questions and we're going to have to watch this one. Bottom line, though, investors are kind of lo it. You cut costs and, you know, if there's still growth going forward, investors like it stocks up about 22 and a half percent here in the aftermarket.

[Carol Massar]

Emily Mason. She is Bloomberg News fintech and crypto reporter. Check out her reporting in the entire team's reporting on the Bloomberg terminal [e-mail] stay with us. More from Bloomberg Businessweek Daily coming up after this.

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[David Westin]

Hey, I gotta say that there are moments in time like today with all the spend and build out and companies doing things related to AI and questions around the return on investment, the ROI and the impact of artificial intelligence that we kind of wish we could pull out that crystal ball and see a little bit into the future.

[Carol Massar]

I think it's fair to say Chris Miller saw something years ago. He's the Author of the 2022 bestseller Chip War the Fight for the World's Most Critical Technology. He joins us from Pittsburgh this afternoon. Chris, it's good to have you back with us. Carol and I were just talking and you know you wrote this book close to four years ago. this point. How different is the world of semiconductors and the world's reliance on semiconductors now than when you wrote the book?

[Chris Miller]

Well, I think the key difference is just the scale of spending that we've got right now on building data centers and buying all of the chips that are required inside of them. Nvidia first and foremost. But not only we've seen companies transformed by the datacenter build out, but in a lot of ways not much has changed other than that we're still sourcing our key semiconductors from Asia and above all from Taiwan. And so the industry is supercharged, its size growing faster than ever, but dealing with some of the same supply chain choke points that it had a decade ago.

[David Westin]

You know, we talk a lot with one of our brilliant voices on the chip world and that is our own Ian King, who has seen a lot of cycles, the ups, the downs, and we talk a lot about that supply demand imbalance and what happens when there's a lot of demand, there's not enough supply, the buildout continues, the investment supply goes up and then there's a glut. So I'm just curious what your view is when it comes to the cyclical nature of the semiconductor world. Has I changed it or we will see also an overbuild and oversupply and then a glut.

[Chris Miller]

I think if you look historically, certainly you see cycles up, cycles down, but there are moments when you see step changes in terms of demand for certain types of chips. We saw that with smartphones, for example, there was no demand for smartphone chips. And then now everyone needs a new smartphone every couple of years. And what we're seeing right now is that type of step change, a huge increase in just the baseline amount of chips that we're going to need for data centers driven by AI. And so I think we shouldn't expect cycles to be over. Certainly there'll be ups and downs in the future, but it's now very clear, I think, that we're just going to need a lot more compute for AI purposes in the future, and as a result, we'll need a lot more of the AI chips that go inside of data centers.

[Carol Massar]

In your view is the promise that many people think AI is supposed to deliver? Will it, will it actually be delivered? Like, what's the future that you envision after all this capex is spent?

[Chris Miller]

Well, I think it's in some ways funny when we ask, will I deliver? Because if you look just three years ago, even after ChatGPT was released, there are so many things that were not possible that are possible today, whether it's the number or the scale of hallucinations and answers that chatbots give you, or the scale of work that you can put together today that just wasn't possible in the past. We've already had so much new capability generated just in the couple of years since ChatGPT that in some ways I think it's a, an absurd question to ask, will I deliver? It already has in a lot of ways, but I think I understand why. There's plenty of questions about what? About the investment that's happening right now. Will that investment pay off? And I think there are reasons to think carefully about how much each company is putting in over what time horizon. But I guess when I, when I zoom out, I ask myself, do I want a world in which there is more access to compute or less? And it seems to me that we should, rather than being concerned that there's too much compute being put in the ground, be excited that there's actually companies willing to invest in the infrastructure that's going to deliver all these capabilities.

[Carol Massar]

Well, I think it's an important question to ask for a few reasons, and one of those is because if you look at just the CapEx that these companies are spending, you know, one company, $200 billion in a single year, that's a big commitment, and that's something that they have to convince investors that is money that is going to the right place. That's money that has to be earned back. Plus on companies coming to a hyperscaler and saying, yes, we think that this money is not only being well spent, but then we can use this compute to actually create a product that will provide a return on investment. So yes, we've seen a lot of the hyperscalers benefit the, you know, the anthropics and the open AIs and the mistrals. Like that's amazing stuff. But at the end of the day, there are a lot of companies that are not necessarily technology companies that maybe aren't yet necessarily seeing an increase in productivity as a result of these tools. So my question is, do those companies start to see that, do we live in a world where this is a layer, just like the Internet was a layer of technology?

[Chris Miller]

I think there's no doubt that we're going to have AI as a layer that's embedded into all technology that we use. And when I look at the economic question, I say first off, is it profitable to serve AI systems today, not train the next generation, but serve today's? And if you listen to what's publicly reported about OpenAI or Anthropic, their margins on their inference business are, are not just positive, but, but quite good. And so that I think is pretty strong evidence that the delivery of already existing AI services is a pretty profitable business. The next question is, should we be investing in R and D in the next generation? Which is of course very, very expensive, but I think it's hard to argue we should dramatically slow down R and D. And I just given all of the extraordinary improvements that we've seen over the past couple of years and in terms of capability and so when you start breaking it down and ask which specific investment do we think is excessive? Which specific investment would rather not be doing? Would you really like to be the CEO of the only big tech company that's not investing in AI? That doesn't seem like a very comfortable place to be. And I'd rather have a situation in which the big technology companies are investing more rather than putting money in the bank or buying back their stock because they didn't have any profitable investment opportunities.

[David Westin]

Well, you know, I would say Apple's doing it differently and I guess time will tell whether or not their approach works out. Chris, I am curious to, you know, who do you talk to? What research do you follow? What are the leading voices? What are the leading companies that you watch to figure out kind of how the semiconductor space is evolving? I mean, we still know TSMC is still the big manufacturer of all chips in the world, and there's geopolitical tensions to that. But give us an idea of where do you think kind of investors and just the world at large need to be focusing their, their attention on when it comes to the semiconductor world. Is it Nvidia? Is it China? Is it something else?

[Chris Miller]

I think the hard problem is that it's all of the above. And we've seen this play out in the GPU supply chain over the past couple of years, where you've had shortages in different types of components, different materials, and the memory chips that go next to GPUs and AI servers. Each part of the supply chain has had to dramatically ramp up its production capacity to respond to this surge in demand. And so if you only look at one part of the supply chain, you miss the. The challenges that other parts are often facing. And so it's the chip designers, it's the chip makers, but it's also the materials suppliers, which are often not even thought of as being semiconductor firms, but produce many of the capabilities that are critical to actually manufacture the chips and servers that we need.

[David Westin]

Do you think the world, or do you think the US specifically does need to be restricting sales of its most sophisticated chips to China or on others? I mean, we did see Nvidia, they still face some uncertainty in China. That's their largest market, or which it is the largest market for chips. The government granting some licenses to ship a small amount of some of its processors to customers there. But Nvidia is not sure if the Chinese government will give its approval. So there's still some back and forth here, but is it still an arms race of source? Arms race of sorts? Excuse me.

[Chris Miller]

Yeah, I think arms race is not a bad analogy. When you listen to tech CEOs, they'll speak in the same language. They're struggling to get access to all the computing power that they need, that they envision needing more tomorrow than they've got today. And if you listen to Chinese technology leaders, what you'll hear from them is challenges in getting access to computing power. And the primary reason they've struggled to deploy AI products at scale is because they've struggled to get access to all of the computing capabilities. And it's on a regular basis. We see new Chinese models launched that can actually be deployed at scale because they don't have access to the advanced chips that they need. And so this does, I think, seem to me that this is still a very powerful card that the US has to play. And so I think we should be very careful or on any decisions to give China more access or at least make sure that you're getting something in exchange for that.

[Carol Massar]

On that, Chris, the U.S. support of TSMC and the U.S. support of intel, different types of support. And I guess you could call the TSMC1 encouragement to build here in the United States. What is the right industrial policy to reduce reliance on companies outside of the U.S.

[Chris Miller]

well, it's a really hard problem because TSMC is such a capable and efficient manufacturer in their home base in Taiwan. But I think the US Government is right to say that we need a more diversified manufacturing base for the world's most important semiconductors. I think we've learned over the last couple of years there's, there's no silver bullet. President Trump's tried tariffs that comes with obvious downside. President Biden tried to subsidies that work to a degree, but only to a degree. Here's the reality. The chip industry has involved hundreds of billions of dollars of capex over the last several decades. And so it's just not going to move fast. And so if you want to slowly change the structure of where chips are produced, you've got a plan for years of years of implementation of measures designed to shift the economics of the chip industry.

[David Westin]

All right, going to leave it there. Chris Miller, thank you so much. Good to check in with you. Professor of international History at the Fletcher School at Tufts University, author of Chipboard joining us on this Thursday.

[Carol Massar]

Stay with us. More from Bloomberg businessweek Daily Coming up after this,

[Karen Moscow]

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[Stephen Dickens]

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[Chris Miller]

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[David Westin]

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[Emily Mason]

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[Stephen Dickens]

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[Carol Massar]

I want to bring in Stephen Dickens, CEO and principal analyst of the tech researcher and advisory services firm Hyper Frame Research. Stephen, good to have you on the program. You follow this company, among many others, very closely. We did hear yesterday from Nvidia that they pointed out in that earnings report that about half of revenue for data centers is coming from not the hyperscalers. So my interpretation of that was, okay, maybe it's the Core weaves of the world. How do you look at that? You're nodding, you're nodding. Okay, that's a good sign. How do you look at what Core Weave is going to report in the context of yesterday's Nvidia report?

[Stephen Dickens]

So thanks for having me on the show. I mean, you talk about the three, arguably four hyperscalers. You could include Oracle in that. Now, obviously alongside names like Microsoft, Google and Amazon's AWS. Obviously those guys have been consuming as many GPUs as Jensen and the Nvidia team have been able to produce. But there's also about 150 of those what we're now calling neo cloud providers that we're tracking. This is names like Nebia, Volta, Core Weavers, as we mentioned. This is Lambda Labs, this is Cumulus AI. There's a whole raft of these players and what they're doing is building out a primarily GPU as a service based model. But then you look at people like Volta, you look at Core Weave, they're trying to expand and come up the stack to be more of a sort of full service cloud platform to be able to service not just GPU centric workloads, but also provide an alternative to some of those three or four big names that have largely had the market to themselves over the last 20 years as Cloud has matured.

[David Westin]

All right, so then we want to see Core Weave with a big capex, right? A big spend because that's how they get there. And we might be a little freaked out by the spend at some point because it takes a little time for all that to pay off. But that's what you want to see longer term.

[Stephen Dickens]

Well, so I think what I'm looking for is capex is what's going to get the headline. The key metric I'm looking for Core Weave to talk about after the bell today is what they're seeing from a customer sort of volume and numbers. There's been a lot of chatter around Core Weave having concentration risk. They supply obviously into OpenAI and a few of those other big Frontier LLM sort of model and training. What I'm looking for is for them to give guidance, whether it's guidance, whether it's as part of the investor deck. How many other customers we've heard that Coreweave has had exposure to probably 80, 80% plus of their revenue coming from four or five customers. What I'm looking for on a key metric that I'm going to be looking to track is what is that sort of diversification of their customer base. I'm looking for this to be starting to be used by Fortune 500 companies. I'm looking for this to be infrastructure to be sold out to other Neo clouds and kind of sold through other routes to market. I'm looking for them to be really able to say we're not as concentrated and not as exposed to the likes of OpenAI and some of the headwinds and, and machinations that might go on with those guys.

[Carol Massar]

Yeah. To that point, Stephen, if you look at the supply chain analysis function on the Bloomberg Terminal, Core Weave's biggest customers, Microsoft Meta platforms, Alphabet, IBM and Cloudflare and Microsoft, at least according to the supply chain function, 60, Microsoft, 67% of Core Weave's revenue. So that is some serious concentration risk. I have a question about hyperscalers versus NEO clouds. Certainly they're different in what they offer in like managed services versus just the actual infrastructure. But is there would there ever be a point where a NEO cloud could grow so big it could turn into a hyperscaler or would it not do that because it doesn't have the same managed services that like an AWS or an Azure offers.

[Stephen Dickens]

So you look at somebody like the team at Volta, we spend a lot of time chatting to those guys, what their sort of global footprint coming up the stack. I'd have them in that middle ground between a NEO cloud and a hyperscaler. I think as the Neo clouds look to build out and add more services to surround that GPU centric workload, whether that's database as a service, kubernetes based services, lots of things you can sort of from a technical level put around that GPU centric offering as they do that I think over time we're going to see probably 150 net down to maybe 20 and they're going to build out a bigger portfolio. So I think it's not an either or. You're going to see those Neo clouds look a lot more like hyperscalers as this market evolves.

[David Westin]

Hey Stephen, just got about a minute left here. In another week, in another couple of weeks or so. And just like 2026, we've seen the AI scare trade where we see a lot of questions about the spend, the build out. Too much different research folks speculating about where we believe for two years and the impact on society. What do you think is the smart conversation right now? And forgive me, just got about 40 seconds seconds here.

[Stephen Dickens]

So based on some research that we're conducting that's about to drop next week, 78% event surprises say I strategically critical, only 37% of a structured deployment process. We're still really early. This is the first innings of a seven game World Series. What this market's got a long way to run and inference is going to be where this market pivots to. We've seen training inferences where it's going to be next.

[David Westin]

All right, so relax for the moment.

[Stephen Dickens]

Absolutely.

[Carol Massar]

Hey, let's think relaxing and chill.

[David Westin]

Carol, come back. Yeah, exactly. Hey, come back when that research is out. We'd love to dig a little bit deeper too. With you on that, Stephen Dickens, CEO and principal analyst of the tech researcher and advisory services firm Hyper Frame Research, joining us.

[Carol Massar]

Stay with us. More from Bloomberg businessweek Daily. Coming up after this,

[Karen Moscow]

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[Chris Miller]

I'm Barry Ritholtz inviting you to join me for the Masters in Business podcast. Every week we bring you fascinating conversations with the people who shape markets, investing and business. CEOs, fund managers, billionaires, Nobel laureates, traders, analysts, economists, everybody that affects affects what's going on in the market. Whether you own stocks, bonds, real estate, commodities, crypto. You really need to hear these conversations. Sometimes it's behaviorists like Dick Thaler or Bob Shiller. Sometimes it's fund managers like Peter Lynch, Bill Miller, Ray Dalio. Sometimes it's authors Michael Lewis, author of the Big Short and Moneyball. Regardless of the conversation, these are the folks that move markets each week. That's the Masters in Business podcast with me, Barry Ritholtz. Listen on Apple, Spotify or wherever you get your podcasts.

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[David Westin]

Hey, we've been watching a lot. When it comes to what's going on in the world of Jeffrey Epstein, the relationships as everybody seems to try to connect the dots on that. Former secretary of State and former first lady Hillary Clinton in a closed door testimony deposed by committee staff of a House committee investigation on Jeffrey Epstein. It happened in Chappaqua. It's in upstate New York. It's where she has a home with her husband, of course, former President Bill Clinton. He is set to face questioning on Friday. Meantime, House Democrats today demanded President Trump follow the Clintons in testifying to congressional investigators on ties to the disgraced financier Jeffrey Epstein. We do want to head to the Bloomberg News Washington, D.C. bureau and to Jamie Tarrabee. She is Bloomberg News national security reporter. Jamie, good to be checking in with you again. A lot continues to come out around Jeffrey Epstein and any ties to people, people with a convicted pedophile, his relationships unwinding. What is significant or what is just random is the process that you and I feel like the rest of the world is kind of dealing with today. Tell us a little bit about the process before we get into some of the news events of the day.

[Jamie Tarrabee]

Well, so the Republican majority of the Oversight Committee has been sending subpoenas to all kinds of people who might be tangentially related or directly connected to Jeffrey Epstein and his sort of web of finances that help fuel his sex trafficking operation. People who have already appeared before the committee or have sentenced sworn statements include former Attorney General Bill Barr, James Comey and and you know, last week we had Les Wexner up in Ohio getting grilled by Democratic staffers of the committee. So this time it's the Clintons. They had been putting off or trying to, they wanted, they wanted to have a public deposition or public hearing because they said they had nothing to hide and because they, the committee basically said if you, we will hold you in contempt if you refuse. And they said, suspected that the Democrats in the House would have actually agreed to pass a vote of contempt. So the Clintons eventually yielded, and here we are. It's the first time a president, a former president, has been called to answer to a subpoena post office, but it is very, very rare.

[Carol Massar]

Do we have any information at this point about what. And the president, the former president is scheduled for tomorrow. But do we, do we have any information about what the Clintons have said or plan to say thus far?

[Jamie Tarrabee]

Well, Hillary Clinton released a statement this morning. She was very defiant about sort of the need to have her come out and, and do all of this. She basically had said that she'd sent a sworn statement in January that she had never met Jeffrey Epstein. So there was really no reason for her to be talking. She said this was just basically a sideshow to distract from President Donald Trump. So it's very interesting because the Republicans for the committee have said that they expect today to be a very, very long day and that tomorrow will be even longer. So what they're going to do regarding their questioning of Hillary Clinton is going to be really interesting. There are obviously some very rare connections of her with Ghislaine Maxwell, the sort of the former girlfriend, companion of Jeffrey Epstein, who's serving her own jail sentence at the moment. She, in fact, attended Chelsea Clinton's wedding as the guest of a friend of the former president. So that's, that's at least one instance where they've crossed paths. And you know, Jeffrey Epstein and Ghislaine Maxwell had had some workings and participation in the Clinton charity. So that, that will also come up as well. But she's, she's very, her, her statement was very defiant. She said, we have tried repeatedly to answer your questions. You are, you really want a sideshow, you want a political circus. And it's, they're basically saying it through a partizan lens, and that's really how they're treating it.

[David Westin]

Jamie, one thing we want to ask, and this was a story of yours, I think you had one earlier in the week and then kind of an update today that House Democrats are demanding that President Trump testified to congressional investigators on ties to Jeffrey Epstein. We should point out that Both President Trump and the Clintons have denied any knowledge of Epstein's criminal activities. As for President Trump, his name comes up a lot, I don't think, you know, we all know in the Epstein files. There's also been a lot of attention to some reporting by the, by NPR to this past week when it comes to President Trump. Tell us what more about why Democrats want President Trump to testify.

[Jamie Tarrabee]

Well, as you said, and this is something that the ranking Democrat, Robert Garcia, said today. He said the only person whose name, or maybe not the only person, but one person whose name comes up more often than President Bill Clinton is President Trump's. And so he would like to see President Trump now also appear before the committee, if President Clinton can do so as well. Well, they also said that they believe that they were, they saw 50 files or records related to this case involving a woman who was a minor when she alleges that the president abused her in some way. We don't have details of that. The Democrats have said that the archive manifest shows that the DOJ took those files out and haven't, haven't returned them. And, you know, the, the DOJ is basically saying those are documents that were taken away and will be returned. But, you know, this is literally a very partisan fight at the moment over the existence of these documents and whether they will actually be returned, whether they'll be released to the public or not.

[David Westin]

But there are missing files.

[Jamie Tarrabee]

There are missing files. According to the reporting and according to, according to what the Democrats are saying, the DOJ says that the files are not missing. They have been removed for particular reasons. So, you know, this is, this is such a political story in so many ways. What was very interesting was that when reporters asked the Republican chair today whether President Trump ought to be brought for questioning as well, he didn't close the door on that possibility. And one thing that I thought was really interesting is that he himself, Jim Comer, the chairman of the committee, said that there was, there was a possibility that the name of Howard Lutnick, the current Commerce Secretary, would, would come up today. And Representative Nancy Mace, who's a Republican, said that she was expecting to ask questions regarding Howard Lutnick as well. So it's just really curious what, what's happening today. And, you know, like, we're watching the same as everyone else to see what develops.

[Carol Massar]

You know, I'm glad you mentioned this is a political story, Jamie, because I'm wondering about repercussions or consequences for people who, like, you know, what is the end game here for people who say, ok, we need to understand what's in the Epstein files. Because at least here in the United States, apart from Guylain, Maxwell and Jeffrey Epstein himself, there haven't been any arrests in the U.S. it's not the case for outside of the U.S. and certainly some people have lost their jobs and some people are stepping down from positions because of their association with Jeffrey Epstein. But what is the end game here?

[Jamie Tarrabee]

I mean, that's a really great question. We have seen, as you said, arrests overseas. And here we've seen people resign their post, very prestigious post, and step away or, you know, sort of relinquish the spotlight in a way. The problem with all of this is, you know, it becomes this whole, you know, the accusations of a cover up that really start to take steam. Because if these files haven't been released en masse, unredacted, then then why is that? And you had elements within the Trump administration who prior to coming into government were very forceful about having those files released and to have that kind of transparency and scrutiny. And now they're really kind of pulling it back. You remember that FBI Director Kash Patel testified in front of a congressional committee saying that he didn't see any evidence of anyone else being involved in the Epstein trafficking operation. And so now he, you know, there's discussions about bringing him back to sort of speak to those statements because the release of the documents has been so fragmented because some names of people who are not victims and minors have been redacted because of the lack of transparency for people who, if you, if you're looking for a conspiracy, you're going to find one. And I don't know if anyone will ever actually be truly satisfied.

[David Westin]

Right.

[Jamie Tarrabee]

But what it has done is it's really caused a division amongst President Trump's supporters, particularly on the MAGA side, who have been sort of convinced of a deep state conspiracy here. And it's very unclear if they will be ever happy with whatever ends up coming out.

[David Westin]

Yeah, very tricky, right? And putting the pieces together. Jamie, thank you so much. So glad we could catch up with you. Bloomberg's news national security reporter Jamie TERRABY There in D.C. this is the Bloomberg

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[David Westin]

This is Scarlet Fu and I'm Paul Sweeney inviting you to join us for the Bloomberg Intelligence Podcast. Every day we harness the power of Bloomberg Intelligence to bring you deep dive delves into the companies that are moving markets from publicly traded companies like Apple to those that are privately owned but known by everyone on Earth like OpenAI. Now I helped to build Bloomberg Intelligence to what it is today. Scarlett and now our analysts are the best in the world covering more than 2,000 global companies. That is your legacy Paul and we speak to those in house experts every day. They are Bloomberg's go to authorities on sectors, companies and legal processes and we do it all live each week. Weekday then bring you the best conversations in our daily podcast. So be sure to search for Bloomberg Intelligence on YouTube, Apple, Spotify or anywhere else you listen. Listen in the afternoons on your way home from work to catch up on the market news you missed during the business day that is the Bloomberg Intelligence Podcast. I'm Scarlet Fu and I'm Paul Sweeney. Subscribe today wherever you get your podcasts.