Ed Ludlow (3:27)

All four have the capital expenditure story in common. Alphabet, Amazon and Microsoft, they have the cloud growth metric in common. Azure grew 40% in the quarter that briefing modest acceleration of cloud growth in the second half this year. Matter is the outlier. It is down 9% on one point on track for its biggest drop since October. It told us the capital expenditures up to $145 billion this year. It gave us an outlook for sales that was in line with consensus. But then there was not that one extra metric about how AI is being justified, how the payoff is translating for them with that go to market.

Caroline Hyde (4:06)

Yeah, let' try and translate therefore because yesterday's frenzy and offered a glimpse at just how some of the world's biggest tech companies are doing in AI. And this is what some of the big tech leaders had to say post

Brad Erickson (4:15)

earnings release Looking ahead, our ability to

John Collison (4:21)

invest in this moment and stay at the frontier, you know, I think puts us in a strong position and I think we are doing it based on tangible demand signals.

Brad Erickson (4:33)

We are seeing nobody has a better

Mark Gurman (4:36)

set of chips across AI and CPU

Brad Erickson (4:38)

work and us with training and graviton

Ed Ludlow (4:41)

and we're unusually well positioned for this inflection.

Brad Erickson (4:45)

We're in the early stages of experiencing

Caroline Hyde (4:47)

from CEOs to the investor. Take Ayaka Yoshioka, that's portfolio consulting director at Wealth Enhancement Group who I'm pleased to say has exposure to all of the four names. I okay, let's start with the winner. Alphabet blew the market away. Is it justified the increase in spending?

Ayaka Yoshioka (5:02)

Absolutely. You know they continue to see this exponential demand in AI whether it was through Google Cloud or through their backlog, doubling quarter over quarter. So yes, the spending is definitely justified and they've been doing a great job of being a low cost token provider for AI. So we continue to think that there is some momentum here with Alphabet and

Caroline Hyde (5:28)

in many ways that's because of the vertical integration one that is replicated over at Amazon and we're seeing a huge backlog, more than $360 billion worth of of coming to business for Amazon. And what did you make of Amazon's numbers in the flywheel effect? Sure.

Ayaka Yoshioka (5:44)

Now it's great to see that acceleration in US Growth, I mean we're talking big numbers here. And so to see an acceleration of us growing 28% year over year versus last quarter's 24%. We haven't seen these kinds of acceleration in these growth rates from us in quite some time. And so it's really nice to see and it really sort of doubles down on the demand that everybody is seeing on the air front.

Ed Ludlow (6:12)

MG give me the capital expenditures numbers for all four and let's show shares of Nvidia. And Ioko explained this to me. Right. The overall CapEx environment has been raised for 2026 in video which you think would be the biggest beneficiary is down 3 1/2% in the session and one of the biggest points drags at the index level. Why?

Ayaka Yoshioka (6:35)

So I think there was so much conversation yesterday regarding, you know, whether it was training and Graviton, Google Talking about their TPU's, you know, custom silicon and you know, the, the sort of shift as we move more towards inference that is really going to be a benefit to, you know, things like companies like Broadcom. Right. And so I think perhaps people are thinking that Nvidia isn't going to be the beneficiary as this infrastructure continues to build out. But I do think Nvidia is going to be the base layer here and you're going to continue to need to build out those large language models. You're just going to get that added additional benefit from CPUs as well going forward.

Ed Ludlow (7:22)

So I wanted to take that sort of half time pause before we move on to the other two, Microsoft and Matter Microsoft, I guess it was an issue of language. Right. They showed 40% Azure growth and said modest acceleration into the second half of this year. The stock is actually down more than, than you might think it would be.

Ayaka Yoshioka (7:41)

Absolutely. With Microsoft, you know, I think it was still a very solid earnings growth number and it's, you know, it got caught up in a lot of the software downdraft that we saw in the first quarter of this year. But Microsoft is continuing to deliver solid earnings. We think that, you know, this is a great opportunity to continue to own these shares and that acceleration you'll see in the back half. I think Copilot is, you know, one of the AI use cases in which enterprise are going to gravitate towards first and so we continue to think there's some, some value there.

Caroline Hyde (8:22)

So you would be adding to Microsoft in this weakness because actually it was one of the only names that was down on the year leading into these numbers.

Ayaka Yoshioka (8:30)

Absolutely. I mean, you know, I think the biggest issue for all of these companies is the free cash flow numbers. You know, as the capex spend continues to rise, you know, despite these double digit revenue growth numbers that they're posting seeing along with solid profit margin expansions, the free cash flow continues to sort of dwindle. And I think that's the biggest issue in terms of how much do you pay for these companies as that free cash flow continues to be pressured and how long will it continue to be pressured?

Ed Ludlow (9:03)

Okay, so let's the three of us try and unpick what happened with Matter. The stock's down 10% on track for its biggest drop since October 30th. The outlook for revenue in the current period was a range of 58 to 61 billion dollars. Basically bang in line with consensus. And then there wasn't another number, right? There wasn't another metric that said all of this investment into AI is paying off.

Ayaka Yoshioka (9:28)

You know, I think we saw some nice numbers in terms of ad pricing. You know that was up 12%. And so I think it was, it was solid but not great. I think it wasn't a blowout or some sort of acceleration there. And then we haven't had some great efficiency numbers or any kind of quantifiable tangible numbers coming out of News Spark and what that means. So you know, just, I think there's a little bit of impatience relative to investors for Metta but I think that that's going to come around and again matters in control of that capex spend so they can dial it back if they need to. I think the higher capex spend does reflect a lot of the additional costs that you're seeing from an input perspective whether it's energy or memory chips, those are all flowing through. So I'm not sure they're intentionally spending that much more. I think a lot of this is that cost a push that is impacting CapEx spend. Yes.

Caroline Hyde (10:31)

Susan Lee, talking about those component prices, I could push us forward. You also an Apple. Apple comes after the bell. Look, can they show some resilience that they can compete in the air space even if they're not having to invest in the same sort of way?

Ayaka Yoshioka (10:46)

Yeah, I know Apple's been a great follower in technology, right. They, they tend to perfect the user experience when it comes to new technology. And so we continue to think that they're working on that whether it's with new enhancements to Siri and you know we do think that they continue to be very diligent when it comes to their free cash flow. And you continue to see that they're not spending as much when it comes to this arms race for AI.

Ed Ludlow (11:19)

Ayako Yoshioka from Wealth Enhancement Group, thank you very much for joining us on Bloomberg Tech. Another story out of Asia overnight, Samsung shares actually kind of modestly lower, down 2%, but record profits over the March quarter. In fact, we're talking about the chip division where profit soared 48 fold. It's a story about spending, just as we've been discussing, but also what Bloomberg's now calling the memory chip super cycle. Samsung exposure to both on the fab side, on the memory side as well. Shares kind of in Korea, pretty muted car.

Caroline Hyde (11:51)

Now Qualcomm's got exposure to both. And this is a story of trying to pivot into the world of AI spending and more away from the complete exposure it had to. Mobile phones up 17%. It's not down after hours. The volatility is extraordinary. We've all focused on this mystery. Leading hyperscaler customers, custom silicon engagement that they've got that they say is on track. Initial shipments later this calendar year. This is the pivot that many want to see in the investor base. Yes, you're in automotive. Yes, you're in the phones. Yes, you're in the IoT space. But are you in data centers? They're saying they're going to be soon. And look, the CEO Cristiano Amon is going to be joining us later this hour to tell us a little bit more. What a ride. Now coming up, we're also going to be diving into Anthropic's ride, the push to ramp up fundraising, weighing a fresh round that would value the startup more than $900 billion. That was your conversation that you had with Anthropom. Well, you've been helping focus on top, but you also be having a conversation with the strike president, John Collison. After the company announced new AI tools and a new partnership with Google, There's a Bloomberg Tech.

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Ed Ludlow (15:56)

Anthropic has begun weighing a fresh funding round that could value the AI developer at more than $900 billion, according to sources potentially overtaking longtime rival OpenAI as the world's most valuable AI startup. Bloomberg's Natasha Mascareness, part of the team that broke the story with us, now I think we've got to be very specific with, with this. This is investors going to Anthropic and saying, let's do this, but take that and give us the details that we have so far.

Natasha Mascarenas (16:27)

Yeah, sure. So last week we talked about unsolicited term sheets getting headed Anthropic way at around an 800 billion valuation, which we said Anthropic rebuffed.

Ed Ludlow (16:38)

They basically said, no, thank you.

Natasha Mascarenas (16:39)

Exactly. The update now is that Anthropic is actually engaging in those conversations at a 900 billion valuation even higher, but no term sheet has been signed. So this is not one of those deals where we expect to see a press release the ink dry by end of day. This is one of those deals where Anthropic is hearing these offers and is responding to the investors that have approached them. And it comes in the backdrop of, you know, Google and Amazon putting tons of capital into Anthropic at around a 350 billion value valuation. So to me, this is a really interesting example of there being kind of two tails of capital raising at the same time.

Ayaka Yoshioka (17:20)

Yeah.

Caroline Hyde (17:20)

Natasha, why the change of heart? Is it a change of heart? Is there a need that before they could tap the public markets, because we're all been talking about an IPO for

Natasha Mascarenas (17:28)

this year, you know, it's, it's pretty much the standard dance in a fundraising these days is how I see it, when investors approach a company with an offer to invest a million, things could be, you know, wrong, so to speak. It could be the wrong investor, the wrong price. With Anthropic, we all know very clearly that they need capital to fund their compute needs. It's why they've brought on so many strategics. It's also what financial investors are frankly, you know, taking advantage of by saying, listen, we'll come to you before you go public. We'll offer you a fresh, you know, tranche of capital, get it all ready and then go public. And so is it a change of heart? I would say yeah. It's different than them completely ignoring the offers. These are serious investors that are approaching them with real capital offers. The next thing to break is who they'll accept and at what price. Like we said, right now it's at above a 900 billion valuation, which if accepted, would surpass their biggest rival, OpenAI.

Caroline Hyde (18:26)

Natasha Mascaren is great reporting alongside colleagues, including Ed. We appreciate it. Now, sticking with Anthropic, the National Security Agency has been testing the startup's new AI model. Mythos defines cybersecurity vulnerabilities in popular software, including Microsoft products. Now that's according to a U.S. official and a source who say that NSA officials studying the Mythos model, well, they've been impressed by speed, its efficiency in searching for potential security flaws that White

Ed Ludlow (18:52)

House officials have spent months, months preparing. A memo that outlines requirements for AI deployment by national security agencies. Sources help Bloomberg the wide ranging AI policy will touch on issues that have been at the center of the feud between the Pentagon and Anthropic. Let's get more with Bloomberg's Maggie Eastland in D.C. maggie, what are you reporting?

Natasha Mascarenas (19:14)

Yeah, again, Ed, as you said, the White House is preparing this national security memoir. It aims to essentially set one standard for how a swath of agencies can work with and contract with AI companies. But what's especially interesting is it addresses each of those key fault lines that we saw come up as Anthropic and the Pentagon were in this very tense feud that resulted in a legal supply chain designation.

Caroline Hyde (19:41)

So the fault lines, let's dig in. Does this end up allowing federal agencies a workaround here, an ability to keep on using anthropic technology?

Natasha Mascarenas (19:52)

Some officials said that they do view this as a workaround. Now one senior official that we talked to disputed that. But the key, one of the key terms here is this idea that it directs agencies to diversify the model companies that it's working with. Now some view this as a way that the Pentagon could be drop some of the more extreme legal measures that would force it to fully excise Anthropic and instead point to this memo which says that the supply chain risk can be dealt with simply by working with other AI providers, which the Pentagon is already doing in its agreements with OpenAI and X.

Caroline Hyde (20:28)

Totally fascinating reporting. Bloomberg's Maggie Eastland, thanks for bringing it. Now to another closely watched AI story. Elon Musk is set to take the stand again today today in his lawsuit over OpenAI's pivot from a charity to a for profit business. That Elon Musk became visibly irritated during cross examination Yesterday, clashing with OpenAI's lawyer over the exact amount he contributed to the startup. Now the billionaire is set to wrap up his testimony today. And we followed by his longtime, well, maybe we call him fixer and neuralink CEO Jared Batchelor.

Ed Ludlow (21:05)

Stripe is partnering with Google to let businesses transact inside of AI Mode and the Gemini app. This was part of a slew of announcements made at Stripe's annual customer conference. We caught up with Stripe president and co founder John Collison.

John Collison (21:19)

I think when people talk about this, it seems really far off. And maybe part of that is, you know, the, the examples people give almost sound incredibly far off, where it's like, oh, I'll just have my agent plan my entire summer vacation. You know, in France, you know, planning the summer vacation, you want to do that yourself. Whereas if you say, okay, you just give your AI, this is the recipe I'm making tonight. Buy the things I don't have in the fridge already. Like, that's the kind of delegation that, you know, people are much more comfortable with. And so we think people and AI services will kind of work, work their way up the trust curve, where again, it's already the case that the research you're doing, the research you're doing, you do with an AI app. You're probably still confirming that directly, but it might get to the case where you're allowing the AI to make small decisions for you and especially as it gets to know you. And so again, on the developer side, imagine you're building a website and you need a hosting provider or you need to buy a domain name for it today. It's the case that you go and you like, find the domain name buying service yourself and you go fill out the department, everything like that. You just want a domain name. You can get it from multiple providers. You'd probably be okay with cloud code or Codex or Cursor, you know, whatever you're using, actually choosing how to buy a domain for you. And so it's already the case that people are doing a lot of interactive buying with AI where they're improving. The final step, we think people are already starting to a little bit in a huge amount of what we announced today is those little decisions, people are delegating them to the eyes. Buying a domain name, again, it's the example I would give. And then as they start to see that it works really well, people will just give them more and more rope.

Ed Ludlow (22:57)

Google has not historically led in payments. The partnership that you've been through today and the changes of integrating stripe into AI mode and Gemini, does that change their fortunes in that market?

John Collison (23:12)

I mean, I think Google has done a phenomenal job in commerce generally. And I mean, again, Google pay is very large and successful within the Android ecosystem. And so I don't think that would be quite a fair characterization. I think they've done a phenomenal job enabling commerce. And again, this is a new tool in the toolbox for them where now they're enabling within Gemini these amazing agent commerce experiences, which again, we think just has to be the future. Because it's so much more convenient for consumers. That's never been the case in technology. When you get a way more convenient way of working for consumers, they pick the less convenient one. It's never happened.

Caroline Hyde (23:47)

That was Strike president co founder John Collison. Great interview, Ed. Now we've got to get back to earnings. We're going to be getting back with them with Brad Erickson from RBC Capital Markets who believes Alphabet's future growth and multiple expansion are constrained some extent. Not constrained on the market right now, are we Alphabet best points addition to the NASDAQ 100 leads the way and we're a record record high.

Ed Ludlow (24:10)

We're trying to find the common story between all four companies, right. Capital expenditures is probably it, but I think that, you know what all four companies said is that they are constrained in capacity, right? They cannot build the infrastructure that they need quick enough to service. In the case of Alphabet, Amazon and Microsoft External demand. And one thing Carrie, you probably get this right, you know meta is internal, internal demand for workloads not necessarily something that's consumer facing and it's getting more expensive.

Caroline Hyde (24:41)

Maybe the $145 billion that they guided to gets less bang for the buck when memory prices have soared, when component prices have soared. This is something that we saw Susan Lee really talk about the fact that pricing pressure is going up and so maybe that impacts how much capex they have to spend. What's interesting though is the capex is firm for the infrastructure layer. Why then is Nvidia down? It seems as though a lot of them are talking up their own in the house chips.

Ed Ludlow (25:05)

Well, all things could be true. It could be that the TPU is coming for them as outlined on the call last night. It could be sell the news and it could be Qualcomm which we'll get to later in the program as they are the datacenter business.

Caroline Hyde (25:23)

Welcome back to Bloomberg Tech and let's take a look at today's big number. We've talked about it already $725 billion. That is how much Amazon Alphabet matter Microsoft together alone expected to spend in 2026 upping their spending plans after their March quarter. But with still a key question when will we see return on all this AI spending? Well we saw it from Alphabet and people are applauding the numbers because Google cloud of pharma than 60% growth and we're seeing really it's doing the flywheel effect because they're vertically integrated business model and the fact that you people are using their tools are up 7% record high. Amazon, that flywheel effect is still there. They create and have custom chips but of course they're also making moves on cloud. 28% growth but maybe we come off near record highs on that share price. Down 5% is Microsoft. And that's more interesting. Yes, they all saw are spending more look, leaning into $190 billion spend for the year. They're also though maybe not managing to ramp up the Azure growth as much as people anticipated, but it's still going to be a healthy 40% in future quarters. It's at 39% for this particular quarter. Move on and see what's happened in terms of matter. I'm afraid we are not applauding Matters commitment to capital expenditure because they don't have a cloud offering thus yet. Let's just have a little listen to what Mark Zuckerberg really had to say about, well, where his spending is going yesterday.

Brad Erickson (26:46)

We are increasing our infrastructure capex forecast for this year. Most of that is due to higher

Ed Ludlow (26:52)

component costs, particularly memory pricing.

Brad Erickson (26:55)

But every sign that we're seeing in

Ed Ludlow (26:58)

our own work and across the industry

Brad Erickson (26:59)

gives us confidence in this investment. That said, we are very focused on increasing the efficiency of our investments.

Ed Ludlow (27:09)

Let's get into it with RBC's Internet analyst Brad Erickson, whose pre earnings report flagged matters quote elevated investment cycle and yeah, that's what we got. Metta is a company that operates social media platforms and it makes money from advertising and at the same time it will spend at the high end $145 billion in infrastructure to support its work in AI. For me there just wasn't that number that explained. This is the result of that investment. This is how our work is getting traction with the world. Is that your take, Brad?

Brad Erickson (27:46)

Yeah, I think that's a very fair way to, to sort of look at it. You know each quarter that ticks off with all of these companies, right, we fair or unfair, we have to evaluate kind of what have you done for me lately relative to that spend. And clearly the, the cloud, the commercial cloud vendors last night are the ones showing sort of the best return, particularly with that margin upside. Whereas with Metta you've got a deceleration. Just start there. Right. The revenue was, was fine in the quarter, but you do have a little bit more deceleration in their guidance for Q2. And then they were the only ones to raise the CapEx guide, at least on an organic basis Business. Right. Amazon and Google. Google had to raise their capex, but it wasn't, it was because of an acquisition, not because of higher pricing. So yeah, it's just a tough combination for, you know, kind of that next day stock reaction.

Ed Ludlow (28:41)

I use Meta I, I'm sure Caroline uses Meta AI too, but I don't pay for it. I use it within the Instagram app, for example, or I'm aware of Mayban Ray Ban metas and you know, voice based assistant version of Meta AI. A parallel example was Alphabet giving us data quarter on quarter for Gemini's enterprise growth 40%. You know, matter doesn't have that sales channel. So what is it that that Mark Zuckerberg can say other than Mewes Spark, the latest model is making ads better. That will convince the street. Yeah, let's keep going with this.

Brad Erickson (29:14)

Yeah, sure, yeah. I mean there's always going to be optimization, right. They drive, you know, more content recommendations. Recommendation gets people staying on there for longer. They show more ad impressions. They find people with, with better ads that convert more. So there's all sorts of value creation that's still going to happen there. But yeah, I kind of agree with you. I think, you know, clearly on the enterprise there's a far more compelling argument for, for you know, enterprise developers adopting things like Gemini or Anthropic or, or chatgpt where I think the idea though that we're kind of broaching for people, we call it Born on, on Metta and what it means is, is we actually think there's big opportunities that are probably underappreciated for Meta to almost start to like help small businesses start, exist and execute entirely on Meta. We think that's a possibility in the future.

Ed Ludlow (30:06)

Right.

Brad Erickson (30:07)

Today you start a small business somewhere else, you come to Meta to market. It's certainly helpful for the business, but they've only participated in kind of that advertising portion of it. Imagine if Meta I started like helping you ideate originate, literally start businesses on the platform that were specifically geared around success with the ads. Right. Like there's a connection there that I think the superintelligence group is aiming to make and I think it's subtle at this point, but it's a topic we're kind of trying to elevate for people because I think that might be the more compelling way that they use Meta AI in the future.

Caroline Hyde (30:43)

Briefly, there was lip service given by, in a statement, Susan Lee, that there's the regulatory overhang and that could impact future revenues. How much does that worry for you at the moment, Brad?

Brad Erickson (30:57)

You know, that's a, you know, you hear to it referred to as kind of the big tobacco moment. I mean that would be relative to kind of social media usage broadly in today's world. That would be such a seismic change. It's a risk. It's. We worry about a lot of stuff on stocks. That's something that's completely out of sort of everyone's control at this point. But yeah, if that happens and they are forced to kind of throttle usage for users below a certain age, it will absolutely meaningfully impact the business. It's, it's also just one of those things. A, it's totally unpredictable. B, you know, there will be like years of appeals involved. And so I don't want to say a fine or a settlement looks more likely, but historically we've seen that be kind of the primary outcome of these types of situations.

Caroline Hyde (31:44)

ABC's Internet analyst Brad Erickson. Really glad we could dig into matter with you. Thank you very much indeed. Look, we got more earnings. Apple reports later today its first release since the iPhone maker really announced the hardware chief John Turner will succeed the CEO Tim Cook. Let's get the details of what to expect. Bloomberg's Mark Gurman almost. Is it a sideshow the earnings?

Mark Gurman (32:05)

Yeah, I mean this is going to be quite interesting, right. A week ago they announced that Tim Cook is stepping down September 1, being replaced by John Ternus. As we anticipated. I'll be looking out for any other new color on the transition if Turnus is going to speak and give some insights to Wall street for the first time. Going to be interested to see how that all gets split up. Obviously from a numbers perspective, we're expecting some pretty numbers, right? 13 to 16% year over year revenue increases. What Apple guided a few key factors in there. The biggest one is pent up demand for iPhone 17 Pro and Pro Max that launched last September obviously. But there were some supply chain constraints throughout the tail end of the first quarter which means that some sales bled into the second quarter. So we'll see a bit of an iPhone increase because of those products. And then they had their wave of new Mac and iPad and iPhone 17 launches very much at the tail end of the March quarter, which obviously contributed as well. The MacBook Neo has been a strong seller so you're likely to see a big jump in Mac revenue as well.

Ed Ludlow (33:12)

Mark. I think we're showing Apple shares up modestly half percentage point. Treading water until tonight but we should probably address how much of a leading indicator Qualcomm is right. They told us that the Android market in China will bottom in Q3. Memory pricing is clearly an issue. What data do we have about Apple facing similar issues?

Mark Gurman (33:33)

You know, the Qualcomm stuff is interesting. Actually. It's it's far as to put two and two together at this point just because the Android market is not selling well in particular parts of the world like China. You know, there's no telling if that means that the iPhone is also not selling well. It's possible that the Android market is not selling well because people are buying iPhones instead. So I really wouldn't read too much into it.

Ed Ludlow (33:57)

Okay, Bloomberg's Mark Gurman on deck after the market closed today for a big Apple print. Thank you very much.

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Ed Ludlow (37:11)

137 Ventures has raised $700 million split across two new funds. The firm has put money behind some familiar names like Anduril, Gusto, Ramp and SpaceX X. Justin Fisher Wolfson, founder managing partner at 137, joins us here in San Francisco. Good morning.

Justin Fisher Wolfson (37:28)

Morning.

Ed Ludlow (37:29)

This is interesting how you've done this. This is two funds where each serves a purpose. It takes your assets under management to $15 billion. And I mean this, Justin, with respect, your firm's gone a little under the radar. And now here you are arriving at this moment of.

Justin Fisher Wolfson (37:48)

I mean, I think we've just been focused on investing. So maybe, I think within the venture ecosystem, people know us.

Ed Ludlow (37:54)

I want to talk about one of the funds in particular. I find this very interesting. The idea of some of the capital is that you offer liquidity, right, to founders, that you back their employees in different forms. Why specifically earmark some money for that?

Justin Fisher Wolfson (38:10)

So if you kind of rewind the clock, right? We started the firm about 16 years ago ago. And, you know, our thesis was that companies were going to stay private longer. And the challenge of companies staying private longer was going to be that founders, executives, employees were going to need liquidity, like working capital. I mean, look at it. If you start a company when you're 25 and then, you know, you end up being 35, right? Like your life is different. Maybe you want to buy a house, right? In the same way, like all these companies need more growth capital, right? And so we've seen the availability of that expand in the private markets. And so, you know, our General view is if companies stay private longer, there are going to be more opportunities to

Caroline Hyde (38:47)

invest in them and opportunities, boy, did you take. You first invested in Space X, for example, in 2010. You've written two dozen checks, it tells me into SpaceX since how much now do you own a Space X if you're able to do that?

Justin Fisher Wolfson (39:03)

I mean, I think at this point we're, I think we own well over $10 billion. So it's a, it's a pretty big position for us and we've had a lot of conviction in the business over the last 15, 16 years. So yeah, we're excited.

Caroline Hyde (39:15)

I mean, if you were in, in 2010, what sort of returns can the LPs be expecting on this?

Justin Fisher Wolfson (39:22)

Oh, gosh, some of those, some of those investments I think are, are probably like hundred X investments at this point.

Ed Ludlow (39:29)

It's interesting. Your $10 billion dollars of position as Space X I think would be around 1% of the company. But you've got a decision to make. So if we're right, and Bloomberg's reporting that. Bloomberg is always right, Bloomberg is very often right. But we're reporting that Space X goes public in late June at a valuation of that's up to 2 trillion, whatever, it ends up raising $75 billion. You keep talking about the whole point of, of the firm is to invest in companies over that longer time horizon. In that case, companies are staying private longer. What do you do for your LPs or for your firm in an IPO scenario? Do you stick with it or what's the strategy?

Justin Fisher Wolfson (40:10)

I mean, I think the exciting part about Space X is like the next 20 years of the business. And so I agree with your question. I think it's a, it's a hard decision ultimately. Let's see where we get to. Right. We'll find out what the company price is at. As you know, these things tend to happen the night before. Right. So I think there's a lot of information between now and when the IPO happens. And I think we're going to be happy with all outcomes, but we're sort of excited for the next couple of decades.

Ed Ludlow (40:36)

I wanted to look backward a little bit. You know, the first investment around 2010, you had already had a history of Space X from your time at Founders Fund. But if you did do two dozen checks over 15, 16, 16 years, what was that like? We make a lot on this program of Google and Fidelity Founders Fund coming in, in these bigger rounds. But you were able to participate.

Justin Fisher Wolfson (40:58)

I mean, I think really the, the thing that we did is consistency. Right. We were excited about the business, we had conviction about the business and so we kept investing. Right. And some people wrote it one check and that obviously was a huge outcome. But we kind of showed in Europe we should have, you're in, you're out and that's really paid off.

Caroline Hyde (41:17)

And now new people show up. SPV access to retail. Is that what naturally has to happen if we're going to get these companies staying private longer? What's the tension there?

Justin Fisher Wolfson (41:31)

I mean once the company's public, obviously everyone will have an opportunity to invest in it. I think, you know, as we've seen more capital become available, available in the private markets. I mean you've seen, you know, some of the large crossover funds get involved. So I mean there's just, there's an incredible increase in the amount of capital available in the private markets relative to, you know, 10 or 15 years ago. And so do you think some of these things are sort of the natural evolution of the private markets?

Ed Ludlow (41:56)

SPVs. Sorry, I just wanted, you know, I want to get an answer to your question because on the show we talked a lot about claimed ownership of companies. Space X is a prime example but Andrew talks about this as well. Yeah, there are people out there purporting to have a position but they bought in through some SPV structure ahead of an ipo. What's the reality of that? What happens when, when the real ownership becomes clear?

Justin Fisher Wolfson (42:20)

Well, I mean I think the greater concern is just fraud in the private markets. Right. And so just because people. There has clearly been fraud in the Space X market, in the Android market, in. And you know, so I think that people need to be thoughtful about who they, who they're partnering with and who they're doing business with because I think we'll find out, I don't know, a year, a year after the IPO when people think they're getting shares and they don't get them right, what actually happened

Ed Ludlow (42:44)

that's because of lockup period.

Justin Fisher Wolfson (42:45)

There'll be some kind of lock up period or whatever but I just think it takes a while for people to like actually, actually start demanding the shares that they thought they owned. And I think that's going to be an unfortunate consequence of, you know, some, some number of bad actors in the

Caroline Hyde (42:57)

market and a big claim and one I'm sure regulators will be looking at. One Bloomberg will continue to report on Justin fisherholfs and it's great to have some time with you. Founder managing partner at 137 Ventures. Now investors look at how they're cheering Qualcomm's entry into AI, sparking the biggest intraday rally after their earnings since October. This is after the company revealed it will ship custom AI chips to a major hyperspace scaler later this year. Joining us now, Qualcomm CEO Cristiano Amon, who is the hyperscaler. Cristiano.

Cristiano Amon (43:31)

I will tell you all about it on June 24th. It's going to be. It's going to be three days after my birthday.

Caroline Hyde (43:37)

June 24th. We've got to hold on to. But what does this signal about? You have been a man who's committed to telling the market that you are expanding the market. It's not just about mobile phones, while Qualcomm has really dominated the market share, but chips now in automobiles, in iot, but really in the data center. What sort of town, what sort of expansion of Qualcomm's business will this mean for you?

Cristiano Amon (43:59)

Yeah, look, you know, this is a great question, and I want to maybe start the answer by saying, you know, why would not anybody, you know, bet on Qualcomm diversification efforts? We started as a mobile company. You look at what we're doing right now, we expanded into PC. We became one of the largest providers of semiconductor to automotive. We're going to industrial, we're going to robotics, we're going to broadband and networking. And I think the data center was a natural thing. We have been working on this for the past couple of years. We've been consistently saying we're building assets. We acquire companies like Alpha Wave. We have a pretty good cpu, a very good accelerator. We're not a small company. We, we ship 40 billion chips. So I actually, I don't know why people will bet against Qualcomm, but I think it's okay. We're just being on this road to execution like we have done on the other business. And we're very exciting because I think what's really happening right now as we enter this next phase of AI, we went from training to inference. Now agents, which actually would generate demand for tokens. It provides an opportunity across the entire Qualcomm business. All of those devices where people are going to have agents running, whether it's phones and PCs, they're out, they're going to go to an upgrade cycle. And then some of the assets that we build create opportunity for datacenter.

Ed Ludlow (45:20)

Cristiano, specificity is so important here. You said, and you can correct me if I'm wrong, you said it was nasic product, which I think the markets look looked at and is a little bit surprised. So you are not doing your own chip, you're not doing merchant silicon, your own designs for market. You're doing an ASIC with someone.

Cristiano Amon (45:42)

So we have said that our data center product and I need to make sure I don't front run my investor day. But trying our data. Yeah, I understand that my data center, my data center product offering including includes three vectors. One is cpu. We are developing a CPU and we're very flexible. We can provide, we can provide a full SoC, we can provide chiplets. So that's one asset. The other asset is an accelerator. We have the accelerator with a innovative memory architecture. We don't need HBM for the disaggregated inference. The other one is the ability to do custom chip which when we acquire Alpha Wave they have both a lot of IP which is important for custom ASIC as well as a custom chip team. When you put everything together, it creates a lot of opportunities for Qualcomm. Now here's what is important to understand. The data center market is highly concentrated, is actually there. But there are about six to eight companies that represent the majority of it. And what you see what's happening in the market right now, a lot of solutions are becoming bespoke. They're no longer just merchant solutions. So I think as Qualcomm entered the space you should expect that we offer a lot of flexibility and we'll leverage our supply chain and our design capability to do bespoke products. And I think that's what we're doing.

Ed Ludlow (47:10)

Four to six companies. That's interesting. So this depends on your definition of hyperscaler. Like for example, Matter is not a cloud computing company but it operates at hyperscale, its own datacenter infrastructure. So maybe that's what we're talking about here. The definition of what is or is not a hyperscaler.

Cristiano Amon (47:30)

Look, I'm just going to cut to the chase. We're talking about a large hyperscalers. You should be thinking about one of the large cloud companies needs that we have today. It's, it's, it's a scale business. So, so I think that's what we're talking about.

Caroline Hyde (47:45)

Oh, getting closer the potential customers therefore a 4 to 6. But they're huge and maybe they're even more than that. So just can you get specific about how big the opportunity is for this particular part of the business? How much you think it could ramp up revenues? Is that something you're able to push ahead before the investors investment meeting?

Cristiano Amon (48:06)

Look we, we don't get, I don't want to get ahead of our skis. We are, we're executing, we're very pleased with the engagement and what we said is it will be material in fiscal 27. Now if you look at the scale of the Qualcomm revenue base, I think, you know, anything material to Qualcomm is probably in the multiple of billion dollars in fiscal 27. But look, we're just starting and, and we're very happy with the progress we're making.

Ed Ludlow (48:33)

Christiana, I think back very fondly to when you and I were on stage together at the Bloomberg Tech Summit. I think it was three years ago now and we talked about the world where we switched to inference running on device. But actually Qualcomm stories really changed in that time. Right. So in this world where we're moving to inference and we're moving to agent tech, how are you positioning Qualcomm? Right. The CPUs in important but you must think differently to how you did three years ago.

Cristiano Amon (49:01)

Look, frankly it's, it's exactly playing out exactly the way we fought and I know we have a limited time but when you start running agents and when you start running things like Open claw in and a bunch of other clause actually what is fascinating to see what's happening, the phone industry, every Android OEM right now is launching their own claw. And the way agents work, they actually operate your device for you. So what you're going to see at the end, you're going to see a lot of activity in the cloud and you're going to see also activity on the device and it's all going to magically work. I almost like to say this. I am sure you have probably 200 apps on your phone or close to that. We never have a discussion, we never have a discussion about how much each app is doing on the cloud or doing on the device. It just works. And I think that's how we see those agents working. They look at your data, they look at things on your device, they do things for you and they do stuff on the cloud. And I think that's why I believe this actually builds into the Qualcomm assets and the fact that we're present everywhere. Our engagement with the cloud companies right now, they look at our devices at endpoint for AI and that's also exciting. I think we're talking with all the AI companies about their new and exciting

Caroline Hyde (50:22)

devices was less exciting has been supply chain disruption. But you were really clear with investors and they liked it quickly with 30 seconds memory you see an endpoint at least in China.

Cristiano Amon (50:32)

Yeah look I the reality is everything is memory and AI drives more memory demand I've drove of a lot demand at the data center. It caused a crunch on the on the consumer electronics. The good thing is we now see the bottom. As I said in the call we're under shipping market demand. We look at customer activations of devices and sell through data. We see how what the demand is. That's now we can call the bottom and you know there's going to be more more supply and more suppliers and we'll see how this is going to play out.

Ed Ludlow (51:05)

The market is taking this really seriously. Qualcomm having its best day since April 2019. Qualcomm's Cristiano Amon. Thank you very much Caroline. That I don't know for me in the 10 years I've been here an extraordinary technology earnings 24 hours and that does it for this edition of Bloomberg

Caroline Hyde (51:23)

Tech Super Bowl 72nd Super Bowl all came yesterday but there's more to come. There's the second half of the super bowl is Apple tonight don't forget check out other podcast. You'll find it on the terminal as well as online on Apple, Spotify and Iheart from New York. From San Francisco, this is Bloomberg.

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