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Carlo Ratti
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Ed Ludlow
Podcasts Radio News.
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Lisa Su
Bloomberg Tech is live.
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From coast to coast with Caroline Hyde.
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Ed Ludlow
In New York and Ed Ludlow in San Francisco.
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Carlo Ratti
This is Bloomberg Tech. Coming up, AMD signs a historic deal with OpenAI to roll out AI infrastructure, a pact the chip makers said could generate tens of billions in dollars of new revenue.
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Ed Ludlow
Plus we speak with the White House AI and crypto czar David Sachs about relations between the US and China in the context of the air race.
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Carlo Ratti
A matters CMO joins us to discuss how ise changing the advertising landscape, what that means for small businesses here and.
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Ed Ludlow
Now we turn our attention to the broader markets. Bitcoin at a record high. The NASDAQ 100 at a record high. We're up 610 of a percent. The moon music around AI infrastructure and the frenzy therein. And it continues. I'm looking at the stocks up 3.5%, a new record high for the index that tracks the semiconductor industry. But what is leading a gain? Of course you know it's one key name. We look at AMD at one point hitting a record high. We are up the most on this stock in nine years. 28% surge. At one point it was 37% higher all as we hear that tens of billions are going to be added in terms of revenue because the Open Air infrastructure pact a sign of real confidence in Lisa Su's AI accelerator and build out ad. We've got such an interesting conversation coming out about this new deal.
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Carlo Ratti
Welcome to Bloomberg radio and TV audiences around the world. AMD has signed a definitive agreement with Open air to deploy 6 gigawatts of AMD GPUs. AMD says it will equate to tens of billions of dollars in revenue. Open AI will get up to 160 million AMD shares in tranches and set against both operational and financial milestones. The focus is inference. Let's bring in AMD CEO Lisa Su and OpenAI President Greg Brockman. Both of them join us on set here at Bloomberg Tech in San Francisco. Good morning.
- [03:28]
Lisa Su
Good morning. It's great to see you.
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Greg Brockman
Great to be here.
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Carlo Ratti
Let's frame the opportunity. Lisa, you know, the market reaction is very clear. But for AMD and the AI industry at large, what do you think this represents?
- [03:40]
Lisa Su
Well, look, this is a huge milestone for amd. You know, we are so thrilled with the partnership with the Open Air team. And it's also, you know, a huge moment for the AI industry because, you know, when you get to the right down to it, you need more AI compute. I mean, that's where we are today. COMPUTE is the foundation for all of the intelligence we can get from AI. And you know, we are a compute provider. We have spent years on our roadmap. We've spent years working with OpenAI and, and the team. And you know, together now we're embarking on, you know, a massive build out of 6 gigawatts of AI compute. And it's a big deal for us, for our shareholders, for our teams and for really, you know, the partnership and the overall ecosystem.
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Carlo Ratti
Greg, I said at the top, the focus is inference. I think that's really important to be specific about what you will do with this capacity, so to literally explain that part. And I'm conscious that, you know, in the first instance, the first target is 1 gigawatt and then eventually 6 gigawatts. But what will you use it for?
- [04:38]
Greg Brockman
Well, I think that the world continues to underestimate the amount of demand for AI computer, right. That just we've seen this explosion of demand with things like chat, CBT, you know, we're at 800 million weekly active users now. This product didn't even exist three years ago. And we're in a position where we cannot launch features we cannot launch new products simply because of lack of computational power. And we see these models continuing to get exponentially better. And I think we're just heading to a world where so much of the economy is going to be lifted up and driven by progress in AI. And so we're very much heading to a world by default that I think looks like a compute desert right there. Just not enough compute to go around. And so we're trying to build as much as possible as quickly as possible. So we're starting with one gigawatt simply because you got to start somewhere.
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Carlo Ratti
Right.
- [05:21]
Greg Brockman
But honestly, we're building as fast as we possibly can and trying to bring as much computational power to bear for the economy and for the world.
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Ed Ludlow
Lisa, this is such a big commitment to instinct in particular as a customer. Does it make Open Air the largest for that particular product?
- [05:38]
Lisa Su
Well, this is certainly the largest deployment that we have announced by far. I mean, you know, 6 gigawatts of compute. As Greg said, we're going to start with the first gigawatt in the second half of 2026 on our new next generation, my 450 chip. I think the thing to understand is, you know, these types of partnerships actually take, you know, years to really get comfortable with the idea that we're going to go all in together. And this is an all in partnership in terms of building out the AI compute that Open Air needs for everything that they're offering to the world. So, yes, it's a huge deal and it also says a lot about, you know, how much needs to come together for this entire ecosystem to operate. So, you know, we are setting up, you know, certainly there's a lot of engineering work, but our teams are working together on hardware, software, we're ensuring the supply chain. All of those elements are set up and ready to deliver on this massive commitment.
- [06:34]
Ed Ludlow
Greg, talk us through a little bit about the players that you need to also lean on. This has been years in the making, as you say, with amd, but what other cloud providers are involved? How are you thinking about this working with an Oracle or others out there?
- [06:47]
Greg Brockman
Yeah, we really think of this as an industry wide effort. And in general, we think that COMPUTE is something that does require the entire supply chain to really wake up and to really start building much more than people were planning on. I think this starts from energy to try to get far more power to be built. Things like nuclear, I think are going to be very important to come online. The cloud providers are an important part of this as well. So we're going to be deploying AMD in our own data centers. We'll be deploying them together with, with cloud providers. You know, we have a deal with Oracle, lots of other cloud providers out there. You can really see that we're very much in the, we just want compute, as much compute as possible. We think this is important for the economy, we think this is important for the nation, we think this is important for humanity. And so really we're working with everyone in this whole industry in order to, to get as much compute power online as quickly as we can.
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Carlo Ratti
Lisa, I'm sorry, specifics, where is this data center going to be? Is it one single site? Is this Oracle that will partner with you on this?
- [07:46]
Lisa Su
Well, actually, what this really is is an announcement of what, you know, AMD and Open Air are going to do together. You know, OpenAI has a lot of partners in terms of, you know, where they deploy. I imagine a lot of it will be in cloud service providers. It's really up to, you know, OpenAI and Greg and Sam and the team. But the way to think about it is for this, you know, amount of compute, it's going to have to be in a lot of different places. I mean, it's a massive amount. Multiple locations, Multiple locations, I would imagine, you know, multiple providers to really get this online as fast as possible.
- [08:19]
Carlo Ratti
Greg, there is a lot of focus on where Open Air is going to get the money from to fund all of this. Sam Altman's big picture commitment is well documented. Right. And the numbers to his mind are in the trillions. But have you specifically thought about debt financing for this relationship with amd? Have you thought about doing a specific equity raise? You are very committed across multiple projects.
- [08:46]
Greg Brockman
Yeah, look, the way that I was, the way that I would look at this is that revenue is growing faster than I think almost any product in history. And that ultimately, at the end of the day, the reason this compute power is so important, is so worthwhile for everyone to build is because the revenue ultimately will be there. Now, as a company that is trying to move as fast as we can, we look at everything right, we look at equity, debt, we look at trying to find creative ways of, of financing. All of this that's been actually a huge focus of us for the past couple of years is thinking about how can we possibly build the amount of compute that is required in order to really transform this whole economy into an AI powered economy. And so I think you'll see lots of creative ideas. But fundamentally, I think at the end of the day it is because we believe.
- [09:32]
Carlo Ratti
I'm sorry to jump in and interrupt and carry. Just forgive me on this one. The condition of AMD issuing the stock to Open AI requires you to spend money, basically because you have to deliver that gigawatt of capacity first. Lisa, I have to ask you if you have assurances that Open Air is good for it.
- [09:52]
Lisa Su
Well, let me be clear. I mean, this deal is a win for AMD, it's a win for OpenAI, and it's a win for our shareholders. And that's kind of the way we put this together. I have full confidence in, you know, OpenAI, Sam, Greg, Sarah. I mean, this is a massive opportunity for us right now right here. It's about who has the most compute and how fast can we get it online. And we're committing to doing this together. And the fact is, as OpenAI buys chips that's great for AMD, our revenue goes up, our earnings go up. You know, we expect that it will also be very, very accretive to, to our shareholders from day one. And as we do that, you know, we're very happy to have Open Air as a deep partner and we win together. So it's like a virtuous positive cycle in how we build out, you know, this big vision for having all this compute out there.
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Carlo Ratti
Right.
- [10:42]
Ed Ludlow
And yet we still question, as you were just talking about, Greg, some of the other supply chain elements. You talk about the need for nuclear, for power. What's really interesting is we. Are you feeling confident enough about the rest of the compute, the supply chain? Is there. Is this going to be US products manufactured? From your perspective, are you looking at also building out internationally with amd?
- [11:03]
Greg Brockman
Yeah, we've. We've been looking at really all options, our preference and really the, the core thing that we tried to do is build as much as possible in the US and you can see the commitments that we've made over the past year, you know, $500 billion of investment in the US and that's not stopping. We're continuing to build. I do think that international, that there, it is also going to be important for the world to have computer. I think that computer is going to become this like national security strategic resource. And every country is going to need computational power. And so we are really not limiting our, our sort of sights in terms of where to build, but we do think it is important that the US Leads in this technology leads in computational power and we're expanding the supply chain. But you can see that we've really been working with partners across the globe in order to actually meet the demand that we expect to be coming in upcoming years.
- [11:48]
Ed Ludlow
Lisa, the manufacturing of these chips, will you look to intel at all for it, do you think, in the future?
- [11:54]
Lisa Su
Well, as you know, the supply chain is something that we work on, you know, very, very meticulously. I think we have a very strong supply chain. We're certainly deeply partnered with, you know, TSMC across the supply chain. You know, just to that earlier question, we're absolutely prioritizing building in the United States because I think that's super important. This is the, the U.S. stack. We want to have as much of it in the US as possible. And, you know, we continue to really look at, you know, how do we ensure that there will be a strong supply chain, you know, going forward.
- [12:26]
Carlo Ratti
Greg Sam posted on X that this deal with AMD is incremental to what's already being done with Nvidia. But as Lisa knows, I spent quite a lot of time looking at the MI family and the newer generations of products to come. Is there a very clear, clear, specific benefit to using AMD technology for inference relative to the capabilities of Nvidia, or do you just see it broadly as some sort of diversifying factor?
- [12:52]
Greg Brockman
Well, I would look at it this way, that there's a huge fixed cost to getting AI models running on any platform. And so that when we look at what's out there, that actually getting AI training to work is, is a huge, huge amount of lift. And that's something we've really only done the work for Nvidia, but for inference, that that's something that's much more that there's a easier barrier to entry there. And one thing we found is that I think that the work that Lisa and team have been doing on the Mi 450 series, it's looking like it's going to be a really incredible chip. I think that, that there's. The way that these things work is there's niches for different balances of memory and computational power. And so as we have a diversity of workloads, we're finding that having a diversity of chips and also really accelerates what we're able to do.
- [13:37]
Carlo Ratti
Lisa, at the beginning of this conversation, I said there are both operational and financial milestones to be met. And Greg explained you got to start somewhere. So in the first instance, one gigawatt, but would you just sort of draw out the pathway to that first gigawatt? You know, it seems like you're prepared to move quickly here.
- [13:53]
Lisa Su
Yeah, absolutely. And maybe, Ed, if I can just build on something that Greg said. I think he's absolutely right. You know, we're a believer in there's a diversity of one workloads and there will be a diversity of workloads across, you know, customers, models, use cases. And from that standpoint, you know, we feel really good about how we're positioned. You know, we, we love the work here because, you know, frankly, you know, OpenAI is the ultimate power user of our chips and tests us in very good ways. So I think that's, that's what gives us confidence that, you know, the technology is there. And then to your point about milestones, Yes, I mean, this is, you know, clearly a case where we are tied to each other. The first gigawatt of deployment is super important. We're going to start that second half of next year and we're going to build on from there. And it really is not just the technology, but, you know, commercial milestones, adoption milestones, and just how we proliferate the capability going forward. But I'm looking forward to building this as fast as possible. You know, we're already working with a number of, of cloud service providers who are also very active on our technology and I think this is a great catalyst to get the industry to build faster.
- [15:04]
Ed Ludlow
Tied to each other is such an interesting turn of phrase. And Greg, look, you are seeing more AI users and chip makers and designers becoming more financially tied to each other. Is this going to continue? Is this the step forward for how you see this financing going forward?
- [15:21]
Greg Brockman
Well, I really see the world transitioning to this AI powered economy. And the interesting thing is within OpenAI that we've really seen what it's like when your progress is limited and accelerated as two sides of the coin by, by computational power, like teams with an open AI, that their ability to deliver really is tied to the amount of compute that they get. And I think we're heading to a world where that is how the whole economy will function. And we're starting to see it, right, that people having access to better AI tools, if you're a coder, you're able to do far more if you have access to better, to better AI models. And we're heading to a world where if you can have 10 times as much AI power behind you, you will probably be 10 times more productive. And so I think that we're moving to a world where the whole industry is waking up to the fact that we have just not planned, we have not planned for this moment where this explosion in AI demand is happening. So it's happening all the Way from the power to the silicon. And I think this whole industry has to find a way to actually rise to meet the occasion.
- [16:21]
Carlo Ratti
Lisa, you have given us a look into the future before about how you see the total addressable market, the industry, now that the ink is dry with open air. And Greg, are you rethinking either your bigger picture analysis of the market for accelerators and GPUs, or do you see AMD now having an improved position in that market relative, of course, to your friends at Nvidia?
- [16:46]
Lisa Su
Well, again, I think, and I've told you before, I believe that this is a huge market. You know, we have size, just the accelerator TAM being, you know, over $500 billion in TAM over the next few years. I think some might say, you know, maybe I was a little conservative in that TAM analysis. But the way to think about it is there's so much need for compute. I mean, you just heard it from Greg. So, you know, this is a huge pie and you're going to see the need for, you know, more players coming into it. And, you know, from my standpoint, this is a big validation of our technology and our capability. You know, as much as we love the work with OpenAI, we're working with a lot of other customers as well. There's a lot of excitement in the industry around my 450, so we're ready for it.
- [17:32]
Ed Ludlow
AMD CEO Lisa Su, OpenAI President Greg Brockman. It's been a joy having you on the show. Thank you both very much.
- [17:39]
Lisa Su
Thank you.
- [17:40]
Ed Ludlow
And coming up, more on AMD and its impact on the broader tech markets. We've got a key investor for you, Tony Wang of T Rowe Price. This is Bloomberg Tech. When your business evolves, so does your risk of data loss. But with Veeam, your data is always on the map. Partner with Veeam for coverage that keeps you moving. And get protection for workloads of all shapes and sizes, even the ones you haven't created yet so you can stay resilient as you scale. With Veeam, it's all good. Get workload coverage that works for your business. @veeam.com that's V E E A M dot com.
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- [19:53]
Ed Ludlow
Let's stay on that AMD OpenAI story its impact on the broader tech markets Tony Wong T. Rowe Price Science and Technology Fund Portfolio Manager. You have exposure to AMD. It's added more than $70 billion in market cap on one day alone. What does this deal signal?
- [20:09]
Tony Wong
Yeah, well I think it's a really exciting deal here for amd. I think it validates their roadmap and their silicon and software strategy. I think it gives them a really big lead customer to really scale and I think that this will probably attract other customers to the roadmap and continue to build out rock. And I've always had this thesis that the TAM is really big and if companies can deliver on that compute that there's there's a lot of companies that can win in the overall computer huge tam. So overall very exciting and you know I think it's got a good set up for the next few years for the company was Runway I mean Lisa.
- [20:49]
Ed Ludlow
Su just telling us that maybe she's being conservative when she puts the accelerator time at $500 billion. Tony, I'm interested though at OpenAI telling us Greg saying that we're looking at all kinds of way of financing this. How are you feeling about this knitting together of purchases and creators, designers of chips?
- [21:09]
Tony Wong
Yeah, well I think that taking a step back over the last 10 years everybody's underestimated this Tam and I think what's exciting about AI is that there are a lot of productivity use cases here and we're starting to see agents really form and then I think physical AI. So I think as long as like the end use cases are delivering a lot of value and there's promise there, I think that's what matters in of terms terms of the roi. And I think a lot of these kind of contracts, I mean they are backstopped by really blue chip companies like Microsoft or Oracle. So in terms of you know how I'm feeling about the financing, I think it's, it continues to be probably a good attractive way to do as long as the use cases are intact.
- [21:50]
Carlo Ratti
Tony, the mechanics of the deal are the Open air has the right to buy up to 160 million shares of AMD at a penny apiece. But that right contingent on the operational and financial milestones that we discussed, it is not circular financing, it's something different. But how comfortable are you with that mechanism?
- [22:12]
Tony Wong
Well, I think it can make a lot of sense, right Like I mean puts the two companies kind of in co development and partnership and I think there's shared economics and it's a win win for both, both companies. I think some of the prices, the warrants are striked at a pretty, you know, high price on the AMD stock price. So I think it's good for both sides and if they win, they win together. So to me I think it can make sense.
- [22:38]
Carlo Ratti
Does this alter AMD's position in the accelerator market? In other words, they're closing the gap a little within video.
- [22:49]
Tony Wong
Yeah, well I think that both companies are doing really well and they're doing things a little bit differently. But I think that you're alluding to kind of the market narrative of AMD was kind of in between Nvidia on the GPU side and then Broadcom on the custom side. And I think this can help lift the narrative to go from like a second place GPU player to a co developed partner of OpenAI on the AI compute side. So it's, I think it positions them well, gives them credibility, scale and additional kind of co development R and D to improve their roadmap. So to me it definitely is a big positive and I don't think it's a zero sum game. I mean I think it just further signifies the demand for computer. It's good for the country to build this much capacity because I do think the end payoffs are immense.
- [23:41]
Ed Ludlow
I mean Tony, we're at a new record high for the NASDAQ 100 at one point AMD was at a record high. The valuations get ever higher. When I'm looking at your holdings, Top Holding, Apple, Alphabet, Nvidia Matter. Do you feel confident that these are going to continue to gain in value with this story?
- [23:59]
Tony Wong
I think there's a good long term story behind all our holdings and I think a lot of them are beneficiaries of AI. They're strong companies that are great platforms. And as a result, I think that, you know, we are entering this inflection and driving a ton of productivity. You think about, you know, output being productivity and labor I think is going up and labor is going to be relatively untapped I think as a limiting factor. So to me I think it's exciting. It's never been a better time to be a tech investor. I think there's just so much changing dynamism. So I'm excited for the multi year here.
- [24:38]
Carlo Ratti
Tony, if you'll humor me, please. My column today was about all of the debt deals that are underpinning the infrastructure build out that we're seeing. You know, everyone seems to have a different comfort level with that as well. How sanguine are you about the role of debt in what we're seeing?
- [24:57]
Tony Wong
Yeah, I think that, you know, the key signal here is, you know, what, what is this AI capacity, this infrastructure capacity worth and what's the useful life? I think a few years ago we were debating is the useful life of a GPU data center three or four years and I think that was just too short. You look at a lot of the GPUs, you know, from seven, eight years ago, they're still being fully utilized because the workloads continue to evolve. And then when you fully depreciate these assets like they're at a price point that can make sense for other ones be running on them. And so I think that, you know, the useful life of these GPUs are definitely more than four or five years. And you know, there's just more and more use cases. You think about robotics like, you know, diagnostics simulation. There's just a ton more than we thought there were three years ago. And I think that's what will keep the utilization high of these data centers. As long as that, you know, continues, I think it makes a lot of sense.
- [25:57]
Ed Ludlow
Tony, I'm going to pivot another part of your portfolio. Verizon change at the top. Hans Versburg handing over the reins. Dan Schulman. How do you feel about it?
- [26:06]
Tony Wong
Can you come again now that question with Verizon.
- [26:09]
Ed Ludlow
We are seeing executive changes at the top on certain companies. How do you feel for example of Verizon seeing Hans Wolfeg changing over the reins today?
- [26:19]
Tony Wong
Yeah, actually we don't own Verizon, so I probably that's a little bit outside of my wheelhouse. To comment.
- [26:26]
Carlo Ratti
Tony Wong of T. Rowe Price, we're trying to get you on all the news of the day, but we really appreciate the insight into the AMD OpenAI deal. Thank you very much, Carrie.
- [26:35]
Ed Ludlow
Time now for talking tech. First up, Apple Ed is facing an investigation in France over the storing of voice recordings made by its Siri Assistant. Probe is related to claims that subcontractors and had access to sensitive recordings. The iPhone maker says it uses Siri interactions to improve services and only stores them in users opt in. Apple declined to comment on the investigation. Plus, Foxconn reported sales growth of 11% in the third quarter and projected further sales growth this quarter. The gains by Nvidia partner, officially named Hon Hai, signals that demand for AI chips and servers remains strong. And Tesla shares jumped after the company posted crypto videos teasing a possible product unveil. Tesla's last addition to its product lineup was a cybertruck two years ago. Executives have said an affordable model Y so in the works. Welcome back to Bloomberg Tech. We check in on these markets new record highs. October apparently is how it's been coined. Certainly if you're looking at the crypto world. Bitcoin 125,230 up 2%. We had a risk on rally throughout the weekend. That risk on rally continues into Monday with the NASDAQ 100 up 7. 10 of a percent. And you know why? There is a key player at the moment that is helping us push up to the right. It is AMD up 26% at one point, hitting a record high up the most in nine years. Extraordinary new deal soaring after of course it's doing this deal with open air for infrastructure that could generate tens of billions of dollars in new revenue. And we had a great conversation with Lisa Su and Greg Bultman a moment ago. Another great conversation coming up.
- [28:09]
Carlo Ratti
Yeah, really looking forward to this one. Joining us now is the White House and crypto czar David Sachs. He is also the co founder and partner of Cross Ventures as well. Of course, as well. David, there is something that I want to talk to you about for a long time and we will get to it. The debate around should the United States or should the United States not export some form of AI chip to China and we will get to it. But I'm sure you can appreciate, you know, the AMD and Open Air agreement is very interesting. And so as a place to start, could I just ask your sort of interpretation of what it signals when you have a US Chip maker like AMD after Nvidia and one of the frontier model shops like OpenAI working so closely together on infrastructure?
- [28:54]
David Sacks
Well, and I think the main thing here is this. There's an AI boom going on and the market is highly competitive. We have a number of leading model companies, we have a number of leading chip companies, and they're all competing with each other and they're all booming. And what we see here is that this boom just keeps going and going and keeps driving businesses to new highs. And this is all a result of President Trump's pro innovation, Pro export, pro AI policy. We saw this help drive U.S. gDP to a 3.8% growth rate in the second quarter. So I think this seems, this boom just seems like it's going to keep going and going.
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Ed Ludlow
And we just heard, I think Jensen Huang was latest on a podcast shouting you out, shouting out those that are in the team at the White House at the moment guiding when it comes to technology. David. But I'm interested as to whether you as an investor have great comfort in these relationships being built, financial relationships between chip designers and the chip users.
- [29:49]
David Sacks
Well, I think it's up to them. You know, I don't really take sides in, in these deals. We want all of our American ag companies to be successful and they're all competing with each other and cooperating with each other. I guess it's called coopetition. And that's a great thing to see. We, we just want, you know, putting my hat on. We just want these markets to be competitive and we want American companies to be successful. And that's what, what's happening right now.
- [30:13]
Ed Ludlow
I'm looking therefore at the future rollout, the build out. Anything that gives you pause in terms of actually the infrastructure needs here at the moment. David?
- [30:23]
David Sacks
Well, anytime you're working in the world of atoms, it's going to be more complicated than when you're working in the world of bits. And so it's very important for us to scale up the amount of power that's available to AI companies. And you're seeing that thanks to President Trump's policy, policies that are pro energy. The president, you know, backed the idea of drill baby drill going back many years. I think he was very farsighted in this regard. He understood that energy is a basis for everything. It's certainly the basis for this AI boom. And we're in the process of, of allowing a lot more power generation in the U.S. president Trump is allowing so called behind the meter power generation. In other words, these companies can stand up their own power generation. We need to squeeze more out of the grid and we're enabling new oil and gas and nuclear. So all the above. So I think that energy is the main thing and President Trump is supporting that.
- [31:16]
Carlo Ratti
David, final question on on AMD and Open Air, did the parties consult the White House about moving forward with this arrangement and their plan to work together?
- [31:26]
David Sacks
No. No. I mean, not with me. And I wouldn't expect them to. We just don't get involved in the deal making between private companies. Again, we're here to create a policy environment that is supportive for all of our companies.
- [31:39]
Carlo Ratti
I appreciate that. Okay. So David, I asked you to come on the program because we spoke at the end of last week for a story that was done out of DC on the idea of, well, what is a China hawk, but also within that broad description, should the United States or should the United States not export deprecated AI chips to China? You've been very generous with your time. But, but I just invite you again for our Bloomberg Tech audience, explain how you view yourself in this debate and what you think is strategically most important for this country.
- [32:15]
David Sacks
Well, first of all, I would say that I consider myself to be a China hawk. I want the US to, to win this race. We understand that China is our main competition globally in this race and we want to do everything we can to win. And President Trump in his speech on July 23rd laid out some of the tent poles of that strategy. We need to be pro innovation, we need to be pro infrastructure and pro energy, and we need to be pro export so that the American technology stack dominates the world. So this is all in the service of the United States winning this race. We understand that it's going to have major economic and national security ramifications and we're in it to win it.
- [32:55]
Carlo Ratti
There is a lot of focus on the direct to China part. But the other way that some look at it is there is a marketplace outside of America and outside of China, the Middle east being an example. What's your position on that and whether the United States wants to kind of leave the world open to China to sell its own technology?
- [33:15]
David Sacks
Well, there was a view in the previous administration that we shouldn't sell chips to many countries, including the resource rich Gulf states. And I think that was a Major mistake. Because every time you tell a country that they can't buy the American tech stack, what's their, what's their reaction going to be? They're going to turn to China and adopt the Chinese tech stack. I have a very simple metric for, for measuring whether we're winning the race, which is global market share. If we look around the world in say, five years and we see that the American technology stack as has say, 80% market share, that means that we won. But if we look around the world in five years and we see that the Chinese technology stack, and I'm talking about Huawei chips and deep SEQ models, for example, has 80% market share, then obviously we lost. By the way, that's what happened in 5G. We don't want to reduce, repeat of that. So again, the strategy here should be for the US to dominate the world and have the greatest market share. And I think this is pretty obvious to everyone in Silicon Valley because we understand that the way to win technology races is to have the biggest ecosystem. If you're a technology platform, you want to have the most developers using your API. If you're an app store, you want to have the most apps in your app store. In a similar way, we want as many users on the American, American technology stack as possible. And I, you know, I find it hard to understand why the previous administration would exclude these rich countries from participating on our tech stack. It certainly didn't help us in the race with China. If anything, President Trump's policy boxes out China from the Middle east, whereas the previous administration's policy forced these countries into China's arms.
- [34:54]
Ed Ludlow
You've reworked, therefore, the diffusion ideals set by the previous administration. But when you're allowing only less powerful chips, I mean, I think the President even called them obsolete versions of Nvidia's chips into China. Does that mean that ship of innovation in China has already sailed? Because they need to have the most sophisticated, they're going to have to build it themselves.
- [35:16]
David Sacks
Well, I think when you're talking about what we export to China, that's obviously going to be a very complicated question. And there's, there's arguments on both sides. I think there's a pretty strong argument for not selling China our latest and greatest chips because that would be too beneficial for them. However, if you don't sell them anything, then like you're saying, that will accelerate their desire to be independent of the American stack. And so I do think there is a compelling argument for selling them a, let's call it deprecated American chip or it's a, it's a less great American chip. And by the way, this is why the Biden administration approved the H20 in unlimited quantities for export to China. Now, when President Trump came in, he said that those H20 sales have to be licensed and they're subject to a 15% surcharge. And nonetheless, all the people who approved the Biden policy started attacking President Trump. I think this is a classic case of no one had a problem with it until President Trump agreed to do it.
- [36:16]
Carlo Ratti
David Jensen Wong went on Brad Gerstner's podcast and there was a reaction to what he said. You would point out you are an official of the government. Jensen is a private citizen and CEO. But at the root of what he was saying was also the idea of talent. Many talented computer scientists and engineers come from China. I think that was the point he was making. But the personnel part of this story, where do you stand on that?
- [36:43]
David Sacks
Well, it's true that something like half the world's AI researchers are from China. And so I do think that we have to somehow be open to, to working with this talent or allowing this talent to use the American chip stack to some degree. So it's a complicated question always of what you allow China to do. But I think Jensen was making a point there about again, the talent pipeline line and we have to be open to it to some degree. Again, I consider myself to be a China hawk, but I wasn't triggered by what Jensen said because I watched the entire two hour podcast, not just the 30 second clip, and I understood what he was trying to say in context. And it is a nuanced question. And look, let me just say to all these people who are criticizing Jensen, what have you done to help us win the race? I can't think of a more strategic asset in the race than in video. And Jensen himself, who for 30 years have been working on these GPUs. And Jensen is a source of huge American advantage in this race. So let's show him a little bit of grace here.
- [37:41]
Ed Ludlow
Context is everything. We appreciate you talking about the complicated as well. White House and crypto czar David Sachs, Great to have you with us. Now coming up, Matters Chief Marketing Officer Alex Schultz discusses how AI is changing the advertising landscape. Joins us next. Bring back Tech. A new book is out. Click here. The Art and Science of Digital Marketing and Advertising. It's by Alex Schultz and he says that AI is going to be a game changing for advertisers if used correctly. Schultz, the chief marketing officer, of course, a Matter knows a thing or two about direct advertising and directing it. You also understand entirely the analytics and the raw data behind all of this. Alex, welcome to the show. I'm so interested in how you have seen the unfolding over the last decade or two. Incremental growth is something that you talk about so much, having direct impact with direct targeted ads in many ways. But then you've got to think of how a company has got long term vision, a North Star as you put it. How are companies small and large managing to balance this right now?
- [38:44]
Alex Schultz
Yeah, thank you for having me. This is awesome to be here here. I mean look, incremental growth is about being incremental to what would have happened without you doing your actions. You need to be incremental to what would have happened. You need to see what the lift is of your work that fits totally with thinking long term. And what is your North Star? What is the goal you want to achieve? That is absolutely a question of like I have a goal, how do I incrementally lift that goal?
- [39:06]
Ed Ludlow
Your North Star was writing this book of late in many ways as well as the day to day which you're understanding the analytics underneath, what's happening in terms of marketing for matter and the growth story. Why did you put this out here?
- [39:19]
Alex Schultz
I mean, my North Star for the book is to be useful. Like I want small businesses and large businesses to be able to actually be better at using the tools. Like you go back ogilvy on advertising, 1985 Bible, absolutely incredible book. But there are new channels that have evolved since then. Digital marketing is 75% of the global advertising industry. There's no book for that. I kept being asked for a book for that. So I wanted to produce a useful book to help people be good at that.
- [39:43]
Carlo Ratti
Alex, in the back part of the book on AI and its impact on marketing, you talk about an audience of one. The idea that the AI can make the ad so targeted to the individual, what are the risks with that? You're clearly needing a lot of data about that person to make that audience of one relevant ad.
- [40:02]
Alex Schultz
Yeah, I mean from my perspective there are clear. Now we've reached the point where there are clear laws out there, there are clear platform policies out there about purpose use, limitation of data. And so it's very clear what you can use the data for. And people like personalized ads so people have control over what data you can get. Young people really understand how to manage their algorithm and they love the personalized ads they get where there's something relevant that's actually useful for them. So I think, I think the balance is actually in a way better place than it was say 10 years ago in terms of people's understanding of these things. So I think the risks are much, much lower and I think the biggest risk is not taking advantage of it. You look where Europe is, you look at how they regret the current regulations, you look at the Draghi report, they are regretting the lack of growth they have versus the growth the US has. And I think one big part of that is they've hurt advertising.
- [40:49]
Carlo Ratti
The big picture with matter has been that all of the work in AI has been paid off for like the bread and butter core business. Can you give us any sort of insight into how much more valuable an AI powered ad is, what the conversion on it is relative to traditional advertising, how it drives growth on the top line?
- [41:08]
Alex Schultz
Yeah, I mean you can step back completely. Our business has been completely transformed by AI. When TikTok came along like five years ago, everything that you were looking at on Facebook and Instagram was connected. Content you joined, you'd like, you'd friended, you'd followed. Today, the majority of Instagram and Facebook are unconnected content. And you can see in our earnings results what the impact of AI allowing you to rank content based on semantic understanding of content and semantic understanding of the individual does for engagement. And then you see it too on the ads in terms of the revenue that's coming through and the results we're providing for advertisers. So it's very hard. High double digit percentage uplifts. If you adopt things like Advantage plus shopping campaigns, make sure you feed the data through with Cappy and do the basics right, which I describe in this book, both with matter but also using anyone else's tools.
- [41:59]
Ed Ludlow
What about human creativity at this moment?
- [42:02]
Alex Schultz
Yeah, one of my struggles is creativity is always about pixels. And look, I love my creative team. They're incredible. We closed Fifth Avenue, we had Lewis Hamilton do donuts on fifth Avenue. It, it was amazing. Things were great and it really, really worked. But there's a ton of creativity with data. There's a ton of creativity with targeting, there's a ton of creativity with conversion rate optimization and flow optimization. And what I get at in this book is creativity in the factors where it isn't David Ogilvy saying stick a car to a billboard with super glue to sell super glue. It's creativity and how you use data to give people amazing personalized experiences and high conversion rate flows.
- [42:37]
Carlo Ratti
Alex Schultz, Chief Marketing Officer for matter. Thank you very much and tune in to Bloomberg Screen Time on Thursday for a deep dive on the creator economy with the head of Met as Instagram Adam Mosseri is one we're really looking forward to. Okay, coming up, we're going to get back to the deal between AMD and Open Air and what that means for concerns around circular financing, the build out of AI infrastructure and everything else. This is Bloomberg Tech Foreign.
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- [45:42]
Ed Ludlow
We're going to get back to Open Air and AMD the deal pushing broader markets higher. Certainly pushing AMD higher. Joining us Deshkaya is with us Swiss Quote Senior Market Analyst Back these ongoing deals between chip designers and ultimately those that are perching the GPUs. What do you make of it?
- [46:01]
Oscar Descale
Well actually it's very amazing news especially for those who are questioning the circular nature of the business and the deals that are being announced right now. But in fine when we look at the AMD and OpenAI deal today. Well OpenAI is out striking deals with data centers and chip makers from inside the US and outside the US in order to stay ahead of the game and make sure that they are not constrained by capacity constraints. So that basically means that this company today is more worried about not having enough supply for the huge demand than the contrary. And that's outright positive for the eyeballs and the sentiment here. And for AMD there is is nothing else to say. That's the jackpot. Their moment looks like it has come.
- [46:41]
Ed Ludlow
Yeah, certainly biggest move in nine years. What's interesting is Nvidia did sink pull back a little bit after it had risen higher on the hopes that Hon Hai and the server demand was clearly there. But then we question market share. I mean is there anything that gives you any anxiety about Nvidia's dominance?
- [46:56]
Oscar Descale
No, absolutely not. And that's due to the context. As you always say, context is everything. The sequence on which we are receiving the informal information has been very insightful in what's coming. Actually Nvidia announced last week that they would be investing up to 100 billion USD in open air that is announcing today that they will be taking a 10% stake in AMD. So there is a circularity there that suggests that Nvidia chips are not going to replace in the context of this Open Air deal but rather complemented now beyond the steel this could give some leverage to amd but it's looks like the companies are considering today that the IP is big enough to feed everyone.
- [47:34]
Carlo Ratti
Grand thepac for public market investors. Is OpenAI the private company becoming some kind of macro level factor that they have to model in?
- [47:49]
Oscar Descale
Well absolutely. I mean they are so huge now. They are the biggest startup in the world. They are worth 500 billion USD and they do have these huge deals with publicly traded companies and those are the market moving deals of market moving stocks. We are talking about Nvidia as we are talking about amd. So definitely Open Air is pretty much the center of this revolution. It has been the, well the starting point and it's is gaining importance every single day. And it was each deal that they announced. They are actually securing their position at the center of this game.
- [48:27]
Carlo Ratti
Should we be asking more questions about how Open Air is going to pay for all of this then?
- [48:32]
Oscar Descale
Well, yes. I mean some outman recently say that they will be looking at some funding possibilities that he didn't give details about. But one of the questions here is that AI is actually a very capital intensive play. So this company needs funding now. Nvidia coming to the rescue could open the way for other companies also looking to help Open Air and take a stake in this company that has not yet gone public. So I think that Open Air, if anything is not going to be having any funding problems at this stage of the game because they are dominating the AI business right now. And even that would say it's a private company, it does have all the fundings that it needs. I think from private and public investors are just eager to take if take part of this company.
- [49:23]
Ed Ludlow
Actually the growth story is so clear in terms of revenue. But when you compare $13 billion in revenue per year and then you're thinking the trillions of dollars it has to spend, what gives you comfort that that revenue will match the amount that ultimately needs to be financed on it?
- [49:40]
Oscar Descale
Well, it's is definitely the reach that they have. We have seen over the past three years other companies like Matter or Chinese companies aside, but many companies right now, perplexity Matter. We have X for example with GROK and other models that are trying to compete Open AI and so far they have not been successful in meeting the large level of enthusiasm that OpenAI had so far. So OpenAI is actually surfing. It has been the first to come in and it still has this popularity and leverage of being the first comer. So I think that they do have a very good leverage in expanding their business and making more revenue in the future. They just need to play the game right. They just need to find the right partners and that's exactly what they are doing right now.
- [50:29]
Carlo Ratti
I pick Oscar Descale, Swiss. Quite great to have you back on the program. Appreciate it a lot. And what a program it was that does it for this edition of Bloomberg Tech Caro. Tune in later today. We have more news due to come from OpenAI. We're going to speak with the CEO Brad Lightcap on the sidelines of Open Air's developer day. Gosh, a lot going on.
- [50:48]
Ed Ludlow
Can't stop, won't stop. And you do it for us. We so appreciate. Meanwhile, check out our podcast, why don't you. There are so many conversations. Conversations you've got to dial back in. Get into Lisa sue, get into Greg Brotman, get into David Sacks and of course Alex Schultz of Matter as well. All online this is Bloomberg Tech.
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