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Coast with Caroline Hyde in New York and Ed Ludlow in San Francisco.
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This is Bloomberg Tech. Coming up in video plans to invest $1 billion over five years in a new lab with Eli Lilly to speed up the use of AI in the pharmaceutical industry.
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Plus Paramount sues Warner Brothers Discovery and plans to nominate directors to the board as its increasingly hostile takeover. B takes aim to upset Netflix an.
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Alphabet breaches $4 trillion in market value. This is CNBC reports Apple has picked Gemini to power Siri this year and.
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Then those moves fall again and really we've got anxiety across the markets more broadly. And digging into the market implications of what seems to be a dialing up in the administration's fight with the Fed. That is what the market tries to digest and why we see a bit of a Sell America theme at the moment. Yes, that small moves in terms of benchmarks, the stocks were down by a tenth of a percent on NASDAQ 100. But we're seeing bigger moves when you're looking what's happening in the bond market in the dollar, for example, we're seeing 30 year yields once again pushing up 2 basis points. Seeing the dollar on the downside. All of this as we try and bake in the macro implications. We look to CPI tomorrow But you're looking at what's underneath the hood right now.
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B
Yeah.
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C
The big breaking news of the last hour is that Apple has selected Google's Gemini model to power. Siri this year reporting from cnbc, citing an Apple statement. And you can see a big reaction in the stock the moment the headlines hit it has f. I'll take you back to November when Bloomberg's Mark Gurman reported that a deal was very close that Apple would pay Google $1 billion per year. And this was just an interim until Apple could get its own foundation models together. But we'll continue to track that story. Another interesting transaction in the market this morning. Nvidia Co investing $1 billion with Eli Lilly into a Silicon Valley based lab split over five years, AI Pharmaceuticals. But the details are interesting here, Karen.
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And we want to get those sales. We can do exactly that with Katie Greifeld. She's over at the J.P. morgan Health Care Conference. Indeed, looking at Silicon Valley getting ever closer to the world of health. Katie, what do you make of this deal?
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D
Yeah, this was a really interesting headline to wake up to, especially when you remember that Eli Lilly partnered with Nvidia back in October to develop an AI supercomputer. So the details on this specific deals as you guys run through them, $1 billion over five years, years to build a facility in Silicon Valley, basically a new lab. We don't have much details when it comes to the terms beyond that, but both companies have described this as a joint investment. And I just actually spoke to the CFO of Eli Lilly, Lucas Montarsay, about what the ultimate vision is here when it comes to AI and health care and this specific partnership. And he said this is really about drug discovery. It's still early days. Of course, they haven't built the facility yet. But the hope is that this will.
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A
Help basically in discovery discovering drugs to really target and treat those really hard to treat diseases. Think gene therapy, for example.
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D
So again, early days, but some big ambitions here.
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C
Bloomberg's Katie Greifeld just down the road at the J.P. morgan Health Care conference all day long here in San Francisco. Less than two weeks into the new year and Nvidia is already dominating the news flow. I want to get to Danny Fish, portfolio manager on the Global Technology and Innovation team at Janice Henderson and the Frank Reality visit. Nvidia is the top holding across a number of funds that you manage. What do you make of that relationship between Nvidia and Eli?
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B
Yeah, well, it actually, it makes a ton of sense to me. I mean, if we think about what's grabbed all the attention over the last three years since the chat CBT moment. It's effectively been the idea of the digital manifestation of AI. But the reality is if we think about the profoundness of how this will impact the economy over time and society more broadly, the focus physical manifestation of AI is as big, if not a bigger opportunity. And if you think about drug discovery and what that means for society and then just think about how far we've come with autonomous driving, where we're going with robotics, there are all these different verticals where it makes a lot of sense for Nvidia to be leaning into. And frankly, Nvidia has got some of the best talent in the world. And to see these partnerships with market leaders makes a ton of sense. And you know, I bring it back sometimes you get this argument, argument of circularity. But the reality is if, if you're Jensen and you have a firm belief at just how big these market opportunities are, you should be leaning in hard to this in invest co investments into labs like they're doing with Lilly, or direct investments into companies like they're potentially.
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C
Doing with Open Air with autonomous driving. A lot of people get it. I wrote about it extensively this weekend. We're going to talk about it later in the program. The go to market in the first instance is with Mercedes who will use hardware and software, but with pharmaceuticals drug discovery research, what is the go to market that Nvidia is going to pull off in the future?
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B
Well, to the so so far, if we think about pharmaceuticals, where we've seen the early benefits of AI have been in things like the clinical process, you know, getting drugs that have already been discovered through that process, internal efficiencies, marketing, things like that. The real, you know, the big prize out there is drug discovery. It's finding solutions to problems that we just couldn't get there without AI or would have taken much, much longer. So to the go to market is actually direct partnerships with these companies. To fast forward the the discovery process.
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A
Denny, that speaks to the broadening out that we're starting to see in the market. We're also going to talk about that the, the fact that we are seeing The S&P 500 actually doing a bit of a challenge in terms of returns versus some of the magic seven names. How much does it mean that we've already juiced the valuation side of the equation for Nvidia or is AI infrastructure still going to be the key watchword for 26?
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B
Well, so far all the data points would suggest that the investments into AI infrastructure are going to continue to be quite robust and we would fully expect that. And you know, and so far, you know, just looking back, you know, I mean, Ed was talking about Alphabet earlier in the relationship with, with Apple, just watching the leapfrogging effects, you know, with, you know, OpenAI and Xi and Gemini, that's very healthy. And as long as we continue to see that and then bringing back to, you know, Nvidia, Nvidia now is, you know, they announced last week Rubin is fully in production. That is going to have material impacts as it relates to inference productivity versus training and inference is the next big handoff. And so if you're a believer that we are now in this, this period where we're going to start seeing increasing deployment and of, of these applications, inference is going to go through the roof and as a result that's going to continue to sustain the investment profile. So we expect it to be pretty healthy. Now, I will say when you're talking about the broader S&P 500, I mean, one of the thesis that we've had for the last three years is AI has really started to take hold, is this is going to be very impactful across all industries. And if you believe that, and the companies that are able to get revenue lift because of deployment of AI, but then at the same time are able to drive cost efficiencies that should be pretty good for multiple polls. And so I'm not surprised to see the market, you know, sort of anticipating of sorts some of the benefits we might get from AI.
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The market's also got more discerning on who has to pay for the infrastructure and what that costs in terms of debt. Denny, I'm looking at again yet another number, $3 trillion this time coming from Moody's, saying how much the data center infrastructure build out is going to cost up until 2030. I mean, McKinsey had already put $7 trillion on that number. But is there a worry as to who has to actually pay for it? Danny?
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B
Well, of course there is. You know, the good news is the majority of this is being funded by the hyperscalers and they generate the free cash flows to actually be able to fulfill the commitments that they've made. And they're all playing the 20 year game. I mean, we've just seen that with, you know, the number of, you know, power agreements that are being struck between, you know, Matter and Google, Microsoft and others. And, and so we feel pretty good there now. Now clearly, you know, the debt markets are going to have to remain healthy. We're going to have to continue to see progress as it relates to, you know, you know, the ambitions of these companies. But there's also something else too. You know, when you look at those numbers, there's also a lot of double counting in it. You really have to parse it back to get to the real meat of what's necessary. And then, you know, also there are natural governors at just how fast this can get deployed. So the deployment of the capital is going to be pretty measured. And that's what makes this very different than say the.com era where so much capital came into areas like telecom infrastructure so fast and it was very easy to get that stuff deployed. This is hard. You look at what's going on at Stargate and Abilene, Texas and trying to put up 10 gigawatts, the labor that's needed, the power, just the expertise. And you know, it's, it's, it's a heavy lift. And so that itself is a natural governor on just how fast it can get deployed.
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C
This is what we were trying to pass at CBS last week. The baseline assumption very quickly, Denny, is that demand still outstrips Nvidia and AMD's ability to supply. How does that set us up for this year?
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B
Well, that's good for infrastructure, you know, because when you're in a situation like that and even a tsmc, for example, where the second. Yeah, yeah, where, where you know, you only have so much capacity and you can only bring up incremental foundries so quickly. And so as a result that's really good from a pricing standpoint, particularly when you're the only game in town. And for certain aspects, Nvidia is still the only game in town.
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A
To Danny Fish, Janus Henderson investors, great to have you on all the games. We are coming up. Paramount in ramps up efforts to thwart a planned merger between Warner Brothers Discovery and Netflix. The latest in the media merger saga that's next is the Bloomberg Tech. Paramount Skydance. While it says it plans to nominate directors to Warner Brothers Discoveries board to vote against the approval of a merger with Netflix, of course, and the company has filed a suit to force Warner Brothers to disclose information about the proposed Netflix Warner Brothers tag higher. Bloomberg's entertainment reporter Felix Gillette joins us on what is an ever more hostile potential takeover. So suing for more information, what do they want to really demonstrate to investors here?
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B
I mean, at this point, you know, they're choosing to raise the hostility versus raising their bid.
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Yes.
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B
And I think, you know, they've been campaigning Shareholders join our tender offer. You know, they've said for weeks now our offer was better than the Netflix offer, accusing the Warner Brothers board of not being transparent during the proceedings. And now they're making this move to essentially say, you know, you have to provide the information to shareholders so they can judge which is a better offer. And to do that, you know, the big, most contentious issue for months now has been how do you value the cable assets that Warner Brothers is planning to spin off prior to selling the studios and the streaming business to Netflix.
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C
The Netflix offer, $27 a share for the studios and streaming spin off the Cable Networks. Paramount, $30 a share for all of it, but basically assigning a value to the networks of $0.
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B
Right.
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C
This is a saga. It will play out over time. It's a really difficult question for you as editor here, Felix, but like what happens next? Is there a real chance that Paramount can force a hostile takeover through this mechanism?
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B
They're going to try. You know, I mean, I think like, you know, the shareholders at this point, a lot of them seem to be sitting on the fence, you know, in terms of who they're going to support. I think a lot of them are hoping that Paramount would come in with a higher bid, go over the $30 a share. That hasn't happened yet. You know, I think again, you know, David Ellison and Paramount have been trying to advocate for this notion that like the Netflix deal isn't even going to happen. They have too many regulatory issues. You know, putting aside the fact that if Paramount offer was accepted, they'd have their own issues in Europe with the States. So yeah, I mean this continues to just get more and more hostile. And this is, you know, the next step is, is this lawsuit and a proxy fight over the directors.
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C
Bloomberg's Felix Gillette, thank you you very much. Another top story, Deep Seat founder Liang Wen Feng's hedge fund surged more than 50% last year making it the second best performer among China quant funds. The strong performance helped boost the cash available for Deep Seek itself. Let's get out to Bloomberg Tech executive editor Peter lstrm. You know, there's two, there's the Bloomberg story, right, which is about a quant funds, you know, amazing performance. But in the reporting, it's super clear the read through that people are making is that that the returns on that the earnings from that fund's performance can be taken by Deep founder and used to give Deep Seek a bigger budget for research and deploying its models.
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B
Right, right, that's exactly true. Yeah, there's A so there's a finance story here, but there's also a tech story and the finance story is very impressive. The hedge fund High Flyer, that was really the place where Deep Seq was born, had a great year. Returns were 57% on average across their various funds. That is is very good for the founder Liang Wenfeng, as you mentioned, it's good performance compared with the other quant funds out there, but it also gives him a much bigger checkbook to be able to go out there and make new investments. Now that probably would be in Deep Seek. Deep Seek has gained a lot of momentum since a year ago when they had their big breakthrough, dropped the bombshell that they had invented this LM for a fraction of the cost of OpenAI's with very similar performance. So now you could see the founder invest more money into Deep Seek, perhaps chase after a little bit of the capital intensive projects that we've seen in the US in particular. We haven't seen those kind of investments in China so far. Or you could invest in other kinds of initiatives that may not be directly the same as Deep Sea because the.
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The whole claim about Deep Seat was only costing $6 million. And the theory in this particular reporting is that maybe they're getting revenues of some $700 million. That could go a long way if you're thinking about the costs of costs of doing the business here. Peter, talk to us about why they're able to outperform so much. What is it they're betting on? How are these quant funds managing to be so superior?
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B
Well, partly with Deep Seek early on, they were able to do this because there were a lot of constraints around the AI initiatives in particular. And we've written a fair bit about High Flyer in the past. They have these quantitative techniques to be able to outstrip their peers within the China market. They were the number two fund, as you mentioned. Also, the China market has been on fire. There have been a lot of investments in other kinds of AI models. Deepsea hasn't gone public yet, but two of the other AI models within the country have gone public, giving them a lot of momentum here. So the market's been very strong. They've been able to take advantage of that. But again, as you say, they now have 100 times as much money as they used to start up Deep Seek in the early days. What are they going to do with that money? How are they going to invest it? They're not talking about this publicly, of course, at this point, but we would expect more things to come from high flyer and deep seek in the future.
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I mean just think, Mini Macs went public on Friday. It was up 100%. It's up 15% again today. Peter Ellstrom on all things Asia. We so appreciate it. Thank you. Coming up, a bit more on Asia. Could Chinese EVs actually dodge tariffs in the EU? We're going to discuss the global electric vehicle wars. Stephanie Valdez street from Cox of Automotive that's Next is a Bloomberg Tech. Every day millions of customers engage with AI agents like me. We work round the clock and have the facts at our fingertips. We're fast and effective but incredibly patient. And we're built on Sierra, the leading AI powered customer experience platform. No hold music, just answers and action. Visit Sierra AI to learn more. That's Sierra AI.
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A
The European Union is weighing minimum prices in for EVs exported to the block from China. That actually would replace steep tariffs. Is it a sign that we've got some easing trade tensions even as the US presses Europe to take a tough line on Beijing? Here to discuss this is Stephanie Valdez, street director of Industry Insights for Cox Automotive. That was sort of the latest news headline that we get that maybe BYD will be able to sell into Europe and not have to have huge tariffs that eats its margin. Are we going to see them able to tackle the European market and continue to scale?
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D
Yeah, you know we look at the electric vehicle market, right. China definitely is dominating. You think about their strategy is to export, Right. They've exported millions of vehicles and they've had a lot of luck increasing share. And so the uk it's basically, you know, it's a compromise. Right. The, the eu, Europe needs the to meet those climate goals. Right. They need to increase their EV adoption. They rely on China for minerals. Right. Batteries. So I think it's a good compromise and I think China will continue to increase their share in those markets. Not only UK but some of the emerging markets as well.
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A
Meanwhile, one of the biggest feedback I often get on my social is about the lack of BYD or Chinese offerings here in the United States. Is that ever going to come to bear or they just forever going to be shut up because it's really bets on Tesla and also pushing away against EVs more broadly.
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D
Yeah, you know, I think if you look at the us that's one thing I think both political parties can agree on is to keep China out. And so I think that's kind of where we're at now. In the future, you know, maybe we could see something that similar happen to the Japanese and the Koreans. They come, they build a partner and they build manufacturing plants. But for now the near term we're not going to have those other than the ones that we already have under geely, which is the Volvo and Polestar. But definitely I think consumers are seeing EVs when they travel abroad and getting the experience of riding in a Chinese OEM and discovering how good quality high tech. And so I think that it would resonate with US consumers at the right price.
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C
Stephanie, last week at CES Nvidia outlined a full stack hardware software solution for autonomous driving and it very quickly raised questions about Tesla. So I asked Jensen Wong about it. Listen to this.
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I think the Tesla stack is the most advanced AV stack in the world.
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B
And and I think the Tesla operations.
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Is the most advanced in the world.
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B
And I, I'm fairly certain that that they were already using end to end AI.
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C
So here's the thing. Mercedes will ship a vehicle this quarter capable of point to point hands free using Nvidia technology. Does Tesla finally have something real in the market to worry about?
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D
I think they do you think about some of the even really is another player right that they at their day they announced their plan. I think definitely there's a lot of competition and I still think you know we're making some tremendous progress. But I think one of the challenges continues to be regulation safety. But I think the Nvidia announcement with that technology to really identify those edge cases which will help with regulations more credibility. So definitely Tesla has some challenges out there for sure.
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C
The reason I find it fascinating is that if you are a Tesla owner, you know, you know all about full self driving fsd. It's a part of the pitch from Tesla. But the vast majority of the auto market, at least in America, maybe they don't think about okay I'm going to buy a vehicle based on its ability to do this. Do you think that changes from here on in?
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D
I think, I think more from consumer is more about the in car experience. So we keep hearing the software defined vehicles. I don't think they're going into I want this autonomous or full self driving. It's more about what kind of consumer experience can I have with technology in the vehicle. So in vehicle IT experience. So maybe it's the ability to have some of that ADAS technology but I don't think that's the main driver. It's more about what's that experience going to be and what other options that vehicle provide.
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A
For me in many ways it's about marketing, getting people in the cars to understand what it feels like and then sort of perpetuate that demand for wanting more and more and more. From your perspective is the consumer mindset there from a safety perspective is the regulation there from a from that point perspective as well?
- [24:12]
D
Yeah, I think so. I think that's the one thing if you think about, you know I think we think about robotaxis, right? We're starting to see a lot of that with Waymo and Z, some other companies, Tesla getting consumers into those robotaxis autonomous. So they're getting to finally experience that. But I still think you know it's been hard to get consumers to trans, you know, kind of consider electric vehicles to get into an autonomous vehicle isn't more so. So I think there's still a lot of work to be done in terms of credibility and safety perceptions for autonomous vehicles from a consumer perspective.
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C
Stephanie, look forward to 2026 for us. What is it you expect to have in United States in particular in electric vehicles and any growth that may or may not come to your mind?
- [24:57]
D
Yeah, you know, 2025 it ended exactly where we thought it would. Our report comes out tomorrow but we're going to be about 2% down year over year round up to 1.3 million vehicles. But going into 2026. Right. We got rid of the carrot and the stick. We no no longer have the IRA tax incentive. The corporate average fuel economy standards have been less stringent, the California waiver. But given all that, we still have 20 plus new EVs launching in 2026. So I think we're still going to see momentum. It's going to be hard but I think consumers are going to have more product. But I think the one thing which we've talked about before in the past is the affordability. If you look at the current product lineup, these that are offered over 60% or over $65,000 so that Stephanie about his treaty demographic.
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C
Stephanie Vada Street a director of industry insights, Cox Automotive. Thank you so much. Coming up we'll speak with Lux Capital co founder Peter Herbert about the firm latest fund, its biggest fund, Silicon Valley meets D.C. this is Bloomberg Tech. Welcome back to Bloomberg Tech. There's a story we're going to go deeper on later in the program. The president saying that if credit card companies don't respect an interest cap of 10% in the year they will be facing illegal activity claims. Basically these are two of the more tech focused names. Klarna firm both down on the news. I would note American Express is also down as an example significantly. We're going to get to that later in the program. Back to one of the top stories. We've had confirmation from Google that it is entered into a multi year agreement with Apple for Gemini to be the underpinnings of the next gen AI Siri. You see when the news broke just before the program about 10:30 Eastern Time, a big jump in Alphabet shares that sent market cap3.4 trillion. They then faded. And I'd remind you as well that Bloomberg did report in November that a deal was close for Apple to pay Google about $1 billion a year for use of that very large 1.2 trillion parameter model. Carrie, what else?
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A
Well let's dig in on Alphabet on its recent moves but Also where it stands versus the rest of the market. Bloomberg equity reporter Carmen Reineke has been really digging in to the idea that maybe we're broadening out. Maybe Max 7 isn't just a surefire bet. Alphabet was a surefire bet last year. Tell us about the discernment we're starting to see among these key mega caps. Yeah, I mean, what we saw last year is continuing, at least in the first few weeks of this year, where the winners and losers are really important. So Alphabet was a winner last year. It was the biggest outperformer and one of only two stocks in the MAG7 group that outperforms the broader market, the other one being in video. So it's really established itself as dominant in the AI trend. And, you know, maintaining that momentum going forward is really important, especially considering that we're starting to see some of these other names lag a little bit. You know, they're just slowing down in terms of overall growth and heading into earnings season. Some of those things are expected to continue. Right. We're just, we're hitting the, the law of large numbers.
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D
Growth is expected to slow, and so.
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A
That might translate into stock gains as well.
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C
Been an interesting morning for Alphabet and Apple and the news flow around the deal to, to improve Siri and I was reflecting on literally just the ticker, right? You know, Alphabet soars and breaches $4 trillion market cap, then kind of fade straight away. What did you see in the markets this morning in terms of how people reacted?
- [28:32]
A
Yeah, so we saw that big spike for both Google and Alpha, or, sorry, Google and Apple shares. It did push Google over 4 trillion in market cap. It's also surpassed Apple recently. So it's the second largest company in the S&P 500, really in the market other than in video. And it's interesting because, you know, we did see those, those gains fade a little bit. They're up now. I think both stocks are, are trading in positive territory. But the overall market, I think we are still seeing a lot of macro news weigh on this. It's been a little bit all over the place today. So big tech is obviously still super important. These stocks are really important. They're so large they add a lot and can weigh a lot on the broader index. But we also are seeing that there is a broadening out. People are looking at other sectors and, you know, it's not just big tech that's always driving the gains and losses in the market.
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C
Bloomberg's Common Reineke, thank you very much. Let's go from the public markets to private markets where interest in frontier tech is incredibly high. Lux Capital has raised $1.5 billion for its ninth fund, the largest in the venture firm's more than 20 year history. Peter Aberd, partner and co founder of Lux Capital, is with us here in San Francisco.
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B
Thank you for having me.
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C
It's exciting news, right? A ninth fund, the largest ever. You turned away about a billion dollars of capital. What's very interesting about it though is the consistency. The themes are the same, the focus is the same. What do you want to do with this fund?
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B
So we will be doing more of the same, but just accelerating that pace. And so we've been investing now for more than 25 years in physical, computational and life sciences, but really at the cutting edge in the frontier of all of these different scientific disciplines. And so as we say, science doesn't seem scale itself. And so that's where we're going to be putting the thrust of our investment.
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C
Peter, we enjoy having you on the program. The firm, you, Josh, Dina, when they cut, when, when all of you come on. But it seems very disciplined, very calm. Check sizes 100,000 up. This is exciting though. These are some of the domains that are moving the fastest. And actually would you reflect that this administration has allowed you to do that? It's the areas of defense, other areas adjacent to ise, something that the Trump administration has moved quickly to support.
- [30:46]
B
So certainly in areas like defense, kind of broadly re industrialization, a lot of the things that we do, it's certainly having a moment and that's really reflected one from the technological waves that are happening. One of the things that is top of everyone's mind right now is physical AI. Right now there's also of the JP Morgan health care event happening in San Francisco. You're seeing huge breakthroughs in medical, robotics and in computational drug discovery. But absolutely, if you look at the world, it's, it's an uncertain place. And defense technology has been really soaring as large nation states rearm and focus on deterrence.
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A
Peter Andrew, of course, one of the key bets he made and we had Palmer Lucky on the show last week from cbs. Of this fund, how much will be to double down on prior bets or how much will be to take out totally new bets on new companies coming to your inbox.
- [31:43]
B
So the spirit of this fund is really thinking about it as a blank slate, starting with a portfolio of probably 40 to 50 core positions. Historically we've had companies that have gone from one fund to another cross fund investing, but it's generally not the focus and Philosophy of each new core fund.
- [32:01]
A
That we raise $100,000 to 100 million. That's a huge breadth that you're giving yourselves. Where do you think you will be excited to deploy? Have the foundational models move forward? Are we seeing more interesting areas of more specific niche parts of the building, the lms or is it more about application? Where are you thinking about getting excited for?
- [32:24]
B
So our mental model and framework really is what we describe as moving from 2D 2 dimensional AI to 3D and that's really areas of robotics and automation and biology. But it's seeing AI for the first time coming out of the digital world into the physical. And just one example of that is really just the momentous opportunity here. Approximately 90% of US GDP is not digitally native. It is in the physical world, it's construction, it's heavy industry and that's $30 trillion of total US GDP. So the opportunity really exists for technology investors focused on software, data, other very specific areas that now have the opportunity to basically 10x total addressable market.
- [33:14]
C
Peter, you're a co founder of, of this firm. Has the composition of the LPs changed from Fund 1 through to Fund 9 and where the interest in you is coming from?
- [33:25]
B
Earliest believer in, in. In Lux was a gentleman. Bill Conway, one of the founders of the Carlo and so he was, he was Lux Ventures one. Today we manage $7 billion on behalf of endowments and foundations and state pensions. So obviously going from an initial individual, albeit a quasi institution, to now serving some of the world's most elite institutions.
- [33:49]
C
I'm really interested in the core competencies you're looking for later in the program. We have One X, the humanoid robotics company on right. And they're out with their own world model. But the problem right now is that in video, as was made very plain last week, basically coming out and say we'll do it all for you. On the hardware and software side, if you're a humanoid robots company or a different physical AI offering, what's left to look for in that regard?
- [34:15]
B
Believe it or not, there will not just be one company that rules all others. And so there are a number of different opportunities. And even within video, as prominent as they are, there are other up and comers. On the silicon side, certainly on the software side, training, there are a number of different companies that are attacking again physical implementations of AI. From Physical Intelligence, that's here in San Francisco, to Applied Intuition, which is a luxe portfolio company which is really creating an operating system in mobility. So there is abundant opportunity and is.
- [34:49]
A
That global, Peter in terms of not just the consumer base but where these companies are getting birthed, how broad do you go?
- [34:56]
B
Well, 1x not an American company. There are many global competitors in this marketplace, even in AI. Right now we're an investor in a company called Second AI based in Japan. We've made probably about a dozen or so investments across Europe in the last fund. So technology is global, it's broadly distributed. San Francisco remains the epicenter, but you will see it popping up coming out of a lot of large research institutions across the globe.
- [35:26]
A
Fascinating. Peter Abe, we thank you. Partner co founder Luxe Capital on the latest fund announcement. Coming up, we talk about the company 1X, the maker of Nio. It says its new AI model will give its home robot the ability to learn new tasks from scratch. We'll talk to the CEO. This is Bloomberg Tech.
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B
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C
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E
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- [38:03]
C
We've got news for you from the world of robotics. 1X Technologies, the maker of the humanoid robot Neo, has an update for its 1X World model, an AI video model grounded in physics. According to the company, the update will make NIO capable of executing on new AI abilities with a simple text or voice prompt. That's even if the robot has zero experience of doing the task before joining us is One Technology CEO and CTO Burnt Bernick. Welcome back to Bloomberg Tech.
- [38:32]
E
Thank you.
- [38:33]
C
I want to keep this really simple. To start, what is an example of a of type task that the update to the model allows for NEO to do that it couldn't have done for the first time without the update.
- [38:46]
E
So I mean, to me it's all about like things just being anything that you don't have in your data set, but still being able to have a sensible approach. So like the first time I really kind of like saw this and it was a simple question just asking the robot, hey, can you, can you pick the post it note down from the board and read it?
- [39:07]
C
But it may never have seen a post it note.
- [39:09]
E
And it's like, of course we don't have any training data on us using robots to like pick post it notes of a board and like look at it and read what's on it. But it can actually do it really well. And it's not AGI yet. There are examples where it fails, but what it does is the ability to have this very sensible approach to anything, which is the cornerstone of learning. Because now all you need is the robots teaching themselves how to do all these tasks by actually experimenting and doing this in the real world.
- [39:37]
C
This model, how good is it? You know, last week see, as Nvidia extolled the virtues of using their open models and inside neo, the brain of NEO is, is an Nvidia inference chip, right? So why not just use Nvidia's Machine model too.
- [39:56]
E
We have a very deep collaboration with Nvidia and we do use a lot of their technology in the stack. I think to us it's also, it's very much about the embodiment. NIO has been designed really over the last decade to be as close to a human as possible. Because if you take all of the knowledge that we have in the world, like everything you can see on YouTube or any kind of video content, and you train a model on this, and now you want to pick up the cup or open the door, if your robot is actually not similar enough to a human, this doesn't work anymore because you wouldn't do the task in the same manner. And this is quite unique to 1X. I think there's a couple of things that really puts us apart and it's that we have robots that are so close to humans in how they interact with the world, but also that they're safe so they can actually try to do something. And if they fail, then the world is still okay. Like, you don't want your. Like, I don't know, you don't want your door to be scratched because there was a robot trying to open it. And this puts us in a category where our approach to the AI is probably a bit different than what the standard is now. And also why we're so very excited about these world models where finally we see robotic scaling following the same scaling laws as, for example, video pre training from the big video model channels like Sora or VO from our competitors.
- [41:14]
A
And go in on the safety a little bit more because you're talking about how it stops your door getting scratched. But for many, it's about, well, when robots start learning to do things themselves. Therein lies the safety issue. What guardrails do you have in place?
- [41:30]
E
So we have some exciting work on that that will come out soon. We are doing the proper things on the safety side with respect to following the standards, helping develop some of the standards, but also ensuring that we, for example, have externally audited work of our safety work by an independent third party, of course. But to me, safety has many layers. You have what we call, like the passive intrinsic safety, where humans are actually very safe in the sense that we have to actively work to hurt each other. We don't, we don't hurt each other by accident, usually. And this is something we build into the machine the same kind of just, you have to be soft, compliant, lightweight, low energy, so you can be safe among people and in the environment. And then, of course, you have the AI Alignment, which is equally important. And how do you ensure that you can always take the safest, least risky path for whatever task you want to achieve. And this is also something that's incredibly exciting about these worlds models that they understand the world so well and also how the physical world works that you can not only ask for, how am I going to do this task? But how am I going to do this task in a manner that is as safe as possible? What are the things that could possibly be wrong, go wrong? And then the model actively reasons about like, hey, here are the things that I can visualize going wrong here. So I'm going to take this path here, which is the safest path.
- [42:52]
C
The problem being sold for other than ultimately accelerating deployment of NIO in the real world is the burden of real world data gathering. A lot of focus right now on simulation and synthetic data. Just talk a little bit about that. Some of our audiences is our industry, they're more technical and they'll want to know how you did it with this particular model.
- [43:13]
E
Yeah. So I think really if you boil it down to the simplest parts, it is if your embodiment, if your robot is close enough to a human, then all of these learnings that we have from video, they actually transfer pretty well. And once you can do that and your robot can now approach almost any task as long as you can ask for it, your intelligence doesn't scale with the amount of data you can collect with humans anymore. It actually scales with the number of robots you've deployed. Because now you just need enough robots actually trying to do all these things and trying to do these things are useful. Right. So you also produce useful work, but in the process, the robot learns and it quickly gets better. And now you just want enough robots across society and doing enough different tasks so that you get a very large data coverage and then you're progressing very, very well on your scaling loss towards general intelligence. But it's now independent of actually having to use humans to gather the data through teleportation.
- [44:14]
C
Exactly. Berniek, CEO and CTO of One. It's great to have you back here on Bloomberg Tech. Thank you very much, Carrie. Plenty of other news headlines.
- [44:21]
A
Yeah. And it's time now for talking tech. And first up, Matter has appointed a former top adviser to President Trump to a newly created senior management role. Tina Powell McCormick will guide the company's infrastructure efforts, including securing future funding from governments and investors for massive data Science center project. Plus, Matter also says it has shut down almost 550,000 accounts in Australia to comply with the country's new social media ban for kids. And the law, which came into effect last year, mandates that services like Facebook and instagram block under 16 year olds from having accounts or face fines of up to $33 million. And anthropic while it's making a push into health care with tools that allow patients and doctors to access medical information on its AI Chatbot. And the new offering is compliant with US Medical privacy regulations, allowing providers and consumers to field protected health data. And okay.
- [45:13]
C
Coming up, credit card issuers are on edge as President Trump calls for a 10% interest rate cap on credit cards for one year. We have the details. Next. This is Bloomberg Tech. Wal Mart is partnering with Alphabet to offer air enhanced shopping on Google, Gemini's platform, part of the retailers race to apply the technology across its operations from apparel and consumables to entertainment and food products. Customers will be able to purchase items on Gemini's browser or mobile app in the coming months.
- [45:49]
A
Let's talk a bit more about the consumer and tech and payments. For example, because President Trump is pushing for a one year cap on credit card interest rates at 10%, it's a move that could upend the credit card industry industry and also ripple through major buy now, pay later providers. Newbanks Page Smith, who covers consumer finance, is right here. Look, is this going to send shock waves and people towards alternative forms of financing if, for example, these credit cards just can't serve the broad consumer that they used to, if 10% is the cap? That's a really good question. I think we are a bit early to exactly see how consumers are responding to this because it's still early days. Just to be clear, President Trump's statement on Friday evening and then again last night was really just saying that that credit card companies, essentially issuers and big banks should be doing this. The legal levers that he can actually pull to implement such a proposal would are still very unclear. We haven't seen any sort of formal proposals.
- [46:47]
D
So to sort of say that there.
- [46:49]
A
Would be fintech, you know, maybe fintech alternatives, sort of folks along the lines of SoFi or a firm or Klarna actually stepping into the void is a bit premature. But although shares have sort of seemed to react and seem to be identifying some potential opportunities along those lines.
- [47:09]
C
Page, the president's claim is that some credit card providers are charging 28 up to 30% as he put it, but also that that the consumer might not even realize that they're being charged interest at a rate of 30%. In our reporting and in evidence, do we know that to be true among some credit card providers?
- [47:27]
A
I mean, I'll speak for myself. I think it would be fair to.
- [47:30]
D
Say that it was a good reminder.
- [47:32]
A
This morning and over the weekend to be checking interest rates on credit cards, as every consumer should be. So I, I think it is fair that it's not a widely known fact of exactly how much it costs consumers to be swiping, tapping, using their credit cards across the board. You do a great job at reminding us that this is still early stages and enacting any sort of proposed cap would take, I believe, an act of Congress, but push us forward to what some of the key executives have said in response to this potential move. Most definitely a quote that stood out to me just before I came on air was that I saw that the SoFi CEO Anthony Noto, I believe the quote was giddy up in terms of the opportunities for so far. So far actually does offer a credit card to its consumers, but it's really a firm that's kind of best known for student loan refinancing and also personal loans for consumers. So that's kind of a flavor of the, the tone some executives are striking, while others are maybe kind of hanging back a bit and seeing substantively what impact this could have or what opportunities it could present for their businesses.
- [48:40]
C
Bloomberg's page Smith, thank you very much. That does it for this edition of Bloomberg Tech.
- [48:45]
A
Carrie so much already. As we kick off this week, don't forget to check out our podcast. You can find it on the terminal. Sell us online on Apple, Spotify and Iheart back in San Francisco and New York. No longer in Vegas. This is Bloomberg Tech.
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B
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