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- [00:00]
Caroline Hyde
Adobe is turning AI promise into marketing reality, a reality where personalization feels more human, automation feels authentic, and customers feel more connected to your brand. From AI frenzy to roi it starts
- [00:16]
IBM Representative
with Adobe, so there's a lot of noise about AI. But time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
- [00:47]
Public Ad Announcer
IBM support for the show comes from Public Lately it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth on public. You can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts? Yep. High yield cash? Yes again. They even have direct indexing. Public has modern design, powerful tools and customer support that actually helps go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by Public Holdings Brokerage Services by Public Investing Member FINRA SIPC Advisory Services by Public Advisors SEC Registered Advisor Crypto Services by ZeroHash all investing involves risk of loss. See complete disclosures@public.com Disclosures
- [01:49]
Caroline Hyde
Bloomberg Audio Studios Podcasts Radio News. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco.
- [02:09]
Ed Ludlow
This is Bloomberg Tech. Coming up, Broadcom CEO Hock Tan says the company expects AI chips to top $100 billion next year. The stock pushing higher on the earnings
- [02:18]
Caroline Hyde
plus anthropic has resumed discussions with the Pentagon about the use of its AI models by the US Military amid a feud over safety details this hour, an
- [02:28]
Ed Ludlow
industrial software startup, Nominal, is Now valued at $1 billion, thanks to series funding led by Founders Fund. We speak to the company's CEO and Trey Stevens of Founders Fund.
- [02:38]
Caroline Hyde
First we check in on these publicly traded markets. Then, once again, anxiety rips through. We're in a sixth day of conflict with Iran and oil prices are still suggesting concern. Brent crude up 3.3%, supply chains being choked. We're going to get into that story later on, but it means that we're seeing inflationary Pressures worry people about the Federal Reserve's ability to cut rates going forward. We've got jobs data tomorrow. The NASDAQ 100 down by a tenth of a percent. 210 of a percent. Let's call it Bitcoin, up by more than 2% percent. What are you looking at?
- [03:06]
Ed Ludlow
Yes, the difficult tension in public markets, the Iran war, but also earnings is there. So Broadcom's up 5%. It's a big game, but nothing sort of remarkable against recent history. The key Data point is $100 billion just in chip sales in 2027, which is remarkable because in the current quarter they'll do about $10 billion. In the quarter gone, chip sales grew, doubled basically 100% from a year ago. There's a lot of momentum there, but it was a high bar. There's also anxiety about. We need to dig into it.
- [03:38]
Caroline Hyde
Let's dig into it. Bloomberg equities reporter run Stella, who goes through all the analysts reports the reactions to the numbers. Are they buying this $100 billion figure?
- [03:48]
Stella (Bloomberg Equities Reporter)
So far it does seem like people are. People are pretty optimistic about the company's position with AI. And a lot of the AI forecasts that Broadcom game were seen as much better than expected.
- [03:58]
Ed Ludlow
So there's certainly a lot of optimism. But like you said, we're not seeing
- [04:01]
Max Schaffkin
the stock really go on a tear here.
- [04:03]
Stella (Bloomberg Equities Reporter)
The way we've seen in past quarters when they really surprised to the upside
- [04:08]
Ed Ludlow
part of this in the data is that there was an existing data point, a backlog of $73 billion relating to AI and they seem to be getting a lot of credit by coming out and saying we have line of sight quotes to this $100 billion through 2027 or on an annual basis, 2027. Like, is that just what the street is seizing on? Did that make an assessment of margins? Did they make an assessment of the other parts of Broadcom's business, which is also software?
- [04:36]
Stella (Bloomberg Equities Reporter)
Yeah, I believe the software business disappointed, at least mildly this past quarter. But I think the focus really is on the AI side of things. I've spoken to people who say that Broadcom just doesn't get the credit for its position in AI, especially relative to companies like Nvidia. So this is obviously a very positive data point for them now. I think there are a lot of just sort of growing concerns out there about, you know, capital spending on AI infrastructure. Are we getting to a point where
- [05:01]
Max Schaffkin
we're getting near peak earnings?
- [05:03]
Ed Ludlow
There might be some of that that
- [05:04]
Stella (Bloomberg Equities Reporter)
is sort of tempering some of the enthusiasm for Broadcom's results. But I overall, anyone who is just looking at the numbers should be pretty happy.
- [05:12]
Ed Ludlow
Bloom is right in the Seleca, who all morning in Chicago has been across dozens of sell side notes and gave us the summary there. I want to talk more about Broadcom. Joanne Feeney Advisers capital partner and portfolio manager. About $13 billion that you manage for clients and Broadcom's the top three, right. In terms of holdings. It's really interesting the direction of A six and custom Silicon. You know, how do you go from $10 billion of sales in the current quarter to telling your investors, oh by the way, next year in excess of 00 billion just in chips? That's believable to you?
- [05:46]
Joanne Feeney
Yeah, it's an incredible ramp at Ludlow, no question about it. But you know, when you look at the history of Broadcom, you know, we've owned them, we've owned this stock for clients since I arrived at the firm in 2015. It's been a core holding, it's been a leading holding for many of our strategies on the equ because of several things. One, they've always managed to to maintain a deep moat in their products relative to the competition, whether it was for iPhone chips or storage or elsewhere. And their acquisitions have generally led to better cost savings than folks had predicted. And you know, now with the diversification, you know, into software and that continuing to do well through VMware, you know, they have recurring revenue streams through the software side which helps maintain margins and they've shown their ability to execute. The fact that they've locked up capacity through 2028 tells us how good their visibility is.
- [06:41]
Ed Ludlow
So I want to seize on that part. A lot of people ask me like what is it the Broadcom actually does? So if you take Google's tpu for example, they co design the architecture, make it a manufacturable chip. But Broadcom is fabulous, right? And so that bit you just said, as far as I can tell, the value is not just in the design of a tpu, which they've been discreet talking about in recent years. It's the ability to scale and get it to market at scale. Is that how you look at it?
- [07:12]
Joanne Feeney
Yeah, that's, that's definitely part of it. And you know, their ability to work well with tsmc, I mean it's not just up to TSMC to get these designs to work. It's very much a coordinated process of design with the manufacturing capabilities. So they have shown that they're very effective in helping TSMC get to high yields and that's behind the scaling capability. But it isn't just the TPU or the xpu. It's also the fact that they're selling the networking technology along with these chips. And in fact with networking expected to grow faster, they're selling networking devices beyond their six customers to the broader ecosystem of AI based data centers.
- [07:53]
Caroline Hyde
They're becoming even more like Nvidia in terms of just a full stack offering and in many ways going for the key competition that is designing the chips for the matter for the Open Air. Did you get enough certainty that that relationship with matter is really strong, that they are going to be able to ramp in the way that they expect for Open Air and these companies that want to build their own and not just wholly rely on Nvidia, you know,
- [08:17]
Joanne Feeney
I think one thing we know about Broadcom is that they work very closely with their customers and that is what has given them visibility in the past. And it's that visibility they're pointing to now. They work on more multi year roadmaps. And so yes, when they say that matter is continuing to work with them, you know, that seems like a reliable piece of information. There was a lot of information on last night's call. But you know, beyond what Nvidia does, the networking capability that Broadcom brings to the table allows their customers not just to build right around the the chip, but also to the connectivity to other parts of the server and the data center. And that's, you know, that's a different line of products. And, and then you look be just the AI business and you've got software that is separate and storage and other, you know, iPhone and other technologies gives them a more diversified positioning relative to Nvidia. We like Nvidia, we've owned it for a long time for clients as well. We think it's going to continue to grow. We think the pie is expanding so much that there's room for both of them. But the visibility that, that Broadcom articulated I think is really compelling and I think that's why you're going to see the analyst community get more on board and raise those estimates.
- [09:30]
Caroline Hyde
Can you talk a little bit how complementary it is to have the hardware and the software offering why VMware matters?
- [09:37]
Joanne Feeney
Yeah, so you know, the, you know, the role of the enterprise software is to not just be able to run AI for your company and use other AI models, but it's to integrate those, you know, capabilities of AI to deliver insights into how you run your businesses. Right. And so that's, it's not enough just to have the information right, you've got to then pass that information through to your enterprise software to enable you to change the way you're doing things within the business, change the way you're serving customers. So that's the integration that you know, that they articulated and I think is a pretty compelling story.
- [10:16]
Ed Ludlow
You know, Hock Tan historically has been Mr. M and A. Right. And I look at like how Nvidia has kept itself in the lead. Not necessarily outweigh outright acquisition, but investments, you know, licensing agreements. Do you see Broadcom doing more of that Joanne?
- [10:37]
Joanne Feeney
I'm not sure which direction you're going in with that one Ed. I do see Broadcom continuing to look for M and A opportunities. I mean right now it seems like they're flat out in terms of, you know, co developing these, these XP use. I don't know if they currently have the bandwidth to do any major M and A. They're using up their capacity allocation at TSMC for what is clearly a high growth, high margin opportunity. But one thing they have done in the past regularly is when any one area of their business got too large relative to the rest, they'd go find some other area in which to invest in which to bring in into the company. So, so you know, maybe over the next couple of years I would see that as a possibility. I don't see it as imminent at
- [11:22]
Caroline Hyde
the moment they're investing in their shares and buying them back. Johan Feeney of Advices Capital, it's always great to check in with you. Thank you. Look, let's turn to private credit now because BlackRock it's marked down its loan to Infinite Commerce holdings to zero from 100 to zero in just three months. Having valued that tech companies debt at $0.100 on the dollar, the roughly 25 million dollar loan to the so called Amazon aggregator is now considered worthless. Marking the second sudden wipeout to hit BlackRock's private credit division in recent months. What's interesting about Infinite Commerce Ed, is it's also VC backed and look they're saying BlackRock saying a lot of this business was written in 2021. Well we just think about what the venture community has got in terms of liabilities to 2021 equity and where that currently trades for them.
- [12:09]
Ed Ludlow
This is Caroline Hyde stomping ground. So I'd be being a bit careful in going to the key risk in private credit that when you have a loan to a private company it doesn't like trade every single day, the valuation kind of lags. And so before you know it, if something's gone wrong. Then you get the piece of news that you just read out. That's kind of how I understand the market at least.
- [12:28]
Caroline Hyde
But what's interesting is another credit offering or another partner that had been lending to Infinite Commerce. They marked that loan down in December. So maybe
- [12:39]
Ed Ludlow
Most Read story on the Bloomberg and no surprise I'm coming up in the program talks resume between Anthropic and the Pentagon over the military's AI. Use the details next. This is Bloomberg Tech.
- [12:50]
Caroline Hyde
Effective marketing is smarter, not louder. Cutting edge technology alone won't deliver better experiences or outcomes. Adobe helps marketers use data and AI to drive smarter engagement, reduce noise, and use AI effectively and responsibly. The brands winning in the AI era aren't the ones chasing every trend. They're the ones with the right systems and strategy. It's time to lead with insight, agility and innovation. It starts with Adobe, so there's a
- [13:22]
IBM Representative
lot of noise about AI. But time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
- [13:51]
Public Ad Announcer
IBM Support for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds and crypto, and they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific, like biotech companies with high R and D spend, small cap stocks with improving operating margins, or the S&P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on Public you just type in a prompt and their AI screens thousands of stocks and builds a one of a kind index. You can even backtest it against the S&P 500. Then you can invest in a few clicks, go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by Public Holdings Brokerage Services by Public Investing Member FINRA SIPC Advisory Services by Public Advisors SEC Registered Advisor Crypto Services by ZeroHash sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures@public.com disclosures
- [15:06]
Caroline Hyde
anthropic well, it's resumed talks with the Pentagon over how its AI Models are used by the US Military. Now that's according to a source, follows a feud between the two sides that had seen President Trump threatened to actually blacklist the company. Let's get more Bloomberg Tech editor Seth Figureman and Dario Amadi had taken this dispute into the public realm. Now we understand perhaps there were talks going on in private again.
- [15:29]
Stella (Bloomberg Equities Reporter)
Yeah, it feels like some of the public rhetoric, which on both sides has sounded pretty fierce, may not be reflecting what's going on behind the scenes right now. Now, we don't know how much closer they are to an agreement here after the standoff last week, but it does suggest that on the Anthropic side, there's a cloud of uncertainty now over its business. And for the Pentagon, we've known throughout that they've leaned pretty heavily on this model. There's been calls both within the defense industry and in Silicon Valley to try to de escalate the situation.
- [15:56]
Ed Ludlow
So I guess we don't know what a resolution would look like yet. Right. But could you just go back, Steph, and explain what the the point of difference was originally between anthropic and anthropic red lines were and why the Pentagon, I guess, labeled them as supply chain risk?
- [16:11]
Stella (Bloomberg Equities Reporter)
Yeah, I mean, throughout, Anthropic has been pushing for two key red lines, first on protections against mass surveillance of American citizens and the other on deployment of autonomous weapons. It seems like throughout the negotiation they've gotten close. There have been stipulations on the contract that get close to it, but there have been certain wording differences that might be nuanced to us, but which Anthropic seems to feel are key to ensuring there are appropriate safeguards.
- [16:38]
Ed Ludlow
Bloomberg's editor Seth Figgman, thank you very much. Let's stick with AI because data centers have proven to be a target in the Middle east conflict, the war in Iran, a modern version of the wartime strategy of attacking an opponent's critical infrastructure. Bloomberg's Lonnie Prinsloo is one of the reporters who's been looking into this and joins us now. Really, we look, we're showing kind of the map right now of the infrastructure impacted, but there are key sites in the United Arab Emirates and in Bahrain. Bring us the latest reporting and what we know.
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Max Schaffkin
Hi.
- [17:13]
Caroline Hyde
Yes. So basically after the Israeli and US Strikes, Iran retaliated and they hit three Amazon sites in the UAE In Bahrain, the other way around. There was also two sites hit in Iran or what we know of, according to our reporting. And what this tells us is that data centers are becoming as critical and as strategic as oil and ports when it comes to war and the functioning of the state during war times. So why. Yeah. And why were Amazon specifically hit? They are of course, wholly owned by the US Software company and there's been some reports that they may have hosted some military data. This is a frightening story. And at the moment we're seeing breaking news around the UAE telling Dubai residents to seek shelter immediately due to missile threats. We go back to, therefore, what operators of strategic infrastructure should do. How can these operators protect data centers right now and the people within them? So obviously you have to evacuate some of these or operate on minimal staff. Going forward, I think you have to treat it as a military priority. So harden your infrastructure, which is very costly. Maybe build underground in bunkers and caves.
- [18:40]
Stella (Bloomberg Equities Reporter)
Yeah.
- [18:41]
Caroline Hyde
But it's going to be have to have some sort of rethink as we go go forward and think about data centers and how critical they are becoming also during times of war, what that means. Bloomberg's Lonnie Prinsloo, thank you so much for joining us on this important story. Meanwhile, coming up, we got about to talk talk more about logistics, the logistics firm C.H. robinson joining us to talk about integrating artificial intelligence into systems and dealing with an AI scare trade, not to mention what's happening with logistics in the Middle East. This is Bloomberg Tech.
- [19:24]
Ed Ludlow
War in Iran has put pressure on global supply chains in recent weeks. Global logistics stocks are stocks have also been hit like other sectors by the scare trade. But one name that's been given some credit in the markets for its integration is C.H. robinson. How is the company managing both of those disruptive events? Dave Boseman, the company's CEO, joins us now here in San Francisco. And you are in town with a big focus on AI in terms of who you're meeting with. But, but you are, when I talk about Sage Robinson, your job is to move goods from point A to, to point B. So let's start with, with the conflict in the Middle east, what are you seeing? Right. How is it impacting you day to day so far?
- [20:03]
Dave Boseman
Well, I first of all, thanks for having me here. And one thing that's happening right now is disruption in our industry is a reality. Global disruption is a reality. And this is just one more thing that, that we're seeing and that we are navigating with our customers. We're obviously seeing you Know, the, the airports within the Middle east are shut down. It was an estimate of about 10 to 13% of that capacity being affected.
- [20:29]
Ed Ludlow
We're talking air freight in that context.
- [20:31]
Dave Boseman
Correct. Air freight out of the, the airports out of the Middle East. The Strait of Hormuz has obviously been affected and that's caused some rerouting of ships around the Horn of Africa and just slowing down overall shipments within that with that disruption. But again we, it's something that we deal with. We've dealt with it before and we'll help our customers navigate through that.
- [20:53]
Ed Ludlow
This is, is a technology show but you know, throughout the week we've been looking very closely at energy. You know, is there anything specific and distilled that you can tell us about in diesel in other markets that impact your operations? Really?
- [21:07]
Dave Boseman
No, obviously it's a, it's more of a wake issue. We look at oil prices really down the line. Obviously we have carriers that can be affected by potential prices down the line. But that's something that we just, we just keep an eye on, not something that is, is affecting us right now.
- [21:26]
Caroline Hyde
So let's talk about how with the hundred thousand of goods you're delivering every single day, Dave, how I and in particular Lean AI as you see it, supply chains are helping you in this situation.
- [21:38]
Dave Boseman
Yeah, Caroline, we are essentially and we are in town for a tech conference and when industrial being invited into a tech conference and we feel really good about that and we essentially operate like a industrial or tech built company in an industrial space. We ship 37 million shipments annually and we have 75,000 customers that we deal with at Robinson and relationships with hundreds of thousands of carriers and AI has allowed us to really disrupt the industry and disrupt ourselves by, by the way and we feel good about that. It's going to the bottom line because we have real customers, real shipments and real data and that's allowed us to have productivity increases of 40% since the end of 2022. And it's just going to the, to the bottom line. We're at the end of the day we're the, the end user beneficiary of, of AI. There's a lot of talk right now, but a company like Robinson benefits from that in the industrial space.
- [22:43]
Caroline Hyde
I mean that talk just take me back to February 12th when you saw your stock plummet about 12% because there was talk that some karaoke company that's pivoted into the world of logistics was suddenly going to eat everyone's lunch. Dave, like how do you ground shareholders in the reality what is it that you show that the innovation keeps on coming and that you're disrupting yourself and not allowing others to come and take that share?
- [23:08]
Dave Boseman
Well, Caroline, I look at that as perception and reality. And we, we're the reality in that space. It's, it's Robinson and not, not perception. You have to have real tangible things. And for us, our tangible things are our data. It's our engineers, that we are a builder, not a buyer. And we have things that are going to the bottom line. I was really, really pleased that our investors, the analysts, the banks really came out and said it's Robinson that is actually the disruptor. And as Robinson said, that should be up on this news. And we agree, quite frankly, I'm trying
- [23:47]
Ed Ludlow
to get a sense of what happens next for you a little bit. You know, we accept AI lowers costs. So you have to make a decision. If they're lowering your costs, do you keep that for yourself or you do something with customers.
- [23:58]
Public Ad Announcer
Customers.
- [23:59]
Ed Ludlow
And then you look at your capex specifically for tech. Where's that going? You've got to keep spending through it.
- [24:04]
Dave Boseman
Yeah, this is, this is amazing when you think about it. First of all, air is driving that efficiency and that, it just gives us that more competitive moat that we have. It's a deeper and wider competitive moat. If you look at the numbers being an end user AI play a fun fact for you. Our usage is up 80, 85x. 85x, 80 85x. We're up on our usage, but our costs are only up 1 1/2x. And so, so we get that benefit of that, that end user. We don't spend a lot. Our token cost is a little less than $1 million. And so it's really about token costs for us. The agents that we built essentially have a marginal cost of zero because we are internal builder. And so all of this continues to drive a competitive deep moat for us that is super hard to replicate.
- [24:58]
Ed Ludlow
That chart we're showing is what the credit I was talking about that you're getting early, early movers in AI. Okay, so two events. We have a conflict in the Middle east and we have AI with disruption. But I know that our colleagues in research in particular, like want to understand where we're at in the freight cycle and whether those two micro events or maybe macro events have changed the trajectory of what your industry was seeing.
- [25:21]
Dave Boseman
Yeah, well, first of all, with 75,000 customers, we see a broad impact of, of, of what's going on in the world. And right now what we're seeing is with the disruption. Again, this has not been the only disruption. There is some, some caution from customers that they have on, on doing that. And for us, we watch two things. You have to watch capacity, which we've seen some tightening in the cost of carriers. But then there's the demand side. And specifically we look at housing, retail, manufacturing and automotive. All of those have been somewhat muted and we're really looking for those to be up and to the right. No major green shoots on that. Certainly disruptions can affect that. But we're watching that and at Robinson, it doesn't matter. We have a system that wins at the low and we have a system that certainly will win at the high and we're excited about it.
- [26:14]
Caroline Hyde
And you got more agents as well with Quinn. Come back and talk to us about those in the Future. Dave Boseman, CEO of C.H. robinson. Enjoy your time on the West Coast. Thank you. Now coming up, China, it bolsters its AI ambitions. More on that next. This is Bloomberg Tech. Welcome back to Bloomberg Tech Tech. Another day of macro that affects the tech markets. Look, we're in a six day of conflict with the Middle East. We also had some resilient jobs data here in the United States with jobless claims. We've got nonfarm payrolls as soon as tomorrow. The market trying to digest what the reality is of the Fed being able to cut into this perhaps more inflationary environment. We're down 610 of a percent. Big tech erodes. But there are some single names I want you to shine a light on because we are on the upside. When you look at Broadcom, we're up almost 5% for this name. Their numbers shining a light, doing better in terms of earnings. But really at the $100 billion commitment that we're getting from the CEO hocks on $100 billion in a sales by 2027 up from just 20 billion in 2025. The market likes that. Also the share buyback I'm looking@booking.com up 7%. In fact Mizuho seeing this could be a Waterloo moment. If there are reports out there that Chat CBT is not going to have a pay for in chat cbt but actually you go to chat CBT apps to end up buying your booking.com or other e commerce plays. That could mean much better news in terms of disruption for companies like this. In terms of generative AI, I'm looking@jd.com up by 1.8%. First loss in four years for this giant in e commerce ad and we're talking China a Little bit more now.
- [27:56]
Ed Ludlow
Yeah. Because overnight shares of Chinese AI chip stocks were on the rise. In its latest five year plan draft, the Chinese government announced a pledge to speed up AI chip development. And some of those names are familiar to you, right? We've been talking about them at least in the recent quarters. Bloomberg Senior Tech editor Mike shepherd joins us now. You know, the idea of the Chinese government having policy support for the chip sector domestically is not new. But I guess we now put some flesh on the bones of that plan in this, this draft document. What's the kind of need to know on what China plans to do?
- [28:34]
Mike Shepherd
Well, we did see a little bit more flesh on the bones and of course this also is part of an effort really underway since 2015 to shift from low end manufacturing to higher end manufacturing. And especially when it comes to advanced technology and chipmaking really is at the center of that. They really want to wean their dependence on US Designers and providers like Nvidia and like Advanced Micro Devices for those chips that would be powering artificial intelligence, which is an area that China has also like the US Staked the claim in. And this is giving way to companies like Camera Khan, like Moore's and and others that have really tried to make leaps and strides in this area of AI chips. We can look for further subsidies and further scientific support area in areas to help these, these chip makers. And it's not just chips though. This is an effort that also focuses on robotics. It also focuses on batteries as well and rare earths. And those are three areas where China already has a bit of a global edge. And it's even showing that it may use its advantage in those areas as potential choke points in negotiations with trading partners like the US Talking the US
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Caroline Hyde
now what China has also gotten leaps and bounds more of than the US Is energy, many would say and the ability therefore to not have to pass on costs of energy to consumers when they ramp up their data centers. That's something that's front and center here in the US Just want to go back to what President Trump said just yesterday, having met with some of the leaders tech CEOs in Washington about those energy costs. Take a listen, Mike.
- [30:20]
Mike Shepherd
Under this new agreement, big tech companies are committing to fully cover the cost
- [30:26]
Max Schaffkin
of increased electricity production required for air data centers. And that would be prices for American communities will not go up but in
- [30:37]
Mike Shepherd
many cases will actually come down and
- [30:39]
Caroline Hyde
very substantially what was committed to yesterday, Mike?
- [30:43]
Mike Shepherd
Well, it's a great question, Carol, because the commitment is really something on paper that sounds really big sounding that they will buy or build any additional power that they need for all of those data centers that they are pushing as part of the artificial intelligence boom. They will also work with states and localities on rate increases that might be affected by whatever they are trying to build in the way of all that data center infrastructure. And they have also committed to fund any additional grid or other infrastructure that would be needed to support all that additional power supply. There is a catch though and that is that none of this is really binding. What the company signed doesn't really have teeth in it from the federal government to actually force them to follow through on any of those pledges. It will really be up to states and the utilities to actually enforce any of that compliance on the ground, either through regulation at the state level. And we have seen that in New Jersey with the freeze on rate hikes or in the negotiations over rate increases by utilities. Now one of the other big questions is on the stateside and that is permitting. And a lot of these companies that were present Yesterday, that included Matter, Microsoft and OpenAI, they all are interested in building their own power sources near those data centers. But what they need is support on the state side to try to speed the permitting. And that was another question that was left open during yesterday's conversation.
- [32:17]
Ed Ludlow
But it was also a central tenet of the action plan published last July which Shep, you and I went through in some detail. Right. We'll get to it later in the week. Bloomberg's Mike Shepherd. Thank you very much Carrie. Plenty of other news headlines today.
- [32:29]
Caroline Hyde
There is and it's it's time now for talking tag at first up Nice owner NYSE owner into the Continental Exchange is acquiring a stake in a cryptocurrency exchange operator OkX in a deal that values the digital asset platform at $25 billion. Now according to the statement seen by Bloomberg, ICE will get a seat on OkX is board. Financial terms are not disclosed. Now shares of StubHub are plunging today after the ticket reseller posted fourth quarter results and 2026 outlook that fell short of estimates. Now analysts say comparisons particularly tough this year noting the absence of one Taylor Swift tour that boosted sales in the prior period. At least two firms have downgraded the stock and Aura Health is acquiring gesture recognition startup DoublePoint Technologies. CEO Tom Hale says the deal will help shape the future versions of Aura smart rings, potentially adding controls powered by voice and hand gestures terms they weren't disclosed.
- [33:25]
Ed Ludlow
That okay. Coming up nominal CEO Cameron McCord and Founders Fund partner Trey Stevens joined us talk about the startup's latest fundings, but also the effort to modernize US Manufacturing through software. This is Bloomberg Tech.
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Ed Ludlow
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Trey Stevens
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Caroline Hyde
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Ed Ludlow
Industrial Software startup Nominal has raised an $80 million Series B extension led by Founders Fund that brings the company's valuation billion to $1 billion at a time when the US is increasingly focused on modernizing and rebuilding its manufacturing capabilities. Cameron McCord, CEO of Nominal and Trey Stevens, Partner, Founders Founder with us here in San Francisco A lot of people say to me, I think you and I have discussed this in the past as well, that the the industrial sector kind of missed cloud and the cloud revolution. And if I was to try and summarize what it is you want to do. You want to build the platform that would account for that, an easier place to start. Like why did you need to raise more funds to do that, to move more quickly?
- [36:23]
Stella (Bloomberg Equities Reporter)
Yeah. Well, thank you for having me. We've been busy since the last 10 months when, when I was in the studio for our last financing. So we're building a platform for hardware testing and operations, a fully integrated solution for the modern era. Frankly, we hadn't touched the 75 million of capital that we raised earlier last year. But when Founders Fund approaches you. They approached us late last year with an offer to lead a preemptive financing. I think you take it very seriously. They have a really unique position and vantage point in the industry, particularly for companies building hardware and I think particularly an interesting insight into the work that we've been doing with Anduril particularly, which we announced a few weeks ago.
- [37:09]
Ed Ludlow
So this is the join up. It was Trey that phoned you presumably. So this is, this is the intersection of what you're working on every day.
- [37:15]
Stella (Bloomberg Equities Reporter)
Right.
- [37:15]
Ed Ludlow
With Andrew as executive chair. But also like the types of companies you invest in through Founders Fund, I always note you separate those two when it comes to Anduril and Founders Funds backing of them. But what was the thesis for you with Nominal? Why did you think that this was an important name to, to back?
- [37:32]
Trey Stevens
Well, you know, there's been an explosion in enterprise SaaS. There's a literal infinite number of companies that you could bring on to help with enterprise software kind of problems inside of an organization. But any reasonable, efficient organization is going to take an approach of trying to cut as much of that out as possible to minimize the spend for, for the org. So there are no nice to haves, nice to have. Enterprise software is not, not good at Android. You know, we have a incredibly intense process coming from my co founder Matt Grimm and our chief information officer Tom Bosco, who are constantly trying to weed out all of the excess spend. But in that same process you come across software that's critical things that you really, really need that are it's worth the money, it's worth the time and effort. Nominal is one of those products that we use inside the enterprise. We were already investors at Founders Fund but it increase, certainly increase the conviction when you know that an organization that I obviously work day to day very closely with was adamant that we needed, we needed to have our hands on this.
- [38:37]
Caroline Hyde
Cameron, your background is fascinating and also what's notable is how you talk about this mission critical Necessity for the software that you're building at the moment. I mean, front and center is the geopolitical issue that currently confronts us. How are you seeing engineers leaning on the, the software at the moment? How much are you thinking about this being ever more integral?
- [38:57]
Dave Boseman
No.
- [38:58]
Stella (Bloomberg Equities Reporter)
Thank you, Caroline. Yeah, I think we, we think of Nominal as building very serious software and building on Trace Point in an era where the last two decades saw a lot of very unserious software optimized for.com era signups, clicks, etc. But the engineers that use Nominal and trusted every, every single day, they're instrumenting hardware, they're automating very complex tasks, they're watching their hardware systems deployed in the field, in operations. And so it has to work. It is the definition of mission critical, especially at a time when that's increasing and the world is moving faster and faster.
- [39:36]
Caroline Hyde
Automating complex tasks. Trey, that is at the heart of a disagreement that's currently upon us with Anthropology Pick in the Pentagon. And we know that conversations have started again in private between those two entities. But how do you think about some of the ethical confrontation that consumer focused AI, enterprise focused AI is currently being confronted with with its use in the military? This is something you've had to think about first and foremost ages ago with Andrew.
- [40:02]
Trey Stevens
Yeah, you're absolutely right. You know, being able to give our war fighters the capabilities that they need to be successful not only in deterring conflict, but in winning conflict, if we would get to a point where we need to do that, is incredibly important. And I think there's nothing more ethical than engaging in good faith with our institutions, our democratic institutions, to make sure that American companies, leading American companies, leading American technology companies are sitting alongside in partnership with those democratic institutions. So, you know, super proud to do that at Andrew, and I know Cameron is super proud to do that at Nominal as well.
- [40:41]
Ed Ludlow
I'm trying to think how we can talk about what's happening in the war in Iran in the context of what Nominal actually does. Right. The defense sector is one of, is a part of your customer base. And what I've been trying to understand when Nominal is, is it the software that's manufactured that is helping to manage the asset that is the factory or the output of the factory. Like that's quite an interesting distinction because throughout the week we've been talking about the rundown of short range long range munitions, the different technologies of the play in Iran. How would Nominal help make that process better?
- [41:13]
Stella (Bloomberg Equities Reporter)
Yeah, really, we're trying to own the end to end process. So really everything from the end of a manufacturing production line through to the experimentation, R and D sort of lab testing of those systems and then the end deployment. And a lot of the thesis behind Nominal is those have become very siloed operations and you gain huge efficiency, speed, scale, reliability if you actually can link sort of with a common data platform that entire process. I always say, I said this last time I was on the show, the, the biggest, I think, tester and validator of advanced hardware systems is the US Department of War. And, and we're very proud to support that, that mission. For us, it's, we are an engineering tool, tool, you know, full stop. And so we try to give those who need it the best, most modern tools to support their mission.
- [41:59]
Ed Ludlow
Trey, you are the executive chair of Andoril. Could I ask simply if any Android technology has been deployed or used in Iran and what the footprint is there and also where Nominal kind of fits in, in managing that process?
- [42:14]
Trey Stevens
Yeah, I mean we have all sorts of primarily counter air systems that are present in conflict zones. So we are actively working day to day with the department in ongoing operations. Obviously can't give a whole lot of details beyond that. But you know, this is kind of one of the challenges of building a defense technology company is that you don't build for the wars of yesterday or the wars of today. It takes time to integrate these things into concepts of operation. So the work that we're doing in the region is work that we've actually been doing for a long time. It's not that we just showed up, you know, in the moment of the conflict. And I think that a lot of this goes to the test and evaluation operations is, you know, getting to preparedness so that you're not just building a technology demonstrator, but you're building something when it's resilient and that is going to work in times of conflict that requires a lot of reps and it's much harder to do than it is with just doing like a sim for software. These things have lives and death like they have human lives involved in them and you can't afford to make mistakes. So you know, we're super proud to partner with Nominal to make sure that we're, we're ready, we're ready for game time when, when that, when that shows up like it has in Iran.
- [43:24]
Ed Ludlow
Can I also ask you, Bloomberg reported this week that Andariel is looking to raise about $4 billion with Andreessen and Thrive Co leading the round. A comment on that, but also, what is it that Andrew needs funding for right now. You're building in Ohio, you're expanding in California.
- [43:40]
Trey Stevens
Yeah, I mean, you nailed it. The challenge is going from being a defense technology company where you're building thousands of things to being a defense manufacturing juggernaut where you're building tens of thousands of things. I can't think of a whole lot of companies in the last 20 years, new companies that have set up mass scale manufacturing. Maybe Tesla is the only real example and is on the path to, you know, trying to be number two in that, in that space. And that's going to require a lot of capital and it's going to require partnership from the department to, to get that off the ground, which is Department of War. The Department of War, which is where we are right now. And it will require partnership with companies like Nominal as well to make sure that we are fielding capable systems and we're scaling in a way where we're delivering a functioning capability rather than just a technology demonstrator or prototype.
- [44:30]
Caroline Hyde
Cameron, I referenced that you had a fascinating background. You worked at Andrew yourself, you've been an investor yourself at Lux. You've also been heading up Sail Drone as well the Defense. You are head of defense for saild drone, autonomous maritime companies. So you've been thinking about all of these questions that currently investors, builders and the community writ larger thinking about how, what was the signal you think has been sent by the Pentagon with its feud with Anthropic and how does it make you feel building alongside the government at the moment?
- [45:03]
Stella (Bloomberg Equities Reporter)
Yeah, I think, you know, we, we at Nominal, we think a lot about where I will intersect with our technology area. And I think the, the unfortunate reality is in the industrial sector and the hardware world, much of the software and technology is so antiquated that it is just now, I think becoming ready and AI adjacent and we are working to help a lot of our customers, you know, operationalize that, that technology. I think in terms of partnerships with the Department of War, the messages that we get loud and clear are, you know, speed and scale are paramount and Nominal plays a huge part in helping all types of, you know, companies field those systems to meet that resilient need.
- [45:46]
Caroline Hyde
Cameron McCord, CEO of Nominal, and Trey Stevens, partner at Founders Fund. Fascinating to have you both join. We really appreciate it. Now coming up, Elon Musk is putting millions into the Kentucky GOP primary. How is it paying off? That's next is Bloomberg Tech. Elon Musk told a jury that his 2022 post about putting plans to buy Twitter on hold was not one of his wisest terrorist. Musk was testifying in a trial alleging he purposely drove down Twitter's share price during his negotiations to buy the company ReMax. Max Schaffkin joins us now. It's not the first time that Elon Musk has his social media posts sort of raked over the coals like this.
- [46:26]
Max Schaffkin
No, this is a long running thing. And in fact, often in these cases his best defense is that he tweets a lot. And you know, his tweets are not always taken seriously. And you know, there is something to that that of course came up, up during the funding secured dispute of 2017 or 2018 when he threatened to buy out Tesla and then was accused of not having the money. So I think it's going to be the same story we've seen over and over again, which is just that he has a tendency to speak his mind. Let's, let's put it mildly on Twitter in ways that sort of don't follow traditional securities norms or sometimes rules.
- [47:04]
Ed Ludlow
Max, last August you and I tried to dissect what the net result was from, from Elon Musk going into the White House. Your latest for Business Week is, is again like his financial backing of certain races this time in Kentucky. Like what, what's the learning here? What are you writing it?
- [47:21]
Max Schaffkin
Well, so top line Ed, I think that the Musk Trump alliance is very much back now. Maybe things are uneasy a little, not as, not as kind of friendly as they were when he was had, you know, constant access to the Oval Office and his child was kind of clowning around with the president United States. But he is certainly in the, you know, in the circle of friends. Now this race is interesting because the candidate that Elon Musk is backing, Nate Morris, is very close to J.D. vance. My sense is that Elon and Nate Morris do not have any, you know, preexisting connection. This is really a J.D. vance thing. He is kind of backing the person who is close to J.D. vance. And when you look at this race, it is kind of like a miniature version of the J.D. vance thing. You have a candidate in Kentucky who is very well connected with tech donors, Nate Morris, also connected to Peter Thiel. He started a tech company called Rubicon, which was the Uber of trash and, but not necessarily hitting it off with voters. The polls, I'll just say have been a little bit spotty, including after this huge infusion of money from Elon Musk. $10 million has gone into Kentucky advertising.
- [48:34]
Caroline Hyde
So do we think it's going to be effective has it have we dissected whether it's effective in the past?
- [48:41]
Max Schaffkin
So far it hasn't paid off. But I'll say number one, there are a lot of undecided votes. Voters when you look at the polling, you know, between 20 and 40% of the voters in Kentucky are still undecided. So you, so maybe they've seen a few ads but they haven't made up their mind. That is one potential factor and the other potential factor, and this is huge, cannot be underestimated, is Donald Trump. A lot of these races are essentially running for Donald Trump's endorsement. That was J.D. vance's plan and I think that's, that's Nate Morris's plan here. And, and the, the truth is that part of what Trump is looking at is can you raise money? And so that that is something you can do with the world's richest man.
- [49:19]
Caroline Hyde
You can Max Jeff can across this for BusinessWeek and Frost Show. We appreciate it. That does it for the decision of Bloomberg Tech.
- [49:26]
Ed Ludlow
Ed yeah, check out the pod. You know where to find it from New York City and San Francisco. This is Bloomberg Tech.
- [49:34]
Caroline Hyde
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