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- [00:00]
Narrator/Advertiser
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Carol Massar
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Amazon Health AI Advertiser
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Carol Massar
Bloomberg audio studios podcasts radio news.
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Vital Proteins Advertiser
Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.
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Ed Ludlow
This is Bloomberg Tech. Coming up, Alibaba releases its latest Quinn model, its biggest ever, claiming performance on par with anthropic plus. Amazon surpassed $3 trillion in market value for the first time extending gains after a big cloud and AI driven earnings report last week. CEO Matt Garman joins us later in the hour and how Apple's reinventing itself as a subscription giant. We'll dive into the details of the iPhone makers Apple upgrade program and its next era of growth. There's an elite club that's getting bigger. Today's big number $3 trillion. Amazon has reached a $3 trillion market value for the first time, becoming just the fifth company ever to hit that milestone. The stock trading at all time highs following its quarterly earnings last Thursday night. From Friday into this Monday session, this is the biggest two day gain on the stock since 2009 and the momentum has really carried through. Later in the hour we're going to speak to CEO Matt Garman and it really was that was the big driver in earnings. The story. There's a lot to discuss. China's AI race accelerates. Alibaba has unveiled Quinn 3.8 Max, its new flagship AI model saying it can rival anthropic best. It's the latest in a wave of Chinese AI breakthroughs challenging Silicon Valley's lead. Bloomberg's equities reporter Henry Ren joins us for more. Let's go over the basics. Alibaba sharing details of the model. The model clearly on benchmarks it says is is high performance and the ADR have reacted quite positively here.
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Henry Ren
Yeah, indeed we are seeing Alibaba's ADR trading up about 5% in U.S. trading at this point. So the company said that it's A new Max 3.8 models rivals the US models, the Frontier Labs models at some benchmarks. So for example on research reproduction, on agent tec use of computers, these are strong suits. It also says that ITS model has 2.4 trillion in terms of parameters and that's basically on par with the level that we've been seeing for the Kimi K3 model which was out a few weeks ago. Also the company, yes also said something about cost obviously per token because it's a bit lower than the US frontier models as well.
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Ed Ludlow
$2 per 1 million tokens. On the input side you have a really strong command of Chinese technology companies from the stock perspective. Right. Is Alibaba a name Henry, that trades on its AI prowess or like some of these American multifaceted companies, a different part of its business?
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Henry Ren
Yeah, it's the story is really important for Alibaba. If we zoom out a bit today it gains about 5% but if you really look at the trajectory since June you will see that the stock is up about 35, 40% from a June low. And the real the key story here is about the more optimism in AI. Obviously we're seeing the Quinn breakthrough today, but really last month the company has a closed door meeting with analysts and analysts came out more optimistic about the company's cloud revenue growth. For example, JP Morgan is modeling about 40, 45% in revenue growth for its cloud unit for the June quarter. So there has been that acceleration over there but still on the main business, on the E commerce business because it has been a company known for its main shopping site in China. That part of business is still lagging, although it's still the cash cloud cow so to speak. So investors opinions are still mixed. So that's why we are seeing sentiment has been pretty weak into June. But since June some positive announcements has really been boosting the stock.
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Ed Ludlow
Bloomberg's Henry Ren thank you very Much. Alibaba says its new model delivers frontier performance and as Henry outlined at a fraction of the cost. Could cheaper accelerate adoption rather than just pressure pricing? Joining us now is Lauren Cassidy, Chief Investment Officer of the founders100 ETF, the ETF tracking founders in this space matter in Zuckerberg, Musk and Space X. The economics of AI is really what the Chinese story is putting front and center. So I pose that question to you. Drive adoption or lower the tokenomics here?
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Lauren Cassidy
Yes, I do see this as a positive in that there's room in the world for both open and closed models and I do think it will drive prices a little lower. It isn't cheaper than anthropic haiku, but if it is favorable fable level performance and it's about a fifth of the price. And so I think that, you know, that could put pressure on the lms. But overall there's still a lot that the American LMS have to offer.
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Ed Ludlow
What are the advantages that the US models have to your mind, Lauren?
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Lauren Cassidy
Trust, reliability, additional features, convenience of not having to modify the models. So it just depends what an enterprise is looking for, what what fits them best.
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Ed Ludlow
I'm looking at the Founder 100 ETF and again, feel free to remind us of the thesis on the founder side, but you don't have any of the, the ideas for some of these big Chinese tech companies. What are the reasons for that?
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Lauren Cassidy
And I think that we believe that in American innovation long term. And just as we've had waves of innovation and greater adoption in the country of the steam engine, electricity, modern manufacturing, computers and the Internet, we are now on the sixth wave which is AI. We think it's going to be a really big thing. We see tremendous adoption over the next decade and we are very exposed to those stocks.
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Ed Ludlow
Let's shift gears a little bit. Space X has its first quarterly earnings and call Tuesday evening. This is what I wrote published this morning. It's the first opportunity that SpaceX investors might have to put the question of a Tesla Space X merger to Elon Musk. Maybe you and I have discussed this before from the Tesla side of the table, but the way does founder 100 ETF stand on that, on that idea?
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Lauren Cassidy
Yes, we believe that's inevitable over time. Elon Musk is an incredible founder and he is building the only closed loop AI network. And over time there's going to be more and more opportunities for Tesla and Space X to share. They're going to be building tariff. I'm really hoping to hear details about that build out tomorrow. They'll be sharing chips. There is going to be a lot of opportunities for synergies between the businesses. It probably makes sense at some point to fold Tesla in to the greater mix as we work towards data centers in space.
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Ed Ludlow
Lauren Cassidy, the founder 100 ETF back on the show. Thank you very much indeed. Another top story. One of the crypto industry's most trusted storage devices is at the center of a major hack. Coin Kite, the Canadian company behind the cold card hardware wallet, says a software flaw made some bitcoin recovery keys predictable, allowing hackers to drain wallets that was supposed to be kept safely online. According to Galaxy research, more than 1700 Bitcoin worth about $110 million has been stolen from roughly 5000 different wallets. Coincide says it has released a firmware update to fix the floor. Another stock that we're watching because of what happened over the weekend. Shares of AMC now modestly higher 710 of a percent had been much higher at the open highest ever. Total weekend revenue including records for admissions and food and beverage. By the way, why the driven driven by the opening of Spider Man. Brand new day, yet to see it. That film grossing $355 million domestically. In the U.S. Valor Atomics, the company building America's first Giga sites, secured $1 billion in its series B funding round led by Sequoia. The company also closed a $200 million credit facility to build the world's first vertically integrated industrial nuclear power company. Joining us now is Valor Atomic CEO and founder Isaiah Taylor. You're also fresh off what now seems, with hindsight, a pretty key demo. That was a bit of an unlock for this round. You want to move quickly, so let's start that. What do you need the funding for and how are you going to deploy it?
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Isaiah Taylor
Yeah, Ed, thanks for having me on again. Just a month ago I was on the show talking about how we became the first startup in history to make nuclear power. We did that by powering an Nvidia Blackwell chip, which was an amazing event. It was the first time that an advanced nuclear reactor has powered AI infrastructure directly. So you're right, it's been an amazing couple of months. We made a lot of progress and really what this is about is giving us the firepower that we need to go build the giga sites. We've now demonstrated nuclear power. This is the reactor standing behind me here and we have to build a lot more of these in order to make pace with AI is building very quickly. We need a lot of power in every direction and this is really about scale for us. So this is the firepower that we need to go and build.
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Ed Ludlow
Sequoia led the round, but Sean McGuire is also going to join your board. Why is that important to you? What is it that Sean can, can give you other than just the check?
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Isaiah Taylor
You know, it's been amazing to spend some time with Sean over the last few months and get to know the rest of the Sequoia team in the partnership. I think Sean's a really, really thoughtful person. He spent a lot of time with SpaceX and understanding that business model. And I think one of the lessons to learn from Space X is really just the power of scale and pace of production. And that's something that we want to do in nuclear as well. So I think that his lessons that he's learned there are going to be applied very well to this business and I'm really excited to welcome them to the board.
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Ed Ludlow
You know, the numbers here are really big, right? So it's a billion dollar round. $6 billion post money valuation. But with respect, you know, this is still early, this is nascent, it is high risk, it is technical. How contingent was that demo that you did just on the show a month ago in literally making the round materialize? How much did investors want to see that this worked?
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Isaiah Taylor
You're right, this is super early and this is a very long journey for us. We see this as a multitrillion dollar opportunity. We're going to go and build the biggest energy company on earth. So these are very early days for sure. You know, we have a lot to prove still. We want to prove pace of production. We want to go from building one reactor in a year to six months to once a month and then even faster than that. So you're right, there's still a lot to prove. You know, I think that this demonstration was really important. We've said for a long time that Valor Atomics is a hardware company. We're focused on hardware execution and on full vertical integration. And that's really what we proved here. We proved that we can take a patch of dirt, we can build a reactor on it, turn it on and operate it. And it's just one small step, but it's the first of many to go and build a nuclear power company of the future.
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Ed Ludlow
Is there one of the things you and I have not yet discussed is who the customer ends up being. You know, you want to build the nuclear power company of the future. You've explained the scale of the tech. You've powered one Blackwell chip, and I think that's important context for the audience. But who do you ultimately sell it to?
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Isaiah Taylor
It's a really good question. I think that nuclear and energy in general is a bit noisy right now. You see a lot of deals getting signed that maybe are binding, maybe are not. We've been really, really focused and disciplined on this point that we believe this is a hardware execution problem. Everyone needs energy, they need it at any price that can get it as fast as they can get it. And so really, really focused on just executing the hardware and bringing new power online. And I think once we get that new power online, that'll open us up to a bunch of really interesting customers who have large balance sheets who depend on energy in order to build what they see as the future as well. And so that's, you know, there's a handful of customers there that are interested in what we're doing, but we're going to stay focused and we're going to stay focused on hardware execution.
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Ed Ludlow
I say I don't know how much you want to talk about finance. I don't know if you're the finance guy in truth at Valor, but an interesting credit facility, Palmer Lackey's, Erebor and JP Morgan, you know, it's $200 million facility, but why was that important? You really sort of put it high up in the announcement today.
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Isaiah Taylor
You know, it is important to us, you know, the long term of this business. Right. We don't want to be relying entirely on equity and we think that power is a uniquely debt finance full thing. And so moving this company from something that's equity financed to debt finance is a long term goal of ours. And it's really great to be working with partners like Arabor who led this round and J.P. morgan, Crescent Cove and Hercules as well coming into it. And we're really starting to demonstrate to the market that this is a business that can take large amounts of credit, deploy it very well, get the yield on that. And this is how we're going to run the business going forward is that these reactors will be financed, we financed by customers, by different ways of putting these tranches together. And that's really how we're going to go and build all of this capex. So we're excited to start to demonstrate this with Araborn.
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Ed Ludlow
Isaiah, let's end the conversation of talking about America's attitude and progress on your industry. Is America moving fast enough so that you can do the things that you want to do on the timelines that you've set out.
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Isaiah Taylor
Look, it never feels like we're moving fast enough, right? We want to move so much faster than we are today. China has about 14 nuclear reactors under construction right now. And we're just starting to break ground on our next one here. So we need to move faster if we want to win on AI, we have to go faster in all forms of power generation, but especially nuclear. I think nuclear is uniquely well suited to win the AI race. It's clean, it scales very well. You can build lots of it in one place next to a large data center. There's a lot of things that work really well for this. But frankly, we do need to move faster and that's why we're so focused on the hardware execution.
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Ed Ludlow
Atomic CEO and founder Isaiah Taylor back on the show. Thank you very much indeed. Let's get to the earnings story. Stay with AI. Up next, Palantir set to report its second quarter earnings today after the closing bell. Joining us, Bloomberg's Lizette Chapman leads our coverage of Palantir. You know, it's so interesting. We go with these periods of times where we talk about Palantir constantly. Then maybe it got a little quiet. Ultimately, the company has a lot of momentum.
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Matt Garman
Right?
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Ed Ludlow
What are you, what are you bracing for?
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Lizette Chapman
Right? It's a pressure cooker quarter, right? They have a history of always beating or exceeding analyst revenue or analyst estimates for every quarter on revenue, etc. So this is already the expectation that they're going to beat or exceed. And so even if they raise their guidance, it's kind of like, so what, you do this every quarter. And so the big thing that people are going to be watching right now is the concentration of sales, whether it's in the US Whether it's international. This quarter, they are expecting really blockbuster growth for US Commercial sales. This has been its strongest area of growth. And next quarter, for the first time ever in its history, analysts except expect them to exceed, have commercial growth, exceed government growth. So what they're going to be looking for this quarter is has it continued that trajectory and how are they doing internationally, which is something that we've talked about, we've had Mark on and some other people on. So that's something that they're going to be looking at.
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Ed Ludlow
It's a really big point because, you know, in the news headlines, Palantir comes up in the context of its work with the Pentagon or with different arms of the US Government in a defense context. But they also have a lot of commercial case studies. So that's the moment in time it flips to commercial. But give us the basics, like what Palantir's business does. Right. We always have to remind us what is Palantir?
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Carol Massar
Yeah.
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Lizette Chapman
Is a software that allows people to make the best use of the information that they have to gather data from all across different sources, that they have to integrate it, make sense of it, map it and then throw an LLM up against it. Whether it is, you know, from, you know, from, from whichever company.
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Ed Ludlow
They're agnostic.
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Lizette Chapman
Exactly, exactly. And so they've worked a lot on showing different partnerships that they have with some of the major players. That's something that they're going to talk about today, I'm sure, along with partnerships with Nvidia, Nvidia and some of the rest. They have gotten a lot of attention for their work with defense. But it's actually the commercial which is their fastest growing. And so we'll see how they do.
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Ed Ludlow
Alex Karp, the CEO is vocal, let's say he also talks about the markets sometimes. But is there a clear Palantir stock story of this year, of the last year? Like how is the market reacted to them?
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Lizette Chapman
Right. The market had massive expectations at the end of last year. The stock was up, it was almost up to 200 or so. And since then it's plummeted from that high. It was trading at something like 247x earnings then. Now it's down to about 67x earnings, which is down from its five year average of 98x earnings. But it's still one of the most expensive stocks on the S and P. So a lot of, a lot of investors are wondering where that disconnect is and whether it's really worth what it said it was going to be able to deliver.
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Ed Ludlow
This seems like a big one, a big one for markets. Bloomberg's Lisette Chapman, who covers Palantir, but also Defense tech venture capital, thank you very much indeed. Now coming up, Apple's changing the way you buy its devices. Why monthly payments could become the new normal power on this is Bloomberg Tech.
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Narrator/Advertiser
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Carol Massar
is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work, I'm Carol Massar. Globetrotters hunting for airfare bargains are in for a rude awakening as the days of stumbling across a cheap seat on a popular flight could soon disappear. Bloomberg's Wan Ha reports that airlines from Delta to Virgin Atlantic are adopting artificial intelligence to change seat prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking pricing gaps that once allowed travelers to find bargain fares. Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seat inventory and seasonal trends, while also continuously tracking competitors fares and capacity changes to update prices and in near real time. The technology could lead to higher fares on busy routes as airlines pack flights closer to capacity, but may also result in lower fares on off peak and lower demand routes. That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started@chatgpt.com today by selecting work mode available on plus and Pro plans.
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Amazon Health AI Advertiser
Amazon Health AI presents painful thoughts why
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Vital Proteins Advertiser
did I search the Internet for answers
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Ed Ludlow
to my cold sore problem?
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Vital Proteins Advertiser
Now I'm stuck down a rabbit hole
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Ed Ludlow
filled with images of alarmingly graphic sores
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Vital Proteins Advertiser
in various stages of ooze.
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Lauren Cassidy
I can clear my search history, but
- [22:56]
Ed Ludlow
I can never unsee that.
- [22:59]
Amazon Health AI Advertiser
Don't go down the rabbit hole Amazon Health AI gets you the right care fast Health care just got less painful.
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Ed Ludlow
Quick check on Amazon shares at all time highs. They've joined the $3 trillion market cap club and this is the biggest two day gain they've posted since 2009 after earnings later in the hour, we're going to speak to CEO Matt Garman, awb, Amazon's key cloud computing unit. Apple is making a big bet that customers would rather pay by the month than all at once. It's the new Apple Upgrade program designed to make your upgrading your device feel more like a subscription bloom. Is Mark Gurman here with the latest power on from this weekend it's been really interesting to see the rollout of this. What are you trying to capture in this, this power on, like where do you think this is headed?
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Mark Gurman
Yeah, the fact of the matter is, is that you're going to see see a change over time from sticker prices to subscription prices. The carriers have been trying this for years. It's been extremely successful for the carriers in the US Internationally. Obviously Apple has gotten on a really good schedule with its new, new products, obviously new iPhones and Apple watches. Every September, the iPad cadence has really become fall and spring. The Mac, you know, depending on which Mac you get, you're thinking fall or spring as well. And so the there are upgrade cycles for consumers. Right. Maybe I'm going to get a new phone every three years. Maybe I'm going to get a new computer every five years. But making it a subscription is going to get people into getting a new phone more frequently. They could give those phones then back to Apple. Apple could resell them on secondary markets. They can reuse the parts for new devices, which creates a big cost savings and improved margins for them there too, as well as that secondary phone business. And then the consumer is paying on a recurring schedule. So the payments to Apple never stop. And over the long term, you're going to see Apple creating far more revenue and profit because of this program. In fact, Wall street has been begging Apple to do this for over half a decade. And so it's a long time coming.
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Ed Ludlow
So this weekend I did my first Apple upgrade. I took my 2020 Mac with an M1 chip and I took the latest Mac Air 13 inches with an M5CH chip. And I did the math and it's a great deal. Basically I can trade in still and still do the Klarna Apple upgrade. The thing that jumped out is I got to wait three weeks for that Mac. That's still an issue.
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Mark Gurman
Yes. So as we wrote in Power on as well this weekend, you know, the Mac Studio and the Mac Mini, those are no longer the only Macs with extreme supply shortages. Now it's the most popular Mac, which is of course the MacBook Air. And new orders, the MacBook Air, are not arriving at this point until early supply September. So you're seeing the supply chain shortage shift from niche computers to the company's most popular computer. So that's not necessarily great. And so what they're doing now, in terms of their marketing online and in stores, they're pushing people towards the base level, M5 MacBook Pro, the 14 inch, which they have A lot of supply of still, and they want to sort of dwindle that down because they're launching the new M6 version in just a couple months from now.
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Ed Ludlow
Mark, just very quickly, we have a story on the terminal about how Apple's Siri stacks up against the new Chat cbt. What do we need to know?
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Mark Gurman
Apple has a huge advantage by having Siri AI built into every iPhone now that can run iOS 27 and the latest large language models. It's competent. Right. The promise of Siri has been there for 15 years. It's never really worked. Now it works. It's nowhere near as good or as capable as ChatGPT.
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Ed Ludlow
Right.
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Mark Gurman
But the floor has improved tremendously.
- [26:39]
Ed Ludlow
Bloomberg's Mark Gurman with the latest power on. Thank you very much. Amazon has blown past $3 trillion in market value after its cloud unit NWC drove big earnings performance last week. The company says its AI business has hit a revenue run rate of $25 billion and its chip business notched the same milestone. Amazon also raised its cap capex plans for this year to $220 billion as it joins the chorus of tech companies backing American Open Models. CEO Matt Garman joins us now on Bloomberg Television and Bloomberg Radio. It's great to have you back on the show. You know, this is the fastest growth for us in nearly five years. But to kind of capture a moment in time, could we start by talking about how much of that was driven by the frontier labs, the big ones. OpenAI anthropic, or how much of it was something broader across the enterprise, something bigger in AI?
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Matt Garman
Yeah, it's actually across the board, this growth that we're seeing right now. And, and much of that is, is some of the AI labs that are building their models on top of us. But actually a lot of that growth is spread across all of our startup and enterprise customers, where AI is really impacting almost every single industry. And so whether it's financial services companies or health care companies or retail companies or media companies, really that growth is coming across the board as companies of all different sizes and all different industries are looking to use AI to, to grow their business. And so, so we're seeing a lot of growth from the top Frontier Labs. But for us, we're not like some others, maybe as concentrated on just one or two large customers, but it's actually growth from a really broad set of customers, which is nice to see.
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Ed Ludlow
Matt, when NWC says the AI business has a revenue run rate of $25 billion, what does that mean? What does the figure Encompass?
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Matt Garman
Yeah, that includes both training from very large companies like Anthropic and OpenAI and other large tech companies, as well as many startups. But it also, and then a big chunk of that is really inference that that broad swath of companies are doing. And so as companies think about how they take models in something, an Amazon bedrock, and run those models to get value out of their business, some of them are automating processes, many of them are running agentic workloads that they build on us to further drive efficiencies in their business or deliver new customer experiences. We consider all of that work, whether it's agent growth, whether it's inference, and some of that is training, new models. All of that encompasses the AI business for us.
- [29:16]
Ed Ludlow
I think I've asked you this question at various points in time since you became AWS CEO, but is there a percentage split right now, training versus inference that you can give me?
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Matt Garman
Yeah, you do. And it actually keeps shifting, I would say more and more. It keeps shifting more towards inference. I think we still see large training clusters being used by a number of companies, but as these, as these models get really popular and really powerful, more and more companies are integrating that inference into their workloads. So, you know, I don't know the exact percentage today, but it keeps shifting more and more towards inference. And we expect that to continue as the economics make sense, where you really want most of that cost and spend being where value is being created for end customers.
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Ed Ludlow
Amazon's overall CapEx number for this year is very big, $220 billion. So it's up 20 billion. And Andy Jassy explained that's mostly AI, but it also accounts for higher memory pricing. Right. CapEx higher because the cost environment's higher. But from US perspective, what's the trajectory for next year? You expect that capex will be bigger still? Because I think one of the things Amazon is quite clear about is that even at $220 billion, it might not be enough to be meet current demand.
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Matt Garman
Yeah, one of the things that we're quite excited about is just the potential business for us is just massive and we see this as a huge opportunity for us to really invest and help customers take advantage of, of the opportunity. And so we will keep investing. We think that there's a big opportunity for us and for customers. And as Andy kind of called out last week, we have really great insight into what that demand is going to be from customers. And so when we invest, and we will keep investing in capex next year as well, we have Great insight into when that revenue is going to land. And so it's, it's, it's pretty well known for us. And as Andy mentioned, much of our capacity is already spoken through through the end of 27 and even through much of 28. And so as we're investing we're getting five year commitments from customers, we're getting these long term commitments and so we're out there making investments to keep being able to grow the business and try to meet customer demand. But as you say today demand still significantly outstrips supply and we're trying to build and invest to keep up with, with what customers are asking for.
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Ed Ludlow
And so we expect the CapEx number will be bigger next year than it is this year.
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Matt Garman
I expect us to keep investing as we see opportunities and some of that we'll see how the market continues to grow. But, but right now we're, we're excited about our investments and we'll continue to invest.
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Ed Ludlow
The chip business has also got a lot of momentum. You know, training for some time has been a big part of the strategy and we've discussed that. I've been able to go to Austin, spend a lot of time in Annapurna Labs to, to look at the, the server design. Let's start by asking, when you say the chip business has a revenue run rate of $25 billion, what does that mean? That is the business of selling the chips to third parties or renting out capacity based on the chips.
- [32:19]
Matt Garman
Yeah, renting out capacity based on those chips. So today we run all of our own chips inside of the cloud and that includes both training chips as well as Graviton chips which are general purpose processors. Graviton is incredibly popular. We've been building Graviton for, for many years now and in fact almost all of our large customers use Graviton as some part of their deployment and it's a key part of how helpful customers deliver extra value by lowering their costs. Trainium is wildly popular and as we've mentioned a couple of times now, we're largely sold out through the end of next year for training capacity and it's really, really popular. We're starting to see both large customers as well as startups really love the cost benefits of running on Trainium and having that choice in a cloud where you can run on purpose built processors like Trainium that give you really great AI performance together with Nvidia chips for when you need some of that processing for GPUs as well gives customers the right mix that they're oftentimes looking for. And so we find that combination to be quite powerful. And our Trainium 3 chips are really, really popular with customers right now.
- [33:30]
Ed Ludlow
We're live on Bloomberg Television and Bloomberg Radio. This is Bloomberg Tech in conversation with Matt Garman, the CEO of US. Explain the difference in economics between capacity based on training and capacity based on Blackwell. For example, like, what is the selling point of going with Amazon Silicon?
- [33:50]
Matt Garman
Yeah, we think that, look, we think customers want choice and so we offer great offerings for, for both products. Some customers really like to build on Nvidia GPUs, and those are fantastic. And we're one of Nvidia's absolute largest customers in the world. We've been offering Nvidia GPUs in the cloud for over a decade now. And US is the most scalable and secure and stable place to run Nvidia servers anywhere. And so we're very excited about that business. But when you add Trainium, we're able to lower the costs for many workloads. And so customers like to have that opportunity where they can take these really massively scaled AI workloads or inference workloads, where we can tune them because we kind of control that whole stack. We, we have control the training chips, the data centers and the inference stack and can really tune that whole stack. And that helps customers lower their costs and improve performance. And we're really starting to see that flywheel go where model providers of all types and customers love that. They get that value and great performance. And we think that that's a real flywheel that we can do, keep turning and are quite excited about continuing to grow that business.
- [34:59]
Ed Ludlow
Could you make it tangible for me? What is the cost saving?
- [35:03]
Matt Garman
It's workload by workload. So there's not like a specific cost savings. But for, for workloads where we see this optimization happen, customers can oftentimes save 20, 30% off of their inference costs when they run that on training.
- [35:16]
Ed Ludlow
Interesting. Would you consider selling the chips outright as opposed to renting capacity capacity based on them?
- [35:24]
Matt Garman
Yeah, we've mentioned that we might consider that in the future. Right now we have so much demand inside of the US cloud that we really love that business. And so that's the place we're focusing right now. But it's an interesting opportunity and it's something that we would definitely consider in the future.
- [35:39]
Ed Ludlow
The other big development was signing the Open Weights letter. You yourself, you know, communicated that. Why was it important to you, Matt, to sign that and participate in that?
- [35:51]
Matt Garman
Yeah, I think that again, a lot of this boils down to customers wanting choice. And the big Frontier Labs have awesome models today. Whether it's OpenAI running on bedrock, whether it's anthropic running on Bedrock, customers really love using those models. But they also like being able to customize models. And so having a broad ecosystem of open weights models I think is incredibly important for, for innovation. It's important for our customers. And so you think about things like the Nematron models from Nvidia or you think about Kimi3 or some of the Chinese open weights models, those really help customers be able to customize to their own data and really be able to innovate. And so we think that it's important to not over legislate there and give that flexibility for customers to use whichever models they find to be the best fit. And that's actually why we really focus on having all of those available inside of Bedrock so that customers can choose
- [36:43]
Ed Ludlow
which ones they want to use not to over legislate. I mean, I had a conversation with Jensen Huang the day the letter was posted about why then, what is the rationale? It does seem like the concern is that the US government overly regulates open models. Was that a sort of a motivation for you?
- [37:01]
Matt Garman
Yeah, I think that's the concern. And I think you just want to make sure that we kind of have an even place playing field and, and it doesn't mean that there's none, by the way. I think there should probably be the same level of oversight of both Frontier models as well as open weights models. And I think we should have a consistent framework but, but kind of making sure that, that folks realize how important that is to what customers and our industry is out there building on and that those open weights are a key building block of that and we want to make sure that however legislation lands, it lands evenly across all of those.
- [37:31]
Ed Ludlow
Matt, a question from our Bloomberg Tech audience view is NWC attitude towards Kimik 3. The open weight was released July 27th. You know, given the platforms AWS offers, what is the plan there?
- [37:45]
Matt Garman
Yeah, it's a, it's a great model that the team there has done a really nice job and we see really great performance there and, and we'll continue to support in Bedrock offering the Kimi models. I think the interesting thing is also as you see many of these open weight companies, they're starting to think about how they make money in these models as well. And so they're starting to introduce licensing around some of these open weights models as when when customers want to run them in a cloud environment. And so I anticipate that there's going to be a blending of some of these models too, where these companies won't continue to spend lots of money and then just offer their IP up to the world. They're going to be licensing models, they're going to have ways of making making money on those as well. And you're starting to see that with some of the open weights models actually having some licensing around them. And so we'll keep supporting these in bedrock and working with those companies in order to offer these in the best possible way.
- [38:40]
Ed Ludlow
That's where I'd like to end the conversation. The business case and economic opportunity for open models from perspective. So if the model makers themselves would like to make money, you know, how does us see that, that going in your favor to make money from. From wide use of open models?
- [38:56]
Matt Garman
Yeah, yeah. I mean we basically, that is exactly what aws. It's a great platform for companies to come and offer their IP and their capabilities to the world. And so everybody, whether they're startups, whether they're governments, whether they're large enterprises, everybody can build on top of us. And if they have choice and they have access to these different models, it allows companies to be able to come and monetize them and sell when they have value to customers, to be able to offer value when they think that they can go at lower prices or better performance. And so having that open platform allows everybody to have that competitive chance. And AWS is a fantastic partner for all of these model providers to get access to the broad set of customers. And so it's a great ecosystem where model providers benefit and customers benefit by having all these in the same place.
- [39:44]
Ed Ludlow
Matt Garman, CEO of U.S. amazon Web Services, back on Bloomberg Tech, thank you very much. Now coming up, home battery startup Base Power has a new valuation, $13 billion. We're going to talk to CEO Zach Dell about its latest funding round and the launch of its US built home powering battery. That's next. This is Bloomberg Tech.
- [40:14]
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- [42:36]
Ed Ludlow
Rising demand for electricity in the US Is fueling investor interest in backing battery startups, among them Base Power, which just closed a $1 billion Series D round at a $13 billion post money valuation. Base Power CEO and co founder Zach Dell joins us now on Bloomberg Tech. A big round, right? And you know, inevitably part of needing the funds is to scale to get moving on the operations side. But let's start there. Like what is it you want to do in the first instance?
- [43:05]
Zach Dell
Zach yeah, well we really want to scale energy infrastructure to meet rising demand for power. So we build a hardware product that we install on homes and we leverage. It's a home battery that we design and manufacture ourselves and we leverage those batteries to support the grid in times of high demand. So we're adding capacity to the system to meet this rising demand from AI electrification of heavy industry, of transportation. We're adding capacity the system through distributed batteries. The grid is able to use those batteries when demand is high and the homeowners that are have those batteries installed on Their home are able to leverage those batteries when the grid goes out.
- [43:43]
Ed Ludlow
Zach, this is a residential product, right. At the basic level, how tied is your fate and future to the adoption of solar in this country?
- [43:56]
Zach Dell
Not really at all. Solar is a generation technology, much like wind or gas or coal. And batteries are really more akin to a transmission and distribution technology.
- [44:06]
Matt Garman
So.
- [44:06]
Ed Ludlow
Right.
- [44:07]
Zach Dell
The way to think about it is that poles and wires move energy through space and batteries move energy through time. And so the battery is really a utilization tool that is helping increase the capacity factor of the system and bring down costs for everybody.
- [44:22]
Ed Ludlow
So I ask you that because the energy or electricity generation isn't the problem here. What is the problem that the base power is trying to solve for?
- [44:33]
Zach Dell
Yeah, we've got a utilization problem on the grid today. So the grid is really built for peak demand, which means that most of the time we're not utilizing all of the infrastructure, which ends up being very expensive for ratepayers or consumers of electricity. So by deploying batteries to the edge of the grid, you're able to increase the utilization, increase the capacity factor, and thereby lower cost for consumers at home.
- [44:58]
Ed Ludlow
I have a Tesla Powerwall 3. It does rely on solar to charge it during the daytime. But let's talk about that as a comparison or a case study. At the technology level, the base core is better. How is the different how it's really
- [45:14]
Zach Dell
designed to be a grid resource. So it's almost three, maybe over three times the size. It's installed much faster. It's actually owned and operated by us, the company base power and use as a grid resource. So when you go buy a home battery or home generator, it's owned by the homeowner and it's really only there when the grid goes out. Our asset is really a piece of grid infrastructure. And so in partnership with some of our utility partners, those batteries are used as a grid resource by the utility in times of high demand, like I mentioned earlier. And then in the deregulated markets in Texas and Illinois where we operate, we use those batteries as a wholesale power asset. So we're really operating a fleet of infrastructure. Whereas those companies that sell batteries or generators, they're just trying to sell high margin hardware upfront. And our view is that batteries are really an infrastructure asset and they're better sold and built kind of as such. Right. And not, not really as a high margin product.
- [46:09]
Ed Ludlow
Zachary, also feel like this is a Texas story from the manufacturing standpoint.
- [46:13]
Matt Garman
Right.
- [46:13]
Ed Ludlow
You know, this is going to be an American built technology. What were the challenges in Establishing Texas as the base, the supply chain, making this an economically viable plan.
- [46:27]
Zach Dell
Well, Texas is a fantastic place to build companies and also to establish manufacturing. And we see actually huge advantages in co locating engineering and manufacturing because the team that designs the product needs to be able to be very close to the team that builds the product. And so by coupling engineering and manufacturing and having that done by one team, one company in one location, you get a bunch of efficiencies, it is much easier to iterate and you can move a lot faster.
- [46:55]
Ed Ludlow
Should we talk about some of your investors in the round? What, what was the importance of, of assembling that group beyond just the checks that came in? What are you hoping to leverage from their experiences and their expertise? We're showing rebate CO2, valor altimeter sands capital D1.
- [47:13]
Zach Dell
Yeah, I mean we're building the company to compound over many decades and we want to establish a cap table that is aligned with that kind of long term thinking. So these investors who joined our cap table today and they have been investing with us now for a couple of rounds, they see the opportunity to scale the business across the US internationally and do that over a long period of time and they add a lot of interesting insights, perspectives and they're really our thought partners and our operating partners day to day. So we're super lucky to have a whole host of new investors joining the cap table and then basically all of our major existing investors reinvesting in the company.
- [47:51]
Ed Ludlow
Earlier in the program we had Valor Atomic CEO Isaiah Taylor on, you know, different part of the energy stack. But we talked about how is America doing in this domain. Right. We talk a lot about China, how quickly China moves, I guess at the nation level and at the federal level. Are you getting everything you need, Zach, to be able to execute in the way you want, get the regulatory support?
- [48:16]
Zach Dell
Yeah, look, I think there's a lot of energy being applied, no pun intended, to the space today. Whether that's from the regulators and policy makers, but also entrepreneur entrepreneurs like, like, you know, our team at Base and the folks you mentioned earlier, some of the other companies entering the space. I mean when we started Base three years ago, it was kind of unique to start an energy technology company. There were not a lot of those out there and now they're very common and you see them pop up all the time and we love that, we think that, that the industry needs more great entrepreneurs and teams solving hard problems and helping us scale our capacity to consume electricity in this country. So I think we're in a really good spot and we just got to keep executing relentlessly and building great solutions to some of these hard problems in the energy industry.
- [48:58]
Ed Ludlow
You're building across the electric stack. And I kind of like read a lot about you and think you're pitching yourselves as like a next generation utility almost. And I think we should end the conversation with like what is your relationship like with the existing utility, utilities with the rest of the grid, because you're all kind of trying to move together in the same direction.
- [49:17]
Zach Dell
Yeah, I wouldn't think of us really as a next generation utility. I would think of us as a modern energy technology company that is a provider of choice to the utilities to scale their infrastructure. So we work very closely with utilities with all kinds of utilities, with municipal utilities like Austin Energy, with co ops like Co Serve and gvec, with investor owned utilities like El Paso Electricity. And we build them technology solutions so they can scale their infrastructure and meet the moment, meet the rising demand that's coming from AI and all these things that, that you discuss all the time. There's an incredible inflection happening in energy consumption in America and it's never been more important for the utilities to kind of step up and adapt. And we are really helping them do that. And it's our honor to work with the utilities. They're incredible partners and they have a huge responsibility sustainability in this coming decade and we're really excited to partner with them.
- [50:08]
Ed Ludlow
Zack, very quickly, what's it like trying to hire right now the talent you need?
- [50:13]
Zach Dell
Look, I think that we have a incredibly mission driven culture and company and there are a lot of people out there, hopefully some of them are watching this show that feel strongly that that scaling our capacity consume electricity and really driving towards energy abundance on the path to human prosperity is one of the most uplifting and exciting missions that you can work on. And so we've had the great fortune of having tons of the best engineers in the world come to base and say, hey, this is a mission I've got to be a part of. And so we've had a really great time frankly building out an incredible team down in Austin of just very mission aligned individuals. And we're excited to continue to grow that team as we continue to scale the business.
- [50:57]
Ed Ludlow
Zach Dell, co founder and CEO of Base Power, thank you very much indeed. There's a lot of other tech headlines. It's time for talking tech. And first up, South Korean AI chip designer Deepaks secured funding at roughly four times its previous valuation, buffing the firm to $2.2 billion. The news comes months after the startup, which develops semiconductor architecture tailored for AI tasks, said it secured over 30 mass production contracts from customers across eight countries. Plus, according to a PwC survey, the Thousand Finance Executives, 86% of his ex said they thought AI training was more valuable than an MBA for new hires. 91% of those execs also said they were willing to pay accordingly, increasing compensation for a literate employees, pointing to a growing urgency for firms to adopt AI tech. And Spider Man Brand New Day was the best biggest debut in Hollywood history, with the movie opening to $360 million in the US and Canada was a smashing success in China too, hauling the country out of its post pandemic Hollywood slump and contributing to a global box office debut of $927 million. That does it for this edition of Bloomberg Tech. These are the earnings that we're looking at this week. Earnings continues We've got Palantir here, SpaceX first ever earnings report and call as a public company amd a big one in the air, infrastructure, space and then later a focus on entertainment, the gig economy, Paramount, Disney, Uber all on Wednesday. Sorry, Disney and Uber on Wednesday. Recap Everything on the podcast was a pretty fast start to the week. You know where to find it on the terminal, on all Bloomberg platforms and online on Apple, Spotify and Iheart. Have a great week. This is Bloomberg Tech.
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