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Put imagination to work@canva.com 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.
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This is Bloomberg Tech coming up. Bloomberg reports that intel approached Apple about a possible investment and talks on the two working together more closely.
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We have the latest plus a quantum breakthrough. HSBC said it achieved a world first in deploying the next frontier of computing in financial markets using IBM's Heron processor.
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And Disney gears up for a legal fight with President Trump over the reinstatement of Jimmy Kimmel Show.
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First we check in on these markets, which if you're looking the NASDAQ 100 and we are down for a third straight day, but only just. We're still questioning the overall picture of valuations. We're still questioning what the inflation print on Friday will tell us. And we're still questioning more broadly how far we've run up in terms of the seismic moves on the S&P 500. The NASDAQ 100 is still close to record highs. I'm looking though at crypto that's actually pulling down yet again. We've got a key exploration of Options. Tomorrow we're seeing some of those bullish bets coming out of Bitcoin and certainly of ETH for down another 3.6%. But what are you looking at under the hood?
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E
Yeah. Let's get to our top story. Shares of intel markedly higher for most of the session. The only name on the Philadelphia Semiconductor index in the green, Apple also higher. Bloomberg reporting. Intel has approached Apple about the iPhone maker investing in it and held early talks on how the US Tech firms could work more closely together. That's according to sources. Intel, which is now 10% owned by the US government, is looking to make a comeback and has already secured investment from Nvidia and SoftBank. I want to get out to Bloomberg's Ryan goal, who broke that story with the deals team. Let's get the very specific details that we had from sources. These are early talks. What was the structure of what they discussed and what do we know about the status of those talks? Yeah, these are early talks. I would say there are still a few unknowns. There's no sense at this point what that investment could look like. There has definitely been some commentary this morning as people are sort of digesting this news. And you can see intel shares are up some 12% or so over the. Over the. Since yesterday and today as they think about what this could mean for both companies. I think if you're intel and you're looking at what it means to right size a balance sheet in your foundry effort, could this mean Apple comes in and thinks about, you know, sending foundry chip orders to the two. Intel's foundry potentially. Could this be something more on the product side? Could this be packaging for some of some of Apple's advanced chips? Maybe. But these are early talks and I think this just goes to show that intel is being quite proactive, especially since the United States, United States government took a stake of 10% in an unprecedented move a few weeks ago. But I think, you know, at this point, I think people are looking at this as a potentially positive move for Intel. Maybe a little more of a middling slash, you know, unknown move for Apple.
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A
Yeah. And that's reflected in the stock move there. We've got 17 billion added in market cap to intel, less so for Apple because, well, Apple at the moment designs its own chips but looks towards TSMC for that. How much do we think though that Apple's dialing in on the fact that they committed to $600 billion of investment in the United.
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E
Listen, I think if you're Tim Cook and you're at the. You're at the White House in front of Donald Trump a few weeks ago saying that you're going to invest $600 billion over the course of a four year period. They already announced a $2.5 billion investment package with Corning, which makes Apple's glass for most of its iPhones. You know, $600 billion is a lot of money and you know, if you think about how that could be deployed in the United States, as far as Apple is made in the United States pledge goes, this is about onshoring as much as it is about anything else. This is about satisfying the White House's plan to have American chips made in the United States and to sort of satisfy some risk as to concentration in Taiwan, where Apple in particular manufactures most of its chips at tsmc. For what it's worth. An intel spokesperson declined to comment on our reporting and Apple didn't respond to our request for comment. There's a history lesson that's important here. Apple mostly in Macs but also in phones until 2019 had a lot of intel silicon in it. That relationships changed. Explain that. Same with Nvidia. You know, Nvidia and Intel had a rivalry history. History that's now changed. Yeah, I think that is a really important point to underscore. About five years ago, Apple decided that it was going to transition away from intel, mostly because it felt that Intel's technology, the actual, its actual processes to make some of these advanced chips wasn't satisfactory enough. So that was kind of a painful breakup for those two companies. A relationship that started as far back as 2005 when then CEO Steve Jobs transitioned away from power PC chips toward Intel. I mean, that was kind of a rough breakup as far as Intel's chip making ambitions in the United States went wrong.
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Gold, it's a great scoop. We thank you for breaking it down for us. Let's get an investor perspective here. Joanne Feeney is Portfolio Manager of Advisors Capital Management. You've had a long history of studying semiconductors as well. At what point does intel become interesting as an investment opportunity when the government seems to be backing it so hard?
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Well, clearly the government is changing the game for intel, but their challenges remain. And their challenges are on the innovation side. Their design plus manufacturing has run into trouble over the past few years. So much so that they've lost a lot of market share to AMD and they failed to become a player in the AI advanced chips. No amount of government investment is going to make their engineers smarter or necessarily speed up innovation. Now throwing money at innovation means they can Hire better people. Right. So there might be some room to believe that their pace of innovation could improve from here, but they seem to have a long way to go. Having potential customers on the sidelines, whether that's an Nvidia or an Apple or others, will certainly encourage investors to take a harder look. But right now an awful lot of assumed outcomes are built into the price of the stock.
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Right.
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So it's not something we're enthusiastic about.
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Joanne, you know this industry. You have deep history of covering semiconductors. You also know the names and the players behind the scenes. Right. When this story broke, what was your interpretation? This is intel going out there and shopping itself to try and save itself or this is some kind of savvy and smart strategic play by Lit Bhutan.
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D
Well, I think intel has for a while been trying to find customers for its foundry plant and we saw Pat Gelsinger do that earlier and he was trying to build the fabs ahead of having customers. Louton obviously is taking a more cautious approach, which I think investors welcome. The government money will help them maybe bridge the gap between getting those fabs up and running and having customers. I think it's smart. They should be talking to everybody that wants to diversify away from tsmc. For a long time the geopolitical situation was fairly stable. I think now there are greater risks to that political situation and relying just on tsmc, even if it does have some manufacturing here in the United States.
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Liberty, real words, well, I'm not going to build it and then wait for them to come. They've got to come and then I'm going to build it. So there is. And then the White House jumped in. It is so much the national security focus, not only because of course one of the key plants intel was originally going to be focusing in on was in Ohio. And we know who's really rather focused on Ohio. To the VP of all of this though, do you think the US can become a domestic chip making champion without tsmc, without Samsung?
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D
You know, Caroline, that's yet to be determined. You know, intel was a U.S. manufacturing champion until they sort of went off the rails with some, you know, poor decisions on which direction to focus for chip manufacturing recipe development. They went down one path, TSMC went down another test. TSMC was right, intel was wrong. And now they're trying to make up for that. And it's going to take time. And I think it's appropriate for potential customers to take a look at intel, even if it's not this year or next year that they can be used but even if it's five years from now, in chip design, you have to work with your manufacturer because the design details depend on the manufacturing recipe. So they need to start working together now, even if it's for manufacturing five years from now. So there's hope for intel, but it's a little early, I think, to be assuming that they're going to be successful in this.
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Joanna, I think I want to talk a little bit about the Apple side of this situation. Correct me if I'm wrong. I think Advisors Capital has like, let's say a million shares of Apple across its different funds. Right. And the reporting was really clear. This is intel going to Apple, who bought the modem business from intel in 2019 anyway, and saying to them, like, you want to invest, like, help us out. But Apple does so much of its own work in silicon. Like, do you see a rationale for Apple to be like, yeah, you know what, let's do this?
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D
Yeah, yeah. We have owned Apple for a long time for our clients across various strategies, some conservative, some more aggressive. But Apple is doing the smart thing here. And first of all, we don't know if this is, these talks are actually happening. We don't know if they're going to advance. But you know, from Apple's perspective, it's no longer about the design of components for its iPhones and its Macs. I would expect that this to be more about manufacturing. This potentially is a move for Apple to become diversified away from entire reliance on Taiwan semiconductor and to have a second manufacturer. They love to have second suppliers. They haven't been able to because intel has been so far behind. If the belief now is that with government subsidies and government investments that intel will have the time it takes to modify their manufacturing recipe and be able to roll out at capacity, you know, product for Apple and video, you know, who knows who else that would be very appealing, I would think, to at Apple.
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Intel was founded in the 60s, right. And we're in a very different situation today. In 1997, Microsoft bailed out Apple. Funny things happen in technology in your career. This in video announcement of intel and now the reporting on Apple. Are these things that you see coming?
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Well, you know, we already saw that intel had received a massive subsidy under the previous administration's chip Act. So we knew intel was getting this money. What's different now is this administration has decided to turn the subsidy into, into an ownership stake, you know, which brings some returns back to, to the taxpayer. But also I think the second shoe to drop potentially are incentives for potential Customers of Intel to help intel get to that point where they have manufacturing that's competitive with, with Taiwan Semiconductor. That's what's really changed today is the incentives circling around the whole industry to try to build up that domestic manufacturing. And that's a big change.
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I have to say, as an investor. You look at what happened with Lithium Americas yesterday, the US reported to be looking at a stake in that company. The shares rocket 90%. The fact that they take a 10% stake in intel and suddenly the shares just go up and to the right. Does it have to become part of your fundamental research that when the US government gets involved, it's very hard, hard to bet against that stock or not be involved in it?
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D
Yeah, fortunately, Caroline, we're able to pick and choose stocks. We own, you know, 40 to 50 equity positions in the different strategies. So we can choose not to be involved in, in companies for which, you know, we think there's significant risk of government involvement because you just don't know which way it's going to go. And, you know, some of these announcements have been pretty unpredictable. So fortunately, there are plenty of places to invest where you don't have to be directly exploring, exposed to government risk. You know, we've owned Broadcom for a long time, you know, since, since I joined the firm back in 2015.
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Yeah.
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And they're doing just fine without any government involvement and they are playing a bigger and bigger role in the rollout.
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And let's just talk therefore about the context of the AI circularity that people have been worrying about or just more broadly the valuations. However, we are seeing bigger and bigger numbers. Yesterday it was Alibaba saying, we think it's going to be 4,4 trillion by 2013. 30. That goes into the need for AI compute. We do see a space where Nvidia can win, maybe even AMD can win, where we see custom asics. When as well, do you put your bets into all of these names or do you have to focus in on the key win that thus far has been video?
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Yeah, you know, I think, Caroline, the way to play this is to recognize that this is a pie that's growing and that there'll be more and more players that take little slices here and there. And there may be some market share change. Right. Nvidia is bound to lose some market share. Not bound to grow less quickly necessarily, but bound to lose some market share. We know AMD has some good processors out there for AI workloads. We know that Broadcom is co developing with the likes of Google, other ASIC based processors. So I think there's room for a lot of players to participate. I think the wise investor will be a bit diversified. Don't just pick one, you know, pick a handful of. There are startup companies that aren't available to us as public equity investors, but those are worth watching because they could become competition along the lines I think we have, frankly. Yeah, exactly. I think we have some years to go while this pie continues to expand. At least that's the information we have now. You know, unfortunately, we don't have great information on how well the applications are turning out and how much money is being made and that ultimately could sustain data center development in the future. But in the meantime, we also have sovereign wealth funds investing in building out data centers. So there's a lot of global growth here.
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Joanne, there are hundreds of billions of dollars committed to build data centers and we know where the chips are coming from and we know who's going to lease the capacity. But there are still so many missing pieces. Electricity, the main one. I just don't understand if this is like people writing checks they can't cash, you know, in the future because all the other pieces won't be there.
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Yeah, no, that's a really good point. And you know, they're writing checks that nobody will take because there isn't the energy potentially to power the data centers. And that's why I like so much the global spread of this, of this build out, you know. Yes. In the U.S. right. We need to, we need to build more facilities for powering these and we're seeing the companies themselves get involved. And that might very well be the solution in the U.S. but we're going to need an awful lot more investment. And that's by the way, why the AI so called investment theme has spread beyond technology. It's into utilities, it's into even pipeline companies.
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Right.
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Where is the demand spreading in addition to the applications? And the global footprint will, I think, be fungible enough to allow the data centers to go where the power and the land is available. And so that's a way also to avoid those bottlenecks.
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Joanne Feeney of Advisors Capital Management, Robust, deep conversation. We appreciate it very much. Okay, we're going to get out to a conversation now with former New York Governor Andrew Cuomo on the state of New York City's mayoral race and he is speaking to Bloomberg's David Gura.
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I came up 25 points to you. Of course, it's a four candidate race. How do you see the path forward here given the polling and sort of where things stand. I should note that the polling hasn't changed a tremendous amount in recent weeks.
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Yeah, it will change dramatically. What you see in the polls is Mamdani is always at about 40%. That leaves 60%. As you accurately pointed out. You have a multi candidate field. So four people or three people are breaking up that 60%. I don't think you're going to wind up ultimately with that larger field. I think the field is going to collapse. I think it's going to come down to me versus Mr. Mamdani. And as I said, Mamdani has 40%. He has his very radical ideas which are exciting to one group of the population, especially young people, but are polarizing to many other people. And I think it's going to come down to a one on one and then it is a totally different race.
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David Curtis Lee with a Republican candidate says he's not dropping out. The incumbent mayor Eric Adams, says he's not dropping out. We've passed the ballot deadline. If we were to have a race where it's you against Zoramundani, polls still show him leading you by by a substantial amount. What do you see in the electorate that the data aren't showing when it comes to that particular configuration?
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C
Yeah, well, polls are historically wrong, especially this year, especially in New York. On your first point, you can stay in the race. First of all, technically nobody can get off the ballot. Right. The question is, are you viable in the race? And you can have people who are in the race, but the voters just think they're not really competitive, they can't win. I'm not going to waste my vote. And I think that's what happens here. I think it comes down to me and Mamdani. I think when people understand what Mamdani stands for besides what he has said on TikTok, you know, he's anti police, disband the police, legalize prostitution, legalize the drug trade, abolish jails. You know, this would be anarchy in New York. Socialism does not work in New York City. It's antithetical. We're the business capital, right? We're pro business. Business is the engine that drives the train. So none of that has been communicated yet. And when it does, I can tell you the minds will change.
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Is there an effort by you and your campaign to try to convince Eric Adams or Curtis Lewa to drop out of this race? Are there conversations that are happening behind the scenes to make what I imagine you see as a compelling case for them to step aside to make this more of a one on one race.
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No, I'm sure they're making their own decisions. Look, I've been elections that where I have dropped out because I thought it was the right thing to do. They have a decision to make. There is no apparent path to victory for them. They in essence would act as a spoiler and that's a decision they have to make. They have to make it personally and that's their business. But again, I think it's going to come down to a two person race no matter what because that's what the polls are going to say and that is the choice. I am a Democrat. My father was a Democrat. I worked for Bill Clinton. Zoran is a socialist. They call themselves Democratic socialists. Right. Didn't support Democrats. Barack Obama was a liar and evil and didn't support Kamala Harris against Trump. Right. So this is a very different, this is apples and oranges between the two of us.
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I want to ask you about some comments that Curtis Sliwa made yesterday. I'm sure you heard them. He was campaigning and suggested that you or affiliates of your campaign had reached out to him and offered him money to the tune of $10 million to drop out of this race. And I'm going to quote from what he said during that campaign event. He called these classic Andrew Cuomo tactics. Why don't you strap up Cuomo to a lie detection machine and ask him and we'll all be blown to kingdom come because he's behind it. I don't have a polygraph machine with me here. But how do you respond to what he's alleging in those comments?
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C
Look, you can't, you have to take Saliba with a grain of salt, right? He is a known con man. He's lied about being victims of crime before. But it's very simple, David. When he said that someone should have said who? Who offered you the money? Let him answer the question because it would happen to be a crime. Right? Who offered you money? He never said who. Which sort of tells you, right, that it's, it's all malarkey. He, there was no person who did it.
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I want to ask you, last we've talked about the state of the race, where you hope that it's headed and if we can, I'd like to look back to 1977. So a ways you were 19. You were a student at Fordham University. Your dad was making a run for mayor and you were helping out on the campaign. He didn't win the Democratic primary and decided to run on an independent line for mayor. He ended up losing that race by nine points. They say that history doesn't repeat itself, but it rhymes. And I know that you don't want history to repeat itself here. You'd like to win this race in a way that he wasn't able to back then, 50 years ago. I'm not the first to point out this historical parallel, but I imagine you've thought about it, and I wonder how that experience has informed your outlook on this race. There was introspection after the primaries. You didn't do as well as you wanted to do. You decided to make this run. What can you learn about that race that your dad waged? And how does that inform the way that you're running this?
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Yeah. My father was an extraordinary individual on many levels. Highly principled, frankly atypical for a politician. And he did, quote, unquote, the right thing, whatever he thought the right thing was for me. I believe in the Democratic Party. I believe in what my father stood for, what John F. Kennedy stood for and Robert F. Kennedy stood for, and Bill Clinton and what Mondami represents in this Democratic Socialist of America. DSA socialists, call them whatever you want, is repugnant to the Democratic Party. I know. And that's what's really going on here. This is a civil war within the Democratic Party, right, where the extreme left is pulling the Democratic Party and the moderates are afraid of the extreme left. It's the inverse of the Republican Party when they had the Tea Party and the Tea Party was pulling, pulling the Republican moderates too far to the right because they were afraid of them in a primary. That's what's happening here. It's a battle for the soul of the Democratic Party. And the Democratic Party is not anti business, it's not anti police. That's not who we are. We're not about redistributing income as a policy. Right. You tax to provide a service. You don't tax to take money from the rich to give it to the poor. Right. That's why Donald Trump calls him a communist. So this is not the Democratic Party that I believe I represent and traditionally has served this nation well. He has zero experience in the position, never managed anything. Five employees, never had a real job. And when, when you, when you're willing to consider chief executive, New York City, no management experience, ran five people. Now he's going to run 300,000 employees, $115 billion budget. You wake up any morning, you could have a terrorist attack, you could have another Covid. It just demeans government and demeans public service in a way that I just find abhorrent. And I'm going to do everything I can to stop it.
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Governor Cuomo, thank you very much. Appreciate it.
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C
Thank you.
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I'll send it back to you.
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Our thanks to Bloomberg's David Gore there and a reminder that Michael Bloomberg, the founder of Majority over owner of Bloomberg News parent Bloomberg LP has endorsed Cuomo in the primary and contributed to his pack at.
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Okay, we have some breaking news crossing the Bloomberg Amazon has agreed to pay $2.5 billion in penalties and refunds and to change its process for how you cancel prime subscription subscriptions. This is in the FTC case against it. So the split is that the company will pay $1 billion in civil penalties and refund $1.5 billion to customers. The accusation that the FTC had made was that Amazon was misleading millions of customers into signing up for prime, but then making it intentionally difficult to cancel. They will now change that process overall. When the news broke, there was a brief spike into positive territory, but we're still down 210 of 1%. The extraordinary thing Caro, is remember that the trial in this case with jury selection was only three days ago and they've reached a settlement $2.5 billion in just three days. Let's get to another story out of the UK data center developer N Scale has just raised $1.1 billion just one week after announcing its partnership with Nvidia and OpenAI in the UK. Let's get more from Bloomberg's Mark Bergen. A lot of focus at the moment on the NEO cloud and N Scale kind of fits into that. What are the details from this story?
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C
We know a lot more than what you said. This is 1.1 billion. They've described it as the one of the largest actually they said it's the largest series B round in Europe. You know it's really fascinating to see the scale though. We have some in our in our story in the Bloomberg today. But this might be just the amount of money they need to purchase just one of their data centers they have had planned to build in the UK And I think you know, they are claiming to go out and purchase deploy 300,000 in video GPUs. So they're going to need a lot more money. We're not sure if this is just equity or equity in debt, but they're.
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Likely to be raising probably both of.
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More and very soon.
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And your investigations before showing the N scale very briefly, Mark has never built a datacenter before Yeah.
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I mean what do you experience? To be fair, that they spun out of a of a crypto mining operation similar to what Core Reeve did. They have hired senior executives that have a lot of experience that the company itself hasn't.
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Greenback's mark bag and short and sweet. And we so appreciate it. Thank you very much. Coming up, the wave of a datacenter announcements keeps on going and talk to Barclays next Cybercriminals. Count on Chaos. Count on Veeam to stop them fast. Partner with them and get 24. 7 ransomware support from the first red flag to full recovery. Whatever the world throws at your data, it's all good. Learn more@veeam.com that's V E-E-A-M.com so have.
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A
Welcome back to Bloomberg Tech. A quick check on some key names that move this market today. Look, we are just questioning some of the valuations within the S&P 500 within the NASDAQ. We're on pause ahead of those big inflation numbers tomorrow, but I dig into individual names that continue to push higher core. We've turned around it was trading lower and then it goes into the green by 1.5%. Why? They've got yet further commitments coming from OpenAI to continue to build out their data center needs, upping it by another six and a half billion dollars to more than 22 billion in commitments. That's important because we'd worried about perhaps a focus on Microsoft as a key client for Core. We've now the NIO cloud really pushing in to other areas of growth. We're also looking at Nvidia up 7. 10 of a percent. This is we just digest this phenomenal scale of investment coming from this company. Whether it's Backing intel last week to 5 billion. Whether it's $100 billion in terms of equity going into OpenAI, no matter what, when they commit to increase that I spend, the market rewards them. Ed. And interesting notes coming out on this company today as well.
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Yeah, I think Nvidia's worth lingering on. Barclays out with a new note, raising its price target from $200 to $240, maintaining an overweight status on the stock. Barclays Research analyst Tom o' Malley joins us, the author of that note. You are in the can of people that listen to Jensen Huang when he said this is going to be a $1 trillion opportunity or industry, and then very recently said, actually it's going to be a 3 or 4 trillion dollars opportunity. And now you, like many say it's a bit more believable to us. Just explain your thesis.
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C
Perfect. And thanks for having me on the show. I think in a prior segment you had Joanne on talking about how the pie keeps on growing. If you, if you look at COMPUTE announcements Since December of 2024 through date, we're looking at over 2 trillion of announced dollars of compute and over 40 gigawatts of power. If you look at what Jensen said historically, about 65 to 70% of that is related to compute. So if you look at what it could mean for Nvidia, it's about $1.5 trillion really coming into the pipeline over a very recent period of time tomorrow.
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E
You saw the announcement between Open Air and Nvidia right? From, from the end, from earlier this week?
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C
Yes.
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Okay. So on the Internet, the analogy or metaphor that people are using with that is it's like an extension cable. That Nvidia is the extension cable. They're unplugging from the wall and just plugging back into the cable. Do you see what I'm asking about? Nvidia puts 100 billion into OpenAI in order for open air to take $100 billion worth of Nvidia gear.
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C
Absolutely.
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How do we interpret that?
- [32:25]
C
I mean, there's two big concerns with the deployments of AI right now. It's one power. And then to the circular reference issue that you see brought up again and again, I would say you can flip this argument on its head. Obviously, it's early days here and there is reason to be careful about circular issues in terms of investment. But I would ask, where should Nvidia invest their money? I think buying back stock now would be one option. But Jensen's in founder mode here. He's looking to create an ecosystem where you're having more and more players actually drive AI further on. And I guess the other point would be this is not just Jensen. You're seeing investments from AMD and Broadcom and this is going to be something that's driven forward by a group of companies, but clearly a concern that many investors bring to light. But I do think that Nvidia is in a unique position where they're taking the capital that they've made and they're reinvesting it in their space. So can look at that argument both ways.
- [33:16]
A
They've just deployed in Europe with N scale, they've been deployed in NEO Clouds and call Weave, for example. Tom, what's so interesting is where the house of cards could fall. What would limit this up and to the right perspective about compute needs and that feeding in to Nvidia and indeed all of the semiconductors that currently have a stake in providing accelerators.
- [33:40]
C
As you mentioned earlier in the show, it's the return on investment first and foremost. And I think that what we do in the note that we had out today is try to show what the investment from a chip perspective is looking like versus what the ROI is. And we do that by looking at hyperscaler rpo. So you look at us, Azure, gpc, Oracle, and over the past several years that's been growing at a 30% CAGR. So essentially hyperscaler backlog that's exploded to over 80% and if you look right now, the backlogs at over $1.1 trillion. So what you're seeing first and foremost is that you're getting some roi, you're getting some business that's stepping up. That's an area of the world that we can do a little more work on. The other side, which is less in the, in the semiconductor ecosystem, is the power side, where if you look at what 40 gigawatts means, you're talking multi major cities in terms of the deployment. So that's really where the investment needs to focus on from this point forward. Because if you don't have a utility bill for someone living in a city and that's being sucked to another data center, that's a serious problem.
- [34:38]
A
Tom, it's interesting that I think Alibaba chimed in the CEO saying 4 trillion is his number two by 2030. But I cast my mind back to March when there was a wobble in the market, when we did start to question some of the valuations. That was because the chairman of Alibaba had said there was a bubble in terms of infrastructure investment, particularly in the us. So how much of this, what, what alarm bell rings for you when we start to get into a valuation that screams bubble? Because you see Nvidia could go up another 30% or so.
- [35:09]
C
Yeah, I think there's, there's two things to look at. The first sort of reset in valuations this year came around deep seek and that was a change in where we saw the revenue come coming from. We've transitioned to what was scaling laws and training. So all these guys making money on training and now we're moving more to the era of inference which is people actually using these models, seeing agents out there actually serving individuals and so you've seen a shift in where can speed compute spend has actually gone. So the ROI is helpful and it makes me feel a bit better as we go along here and we'll continue to look at open, open air, anthropic and you'll see more fundamentals come out as time goes on along. But the concern is always these are very large numbers. Where do these dollars come from? First step is look at hyperscalers. If you look at today the capex as a percent of op income is still around 50%. I wouldn't start to get worried until you're above 100% and getting to a position where obviously taking on debt to do this. And then secondly I would look at the sovereigns where globally you're starting to see countries invest in this and that's additional dollars that is outside of that original pie. And that was always the proxy for when are we run out here, when do we get to the limit of hyperscaler?
- [36:16]
E
Capex Tom, you did not reference intel in the note you published overnight, but you do cover Intel. I just wanted to ask for your reaction to the Nvidia equity investment in intel, but actually for me more the partnership on x86 and also in the PC domain. Like how do you you interpret that please?
- [36:39]
C
Yeah, I think just first impression and foremost From a very 30,000 foot view, it's good that intel is getting dollars to bridge the gap here. There's obviously been some capital concerns when it comes to how it moves the technology profile forward. We've seen a government investment, we've seen some other investors, Brookfield and Apollo over the past several years and you haven't seen a big change in the technology profile. What I would argue is that this is very favorable for Nvidia. You potentially have intel focusing in AI product for x86 CPUs in the data center. That will help with the 36 and 72 systems that Nvidia has out there today. On the, on the PC side, gaming PCs already have a discrete GPU and videos already there. Maybe you could see some collaboration that helps drive forward Intel's push on the IPC side. But largely this seems like a more favorable agreement for Nvidia. And funny how times change within video. Stepping in to rescue intel here.
- [37:30]
E
Okay, Tom, let's end here. So there's consensus that in AI and data center at least this will be a $4 trillion industry over varying time frames or addressable opportunity. Have you and your colleagues and peers calculated how much of that you expect in video to take? And have you factored in competition from amd, GROK and other custom ASIC solutions that are coming out?
- [37:55]
C
Yeah, so I don't think we've done a full analysis analysis when we get to that 4 trillion, boy, that would be great if we do. But I would say that right now general purpose silicon still represents greater than 90% of the market and that's Nvidia and AMD. Broadcom with their announcement, particularly with OpenAI is starting to take more share. If you look at the longer term horizon, I still think general Purpose Silicon makes up a majority of the market, say 6040. But you do see from where we are today, general purpose silicon is, is a much larger piece of the pie. So again, as Joanne was saying before, it's smart to be invested across these names. If you look at Broadcom, they're just growing at a much faster rate than where they are today, which makes that story very interesting as well. So I guess in summary, just $4 to Nvidia over the long term as I look at the market, but a faster growth rate from the custom silicon guys.
- [38:44]
E
Tom o' Malley from, from Bucky's, I think the first time on Bloomberg Tech and we've really enjoyed it. Thank you very much. Carrie, what you got?
- [38:50]
A
It is time now for talking tech. And first up, Elon Musk's X AI. And the US government has signed a deal that allows federal agencies to use Grok AI Chatbot. Now the deal is part of a push to speed up adoption of new technologies like artificial intelligence. And it just 42 cents per agency, the cheapest contract yet. And the government's new initiative plus the Trump administration has launched investigations into imports of robotics, industrial machinery and medical devices. The pro probes set the stage for tariffs which the President is allowed to place on goods deemed critical to national security. And Apple is calling on the EU to scrap the Digital Markets Act. Now the US tech giant argues that the consumer protection law worsens user experience, increases privacy risks and threatens to undermine innovation, though the company says it is complying with the law while it's in.
- [39:36]
E
Place at okay, Coming up. Alex Alexa von Toby of Inspired Capital joins us. She'll explain why she says physical AI is reaching an inflection point and the impact of Quantum on financial services, which today is a top story. This is Bloomberg Tech.
- [40:01]
B
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Someone with new long term goals?
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- [41:34]
A
HSBC has achieved a breakthrough in deploying quantum computing in financial markets. Now using IBM's Heron Quantum processor, the bank was able to improve bond price predictions. Let's talk about the opportunity to invest in this next frontier of computing and Alexa von Tobel, founder and Managing Partner of Inspired Capital. Previously the founder of fintech startup Learn Best. She sold to Northwestern Mutual back in 2015. And what interests me so much is within your podcast you just been speaking to a founder you've backed Logical all about the future of Quantum. You have been deep diving on this. So when you see these sorts of iterations and breakthroughs, what do you make of it? Where is the opportunity for you in the seed in the series?
- [42:13]
G
A First of all, great question. As you know, I'm a long term early stage investor. And I like to look for companies that could be worth 10, 20, $30 billion. There's very few of those in the world. And I think that led me to quantum now almost a year and a half ago, thinking it's sort of the next wave of innovation after AI. And the potential is profound. Once and if we build these quantum computers, and mind you, it's a category where people have been toiling away for 30 years without much success. But the best experts in the world believe that in the next decade we will begin to see real advancements towards building the first scaled quantum computer. And what comes out of that is huge advancements in financial services and pharmaceuticals and all these other categories that are going to change the world in a profound way.
- [43:00]
A
When you think about IBM's role here and they've come on the show and said by 2029, are quantum computers going to be in there in the wild and achieving real things? Then from the early stage founder, how are you seeking them out and where can they add to the quantum process?
- [43:15]
B
Sure.
- [43:15]
G
So I think the big goal right now is people are trying to get to 10,000 qubits. So many different hardware types, six or seven based on how you cut it. And I think your most important researchers and PhDs in the world are trying to get to 10,000 100,000 skilled qubits. That is the march that everyone is working towards and we're rooting for them.
- [43:37]
E
Alexa, I'm really interested in like the business model, which I know is a bit of a dry way of looking at it, but when we think about compute for data centers, in the context, people lease that capacity.
- [43:47]
B
Right.
- [43:48]
E
I think about the work that Google is doing in quantum. It uses its quantum machines in house for research. So with what HHSBC did with IBM and when you're looking to invest in the earlier stages stages of this field, how do quantum computing companies give their services to a financial institution like an hsbc? What's the model for that?
- [44:10]
G
That's a great question. So I think we're going to see a few things. First of all, right now, people will rent out their quantum computers. You're seeing prices from 10,000 to, you know, in different cases, $50,000 per per hour, etc. So people will rent them out. I actually think it could be a profound business business model shift, which is whatever is created with that quantum computer, whatever ip, whatever technology that comes out of using those advancements in compute, that you could take a revenue stream forever. So that is sort of an interesting shift. Somebody Once said to me that whoever builds the first quantum computer almost overnight could become Pfizer because the compute of what's possible for pharmaceuticals could be that profound. So it gives you a sense sense of the shift, which is you could potentially take a stream of the IP that comes out of quantum computers as a, as a new business model entirely.
- [45:02]
E
Alexa, you are one of many, I would say, that is arguing that physical AI is having a chat GPT moment. Physical AI is now a pretty broad category. So which vertical within that would you say that is most true of?
- [45:17]
G
Great question. And so what I get excited about as everyone was running at digital AI as you've seen the dollars pour into the category and inspire, our venture fund, early stage venture fund is very thesis driven. So for us, what physical AI means is taking big foundational models that now exist credibly that can interact with things like sensors and robotics and create smart devices everywhere in our physical a world. If you think about just our infrastructure, we all live because of our infrastructure. Our water, our pipeline, our electricity, our roads. And we're getting to the point where we can no longer be reactive, which is what we are. It's almost like the Roman times. Something breaks, you go and fix it to becoming predictive about our ecosystem around us, our world and infrastructure around us. And that is what we mean by physical AI at inspired, we're really looking for the intersection of of observability and predictability in the environment around us.
- [46:15]
A
And looking at your portfolio companies, you've already made some key bets. Thinking about Bright Eye, TC Labs, what is it that these companies that we see on our screen now have offered you from the seed in series A area that you feel hasn't been adopted already by big industry by big companies already listed?
- [46:32]
G
Sure. I'll start with bright a bright AI. Alex, the CEO is an absolute technical genius, the godfather of IoT and he invented a sticker. There's now 250,000 already deployed of these stickers. And they can go on anything from a utility pole to a water pipeline. And here's what it does. It then sends an observability layer back to whichever company has, has bought these stickers and can say now proactively. The utility pole is 25 degrees slanted. Let's go fix it before it falls on an electrical wire and takes power grids out literally. Men and women walk up and down utility poles right now and observe them physically and then fix things versus being predictive in fixing it. Bright Eye in the water world will literally find inside pipelines the leaks and right now Today we lose 6 billion gallons of treated water which is 15 million homes of water. Think about that every single day because of leaks and bursts. And Bright Eye is the sensors that will get ahead of that set Bright AI a company we're really rooting for. Another company as we said was TC Labs which is an incredible team out of Google. They're trying to save one gigaton of carbon each year and what they do is go take the energy we already have. So think about this. Because of AI we need wild amounts of energy right there. There's not enough energy. Energy is the headline and so they are going to the infrastructure. We already have oil refineries and not only helping make them be more efficient using AI so that they can produce more energy but also more carbon friendly such TC Labs and then finally three SWIFT is the data set of sensors for our forest. The forests are the lungs of the planet and they are measuring them so that we can get ahead of forest fires and major storms forms that then take power out. So as you see we are very forward thinking in physical Alexa Von Tobel.
- [48:27]
E
Co Founder Managing Partner of Inspired Capital thank you very much. South Korea says investment projects in the US Will remain in limbo until visa issues are resolved. In the wake of the Trump administration's immigration raid at a Hyundai LG Energy battery plant in Georgia, South Korean Prime Minister Kim Min Suk sat down with Bloomberg Cherie on in Seoul for an exclusive interview.
- [48:52]
C
Realistically, without a solution, it's difficult to.
- [48:55]
B
Invest in the United States and carry.
- [48:58]
C
Out the various joint projects currently planned.
- [49:01]
B
Between South Korea and the U.S. we.
- [49:04]
C
Absolutely must find a solution. Several projects are underway between South Korea and the US without resolving the visa issue, meaningful progress remains virtually impossible.
- [49:16]
A
Coming up, Disney readies for a legal battle with President Trump over Jimmy Kimmel's late night return. More on that next. This is Bloomberg Tech.
- [49:32]
B
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