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- [00:01]
IDA Ireland Narrator
With the highest number of young STEM graduates per capita in the eu, Ireland has the people and skills your company needs to succeed here. IDA Ireland, the national investment development agency, can help you find and nurture the people you need to internationalise and thrive. Our talent is just one of the extraordinary benefits Ireland has to offer. Learn more@idailand.com invest in extraordinary
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Unidentified Speaker
so there's
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IBM Representative
a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a Global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions. Not noise proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
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Venture Global Representative
IBM Global we think about what can be done, not what's usually done through innovation. Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.
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IDA Ireland Narrator
Bloomberg audio studios podcasts radio news.
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Ed Ludlow
Bloomberg Tech is live from the heart
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IDA Ireland Narrator
of Silicon Valley with Ed Ludlow in San Francisco.
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Ed Ludlow
This is Bloomberg Tech. Coming up, tech markets are mixed as US Iran jitters revive risk off sentiment and send oil higher. Plus open air AI gets a $520 million credit line from bank of America while the chat GPT maker prepares to roll out its most advanced model tomorrow. Eric Hippo from Larry Hippo discusses the early stage investing landscape at a time of ballooning valuations, New York's tech scene and a whole lot more. Welcome to the show. Let's get a check in on these markets and it is a mixed picture right now. It's difficult to say what the main driver is. Earlier in the morning, headlines from the President of the United the status of relations with Iran did have an impact on sentiment. Semiconductors are rebounding from from a volatile period of selling, which all stems from Samsung's prelim earnings. But there is sort of a reassessment of the trade. I'd say it's what's happening with the war in Iran as we await a press conference from the President in Ankara to start any moment now. By the way, I want to bring in Bloomberg's Washington correspondent Tyler Kendall. We've heard from the President a few times this morning already what, how would we summarize the United States position right now on Iran?
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Tyler Kendall
Well, there were a lot of fast moving developments and we're about to get more when President Trump takes the stage there. But he is essentially threatening that we are going to see further US Strikes on Iran tonight after a wave of attacks overnight in response to Iranian aggression in the Strait of Hormuz. Because over the last few days we've seen at least three Iraq, three commercial tankers targeted by Iran for transiting through the strait using that US Approved corridor that gets them closer to the coast of Oman and further away from the Iranian coast. And we're hearing from Iran within the last hour, reporting on Iranian state tv, threatening that the country will close down the strait completely if the US does follow through with its threats for further strikes on the country. And it hasn't just been escalation when it comes to kinetic action, but we're also seeing just yesterday the U.S. treasury Department moving to revoke that critical waiver when it comes to allowing Iran to sell its crude to market. So the US Is now taking that further stance when it comes to squeezing Iran on the economic front, as it appears that these negotiations at this point have really been stalled. Now, even with all of this said Ed, President Trump here is saying that he thinks the cease fire is over, but he did leave open that pathway that negotiations could continue. He said that he wasn't going to stop his diplomatic team from trying at least. But in his opinion and in his words, he thinks at this point it's just not worth that effort.
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Ed Ludlow
Bloomberg Silent Kendall in Washington. Thank you. We will hear from the president very soon. Again, to summarize, markets, tech generally lower, semiconductors outperforming. Let's try and get to our top tech story. Bank of America is changing its tune on open air. After initially passing on lending to the company, it's now extending a $520 million credit line. That's according to sources. Joining us with the exclusive, Bloomberg, Sridhar Natarajan. Okay, so we're saying that this is a U turn. Give us the back story.
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Sridhar Natarajan
Well, it is an interesting clash. The sector right now is represented by companies like OpenAI, high growth, massive cash burn companies that are dominating the sector. And on the other hand, you have the old God of Wall street, bank of America, the second largest lender in the United States. That is defined by its responsible growth mantra. So when a company like that comes out and asks for a credit line, you can see why that bank would be reticent. And they had said no previously, when pretty much the entire list of bank of America's rivals lined up to extend a credit line to Open Air, they said no again in March 2026, as recently as March. But now in recent weeks, bank of America finally is on board. And the best way to explain this is it showcases the internal struggle between maintaining this responsible growth philosophy, which unfortunately translates to a more conservative approach versus bankers wanting to chase the hottest deals out there. And there's always going to be some risk on them.
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Ed Ludlow
The hottest deal could be an OpenAI IPO. Right. We and others reported last week, the week before that, an Open Air ipo looking like 2027. Right. Originally, maybe this, the end of this year, now 2027, bank of America wants to get in on that, right?
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Unidentified Speaker
Yeah.
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Sridhar Natarajan
I mean the reality of modern day Silicon Valley is if you want an admission ticket on the big ticket IPOs, it is almost expected that you support the company in the lead up to that. And extending a credit line, participating in a credit facility is one obvious way to do it. Yes. We still don't have Clarity on when OpenAI could go public. Could it be later this year, could it be next year? But really the window for bank of America to come in would have been closing down. This doesn't necessarily guarantee a seat at the table, but it certainly goes a long way towards helping them get there.
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Ed Ludlow
Sridhar Natarajan, thank you very much. Staying with OpenAI, the company is making news on the product front as well. It's now set to expand access to its most advanced AI model, GPT 5.6 tomorrow. Bloomberg's editor Seth Figgman with us with the latest the this is an interesting case study because it is OpenAI more widely releasing a model that the US Government has had time to review per the executive order of the President of the United States last month. What do we need to know?
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Seth Figgman
Yeah, I mean it has shades of what happened with Anthropic, though there are some distinctions here. There was not really any formal export control or ban on open AI's model. So throughout this felt a little bit more voluntary. But the government had pressured OpenAI to do a staggered release of the model and approved the initial list of partners who were able to access it. Now they're saying it'll be available publicly to everyone starting tomorrow. But we don't really have much clarity on what, if anything has changed. You know, with Anthropic, there were additional cybersecurity safeguards that were agreed to and implemented as part of the company bringing back its fable and Mythos Models here we don't really know what meaningfully has shifted. What we do know is that this just now does not feel like a workable long term strategy, at least for AI developers to have to go through this kind of ad hoc reaction.
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Ed Ludlow
Let's talk about the model itself or themselves. There was a limited Preview, but basically OpenAI is doing this in three tiers. What do we know about this generation of model from OpenAI?
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Seth Figgman
Yeah, I mean more of what we've been seeing in recent months from both OpenAI and Anthropic, that this model or this family of models should be more, more capable when it comes to cybersecurity tasks and both the defending cybersecurity as well as coding efforts. And ultimately, as we were talking about earlier, with the IPO coming opening Anthropic are vying against each other to cater to this market for coding and cybersecurity tools and getting as many business customers as they can. So it's really paramount to get these new models out as fast as they can in the face of increasing opposition from the government.
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Ed Ludlow
Seth, some quick context what you said at the beginning, you know, Sam Altman seemed to sort of be more on a voluntary basis willing to do this with the US Government. Could you give some of the background, please?
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Seth Figgman
Yeah, I mean, again, this is not the Commerce Department as far as we know, putting out a formal export control ban on opening eyes models in the way that happened with Anthropic. And throughout in recent months, it's, there's been a bit more of an adversarial or tense relationship between Anthropic and the government than there has been between OpenAI and the government. That said, if the government is pressuring, whether foreign, formally or informally, the company to move a little more slowly here, you know, it's hard for any company to buckle that pressure. So I think we've seen this happen seemingly in a more voluntary way, though under some duress.
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Ed Ludlow
Bloomberg's editor Seth Figgman, thank you very much. An Update on Amazon's $25 billion bond sale. Demand peaked at $62 billion before settling at roughly $41 billion in final orders. So about 1.6 times the size of the deal. In terms of oversubscription, that's well above the average, below the average, I should say, for US investment grade bond offerings this year, which had been typically around four times oversubscribed, according to Bloomberg data. Even after the offering, investors had a higher than usual premium opportunity. Amazon could not generate the kind of blockbuster demand that some had expected. Suggesting that there is a limit to investors investors appetite even for the debt of the biggest tech companies. The company, which is expected to spend almost $200 billion this year, has tapped different currencies to fund its plan and is the biggest debt issuer among the firms that are leading the boom. If you've been wondering whether the rally in tech has run its course, our next guest says no. She sees recent market moves as a rotation with AI demand and tech fundamentals still looking strong. Margaret Patel of Allstring Global Investments joins us now. It has been so difficult to get to the root of what's been driving the market in just the last 48 hours. A case study for you is Samsung. Incredible numbers on the top and bottom line and yet the sell off in semiconductors that followed was difficult to gauge what was happening.
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Margaret Patel
Well, it is remarkable that across the board in the tech sector, the hyperscalers, Samsung, the memory stocks all had fantastic numbers, all had an outlook looks as if it was even accelerating from the current outstanding levels. And I think you really have to look at short term volatility. We had the Korean market which was very volatile. I think some of that splashed over into our market. You had some new, very large new issues, techs like Space X for example and you had midyear where a lot of people are adjusting their portfolios, particularly after some of the stocks have had such an enormous rise, others not so much some of the MAGA stocks. So I think you're seeing a lot of jostling short term trading, really unrelated fundamentals which are as strong as they've ever been, if not stronger, plus a backdrop of a very strong economy, capital expenditures very strong. Those are all sectors of the economy that will be using tech products also in addition to AI and so forth. So really it is a disconnect but I think it's a pretty good opportunity because a lot of these stocks have cheapened up over the last year four days and really some over the last six months.
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Ed Ludlow
Margie, here's what I know. The semiconductors are coming off their best quarter ever in a long time. Nvidia is trading at 18 times forward earnings cheaper than the S&P 500 right now. And from a memory perspective, nothing has changed. Supply is tight, DRAM pricing is going up, NAND pricing is going up. Take all of that in aggregate and tell me what, what it tells us.
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Margaret Patel
Well, it tells you one thing about Nvidia, that it is so widely owned that most people have an overweight in video and that as a result, although they again they Report very very good numbers, very good outlook. The stock is really stagnated. If you look at the P E the dividend yield, cash flow yield it really looks like a consumer staple as far as its financial profile even though the growth and the profit margins are very high. So I think it's as the market is differentiating among these companies number one and number two there's just a reality that great as in video is if most investors which seems to me are have an overweight position in video there is really no marginal buyer left to come in and raise a stock even in the face of good numbers. And I think you're seeing that in contrast to say memory stocks which I would say have been under owned and had spectacular performance performance this year but again they're on their own so people really have an appetite to increase their holdings in some of those stocks.
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Ed Ludlow
We have some breaking news in the markets. Oil has really extended gains. We're now seeing Brent crude rising above $80 a barrel now just a touch below $79.83 of course we're expecting to hear from the President of the United States in his NATO press conference any moment now. How is it is the ongoing situation with Iran impacting the technology sector?
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Margaret Patel
I think it has a very very very minor impact particularly in the US because we have much lower foreign oil dependence. We actually are exporters of energy products and really if you look at the energy sector itself you could say that this is going to really command those companies whether exploration, transportation, export to actually use more technology products in order to cut out their vulnerability versus Iran. So I would say net, net that indigestion in the Middle east caused by Iran is actually a positive for investments in the tech sector, for the energy sector. So again it's certainly not a negative and I think really a positive because the it will increase the demand for high tech products for exploration and transport and so force.
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Ed Ludlow
Here's one for you the link between capital expenditures and real world inflation of the world of the data center. We talked about Amazon and its activity in the bond market and the idea that Amazon is a case study CAPEX $200 billion this year, maybe $300 billion next year but what I see on the Bloomberg is construction and labor inflation, memory inflation how does that factor into higher capex?
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Margaret Patel
Well really it, it says to me that inflation supports higher profits across the board and you've seen that actually looking at results for the first quarter that companies are reporting record high profit margins in tech of course but also in other sectors too. Why because they have the ability to pass on input increases in prices and maintain those very high profit profit margins. If you remember, say about six months ago, people were worried that companies would not be able to pass on price increases and their margin to be squeezed. And it shows that actually this little bit of inflation is helping companies, helping their profit margins and I think supporting stock prices and really when you look and you say well profits in the first quarter were up by 28%, revenues up 11%, profit margins I think 19%. You know, even if the Fed raised rates by a quarter of a point to you know, three and three quarter to four and a half, that really doesn't. It's such a small amount compared to those other very, very big numbers. So we think it's, I won't say immaterial, but pretty close to it. Certainly the Fed has indicated it wants to be more passive, not as aggressive as they been in the previous year. So that's really a positive to say lower volatility in the financial markets. All sectors better benefit. Tech of course does too, but really all the companies benefit.
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Ed Ludlow
Margaret Patel of all Spring Global Investments, thank you so much. Dynamic conversation on tech in the markets. I'm taking a look at Alibaba. These are the US listed shares and you know, it's a serious gain 11%. What happened was a pre earnings briefing for the analysts and it looks like the market in part based on that has become very optimistic about the potential earnings potential of Alibaba. But also more broadly this kind of shift of capital that we have been seeing in the short term into major Chinese technology and Internet companies. It's an interesting move. We'll keep tracking it. Coming up, Apple's chip partnership with Broadcom actually gets even bigger. The expanded deal is expected to exceed $30 billion. We have the details. Next, this is Bloomberg Tech
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Michelle Davis
Foreign.
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Ed Ludlow
A bigger check for its U.S. supply chain. The company says its expanded Broadcom partnership will top 30 billion USD. Bloomberg's consumer tech and Apple Managing editor Mark Gurman's with us here in New York City. Very quickly we're getting more details of this, right? It's not just the headline figure, it's the sort of structure of it. Again, very usually focus. What are the new details?
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Mark Gurman
Yeah, I know Apple loves to put out these announcements every so often. The President Donald Trump obviously loves these types of announcements. Tim Cook, Apple CEO had a $600 billion commitment announcement in the Oval Office over a year ago. This is part of that 30 billion in expenses for these chips. These are developed by Broadcom produced the United States as part of that cap capital expenditure investment of one and a half billion from Apple into Broadcom's Fort Collins, Colorado facility. The Trump administration obviously, like the other announcements, is probably eating this one up.
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Ed Ludlow
Let me go back to what we talked about in the last couple of days because it was really picked up. What are these Broadcom design chips going to actually be used for with Apple?
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Mark Gurman
You know, Apple is working with Broadcom on a range of things in terms of this announcement. They're saying this has to do with wireless components. The key here is that we Broadcom has long been Apple's supplier of Bluetooth plus WI fi chips. In order to get your phone to connect to the Internet on your home network or your office or what have you and connect other devices over Bluetooth, they relied on Broadcom, but they designed them out and they built their own N1 chips. Those are expanding rapidly into iPhones, iPads and Macs. You'll see a range of new smart home devices with this Apple wireless chip in the coming months. New Home Pod mini, new Apple tv. But they are making what are called RF filters. It's a component that works with the new again in house cellular modem, the C1, the C2, the C3 that Apple's rolling out over the next few years. Broadcom is also working with Apple on ASIC chips, a component related to upcoming Apple intelligence servers that are going to be deployed over the next year and so forth. So a lot of work going on with Broadcom even though they've been designed out of their primary component.
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Ed Ludlow
Bloomberg's Mark Gurman, who leads our coverage of consumer technology, thank you very much. Billions of dollars in planned investments to develop the US Chip sector could be at risk from a lack of workers. According to analysis from McKinsey, the chip industry group SEMI and the National Science foundation, the US could face a deficit of 157,000 full time skilled workers by 2030. Bloomberg's Maggie Eastland joins us with the details and that chart. I mean this is a drastic deficit of skilled labor, the exact type of labor that is necessary to get this built. Take us inside it.
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Maggie Eastland
Absolutely. So the US has been trying to create a manufacturing renaissance, especially in the semiconductor industry for many years now. The Chips act of 2022 tried to address some of those financial shortfalls, those extra costs that companies face to build in the US But a key part of this that still isn't figured out is all the workers that will be needed. One thing I found really interesting in this reporting is that you know, most US Engineering students don't want to work in the chip industry. In fact, only 3% of those students ultimately go on to work in the chip industry. When there are so many other exciting careers in tech, in AI that are, you know, viewed as a bit more vanguard and exciting maybe than hardware.
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Ed Ludlow
Right. Maggie, let's just go back to basics. Like what kind of jobs are these? What kind of skills are we literally talking about?
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Maggie Eastland
Absolutely. So the biggest gap is in manufacturing engineers. You know, there are a lot of engineering students in the US but most are not going into manufacturing. There are also technicians. So these are high skilled jobs but they don't require as advanced of education. The CHIPS act did address some of this and there are a lot of employer funded programs to increase the number of technicians. The harder problem is actually going to be the engineers.
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Ed Ludlow
If you are working in that field, Maggie and I easy to find, reach out. I'd love to hear what your experience is in industry. Maggie, very quickly you just touched on it there. What are the companies doing right? Are they having to hire competitively with big pay packages? What's the solution to bridge the gap in the short term?
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Maggie Eastland
Look, companies told McKinsey and SEMI and NSF in this survey that they are already facing difficulties hiring engineers. You know, immigration may fill some of this gap. There's been some challenges there. There are, you know, this survey is recommending that the companies work with universities a bit more to increase interest in semiconductor careers. But, but really what this analysis is showing is that the companies need to be doing more work in order to fill these engineering gaps.
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Ed Ludlow
Bloomberg's Maggie Eastland, thank you very much indeed. Coming up on the program, Chinese AI firm Jeep, who will sell $4 billion of shares after rallying nearly 1500% from earlier this year. Look, we're still awaiting a press conference from President Trump in Ankara, Turkey, set to start any moment. A lot of headlines this morning relating to the to Iran. The president had said that the US Will probably strike Iran again tonight. Then he said that he will continue to deliberate. We'll get the latest headlines on that very shortly. This is Bloomberg Tech.
- [22:51]
IDA Ireland Narrator
With the highest number of young STEM graduates per capita in the eu, Ireland has the people and skills your company needs to succeed here. IDA Ireland, the National Investment Development Agency can help you find and nurture the people you need to internationalize and thrive. Our talent is just one of the extraordinary benefits Ireland has to offer. Learn more@idailand.com invest in extraordinary
- [23:20]
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- [24:31]
Margaret Patel
in just 15 minutes.
- [24:32]
Ed Ludlow
Start your day with Bloomberg Daybreak, the podcast with a global view on the stories that matter. I'm Nathan Hager.
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Margaret Patel
And I'm Karen Moscow. Join us each morning for curated stories on current events, politics, business and foreign
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Ed Ludlow
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Margaret Patel
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Ed Ludlow
Listen to Bloomberg Bloomberg Daybreak each morning on Apple, Spotify or anywhere you listen.
- [25:02]
Uhara
It's time now for Talking Tech. I'm here onand first up, Chinese AI firm Zhipu is slated to sell $4 billion of shares after its stock soared nearly 1500% following a January listing in Hong Kong. The firm, which trades as Knowledge Atlas Technology, will use the money for research and development, expansion and other investments. Plus, Samsung says it has started mass production of its most advanced AI data center storage drive, designed for Nvidia's upcoming Vera Rubin platform. The company says the new drive is more than twice as fast as its predecessor and is built to handle the massive data demands of AI workloads. And Meta debuted a new AI image generation system called Muse Image, its first major release since chief AI officer Alexander Wang took over the company's AI efforts. News will be integrated into Meta's apps, including Instagram and WhatsApp, allowing users to generate new images or edit existing photos.
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Ed Ludlow
Ed okay, thank you, Uhara. Coming up, it's day two of the annual Allen and Co Sun Valley Conference, also known as the Billionaires Summer camp. Stay with us. We're going to go to the ground. We're going to get the latest details and some of the news. We're still awaiting a press conference from the president of the United States in Ankara set to start any moment now. We will bring you the latest headlines with a focus on the situation with Iran. That's next. Stay with us. This is BLOOMBERG Tech. Welcome Back to Bloomberg Tech. Nvidia is is cheap. The stock's down about 15% from a May peak, sending the company's valuation to pre boom levels as investors turn towards semiconductor manufacturers. Bloomberg's Carmen Reineke, she's got the charts high.
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Maggie Eastland
All right.
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Michelle Davis
Thanks.
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Maggie Eastland
Yeah.
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Uhara
So let's take a look at Nvidia's valuation here.
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Tyler Kendall
So that 15% decline in stock price
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Michelle Davis
has raised up on using AI to execute tasks and sharing use cases with each other. In terms of who we've seen so far, I mean, it's been a lot of the usual suspects. David Zaslav, of course, Bob Iger, Disney's new CEO, Josh d'. Amaro. We saw Sam Altman yesterday as well this morning, Lachlan Murdoch. One thing that's been a little bit different this year, though, is that it seems like folks are a little bit more reluctant to come and talk to us in years past. You know, David Zaslav has always been very eager to get his time with the press, but he, you know, not even even he gave us time. We saw Comcast executives Brian Roberts and Mike Cavanaugh yesterday. They, of course, smiled at the cameras but wouldn't come and engage. And one theory for why that's happening is a lot of these companies have deals in the pipeline or on their wish lists that are really going to hinge on getting regulatory approval. And it could be that in this very politicized environment, they're reluctant to speak out and say anything that's going to muck up their ability to get these deals across the finish line.
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Ed Ludlow
And remind us the deal is Paramount and Warner Brothers. What's the latest there?
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Michelle Davis
So the latest on the Warner Brothers Paramount deal is that they are still awaiting regulatory approval in the EU and the UK the EU has set a deadline of July 22 to decide whether or not they want to clear the deal or investigate further. We, of course, asked Warner Brothers CEO David Zaslav about their regulatory strategy and whether they plan to offer any concessions to the eu, but he declined to comment on that. And Comcast, of course, has also announced that it's planning to separate its NBC Universal Media division from the cable unit. And if, if those do result in sales on either side, that will also require regulatory, regulatory approval here and in other places.
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Ed Ludlow
Bloomberg's Michelle Davis in Sun Valley, Idaho, thank you very much indeed. Now coming up, Eric Hippo from Larry Hippo discusses how his firms choosing early stage startups to back in a landscape where late stage companies are kind of all the rage and valuations right now kind of through the roof. We are still awaiting a press conference from President Trump in Ancrest, set to start any moment now. We will bring you that as it happens. Stay with us. This is Bloomberg Tech. Blue Origin is seizing on investor enthusiasm for space. It's raising $10 billion at a $130 billion valuation in its first external funding round. According to sources. The rocket company, which is until now been financed by its founder Jessica Bezos, blew stepping up efforts to take on rival Space X, though its new Glenn rocket, which can take payloads to space, is temporarily grounded following a launchpad explosion in May. Money's flowing into venture capital, but it's increasingly concentrated. Pittsburgh says the AI accounted for nearly 77% of global VC deal value in the first half of this year, with more than 42% going to just three companies, OpenAI, Anthropic and Xi. But beneath those mega rounds, investors are becoming more selective, especially early on. Joining us to discuss that environment is Eric Hippo, managing partner at Lara Hippo, one of New York's most active early stage venture capital firms. I think there's a lot of consensus right now about what's happening, Eric. Seed stage is very hot. Valuations in some cases are extremely high. We can debate how high is too high, but it's the Series A spot I want to start. You have this belief that it's, it's tough. Why is it tough?
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Eric Hippo
Well, it's, it's first of all, good morning, Ed. Good morning. Be here. It's, it's kind of related to what you said, which is that the valuations are very high. So you know, valuations are 50%, 100% more than they were in the past couple of years shares. So that's a starting point for us, right? We're seed first investors. And, and so companies can raise these rounds at these crazy valuations, but then if they don't get into a high growth fast, go to market mode, they can't raise a Series A because the valuation that they started with was too high. So you can't, you know, you can't have it both ways. Either you start in the most modest saturation, you grow into, into it for your series A. Or if you don't, then you, the series investors will pass on you.
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Ed Ludlow
Valuations are extremely high, as you wrote to me, in some cases completely nonsensical. So where does the power lay? Like, like who's allowing a valuation at the seed stage to series A to get to that level that the founders that are raising or, or those that drove and led the seed itself?
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Eric Hippo
I think it's those, it's the investors themselves. The investors are trying to find those big winners. And there's a, there's a, there's also, particularly on the west coast, there's some sort of a consensus building. You know, let's, let's pick company A to be the winner in category B. And so everybody piles on and you know, it's whether the company has the right moat or doesn't have a right moat. And I would argue, you know, if you're just a wrapper around the, the foundational models, you don't have much of a moat. But nevertheless, you've been anointed as the winner and so you raise more and more money at higher and higher valuations and then everybody else is who is not anointed. The winner is kind of left on the wayside.
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Ed Ludlow
Eric, you've been at this a long time with respect. I wondered if you could reflect on, on how the sort of price discovery and vetting of a founder present day is different to when you started out in your career or even just five years ago.
- [32:58]
Eric Hippo
I said that there's way more importance at least coming from us in the quality of the founders, particularly at the early stage. You know, often there is, it's an idea of, or there's a model or there's a prototype, but it hasn't really been battle tested yet. And so the quality of the founder is really essential. And it's not just the quality of the person or these people in terms of thinking and their ability to execute, but there's also their personality and their resiliency. You know, building a business is really, really difficult and how, you know, we're going to be married to them for a long, long time and we want to make sure that they're the right people. So that really is our main focus now. Obviously we're interested in what they're doing in the domains. You know, we, we avoid investing in foundation models, anything that, that has heavy computing layers. A lot of capex that's really kind of for, you know, the big mega funds on the west coast. We're looking for people who have domain experts, expertise who have a passionate idea and that and most, most people obviously these days are going to be using AI to launch their products. And so it's, you know, we've done this now for 17 years. We're looking for that needle in the haystack, that exceptional funding team.
- [34:20]
Ed Ludlow
It's so interesting because if you think the phrase seed round I've written this year, like what's the point? You can call it a coconut seed or a mango seed round, but the sort of interesting part is that a small group of largely researchers can raise such an incredibly large seed for compute. So if you're looking for the profile startup that doesn't need the compute, are they able to come up like that debut check size, you know, what would they need it for?
- [34:50]
Eric Hippo
Well, no, look, everyone's going to use compute at least some point or another. I'm looking for companies that don't have to be building the compute themselves. I see, but, but they'll be able to rent the computer, they'll be able to, you know, offer tokens which are really a measurement of compute. So, but we're looking for, we're looking for people who have original ideas that are, you know, not just, again as I mentioned, wrappers around, around the lamps or around the foundational models. And we're going to see that second generation of AI companies. And we saw this in mobile, we saw this, you know, previously in previous technological cycles. You know, the first cycle is typically kind of the low hanging fruit. I'm going to automate this, I'm going to go into customer service, I'm going to go into law and these kinds of things. The second generation of people who invent products that could not be, be made possible without the technology of today. And the technology of today obviously is those are the people that we.
- [35:51]
Ed Ludlow
Look, you're deploying your ninth seed fund and what you told me was you're doing it with extreme discipline. So I wonder how often it's more about resisting the urge to participate in a round potentially rather than go actively chasing rounds.
- [36:08]
Eric Hippo
Yeah, look, that's where there's art coming into the science. Right. So the science is, you know, can I live with a high valuation and what will become of the company if it starts at such a high valuation? The art is, you know, do these people have taste? Are they, do they have an idea that is might, might not command a super high valuation today because it's brand new, it's novel, it hasn't been proven proven. And so again, you know, you weave and you, Bob, and you go this way and you, you, you know, our deal flow hasn't been at the highest level it's ever been. You know, we literally are talking to thousands of companies. Our entire team talks to thousands of companies every year. And so we've become more and more selective as a result of that. And, and, and you know, we use our experience, we use our kind of, you know, accumulated knowledge over the years to try to pick the best teams.
- [37:10]
Ed Ludlow
Eric Hippo, Managing Partner at Larry Hippo. It's been great to have you back on Bloomberg Tech and thank you for sharing that accretive knowledge with us. Coming up on the program, Sambanova CEO Rodrigo Liang joins to discuss the company's latest funding. It's $1 billion and what's driving the next wave of AI infrastructure investment, investment, but also innovation. And we're still awaiting a press conference from President Trump in Ankara, set to start any moment. We will bring it to you when it happens. This is Bloomberg Tech.
- [37:45]
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- [38:56]
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- [39:29]
Ed Ludlow
Chip startup Sambanova has completed the first close of its Series F, raising $1 billion at an $11 billion valuation. The company is among a growing group of startups aiming to challenge Nvidia and supply AI infrastructure specifically for inference. SambaNova CEO Rodrigo Liang is with us with more. Let's start with the the basics of what that capital allows you to do in scaling the platform.
- [39:53]
Unidentified Speaker
Well, look, you know, it's the inference market has broken everything open and that's where we focus. And so we're seeing this incredible demand in the market for inferencing and inferencing at really high token speeds. And so the capital allows us to really accelerate the supply chain, accelerate the build out of these racks and deliver the racks to a broad range of customers.
- [40:16]
Ed Ludlow
Inference is split in two phases. Prefill, decode. And so, you know, to the audience that might not be familiar with that, take the opportunity, Rodrigo, to explain why a specific platform for the decode phase is important, why it works better for inference.
- [40:30]
Unidentified Speaker
Yeah, I mean the analogy I make is like, you know, if you're the Disneyland ride and you have the rights really busy and you want to organize the queues ahead of time and so refill, what you're really able to do is organize this traffic to maximize what you need to do when the decode phase of inference shows up. And so what you're seeing is that if we use Nvidia for the pre filled portion and then replace that Nvidia rack using some for decode, you're getting 2 to 3x throughput advantage on the same infrastructure, the same cost, so driving your output to a much higher level without increasing your investment.
- [41:05]
Ed Ludlow
So this is the bit that I find fascinating. SM40, SM50, your proprietary tech, the way that you, you put it out there five to ten times faster on inference on the decode phase when compared to Nvidia gpu. But the reality is it is working alongside other accelerators on the platform. Right, Explain that.
- [41:26]
Unidentified Speaker
Yeah, that's right. So if you look at a summit of SM40, it was originally design for the enterprise for on prem use cases. So you could do the preview, you could decode altogether and you can actually run these models at a really, really high performance, very low power, 10kW per rack versus 100kW on a typical GPU rack. Now if you actually go at scale and you look at these cloud players, these very large frontier labs, what they're doing is actually running lots and lots of traffic behind it. And so now what you want to do is actually, actually take Nvidia chips. We are very good for certain things, marry them together with some of the racks which are made for very fast decode of inference and then getting the maximum throughput and maximizing the output of whatever power you're able to secure for the data center.
- [42:13]
Ed Ludlow
Let's, let's give some some size and scope, please. Rodrigo, how many customers are actually running production workloads on SM40 or SM50 chips today? And I guess you'd measure that as tokens processed per day or what would the unit of measurement be?
- [42:29]
Unidentified Speaker
Well, today, look, you know, some of what we're in the business of moving racks. Our customers are service providers, cloud players, model builders. Those are our customers. We don't sell tokens, we really sell racks. And so if I, you know, if I look at kind of what we did to summit over, we're already in the dozens of customers and we'll touch triple digit by the end of the year. And so you were in the model of deploying racks, which then those customers of ours would turn into token services that allowed them to offer these premium tokens very fast tokens on the largest models, out to their developers, out to their users.
- [43:03]
Ed Ludlow
JP Morgan's the big one, right? It's a really interesting case study. Explain what it is that JP Morgan is able to achieve with your technology.
- [43:12]
Unidentified Speaker
Yeah, really excited about this announcement. J.P. morgan has selected some of it to be the inference provider for the bank. And what you're seeing now is where the end, where the attention continues to be on the frontier labs on the hyperscale clouds. One big segment of inference or AI is waking up and that's enterprise. The enterprise. You know, there's frankly, you know, JP Morgan has always been the leader in actually using technology to drive the business. And so they're using some ATOVA because they can bring this technology onto their premise. Private data put into these racks, secure data completely within their own firewalls and you can do all of this highly regulated business in production within the fine confines of a nicely protected environment.
- [43:59]
Ed Ludlow
Rodrigo, I think you'd admit, right, there are many inference specific platforms out there in the world at different stages in their life cycles. But you know, I want to go back to this idea that the SM40 and SM50 work in conjunction with an aggregate with other accelerators, but in particular the gpu. The GPU architecture relies on high bandwidth memory. Cerebras, for example, has talked a lot about its use of sram, so it's not affected by the bottleneck that is hbm. How does that play out for Sambanova?
- [44:30]
Unidentified Speaker
Well, some of you know, it's a data flow architecture. Which is very SRAM based. And so what it does, it actually is able to actually take all the benefits of the sram, the very, very fast SRAM and generate the speeds. One of the benefits of having HBM is now you're able to run the big models where the SRAM traditional SRAM based architectures that are don't have hbm, they can't run the trillion parameter models models, they have to quantize those models. And so we want to tackle the hard models and so we use hbm. But here's what we did on Summon over. We use HBM that was N Miner 1 technology, HBM that was already in mature production which allows us to actually generate significantly more supply versus competing with Nvidia on say the latest and greatest newest hbm. And so we're delivering high performance using mature HBM technology where the supply significantly better.
- [45:25]
Ed Ludlow
Let's end on going back to the round. Very interesting. Who's now on the cap table or increased position? What happens next for you guys like capital intensive on the R and D side, on the scaling side? How are you going to manage your finances going forward?
- [45:40]
Unidentified Speaker
Look, I mean this is something that you know we're heading to scale and you see the investors coming in, you know, from General Atlantic to Capital Group, Tiero Price, Columbia, Seligman and just incredible investors that have great track record going to the public markets. And so we're actively driving the scale. We see incredible ramp up on our demand and so we're just focused on delivery and driving the revenue to to the point that allows us the option of actually going into the public markets.
- [46:06]
Ed Ludlow
Hey, Bloomberg Tech Technology. But also the money behind it. Rodrigo Yang, CEO of Sam Benova. Thank you very much for your time. We're still awaiting a press conference from the President of the United States in Turkey. We will bring you that press conference and the President as soon as it starts in Ankara. There have been many headlines already this morning relating to Iran and that is the expectation of where that will focus as well as the discussion that has happened over a number of days relating to Naito. That is why they are there. That does it for this edition of Bloomberg Tech. The markets right now are pretty mixed and pretty all over the place. We had some really interesting insight from those in the markets, both private and public. Recap all of that on the podcast. You know where to find it on all of the Bloomberg platforms as well as online on Apple, Spotify and iHeart.
- [47:04]
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