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- [00:00]
Caroline Hyde
AI agents are getting pretty impressive. You might not even realize you're listening to one right now. But we don't just talk, we work 247 to solve customer problems. No hold music, just answers and action. Visit Sierra AI to learn more.
- [00:15]
Public Sponsor Announcer
Support for the show comes from public on public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index. With AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are completely customizable and based on your thesis, not someone else's. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public.
- [01:05]
Okta Sponsor Announcer
Investing Brokerage Services by Open to the Public Investing Inc.
- [01:08]
Public Sponsor Announcer
Member FINRA and SIPC Advisory Services by Public Advisors llc. SEC Registered Advisor Generated Assets is an interactive analysis tool.
- [01:16]
Okta Sponsor Announcer
Output is for informational purposes only and.
- [01:19]
Public Sponsor Announcer
Is not an investment recommendation or advice.
- [01:21]
Okta Sponsor Announcer
Complete disclosures available@public.com disclosures these days it seems like AI agents are just about everywhere you turn every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta you'll turn risk into opportunity. Secure every agent Secure any agent Okta secures AI.
- [01:58]
Chase for Business Sponsor Announcer
Bloomberg Audio Studios Podcasts Radio News. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York.
- [02:13]
Caroline Hyde
And Ed Ludlow in San Francisco.
- [02:18]
Ed Ludlow
This is Bloomberg Tech. Coming up, Nvidia invests an additional $2 billion in Core Weave, expanding their partnership with to accelerate the build out of AI factories.
- [02:27]
Caroline Hyde
Plus IonQ continues its acquisition spree as the Quantum company buys chip maker Skywater Technology in a cash stock deal worth.
- [02:34]
Ed Ludlow
$1.8 billion and gearing up for big tech earnings matter. Microsoft, Tesla and Apple all set to report earnings throughout the week. We have the preview and the markets.
- [02:46]
Caroline Hyde
Are up ahead of those all important earnings tests. We want to see whether there's vindication with the revenue and the profit lives up to some mighty Valuations, particularly in the space. But we're up for a full straigh day on the NASDAQ 100 longest winning streak since back in December when we had a five day run heading in to the Christmas period. So there is optimism but not if you look at the US dollar, not if you're seeing the search for safety in gold. But we stick to our knitting here in tech and what we've got.
- [03:11]
Ed Ludlow
Ed, we've got a deal and it's for Nvidia to invest an additional $2 billion into Core Weave. They're going to buy Core Weaves common stock at $87.20 a share. There is a technology sharing part of this, but the bigger picture is to accelerate the build out of capacity. Bloomberg last night speaking on the phone with the CEOs of both companies. Bloomberg's in. King who conducted that conversation joins us now on set. I'm going to get to the circular financing bit first. We asked him is this circular financing him being Jensen Huang, the CEO of Nvidia, his answer was pretty simple that he's saying this is a very small proportion of, of what core we've going to need to raise on an ongoing basis to build out capacity and it's in line with what they invest in lots of other companies. Take it from there.
- [03:59]
To Him Srivastava
Yeah, I mean he said look, whether it's cool we've, whether it's a, whether it's any of the others that he's open obviously that he's agreed to give a lot of money to, he's like this is just a small portion. This is me just helping them out a little bit and showing faith in what they're trying to do. They're going to have to go and raise this money themselves. The market will basically sort this out. This isn't circular financing was his argument.
- [04:23]
Caroline Hyde
And it felt like the call. We CEO Michael Entrator came back and said look, it's a drop in the ocean compared to the amount of infrastructure spend that we're having to do. But where do they strategically alight? Why dig even deeper into their pockets to give money to Cool Weave at this time?
- [04:38]
To Him Srivastava
Yeah, I mean Jensen said that this is a really a technology partnership that Core Weave is a very early adopter of of Nvidia systems tends to do.
- [04:48]
Kim Forrest
Them in the way that Nvidia thinks.
- [04:50]
To Him Srivastava
They should be done and this kind of serves as like a reference platform. So they like that and also just thinks there's a lot of demand out there so the faster we can go, the better, the better.
- [04:59]
Ed Ludlow
Things get there's also CPU put the GPUs to one side. What Jensen Huang really wanted to emphasize as far as I can tell from reading the transcripts of your conversation, is that vera root vera CPU is now going to be a standalone infrastructure product Core weaves relevant here. Just explain what he told you on the phone.
- [05:18]
To Him Srivastava
Yeah, I mean as you know, Jensen never says anything without having carefully thought it through. So he really wanted to deliver a message that this is a standalone product as well as being part of the infrastructure. You remember previous versions have been sort of integrated into Nvidia's right.
- [05:33]
Ed Ludlow
One of six chips right now.
- [05:34]
To Him Srivastava
Hey, you can use it on your own if you want and that makes it a direct rival to some, you.
- [05:38]
Ed Ludlow
Know, big real quick AMD under pressure. Intel also under pressure in is that a surprise?
- [05:45]
To Him Srivastava
It shouldn't be. No right.
- [05:47]
Caroline Hyde
In King, we thank you so much for breaking down a really important story for us. And look, there's another one in the world of semiconductors. Microsoft is rolling out the second generation of its own AI chip to see shares are up about a percentage point. Not moving much on the news that is just dropping. And Bloomberg's Matt Day is a person who covers Microsoft for us, breaks that news. How important is it that yet another company is building their own AI chips?
- [06:10]
Okta Sponsor Announcer
Well, for Microsoft it's, it's really important. They got a bit later jump than their biggest rivals, Amazon and Google in building their own silicon. They see this as an important way to reduce costs to find another source of availability. So it's going to be a really, really big test for their chips unit and for their cloud business.
- [06:25]
Ed Ludlow
We write in our, in our Bloomberg story that it could eventually provide an alternative right to invidious hardware. But the reality is like all the other hyperscalers, Microsoft still depends on Nvidia. Just explain its scale of its compute and what it does rely on Nvidia for.
- [06:42]
Okta Sponsor Announcer
So Nvidia is the workhorse that powers, you know, the vast, vast majority of the AI workloads in Microsoft's data centers. You know, if you're using OpenAI as a, as a chatbot consumer, chances are you're pinging an Nvidia chip running in some Microsoft data center somewhere. You know now like everybody in the industry, Microsoft would love to have some other options. Hence this effort with Maya to try to build, build a better mousetrap, one more suited for their data centers and one that ideally could could reduce some of their costs in the long term.
- [07:08]
Caroline Hyde
Tell us how it's rolling out, where it's rolling out first and ultimately when customers go be using it.
- [07:14]
Okta Sponsor Announcer
So it's not clear when customers are going to get their hands on this. The first units are live today, Microsoft tells us in data centers near Des Moines, Iowa. More coming to the Phoenix area. But we don't have a date yet for what a wider rollout looks like or you know, sort of crucially what availability looks like. Is this going to be a global rollout? Is this more of a kind of R and D step? And future chips are going to are going to sort of carry the mail for them. So kind of yet to be seen how broad they take this one.
- [07:39]
Ed Ludlow
Bloomberg's Matt Day out of Seattle with the latest on Microsoft's latest AI chip efforts. Let's talk through the market reaction to all of this with Kim Forrest, CIO and founder of Boca Capital Partners. And go back to the Nvidia Core Weave deal. You know, it's a driver in markets this morning. The explanation from Nvidia CEO Jensen Wong is that it is not circular financing because it is a small portion of Core Weaves overall capital requirements. Are you concerned about that and what do you make of his response?
- [08:10]
Kim Forrest
Sure. Well, of course it's circular financing. You know, Core Weave as well as everybody else. Even Microsoft is a big customer of Nvidia. So if Nvidia is investing in its customers, by definition it's circular financing. It is a good point that, you know, 2 billion is probably a rounding error for Nvidia at this point. But it's also true that Core Weave has to prove itself to the market and raise its own money.
- [08:40]
Ed Ludlow
Kim, we're saying circular financing, the term as a bad word, bad phrase. Is it right?
- [08:49]
Kim Forrest
Yeah, kind of. You know, Jensen points out that Core Weave is going to be one of their reference accounts. What you ideally want is in a reference account is somebody that has worked with you, is kind of pure and has no inside kind of relationship with what they're recommending other than they use the product, they love the product. And you know, this kind of sullies the relationship that CoreWeave has so much investment from the company that they're giving a reference for.
- [09:21]
Caroline Hyde
Meanwhile, many would say is just because we cannot build compute fast enough. And in many ways Nvidia more than anyone sees the opportunity and it's just piling money behind this to be able to get the end demand that it needs for the products that it's currently building. Kim, are we likely to see through these sorts of technological partnerships as well as financial partnerships actually us get the Compute out at the time of speed that we need.
- [09:47]
Kim Forrest
Sure. Well you know we're going to see them until we don't. I'm not trying to rain on anybody's parade we but at this point it's all kind of, you know, up in the air. Right now there is a huge demand for compute but like everything else in the world somebody's going to overbuild and it's going to, you know, be jarring and disappointing. I'm not saying that that's any time in the future. I'm just pointing out the obvious that you know, yes, this is a very symbiotic world with customers and providers and competitors all kind of working in the same pool. It's messy and it's like real life because it is. But you know, just be warned that this is not. Trees don't grow, you know. Well trees grow into the sky but not forever. We'll put it that way.
- [10:36]
Caroline Hyde
Well they're not going into the sky today for intel and AMD because both of them under pressure that maybe his Jensen coming for their piece of the pie, the CPU part of the pie, that everyone was very excited for them indeed intel of late in the run up in their stock. Does Vera brand the CPU on its own prove that it's a key competitive to them too?
- [10:55]
Kim Forrest
Well, I think at first it's going to work in its own environment and it may become a competitor. Sure. I mean I think the takeaway from all these announcements over the last, I don't know, 48 hours is that everybody's innovating and that is excellent. I love competition, I'm a capitalist, innovate, try to out compete, do it live that way. But the fact of the matter is the CPUs that are the workhorses in just plain old cloud computing aren't necessarily going to be interesting or aren't necessarily going to look to Nvidia. Nvidia loves the highest priced product, that's what it does. And I'm sorry, the workhorse people need reliability. They need it to look the same across their platform. They need a lot of stuff that a new CPU chip isn't necessarily going to be interesting to them. Now in the world of AI data centers, sure. But in the old fashioned ones that are going to have to persevere for decades, I don't know that that's really a competitor Nvidia.
- [12:07]
Ed Ludlow
That's an interesting observation because the GPUs in the AI context are ARM based and so if you are running those GPUs of x86, you're going to have to do some special software work to make the match. Let's put that to one side. It is a massive week in the world of technology from earnings alone. We also have a Fed meeting on Wednesday. Of those names that are reporting this week, what are you most concerned about and what do we need to be looking for in the earnings context?
- [12:33]
Kim Forrest
Well, you know how thing, how are things looking in the future? I don't really even care about how things look for last quarter. I have to tell you I'm looking for the next six months and I think especially on more consumer leaning things like Apple that might be, you know, the focal point for all investors is what new products are driving consumers to the company and are they meeting demand? That whole thing about how in demand are consumer items. Microsoft has a little special issue. I think there's a lot of concern that I maybe cloud is going to replace a lot of software packages that make businesses run. I don't know how true that is but I think we're going to get a glimpse into how popular or you know, whether or not businesses are paying up for enterprise licenses and that's always a concern.
- [13:34]
Caroline Hyde
Kim Forest, cio, founder of Boca Capital Partners thanks for joining us across the spectrum of earnings and semis today. Coming up we're going to the world of quantum Ion to CEO Nicola Dumasi is going to be joining us how his company has just bought yet another quite the acquisition spree. We talk about why once again into semiconductors. This is greenback tech. Every day millions of customers engage with AI agents like me. We work round the clock and have the facts at our fingertips. We're fast and effective but incredibly patient. And we're built on Sierra, the leading AI powered customer experience platform. No hold music, just answers and action. Visit Sierra AI to learn more. That's Sierra AI.
- [14:32]
Public Sponsor Announcer
Support for the show comes from public. On public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index. With AI it all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year. You can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are completely customizable and based on your thesis, not someone else's. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public.
- [15:22]
Okta Sponsor Announcer
Investing Brokerage Services by Open to the Public Investing Inc.
- [15:25]
Public Sponsor Announcer
Member FINRA and SIPC Advisory Services by Public Advisors llc. SEC Registered Advisor Generated Assets is an interactive analysis tool.
- [15:33]
Okta Sponsor Announcer
Output is for informational purposes only and.
- [15:36]
Public Sponsor Announcer
Is not an investment recommendation or advice.
- [15:38]
Okta Sponsor Announcer
Complete disclosures available@public.com disclosures these days it seems like AI agents are just about everywhere. You turn every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta you'll turn risk into opportunity. Secure every agent, secure any agent. Okta secures AI.
- [16:18]
Caroline Hyde
Ironq well, it's agreed to buy US based chip foundry Skywater Technology for around $1.8 billion shares. On the downside for Arkou, now they have been up earlier. We're seeing Skywater up more than 5.8%. It's a cash and stock deal and it's the largest in quite the string of recent acquisitions by the Quantum computing firm IronQ. Let's talk to its CEO now. Nicolo de Massi what does having a US based chip foundry add to the speed of your own technology?
- [16:44]
Nicola Demarci
It actually does three exciting things for Ionq. The first is that it accelerates our entire roadmap. So we talked this morning on a public webinar sort of earnings call style about the fact that it's going to bring in the cycles of R and D design and packaging iteration we do to build our quantum computing chips and hence our full fault tolerant machines quite considerably. We're moving things in by about a year on our 2 million cubic chips and we're moving full fault tolerant chips forward into 2028 where we'll have them ready for scale up by the end of the year. What's exciting also is this is a big bet for us on what's called the merchant supplier play in the quantum industry. So Ionq already sells our atomic clocks to a number of quantum computing companies in the us. This is going to expand our ability to supply the quantum industry. Our photonic interconnect quantum networking business is also built to cater for multiple quantum computing paths and modalities. And last but not least, of course it's a, it's a big spread bet on the US Semiconductor manufacturing, you know, tailwind that I think is already being experienced for critical industries as we think through supply chains, security and the importance of keeping everything domestic to ensure security.
- [18:10]
Caroline Hyde
Does that help build and leverage the relationships you already have with the US Government, for example? Is that an area that you think is going to drive growth?
- [18:21]
Nicola Demarci
Oh, for sure. The US Government's a very important partner in the Department of War, of course, is is very important. Skywater obviously does a lot of work not only for the quantum industry as a whole, where I would argue they are far and away the leading, if not only quantum foundry, but Skyward also does work more broadly in classified programs, as does IanQ. And so there's plenty of synergies on that vector alone. We look forward to doing more for our nation's government classified and not. We look forward to doing more for our nation's Fortune 500 companies. And this is a relationship really excited about because it increases the velocity and the frequency with which we can spin wafers across all of our product generations. Which means the further out we're talking, the more room there is to move things forward. And you're seeing us continue to spend money to move things to the left on our roadmap and win this geopolitical space race of our era.
- [19:24]
Ed Ludlow
Nicola, continuing to spend money. There's a lot of emphasis that this is Skywater with US only operations. Do you look at Europe and other jurisdictions and give yourself backing to go out and do another deal if you need to have a similar footprint and presence in a different market or geography?
- [19:43]
Nicola Demarci
Well, Skywater has a tremendous amount of upside capacity that we can tap into here, not just on the design engineering side, but on actual manufacturing. So we did this deal because we believe that manufacturability is paramount. Our ambition, as I think you both know, is to be both the Nvidia and the Cisco, if you will, of the quantum computing and quantum networking and security space. And so our full quantum platform, networking, sensing, security and computing all has foundry requirements, all has semiconductor manufacturing requirements. What this deal does is it improves certainty, brings forward the roadmap and of course make sure that we have industry leading costs. So I think this is going to be enough capacity for, for global production. Skywater focuses on high security classified program work and US Government work. And that's usually a standard that's accepted very internationally for the five eyes, Naito and our allies.
- [20:42]
Ed Ludlow
Nikola, in the global quantum race, how do you stack the US as a leader in field against the prospects of Europe and what you see being worked on In Asia.
- [20:55]
Nicola Demarci
Well, I fancy IQ's chances, you know, most. And first of all, I think that beyond iq, there's a very vibrant ecosystem in the US and of course there is in Europe. The geopolitical race is I think, very much between the US and our allies and what's going on in China, to be honest. And this is of course of paramount strategic importance, not just on the computing side, but also on the quantum security side. These are all solutions that IonQ provides. We're the only quantum platform company in history and as you both know, we already have a strong foothold in Oxford, England, Geneva, Switzerland and Seoul, Korea with our offices that continue to expand to ensure that we're able to not just deliver those solutions, but deliver them in the right global and local way across government and commercial needs in every one of our allies.
- [21:48]
Caroline Hyde
Well, that was the other big deal that you did. Oxford Ionics quantum chip technology that you purchased. And I'm interested in how the relationships though going back to Skywater are going to continue because they also serve other quantum competitors of yours. Will they continue to do so?
- [22:02]
Nicola Demarci
Absolutely. We are steadfastly dedicated to ensure that the quantum industry prevails. We respect everyone's pathways to market. At the same time, as I mentioned a couple of minutes ago, IQ already is a merchant supplier. On our own we supply atomic clocks and photonic interconnects to the industry and networking equipment. And so Skywater will be, will be taking our existing merchant supplying business and accentuating, deepening and broadening that with of course their chips business. So rest assured, we see this very much as a bet on US Quantum, our allies, quantum, the quantum industries supply chain needs doing those, fulfilling those securely and at scale and at the same time in a walled off manner. IonQ's own roadmap of course will also be accelerated and its supply chain domestically assured.
- [22:55]
Ed Ludlow
Nicola, very quickly you said that this brings things forward by a year. There are people that just aren't familiar with quantum computing. How real is this going to be in the real world and when?
- [23:07]
Nicola Demarci
Well, we've been saying since we completed the acquisition of Oxford Ionics that full fault tolerant gate model quantum computing is going to happen by the end of this administration. This transaction obviously accentuates that, underwrites that and assures that. And so I think you're going to see, you know, in the next three years, everything that we have promised on our roadmap come good and hopefully then some. The reason why this is so exciting for us is that with Skywater we can make quantum computing A mass market reality. And we can do that at a price point that's accessible not just for governments, but also Fortune 500 companies. And that's very much our goal, to build the winning quantum ecosystem across all solutions and product family offerings that IonQ have. Security, sensing, networking and computing.
- [23:58]
Ed Ludlow
IonQ CEO Nicola Demarci, it's great to have you back on the show. Thank you very much. The pressure is building on Grok X AI and Elon Musk's AI chat bot. The European Union says it's probing X over concerns that it didn't prevent its chat bot from generating deep fake images that quote, may amount to child sexual abuse material. Bloomberg's London based tech editor Olivia Stolen joins us. Olivia, what's the need to know here from, from the EU probe side of this?
- [24:27]
Caroline Hyde
Well, it's another day, another investigation into.
- [24:31]
Kim Forrest
X from the eu.
- [24:32]
Caroline Hyde
This time, yeah, it was about whether or not they did exit a sufficient risk assessment to prevent harmful outputs from Groq before deploying it across the eu. This is a legal requirement under the Digital Services act, which is a kind of set of rules around illegal and harmful content. And so, yeah, so there's quite a long list of investigations of X at the moment within the eu. But this certainly adds to it. I mean, you mentioned France has also been looking into it. Ofcom in the uk where you said India. But Olivia, X's responses, they've taken the necessary steps in some way. Of course. It's a unit of Xi and this again builds tensions between the US and the EU inside some government manner. Right. I mean this has been a bit of a flashpoint in the sort of debate over free speech and control over.
- [25:25]
Kim Forrest
Big tech between D.C. and, and Europe, clearly haven't.
- [25:31]
Caroline Hyde
I've been kind of checking to see.
- [25:32]
Kim Forrest
If there's been a response so far.
- [25:34]
Caroline Hyde
From either Elon Musk or J.D. vance or Trump on this particular announcement. So far I haven't seen anything, but I'm sure it'll be something that will.
- [25:43]
Kim Forrest
Come up in the coming days. Yeah, the Trump administration has been very.
- [25:47]
Caroline Hyde
Critical of this, of the EU in trying to police content on these platforms. Free speech violation.
- [25:56]
Ed Ludlow
We just showed X's statement, but it was a previous statement on how they go about removing illegal content, including child sexual abuse material. Very quick 15 seconds of it. Does the EU probe have teeth?
- [26:09]
Caroline Hyde
It does. I mean, they can find as much.
- [26:11]
Kim Forrest
As 6% of global annual revenue if.
- [26:13]
Caroline Hyde
It'S found to be in violation of the DSA. And already they on the heels of a separate 120 million euros, EU penalty coming his way. Previously Bloomberg's Olivia Solon breaking all down. We thank you so much. Look, coming up, defence stocks, they're on the higher side. In fact, they soared as governments ramp up spending on heightened geopolitical tensions. More on that next. This is BLOOMBERG Tech.
- [26:55]
Ed Ludlow
Welcome back to BLOOMBERG tech. We're halfway through the show and it's a big week in the world of technology when it comes to earnings.
- [27:01]
Caroline Hyde
Tesla.
- [27:02]
Ed Ludlow
Tesla, which reports on Wednesday is currently the lag at down 2%. But it's a bit of a calendar to track. Now Apple's the most interesting, up almost 3%. Actually, it's on track for its biggest jump since October. People have been passing the third party data. There are lots of analysts out there that have said buy the recent dip because it might be better in China than we first thought. When it comes to Apple, of course, you move past that moment in time, carry that is earnings, particularly the court of gone. And people want to know what's happening with Siri, what's happening with the AI version of Siri. Mark Gurman's done a lot of reporting on that, of course. But until the company says something material, that's still the hopes and expectations of the street rest in what are you looking at?
- [27:43]
Caroline Hyde
It's an Alphabet story too, isn't it? But I'm going to pivot away from the earnings story just for a moment because we've got to talk about geopolitical tensions. We have seen the effect it's had on defense stocks. They soared as you see. In fact, the sector gained nearly 40, we'll see 44% you've seen in the last one year basis. Military contractors are cashing in as governments ramp up the spending on fighter jets, on missiles, but also tech areas, drones. And some investors really say that the rally is just getting started. Here with more is Bloomberg equities reporter Avanese Vanilla Ramos. And obvious, is it sustainable? What do we expect in terms of revenue growth, profitable growth, fundamental growth on these earnings?
- [28:23]
Carmen Reineke
Sure. Caroline, thanks so much for having me. And yes, political developments are definitely a major driver of this sentiment. You know, the rally is driven by expectations that the sustained increases and global defense spending, this geopolitical instability, shift in alliance and ongoing conflicts are going to sort of like, you know, boost more this rally and continue this rally. And then these earnings this week are going to be really a test to what can actually happen. And you know, the aerospace and defense stocks index is rising or rose about 42% last year. You know, pacing a little bit of the Broader market analysts are concerned about certain things. You know these stocks are in the political crosshairs just to get it that way. Definitely the, the other concern is. Yeah.
- [29:19]
Ed Ludlow
So let's do a bit more on the political crosshairs. When Caroline and I were in Las Vegas for cbs, the president on True Social was very clear ahead of an executive order that he wasn't happy about defense company compensation. The compensation the CEOs at the head of these crimes because they weren't delivering. That seems incongruous with the massive run up in those stocks.
- [29:42]
Kim Forrest
Sure.
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Carmen Reineke
I mean the, the investor confidence right now and that's a very interesting. But the investor confidence right now and momentum is sort of like these companies are growing a little bit faster than what they the the sort of like classic thought about or behind this defense stocks usually is or was because a lot of these companies are moving into the technology play. There's a lot you know modern warfare is increasing. There's relying more reliance on drones, on AI, on advanced sensors, software, missile defense systems. So once all these companies are sort of like tapping into that investors continue to be a little bit more positive on this side.
- [30:24]
Caroline Hyde
And that is exactly why we have you on because of the tech focus that these businesses are having. Well watch out for their earnings. Bloomberg's release. Vanilla Ramos, thank you so much for joining us. Meanwhile let's turn to wintry weather. It is blanketed. Most of the United States is leaving lingering effects to power grids. They're expected to endure increased stress from really brutal cold in the wake of the damaging winter storms. Get this. More than 800,000 homes and businesses nationwide are currently without power. And this is concerns already have been growing around the US's power grids. Resilience in place. The first face of rising power demands. Power. Natural gas Reporter Noreen Malik has been very busy this weekend reporting all of this out. What's the effect on prices?
- [31:02]
Carmen Reineke
Yeah, prices got really high yesterday. You know weekend is usually a lull for prices and we saw prices around like 000 this morning. The Texas grid in like West Texas where they're usually lower was like $2,000 and.
- [31:16]
Caroline Hyde
Right.
- [31:16]
Carmen Reineke
And in Dominion in Northern Virginia where there is that concentration of data centers we got to like $1,000 as well. Spot prices are a little lower because real time demand seems to be affected by school closures and businesses just everyone working from home. But it's going to be an extended cold and that's what's most concerning right now Noreen.
- [31:37]
Ed Ludlow
Out here on the west coast we're used to a very similar story, but the opposite right in the summertime extreme heat, the grid being under pressure and either the the utility can or can't cope. What is it like from a technology perspective or just operations perspective that the grid can actually do to manage and cope in scenarios like the extreme cold we've seen and weather on the East Coast?
- [32:01]
Carmen Reineke
Yeah, I think what's interesting about the east coast and even down to Texas is they've also become winter peaking grids, not just summer like California. And so they're basically trying to take out all stops. You've had the Energy Department grant authority to Texas, New England and PJM which is the largest grid that stretches from the Mid Atlantic to the Midwest. They've granted them authority to run power plants basically all out, irrespective of like emissions limits. The DOE also told ercot, the Texas grid operator that they can use backup generators at data centers and factories to supply the grid. And last night PJM had a call, call with members to tell them that hey, we're going to, we're putting in place measures to also do the same to use data centers in lieu of blackouts. If things got that bad right now they're expecting to have enough power.
- [32:51]
Caroline Hyde
Who buys the price? Who bears the cost Right now?
- [32:54]
Carmen Reineke
Ultimately the consumers. Everything is passed on to consumers. How quickly will depend on your utility rate, but wholesale prices are often a pass through cost.
- [33:05]
Ed Ludlow
Noreen Malik, Bloomberg. Busy weekend for you across what is an astonishing visual story as well. Thank you very much. Coming up, Base 10 CEO to Hindry Vistava and one of its backers Conviction Sarah Guad. They join us as the startup more than doubles its valuation. We had the details. Next confirmation of that round. This is Bloomberg Tech.
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- [36:24]
Ed Ludlow
AI inference startup Base10 Labs has raised $300 million. The funding round lifts Base10 valuation to $5 billion, more than doubling what it was just six months ago. Base10 CEO to him, Srivastava and Conviction founder and partner Sarah Gua who participated in that round, join us here in San Francisco. I've been using a number of generative tools this morning to try and distill down what it is that base 10 does. I'm going to read you one and you can tell me and I won't say what engine was based on. Provides the software and infrastructure that lets companies run AI models reliably at massive scale only once they're built. It's about being fast, stable and cost efficient. Is that what you do? Why did you need to raise $300 million to do it?
- [37:06]
To Him Srivastava
Yeah, well, the way we think about it is that inference is probably the largest market that will ever exist.
- [37:11]
Ed Ludlow
Yeah.
- [37:11]
To Him Srivastava
I think you see this like, amazing set of companies like Cursor Bridge, Open Evidence notion kind of growing with the their inference workloads and you know, to support the scale of these massive companies and, you know, we're just arming ourselves there. More importantly, the amount of compute that we're going to need to support this is going to be very large. And again, compute is a capital intensive business and that's the business we're going after.
- [37:39]
Ed Ludlow
Lots of very interesting participants in the round. And Sarah, it's great to have you back on Bloomberg Tech. I was really interested to see Conviction in that. Right. You know, the size of the round, the valuations. Interesting. But you're all about helping founders build up, you know, conviction. Why did you want to do this?
- [37:56]
Chase for Business Sponsor Announcer
Well, I'd say this is a very secular bet for us. First, we have invested in every round of base 10 since inception from my prior firm and then through Conviction. And So I think 5 billion actually is a very small number. Number.
- [38:08]
Ed Ludlow
Greylock was your prior firm at Greylock.
- [38:11]
Chase for Business Sponsor Announcer
And then at Conviction, my current firm. $5 billion is a very small number compared to the opportunity ahead. I genuinely believe that. And so, you know, we're looking at the difference when we make that investment. But I think from a broader perspective in video and base 10 and conviction, we have the same vision for what needs to happen to enable all of these native startups. Inference engineering, RL as a service, the optimization of models to make them cheap and efficient to run. These are like the three hottest jobs in AI right now. And one, one thing base 10 does is take these capabilities and use Nvidia capacity, make them available to everyone rather than just the labs.
- [38:52]
Caroline Hyde
Let's talk therefore a little bit to him about. You said you're arming yourself for this opportunity in inference. Nvidia is interested in invested in investing. But how much do you end up using technology, competing against? Where do you see the future of what it is that you're solving for?
- [39:09]
To Him Srivastava
Yeah, look, we've been partnered with Nvidia for, you know, almost five years now. They're, you know, they're a big part of this future. We, you know, we work really, really closely with the chips they provide. We don't see them as a competition, honestly. We think everything's kind of a rising tide and we want to, we want to work with the, you know, the biggest and best players and customers and suppliers and vendors and technologies and Nvidia is a big part of that.
- [39:35]
Caroline Hyde
Sara, to that point it's interesting the amount of news we've had around Nvidia today whether or not it's another what people call secular financing deal backing core, we've buying stock, indeed talking about a CPU and indeed we've seen Microsoft announcing yet another chip high version for themselves to how does this bear out? Does everyone win? Are they going to be select winners?
- [39:57]
Chase for Business Sponsor Announcer
Well, I think so far it looks like Nvidia is a pretty strong winner at the chip level. I do think that there are enormous investments in accelerators, particularly at DeepMind but there are other legitimate efforts as well. And I think it all speaks to the overall demand in this market. The reason people are making these really strong, strong investments in other chips is because they're going to go spend billions and tens of billions and hundreds of billions of dollars trillions if you listen to Sam against this compute over the next decade. Right. And so I think the, the question of winners is the problem today is just meeting the demand and all of these players are trying to come up with alternatives less about cost and more about creating more supply.
- [40:41]
Ed Ludlow
I enjoyed reading about and learning about based on 10. There's a section on your website where you break down pricing and I don't know that might seem really mundane to both of you but you basically have pay as you go at the low end right through to enterprise level deals. Explain that kind of strategy. You know we've discussed with Cursor the idea of per desk versus pay as you go. It's actually a very interesting model.
- [41:06]
To Him Srivastava
Well, I think pay as you go pricing is fully aligns ourselves with our customers. So we are only getting what they who are, who are our customers. So think about the fastest growing companies in the world. So anywhere from a bridge, open evidence, Cursa. No, sure. Gamma Clay, all these are companies that you've covered I'm sure over the last year. These companies are going incredibly fast and you know they are using a lot of inference and by aligning ourselves on a pay as you go model we only make money, you know when they are getting value out of the models that they are training for their customers. And so that's actually a very important part of our business. We think it's a very important part of the ecosystem and it's all about being a long term partner to the best companies in the world.
- [41:48]
Caroline Hyde
And Sarah, what gives you the confidence that this doesn't get commoditized or at least how sticky all customers when it comes to inference?
- [41:57]
Chase for Business Sponsor Announcer
I think Training is a job by job sort of buy. Right. Inference has the stickiest characteristics of any business I've ever seen. Right. And so you know, without giving specifics, the NDR on base 10 is through the roof and we see customers, they come with us, they scale with us. They don't want to take on this enormous engineering burden of you know, these different specializations I described like the labs want the kernel engineers too. They're very excited. Expensive. Managing across 10 different clouds is very expensive. Owning your own capacity. You know Ed was just talking with to him about the pay as you go versus the capex upfront model. The application winners, they don't want that. They want to go after new business and creating value for users.
- [42:42]
Ed Ludlow
There's a lot of energy in your industry still. It's really cool to have you both both here in person. Deal flow hasn't slowed down at all. I wondered what the talent story is right now. Sarah was talking about the three kind of core roles, hottest jobs. I'm assuming that a chunk of that 300 million reflects the capital intensity of talent right now as well.
- [43:01]
To Him Srivastava
Yeah, we look we've been very lucky to be able to attract really great talent up until now. That being said, as Sarah said earlier, the folks that we are going after are very, very in demand. There is, you know, if you think about inference being this massive market and that's big systems engineering and code engineering problem that needs to be solved and probably there's you know, several thousand people in the world have solved this at scale. Yes, it is going to be very aggressive and you know to win the ultimate prize for us which is you know, being the inference cloud, the US for inference that it's a big target to have and yeah, we need to be able to get that talent.
- [43:40]
Ed Ludlow
Sarah, I also know you as kind of Sarah the operator, not necessarily just right writing checks. We've been talking about is circular financing a bad word? For example with Nvidia and Core we've but like is there an opportunity here for you to look at the rest of your portfolio and your historic investments and say to some of these companies like you guys should work together. What's the reality of that?
- [43:59]
Chase for Business Sponsor Announcer
Well I'd say based on does have a lot of customers they've won within the portfolio and one of the things that we do at small scale that's very related to this Nvidia move of enabling its ecosystem system and its customers is have an incubator base 10 is a contributor to that. They give credits to startups, they're offering their expertise to these companies. We give people compute upfront as well and it's to reduce the barrier to entry for the next generation of application companies. This program is called Embed and I think our entire investment is we want to see more of these AI native application companies win, which Base 10 does and Nvidia does too.
- [44:35]
Ed Ludlow
To Hinds you Vistava Base 10 CEO Conviction founder Serigua it's great to have you both here in San Francisco. Thank you very much Carrie. There are so many more tech headlines out there today.
- [44:44]
Caroline Hyde
Boy are there and around compute and such we're talking SoftBank. First it stopped talks to by datacenter operator Switch. Now that's according to sources, the company has been pursuing Switch for months, offering as much as $50 billion. But the deal would have helped build out SoftBank Stargate infrastructure to Discussions continue though for a partial investment or a partnership. Plus Samsung is getting close to securing a certification from Nvidia for its latest AI memory chip, the HBM4. Sources say the South Korean company has entered the final qualification phase after supplying samples to the US chip maker in September. Samsung is said to be preparing mass production for the HBM4 in February. And shares of USA Rare Earth, they're surging. The company entered a non binding letter of intent with the United States Commerce Department. $4.6 billion in funding in exchange for 16.1 million shares and warrants. Now the company also raised one and a half billion dollars in private investment to accelerate domestic heavy rare earth production.
- [45:48]
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Carmen Reineke
Miracle that can't fail, really banking on incredible growth. Microsoft Meta Alphabet they are just committing billions and billions of dollars to capital expenditures.
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- [46:09]
To Him Srivastava
Around doesn't necessarily come around. A precarious investment strategy is emerging.
- [46:18]
Caroline Hyde
Multibillion dollar circular deals, huge, huge sums.
- [46:21]
Okta Sponsor Announcer
Of money are just being passed between these enormous companies that are pouring hundreds of billions of dollars into the promise of AI.
- [46:29]
Caroline Hyde
And the promise is huge.
- [46:32]
Public Sponsor Announcer
So this is a structural shift like.
- [46:34]
Kim Forrest
Electricity or the Internet.
- [46:37]
Okta Sponsor Announcer
But AI with all its potential remains largely unproven for profitability.
- [46:42]
Carmen Reineke
Probably the biggest question in San Francisco right now is are we in an AI bubble? And if we are, then well, how big is this bubble and how bad.
- [46:50]
Chase for Business Sponsor Announcer
Would it be if and when it does burst?
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Okta Sponsor Announcer
So is this the dawn of a.
- [46:56]
Carmen Reineke
New age of AI powered growth or.
- [46:58]
To Him Srivastava
The biggest bubble ever?
- [47:04]
Ed Ludlow
You can watch the full episode of that Bloomberg original space on YouTube and bloomberg.com we have another alleged example of circular financing. Just today in video Investing, another additional 2 billion into Core Weave. Nvidia CEO Jensen Wang saying that it is ridiculous to call it circular financing because it is just a tiny portion of what core weaves have to raise overall. And it's in line with Nvidia's other investments. Make your own mind up on that. There's also a piece on the Bloomberg about how Nvidia's rally of late shows that a year ago deep seek fears might be a little unfounded. And that is written by Bloomberg's Carmen Reineke. Carmen, great pace as always, data focused. What do we need to know here? What are you writing about?
- [47:44]
Carmen Reineke
Yeah, so I think the thing that's most important or interesting to watch here is how, you know, a year ago this deep SEQ news came out in Nvidia sold off, you know, almost $600 billion in market value was erased in one day. And it looked like maybe the start of or maybe a practice run for the bubble popping. But if you look a year on now, a lot of those fears are really unfounded. You know, the stock is up nearly 60% since, since then we've seen it just continue to grow revenue and overall the ecosystem has also continued to develop. You know, a year ago Nvidia was still by and far the kingmaker. It was seen as sort of the only show in town when it came to chips. And now we're just seeing so many more businesses sort of step up, come to the plate with their own chips, trying to not be so reliant. And then, you know, we're also seeing, you know, more energy and construction and infrastructure stocks kind of come online. So. So while there still are concerns about some of the circularity here for sure and even, you know, the deal with Corey and Nvidia goes deeper than just the most recent news. The overall sort of expansion of the trade is giving bulls sort of more room to run.
- [48:52]
Caroline Hyde
What do we need to see this week? Common for example, Microsoft today unveils that it's got yet its second round of its own accelerator pointed maybe at trying to reduce its dependence on an Nvidia. But we're also going to see what its capital expenditure looks like, how much it's continuing to invest. That's going to be important for Nvidia's numbers that don't come for until the end of February.
- [49:13]
Carmen Reineke
Exactly. Really the biggest thing I think that investors are watching in these big tech earnings that we're seeing over the next few weeks is that capex line item are these companies continuing to grow or say that they're going to spend even more? That's really sort of paramount to the rest of the trade or how it continues to develop. And then on the flip side, I think investors will also be looking for signs of roi, right? We want to know that all of this money is going to something that it's going to help the bottom line, that it's helping efficiency and to drive business forward. So really two big things that we're.
- [49:47]
Caroline Hyde
Going to be watching Bloomberg's Carmen Reineke, it's great to have you on. It's a great piece that you also are in on Bloomberg Originals. Meanwhile, that does it for this edition of Bloomberg Tech.
- [49:58]
Ed Ludlow
Yes, Strong start to the week. Carol has made it through the storm to the studio and there's a lot more to come. Recap on the podcast. You know where to find it on the Bloomberg platforms Apple, Spotify and Iheart Online. Stick with us this week. This is Bloomberg.
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