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Hi, I'm Lisa Mateo introducing you to the new Stock Movers Report from Bloomberg. These are short audio reports, five minutes or less, delivered right to your podcast feed. Throughout the day, Stock Movers fills you in on the day's winners and losers on Wall street and tells you about the news and data that's driving those gains and losses. If you want to stay plugged into the stock market but don't want to spend all day watching tickers scroll across your screen, then Stock Movers is a place for to get informed. Listen a couple times throughout the day to find out what's moving equities and why. Search for Stock Movers on Apple podcasts, Spotify or anywhere else you listen. Get the latest stock news and data backed by reporting from Bloomberg's 3,000 journalists and analysts across the globe. Subscribe to Stock Movers wherever you get your podcasts from the heart of where innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. Live from New York, I'm Caroline Hyde.
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And I'm Tim Stanback in San Francisco. This is Bloomberg Technology.
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A
Coming up, Nvidia CEO Jensen Huang unveils new chips and technology at the company's annual developer conference, but fails to wow investors. We'll have all the details. Plus China's Tencent posts its fastest revenue growth since 2023, with the company planning to ramp up spending and cloudflare out with new cybersecurity products aim to help safeguard against AI vulnerabilities. We speak with the CEO Matthew Prince, but first we check in on these markets which are not all consum with AI but instead all consumed with the Fed. We're currently up 8, 5, 10% on the NASDAQ 100, bouncing back off what had been a significant sell off yesterday. And overall we still contend with the macro forces versus the micro on the points higher though Apple doing well to push the NASDAQ 100 higher, so too is Nvidia. We go into that particular name as GGTC continues. We're up 9 10%. Remember it fell 3.4% yesterday as Jensen Huang took to the stage, unveiling a whole host of new AI improvements chips that move from the Blackwell Ultra onto Vera Rubin. We also get a new scientist name for the next iteration. But Tim, it didn't wow investors.
- [02:43]
B
It feels it didn't. There's always today and there's always the rest of the week. For more on Nvidia, Mandeep Singh of Bloomberg Intelligence joins us now. Mandeep, there's this narrative emerging that costs are just getting out of control. What did we see yesterday? What did you see yesterday from Nvidia that said to customers, you're getting more value out of what we're bringing you?
- [03:05]
C
Well, one, there was a clear shift towards reasoning and you know, the fact that he said Reasoning requires 100 times more compute. So from that perspective, you know, the demand trends seem to be reassuring coming from Nvidia and clearly they are ahead when it comes to, you know, the performance per watt that everyone seems to be focused on with these chips. And look, you could argue, you know, there isn't a new end market on the horizon, even though they announced, you know, the partnership with GM or the Humanoids was part of the keynote as well. But to me it's still all about data centers and servers. And they seem to have a very clear roadmap till 2027 in terms of what kind of performance improvements they're looking with the next version of their chips.
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A
I think vera Rubin expected to 3x the improvements on Blackwell Ultra. We get Feynman being the next name for the future platform of focus. But look, analysts overall once again declaring that the moat is strong. That may be eight years ahead of the competition. If you're talking to certain hyperscalers, what more can you do to juice what's currently in the valuation right now?
- [04:14]
C
Well, so if you look at the trajectory of Nvidia's numbers, they have always moved to the upside because they have come up with something new or, you know, an additional customer that is true.
- [04:25]
A
Of the same ramp up, not new enough for that.
- [04:27]
C
Well, so you have to look at the hyperscale investment and they are all developing their own Asics. So the fact that you have competition on the horizon, even though Nvidia is way ahead of everyone else in terms of performance, but you just can't rule out the fact that Asics are a real possibility. That's what Broadcom called out and to me that competitive environment will get challenging. And look, they made the pivot to reasoning after deep seeking. This wasn't six there six months back. It was all about pre training. The keynote this time around was all about inferencing and reasoning. So they are very good at making those pivots. But the fact is the market keeps evolving and I think Asics are still a real threat when it comes to Nvidia sales at the data center level. Yes, it's a $1 trillion market, but who can give the assurance that it will be Nvidia who captures most of that end market because your competition is the four or five main hyperscalers that are still looking to develop that ASIC option.
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Frenemies continue. Mandeep Singh of Bloomberg Intelligence. Love having him. Meanwhile, a wider investor. Look now at Nvidia and some of the others in the chip sector. Kim Forrest Becker Capital Partners CIO joins us. And Kim, we mention how their own clients are becoming their competitors, not to mention AMD still trying to be and also ran in this space, not to mention intel, really languishing. But can Nvidia remain the king when it comes to AI?
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D
Well, maybe. I think it's a strong maybe there and maybe they do rule the hardware world or a lot of it because, you know, there really is no substitute right now. Here's the thing though. Human beings are incredibly inventive and in video, although they always trot out the fact that they have software that developers may use, I think the very largest developers that are using these chips are writing their own software, not depending on cuda. So keep that in the back of your mind. But I believe what Deep Seek has shown the investing world is there's more than one way to skin a cat. And just throwing really expensive chips and tons of chips at a problem is not always the answer. So I'm looking out there for innovation in the software world to make the build out of a data center a little less like key into developing AI in the future. So more software, less hardware.
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B
Kim, do you think that the market has fully priced in the impact of Deep Seek?
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D
No, actually. And I think this is a really difficult area to talk about AI without really nerding out. So let's keep it at the 50,000 foot level.
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A
This is the show to nerd out on, Kim. This is a show to nerd out on. Just saying.
- [07:25]
D
Okay, yeah, but I, yeah, okay, I'm trying to restrain myself, but here's, here's what I see is the essential problem is there are limitations in the physical world. Power, you know, how quickly you can build a data center, how quickly you can build chips, the, the machines that create these exotic chips, how quickly you can build that. It's all, you know, a physical world problem. In many way, software is exactly what we've used in the past to become more productive. And why not use it on AI itself to, to use these data centers that we already have and rethink the software and the training, testing and validation kind of exercises we do to build large language models. Why not make that better by better software? Crazy.
- [08:19]
B
You have the background to nerd out on this because before finance you spent more than a decade working on this stuff. I mean this was 20 years ago. So you've been thinking about this stuff for a long time. But now do the economics of inference work? Do the economics of agentic models work?
- [08:35]
D
Right now I don't think so because they're so expensive to to build and it doesn't look like people are lining up to buy it. I mean is it really that simple? I think the answer is yes. I have not been convinced that there is a strong enough problem that can be easily identified and thus monetized in in AI. Do I think it's the future? Absolutely. But I think that businesses who have to put their assets at risk buying this stuff and then using it and remember a lot of language, large language models are 85 to 95% Corre and that is underwhelming. You know, if you're going to build your business on something that's incorrect, you know, 15 to 10 to 15% of the time. Yeah, these are real world problems that we have to get unexcited about and fix. And again my answer is software because that's what I it's my book. I know that that area as opposed to building better hardware.
- [09:43]
A
Well, go to the software, go to the newly released open source software Dynamo and look, there's crowing that that makes deep seats are 130x faster when you run this new open source software being offered by Nvidia. So are they not adapting quickly enough? Because it certainly feels as though they've got an answer for everything.
- [10:00]
D
Well, I think we really have to do is attack. I mean faster is better, right? But then how do we stop wrong answers? That's where the humans have to come in and kind of build stuff around that to wall off the bad an and you know, whenever I was doing this back in the late 90s, that's where a lot of our time was spent on refining the models was to make sure that we weren't returning bad answers. And I don't really see that as a focus. And again I'm talking my book what I know and it's still a problem. That's the crazy thing, you know, 30 years later, wrong answers are still a problem.
- [10:41]
B
Kim Forest a Boca Capital Partners. Kim, always great to check in with you. Appreciate you joining us today. Meanwhile, as many as 400,000 Nvidia chips are set to have a new home in the small city of Abilene, Texas. It's the site of the first data center complex for OpenAI's Stargate Infrastructure venture. According to the developer, the project will complete. It will be completed by mid-2026 with support for hundreds of thousands of AI chips, though no word yet on how many chips have been committed to the project so far. Caroline.
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Coming up, we're talking connectivity and connectivity firm Cloudflare introducing new tools to take on vulnerabilities when we're speaking with the CEO Matthew Prince. That's next. This is Bloomberg Technology. Hello, I'm Caroline Hoepke.
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D
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B
Cloud connectivity firm Cloudflare is in the midst of its annual security week, announcing its slew of new products, including one to help safeguard against AI vulnerabilities. Here to discuss is Cloudflare CEO Matthew Prince. Matthew, you just announced Cloudflare for AI this week. It essentially allows customers to safely use and develop AI tech. Up to now, though, what has been the problem? What has been the challenge? What has been the vulnerability?
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F
You know, I think the thing that's really hard in the AI spaces, as your last segment was talking about, is everyone's just rushing as fast as possible. Everyone's bored, is saying, what are we doing in AI? And everyone is trying to go as fast as possible. And what that means is mistakes get made. Data that shouldn't leave your enterprise gets sucked up into an AI model. People maybe are using AI in a way which might embarrass you or your firm. And what we've heard from our customers is that they want guardrails, they want controls to be able to make sure that even as they go as fast as possible, they're not going to break anything, which is really really important. And so that's what we're launching with Cloudflare for AI. And we're really excited to see already customers using it to make sure they can go as fast as, but not make those critical mistakes in the space of AI.
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A
Matthew, you've got so many current security offerings already. When you think about web applications, firewall observability, API protection, what's new here in terms of Cloudflare for AI? Is it new, bundling, thematic, or is it, is there really new offerings coming?
- [13:57]
F
You know, I think that it is a combination of building on the foundation that we have where we can process just vast amounts of data flowing through our systems, do analysis, do all those controls, but then adding on top of it, not just how are we looking for hackers, how, how are we looking for threats, but how are we actually looking for the ways that people might be using AI in a way that might be embarrassing to a company, in a way that might be revealing secrets that are there. And I think part of what's powerful here is, yes, we have a whole bunch of customers that care about keeping their use of AI secure, but a lot of the AI companies, in fact most of the major AI companies also use Cloudflare. So we've been able to actually integrate those two sides in a way that give you a holistic offering and make sure that you can again, go as fast as, as possible with AI, but do it in a way which is secure and has real guardrails, that speed.
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A
That desire to get out in front. When it comes to AI, many would class that as hype. Can you just set the broader context here of whether you think the hype is turning into AI productivity reality?
- [14:57]
F
Yeah, you know, I think there's, there's. In any time you have something which is as disruptive a new technology as AI, there are going to be a certain amount of, of money which is spent on it, which is just lit on fire. And I think that's just the reality that that's there. But what we're seeing is that there is real value which is being created as well. And so even if we assume that only 1% of what's being done today turns into value, what we see from our customers, what we see from the companies that are out there, is that that 1% has the opportunity to have enormous returns. And so, again, I think anyone who's not doing at least something experimenting in AI is probably missing the boat here. And again, I don't hear a lot of customers that are saying, gosh, we're going to shut down our efforts. Instead, I think people are stepping on the accelerator, finding more ways to use this. And again, I think we have to acknowledge some of this is going to be just lighting money on fire. But, but a lot of it is going to turn into real innovation over the long term.
- [15:51]
B
MATTHEW Investors watching right now probably are wondering how big of a business does this turn into for Cloudflare? What are you modeling internally?
- [15:59]
F
So again, we don't, we don't forecast anything in particular, but what I will say is customers are coming to us and this was, this was a real demand that was driven by our customers saying, you are extremely well positioned to be able to solve this problem. This is something that we want and that we want you to build. And so I think that that gives us a lot of confidence that as we invest in this space, that is something where there will be real returns. It's something that customers want, is something that the largest enterprises are realizing that they need, that they can't just go at the, you know, full, full throttle without those guardrails in place. And because of the unique position that Cloudflare is in, we can deliver those guardrails and make sure that you can.
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G
Use AI safely because you're offering the.
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A
Platform to build, to deploy the apps. You're also offering the security. But paint a picture of the ecosystem right now because people might be thinking, okay, your competitors are like NWC and fastly. But then there's this deal with Google buying Wiz and what that does for overall security of infrastructure, cloud infrastructure. Where do you fit in with Cloudflare?
- [16:56]
F
Matthew I mean, those are all very different companies. And I think the first thing to say is congratulations to the Wiz team. It's incredibly hard to build companies and the fact that they so quickly generate, built something that had enormous value and were able to sell it to Google, I think is something that again, deserves an incredible amount of tip of the hat to, to them and what they're doing. I think the fact that Google had to build Wiz just shows how security has to be part of any cloud platform. And Cloudflare really started with security. I think that's given us a huge advantage over, over time. Wiz is really great at identifying what an enterprise's security vulnerabilities are. And what we're proud of at Cloudflare is that we have actually been the solution, once wizard identified the problem, to actually solving the security problem behind the scenes where they're recommending us as that solution. Google's been a long term partner of Cloudflare. We hope that will continue expect that will continue over over time and I think integrating with actually makes it make more sense sense for them to be integrating closely with Cloudflare and being able to deliver our services as one seamless.
- [17:55]
A
Offering some of the best birds eye perspective of the Internet writ large. We love having you on. Matthew Prince, Cloudflare CEO thanks so much Tim. Off we got.
- [18:03]
B
Well it's time now for talking tech. First up, Google launched a redesigned version of its budget Pixel phone, upgrading the chip and battery life weeks after Apple's lower end iPhone 16 went on sale. The new Pixel 9a cost $499 in line with the price of last year's Pixel 8a Plus Tesla was granted approval to begin carrying passengers in California. The approval does not allow Tesla to offer rides in autonomous vehicles, but a ride hailing business with human drivers could pave the way for Tesla to eventually introduce robo taxi service in the state where Waymo already operates here. Here in San Francisco and Show me is working to expand its production capabilities to meet demand. This comes after it raised its 2025 delivery target for EVs to 350,000 units, reflecting inroads into the Chinese EV market. Shami Group Vice President and CFO Alan Lam joined Bloomberg Television in an exclusive interview to weigh in on this.
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H
You see a couple of our EVs.
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A
Right that the red one being the SQ7 and then the yellow one which.
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F
Is something that we just launched is.
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Our SU7 Ultra which we are selling.
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At a starting price of over 500,000 RMB.
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G
We are running one factory right now.
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In Beijing which is fully ramped up.
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C
We are working very hard to squeeze the extra production volume out of that of that factory.
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H
But at the same time obviously we.
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G
Need to continue to expand our production.
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F
Capabilities by adding new production insights.
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A
Tencent posted its fastest pace of revenue growth since 2023, revenue rising 11% for the three months ending in December and it also shed some light on its ambitions. Henry Ren joins us now for a breakdown and Pony Marty setting out that they're kind of going to do in AI what they did for gaming. Build their own but also offer third party.
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H
Indeed so so breakdown for results shows that the company is doing pretty strong across its all its business lines from gaming to social network of WeChat as well as the payment and fintech. But of course is the key business focus for today and the company said that it made a so called emergency purchase of GPUs in the fourth quarter because it was seeing a surge in demand. And indeed, we're seeing this coming through on the revenue side of things as well because the company said that it's a crowd business, doubled its revenue in the fourth quarter. And, and just to give you a sense of things in terms of how much the company is spending on these days, the company said that its fourth quarter capital spending quadrupled from the same quarter in 2023. So it really shows you the urgency that the company is having in terms of catching up on other Chinese big tech companies in terms of, you know, enhancing its AI capabilities.
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B
Bloomberg's Henry Ren joining us from London. Henry, good to see you. Thanks so much. Meanwhile, Elon Musk invested $150 million to acquire more shares in X last year at a valuation approaching the price he paid for the company's Equity back in 2022. Bloomberg's Kurt Wagner joins us now with more. Kurt, what's the end game here? Does he just want to own the entire thing?
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E
Yeah, I mean, he already owns around 75% of X, so I'm not sure how much of this is, you know, buying 1 million more in shares is not going to dramatically change his ownership. It could be he was, you know, buying out somebody who wanted out. I think more than that, it's, it's perhaps a signal, right, that this company is, is still valued at where he, or close to where he purchased it. We know they're out raising money right now from, from other investors. And so maybe having that sale at the end of last year, sort of setting the benchmark. Right. Like if Elon's willing to buy in at close to what he paid for it, maybe others should as well. So perhaps it was a little bit more of a sign anything.
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A
The signal was an amazing deep dive by you and other reporters into Kingdom Holdings Annual report, that's a Saudi investment firm that seems to where we got the tip off that he was offering these sorts of prices for the equity. Overall, the business seems to be improving, right?
- [22:24]
E
Yeah, well, that's the, that's sort of the narrative. And there's, there's signs that point to that, Right. Number one, the fact that they're out trying to raise at this $44 billion price tag is one sign. We know, and we've talked about this on the show, that the banks that were holding all of X's debt have been able to sort of offload that at around, you know, the same price at which they loaned it a couple of years ago. And we have heard stories of advertisers returning. Now, I will caution, on the advertiser front, X and Elon are also suing a bunch of advertisers. Right. So there is some fear out there in the market that, hey, if we're not spending on X, we're sort of opening ourselves up to a potential legal dispute with this company. Maybe we throw them some money to avoid that. But, yes, there are some signs that, you know, perhaps things are certainly better than they were were, you know, six months ago.
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B
Kurt, you wrote the book on this. How is the product change under Elon Musk's ownership? I mean, we've all seen what the experience has been like, but how is the product actually changed?
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E
Yeah, I mean, I can only speak for myself here, but I would say the biggest thing is that the news value of Twitter or now X, in my opinion, has gone down. Right. I remember the first Trump presidency, how much news was coming out of that administration, and Twitter was really like a must have for me. I think the changes that Elon has made around verification, I think the changes they made around the ranking has just, in my opinion, made it less useful as a news venue. And especially it's been heightened to me, given the fact that we're in this Trump 2.0 presidency and we're seeing that news cycle again pick up just like we did during the first time around. I just don't feel like I'm getting news through apps in the way that I used to through Twitter. And I think the verification thing in particular has a lot to do with that.
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A
That I spy. Battle for the bird just over your shoulder. Bloomberg's Kurt Wagner on the book, we thank you. Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York.
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B
And I'm Tim Stanwak in San Francisco.
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A
Let's check in on these markets, Tim, because got a little bit of a reprieve ahead of the fed, of course. 2:00pm New York time, we get what is the ultimate transcript, but then you get the press conference coming from Jay Powell. What will he say about the overall economy? Of course, we're expecting no move in terms of rates, but we're up 9.10of a percent as some of the tech names catch a bit on the higher side. Apple leads the chart in terms of points, but drill into actual individual moves. Apple at 1.4% even as the European Commission once again coming out strong, telling Apple to loosen its control over its iPhone operating system to comply with the law. That law being also the Digital Markets act that they're warning Google about as, as well, well to comply with and it favors its in house services and prevents developers from offering alternatives. Aside from of course the App Store, Play Store. Move on and have a little look at what's happening in terms of matter though, because Matter had been your outperformer of choice when it came to mag7 so far this year. But finally it tumbled into the red for year to date and we're off by another quarter of a percent this time. Cathie Wood seemingly offloading some shares. She'd been buying them up all through last year but now we understand they finally taken some profit and that matter holding. But let's turn back to the markets more broadly now. We're pleased to welcome Jay Jacobs. He's US head of thematic and active ETFs at BlackRock. And today is such a case in point, the macro kind of outweighs the micro and fundamentals. Nvidia CEO Jensen Huang cannot catch the vibes back into his shares and into his market capitalization until basically we hear more Better Moon music out of the Fed.
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G
Well, I think it's that tension we're seeing, right? Is this an interest rate driven market or is this a thematic driven market? And frankly what we're seeing from our investors this year is more thematic. The developments in AI, the developments in geopolitics, that's what's driving a lot of the investment this year. This is why we've seen continued inflows into AI ETFs like RTY from BlackRock. It's why we're seeing a lot of interest in areas like infrastructure mid geopolitics. But not every day is the same. We certainly see this tension playing out in real time. Leaning a little bit more thematic this year though.
- [26:22]
A
That sounds and odds I would have thought for many who feel that they might have lent in but they've actually lost money. We started to see investors pull out. In particular are some of the big winners. So you're saying people are still allocating towards them even though ultimately they're in the red for year to date?
- [26:35]
G
That's right. We've seen about 50 million come into our air related ETFs. That's RTY, which is an index based ETF around AI and then BI, which is an actively managed fund where we're picking winners within the space. So people are buying the dip. And I think a lot of it comes back to valuations.
- [26:49]
A
Feel like it when you're looking at individual names in the fund space.
- [26:52]
G
They are. And if you look at some of the valuations you have these incredible AI companies, some of the biggest, fastest growing, that are trading at the same P E as 75 year old fast food companies right now. So there is value in AI which doesn't seem, I wouldn't have said that three months ago, but that's absolutely the case right now. Yeah.
- [27:10]
B
It's surprising to hear you say that because I think a lot of people would argue, Jay, that there's still, by many measures, these are still very expensive stocks. So where specifically are you arguing that there's value?
- [27:24]
G
Lost audio.
- [27:25]
A
Oh, I don't think he can hear you. But as we get the connection back again, Tim was asking about where exactly you think you're seeing value. Where because you know a 25, 26 times future earnings for video still feels kind of expensive even if it is akin to a 75 year old restaurant chain.
- [27:40]
G
Well, I think it's what you're paying for that growth right in the, in the absolute 25 times earnings. Sounds expensive, expensive. But when you get, you know, earnings growth that's, you know, 30% a year right now you're seeing top line revenue growth in the high double digits. That is so much far superior towards even the broader technology sector. But even the S&P 500 S&P 500 more broadly generally speaking, you're seeing companies grow twice the speed of the S&P 500. So it's okay to pay a little bit more for those valuations if you expect to see the growth back that up.
- [28:09]
A
I suppose everyone was in on the hype and now it becomes okay. I'm committed to the long term trajectory and Jensen Huang did a good job at showing that he's still building a moat, that still his company is going to be there for the next eight or so years ahead of others, as many analysts would single out. But I think in the here and now people are seeing a different, an opportunity cost by investing in certain names. Are you seeing it spread, spread out? Are you seeing people okay, go. I'll back the energy or I'll back. In fact the application of AI rather than the infrastructure, the ultimate, you know, picks and shovels that we've seen committed.
- [28:42]
G
To of late, it is spreading up. I think the picks and shovels theme is still very much in vogue right now. You're seeing it with semiconductor companies, you're seeing it with data centers and digital infrastructure where there's just, there's a shortage, there needs to be more data.
- [28:54]
A
We're just not seeing that in the share prices. You've seen semiconductors absolutely obliterated this year.
- [28:59]
G
But we're seeing in the investment dollars where you have some of the Mag 7 companies spending hundreds of billions of dollars billion to build out this space. And so yes, you know, markets are volatile in the short term. In the long term we see a lot of opportunity in a still. Digital infrastructure is really the first area. I think the next area of attention from the market is going to be on the data companies. Who owns the unique data that's going to have to feed into these large language models. Right now you could actually run out of data by next year. In terms of what is training these models. They're ingesting so much data to get so much more powerful. That unique high quality data is going to be where a lot of value lies. And then finally beyond that, I think we're going to see really transformative industries really build around artificial intelligence. But you were saying the users, the adopters, that's where kind of in the back part of this decade, I think we're going to see a lot of value unlocked as well.
- [29:42]
A
I'm interested as to where the fund flows are coming from geographically. Can you break it down or even when it comes to age groups. How are you seeing people allocate towards the trade?
- [29:51]
G
We don't get that much level of detail in the ETF space, but I can say it's being broadly felt right now. So you're actually absolutely seeing a combination of end investors as well as financial advisors who have been looking at the trade for a while and maybe even telling their clients, I'm not ready. The valuations look a little bit stretched. This thing's been on a run now that it's pulled back this year in a pretty significant way. They see it as the entry point for long term investing. So we're seeing that pretty broadly across our our investor base.
- [30:16]
B
All right, BlackRock's Jay Jacobs joining us there in New York. Jay, thanks so much for joining us. Well, Elon Musk's X AI and chip maker Nvidia are joining forces with Microsoft and BlackRock to build $30 billion worth of AI infrastructure, mostly in the U.S. the group also includes United Arab Emirates backed MGX and plans to focus on data centers and energy infrastructure. Both Microsoft and BlackRock have ties to XI rival Open Air, which is part of a $100 billion infrastructure plan, Stargate. Caroline, I feel like I need some sort of chart here to keep track of the strange bedfellows, but I guess the opportunity brings somewhat frenemies together.
- [30:59]
A
I mean the whole world of the AI space Seems to be one built on frenemies as is more broadly in tech. Tim. But is it interesting that when we saw the Stargate announcement in front of the White House, Microsoft wasn't there. It seemed to be OpenAI opening itself up to deals with Oracle, but Microsoft saw them in there all along with BlackRock really trying to integrate and ensure that allocated dollars is going into data centers. And look, when you see the news as we report at the top of the show that 400,000 GPUs can be homed in the Texas building that's currently happening by Stargate, it does feel like the demand is still there for all things that Jensen builds.
- [31:36]
B
Yeah, the demand is certainly remarkable. And look, we have to wait and see what we hear from from Nvidia in the coming week as GTC wraps up. But no question that investment these companies are making, it's still happening.
- [31:46]
A
Coming up though, we're going to talk about what it takes to stand up from that crowd in market for building AI developer tools. Axel's Christine Esserman is going to be joining us next. It's all about graphite for them. This is Bloomberg Technology. You can get the news whenever you.
- [32:03]
D
Want it with Bloomberg News Now.
- [32:05]
A
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Yes, there are other products like this from a variety of news organizations, but they usually rerun their radio newscasts throughout the day.
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A
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- [33:08]
B
Google has agreed to pay $32 billion to buy Cloud security startup Wiz. It's the most search giant has ever paid in an acquisition and it's a big win for the backers of Wiz. Joining us now is Bloomberg's Katie Roof. Katie, we're learning more about exactly how this deal came together. Even though it was over a long period of time, it was also just recently, really in the last Week and a half or two weeks. What do we know exactly?
- [33:34]
I
So, you know, the Google first expressed interest after hearing the buzz about WHIZ at RSA security conference last May. And then, you know, talks picked up last summer and Wiz was not interested at all in selling at the time, even though 23 billion, you know, which was so much money, especially for a company that at the time is just four years old. But what changed is the regulatory environment. There were people involved with Wiz who very concerned about, you know, another Adobe Figma type situation that, you know, went on with regulators and slowed the company down. And so, you know, there's a perception at least that this deal would be more likely to get approved under the current administration. Of course, that remains to be seen. And so, yeah, really what we understand is that in the last week or so, Google's persistence finally paid off.
- [34:29]
A
It's interesting, isn't it? We had the FTC check Andrew Ferguson on earlier in the week saying, look, we're going to get out of the way if we decide that we can't win in court or can't bring an antitrust case. But ultimately they're still plowing ahead on other Alphabet focused investigations when it comes to the speed of this particular set of negotiations. Boy, it was fast. It came together in what, a week and a half you say here in New York?
- [34:53]
I
Yeah, so we're hearing. It's about that. You know, earlier this month, as is our understanding is when talking stocks picked up again. You know, if you even look at what WHIZ was doing, even as of January, they hired an IPO ready cfo. They fully thought that they were going to IPO at some point and they were taking steps for that. But yes, recently Whiz was in the middle of a funding round and changed course and decided they had, you know, $10 billion more reasons to sell. There's the 32 billion that was announced and there's also an additional billion bonus, an employee retention bonus that they made.
- [35:30]
B
Receive some real cash, not just for the founders, but also for the venture capitalists who back the company. Bloomberg's Katie Roof joining us on that. Now it's time for our VC spotlight. The market for AI developer tools is quickly becoming crowded as more companies turn to AI generated code. For a deeper look at this space, we're joined by Excel partner Christine Esserman. Christine, good to have you on set with us here in San Francisco. Excel just invested in this $52 million Series B in a graphite. What is the opportunity that you see Here.
- [36:01]
J
Yes. Well, thank you for having me, Tim. Yesterday we announced our $52 million Series B in graphite.dev Graphite is an AI powered code review platform. And like you mentioned, I don't think it's any surprise that the amount of code that's being generated has just absolutely exploded in recent months, largely thanks to the success of companies like Cursor and, and Windsurf and Copilot. And as a result of all the activity in Cogen, there's just been an increased emphasis on reviewing that code, testing it and deploying it. And that's where Graphite fits in. Graphite is really the collaboration layer where human developers and AI agents can collaborate on on code changes.
- [36:39]
B
So you mentioned it's a collaboration layer, but I think when people hear about products such as this, they think about their own jobs being at risk. How do you see this disruptive the engineer in the software developer market?
- [36:51]
J
Yeah, it's a really good question and I think there's a lot of conversation and a lot of people that are saying will the software developer cease to exist and what's the future of that career path? Anecdotally, just across the Excel portfolio and across conversations that I'm having with with technology leaders in the enterprise, everybody is trying to hire more and more software developers and it's actually a war for talent. Talent that's largely due to the fact that software developers can just be much more productive with tools like Graphite. We're seeing incredible productivity gains and companies are going multiproduct faster. And I actually think that this is going to be an accelerant to the software development career.
- [37:30]
A
We talked about this being a crowded space when it's actually coming to using AI to build code. This is about assessing that code. But there are other startups busily building in that direction. I think of person who helped build GitHub Copilot is busy building poolside. How do you decide that Graphite is a winner here and in what capacity will it win?
- [37:50]
J
Yeah, well, there's certainly a number of companies that are vying to be the next multibillion dollar company in the developer tool landscape. I personally think Graphite is unique in a number of ways. First and foremost, the team is just absolutely exceptional. It's founded by three co founders, Meryl, Tomas, Moss and Greg. They all met while studying computer science at Harvard and they've just built an exceptional team in culture in New York City. Secondly, this team has just been able to move very fast and ship new features. Yesterday they launched their standalone AI code review product called Diamond. I think it's just really important to stay ahead of the curve, constantly be iterated, iterating on product and graphite is able to do that.
- [38:33]
A
That I'm going to be a bit selfish here because this company is based in New York where I happen to sit and I just think of AI Lab Cognition as well, raising a ton of money, huge valuation, and they're busy actually trying to build an AI software engineer. What's New York got versus the West Coast?
- [38:50]
J
Definitely it's a. It's a great question. And at Excel, we're global, both in terms of where our offices are and where we invest in companies. We've long believed that great founders are everywhere across the globe. Globe. And it's important for us to be able to find those founders no matter where they're building their companies. Graphite's unique in that they're in person five days a week and really care about building a strong culture. And I think that's given them an edge in this very competitive time.
- [39:14]
B
Your own portfolio companies include Graphite, Linear Merge, Remote and Headway. What's exciting to you now as you look across the startup landscape?
- [39:23]
J
Yeah, well, I'm having a ton of fun. I think that there's no time like this when companies are just growing so quickly and viruses just have so much willingness to spend on technology. So it's been amazing just to see the interest in enterprise technology as a whole. But what I look for when making new investments in consumer and enterprise and infrastructure is really just phenomenal. Founders. This is a people business and I'm just so fortunate to be able to work with exceptional founders across all those different companies.
- [39:53]
B
But is there a type of technology right now that you see on the horizon? Horizon that's really exciting and you want to get behind. We understand that the people make the companies, but the tech has to exist too, for sure.
- [40:04]
J
And we are seeing an incredible platform shift right now. I mean, software development is entering a new paradigm and I think it's really important to just be paying attention to all the different technology innovation. If history is going to repeat itself, I think we're going to see new winners across productivity, collaboration and security. And we're paying close attention to all three of those areas.
- [40:25]
A
Yes. Christine, I've got to go back to something. You said that graphite is unique because it's in the office five days a week. Is that something you care about in person? Collaboration, when ultimately engineers can be based anywhere and work together?
- [40:38]
J
Yeah, for sure. So we work with companies that are in person and also companies that are remote. And I think it really depends on the subcategory that you're building in right now. In developer tools specifically, I think it's really important for teams to be able to move quickly and be in person together. This market is moving so, so, so, so fast. And like you mentioned, it's very competitive and we're waking up every day to companies that are raising hundreds of millions of dollars and in order to be able to keep up, I think it is really important, important to be in person together and to be able to pay attention to everything that's going on in the competitive landscape.
- [41:12]
A
Music to many of some of those in finance here in New York at least. Christine Esselman, partner at Accel, we thank you so much for joining us. Meanwhile, well, we want to update you on a developing story outside the world of technology. President Trump says he just completed a one hour phone call with Ukraine's leader. Trump says the call with Zelinsky was, quote, very good. Remember, the two presidents had a dramatic disagreement at the White House recently. It resulted in, of course, Zelensky being told to leave and a deterioration in the relationship. We'll continue to monitor and bring you any more information from that call. Adobe unveiling a new suite of product innovations integrating AI to really help drive the customer experience. Pleased to welcome Adobe Digital Media Business President David Wadhwani to the show. And just tell us what is going to be happening to a customer right now? How much are they going to be interacting with agents? What does it change in terms of their experience?
- [42:07]
H
Thanks for having me on the show. Yeah, it's been amazing having the world's biggest brands and so many companies together talking about the evolution of how creativity and how agent tech and AI is going to change what we call the content supply chain. And the question here is around how do you create more content in a personalized way to reach audiences with messages and content that really resonates with them? So the entire show that we are at Adobe Summit today has been really around enabling enterprises to create more content at scale through AI and agentic experiences that can create better engagement with their customers.
- [42:47]
A
Some of that is about interoperability as well. You recently added Google's model example for four users. Where else are you integrating? Who else are you adding?
- [42:55]
H
Yeah. So first of all, just so everyone understands, we have the world's broadest set of AI models focused on creativity. And we develop those models in a way that is is more controllable and toolable than anyone Else in the world world. We also recognize that customers want to have a broad set of models that have their own individual personalities. So we announced partnerships with Google to bring the Google models for both image and video in. We also are working with Flux. We're also working with a host of other third party models including Runway for video and these kinds of things. So we're very excited about making sure that Adobe becomes the one stop shop people can come to two for the most controllable AI models and the trusted partner in terms of getting access to everything agentic and everything based.
- [43:46]
B
David, how does this affect pricing here? How can you move the lever when it comes to pricing? Can you keep pushing for more price increases because of what you're adding?
- [43:56]
H
If you look at where we are, creativity is the foundation of everything that is happening and change that's happening in the world today. When it comes to communication, whether you're a business professional or a consumer, whether you're a creative professional needing to produce more content, whether you're an enterprise trying to create a lot more scaled content for personalized experiences, that foundation of creativity is what we bring to the market. We are bringing a lot more offerings around freemium offers in web and mobile to reach billions of users at the with business professionals and consumers, we're bringing a lot more value to existing creative professionals where we can bring in more tiers and we're bringing a lot more solutions and value to enterprises. So across this entire ecosystem there's, there's room to bring in more users, provide more value and drive more increased monetization.
- [44:48]
B
Very briefly, can you just give us a timeline here about achieving AI sales of $1 billion? You've recently disclosed a run rate of $125 million. You'll be able to double that by November. How long until AI sales reach a billion?
- [45:03]
H
Well, first of all, we are already influencing billions of dollars of Adobe business because AI is pervasive in everything we do. But to your point, we also announced that we have standalone value new products that have hit 125 million today. We expect that to double in the next nine months. And everything we see shows a lot more acceleration in that space and those, those products. So we're very bullish about that continuing to grow and actually accelerate in the years ahead.
- [45:29]
A
David Bomani, great to catch up with you. Off the heels, of course, of Adobe Summit, you're the Adobe Digital Media Business President now. That does it for this edition of Bloomberg Technology. You do not want to forget to check out our podcast. You can find it on the terminal as well as online on Apple, Spotify and Iheart. Catch up on all the latest out of Adobe, Summit out of GTC from Video, and of course, tune in to the Fed special a little bit later as well. This is Bloomberg Technology.