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- [00:01]
IDA Ireland Representative
With the highest number of young STEM graduates per capita in the eu, Ireland has the people and skills your company needs to succeed here. IDA Ireland, the national investment development agency, can help you find and nurture the people you need to internationalise and thrive. Our talent is just one of the extraordinary benefits Ireland has to offer. Learn more@idailand.com invest in extraordinary
- [00:31]
IBM Representative
so there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a Global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions. Not noise proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
- [01:00]
Optum Representative
IBM Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person how you need it. Optum is helping make healthcare work as one for everyone. Everyone. Learn more@business.optum.com
- [01:32]
IDA Ireland Representative
Bloomberg Audio Studios podcasts Radio News. Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.
- [01:52]
Ed Ludlow
This is Bloomberg Tech. Coming up, tech's biggest names are making the case for open air, arguing open weight models are key to innovation, competition and even security. Plus intel showing signs of an AI driven comeback, forecasting stronger sales as its datacenter business accelerates. And AMD and Cerebras are teaming up to challenge in video, promising some of the fastest AI systems on the market. We speak with Cerebra CEO Andrew Feldman. Our top story this Friday a major push to shape The Future of AI. A coalition of technology companies, CEOs and venture firms is urging Washington to embrace open weight AI models, arguing they're critical to American competitiveness, innovation and national security. The signatories include Microsoft, Satya Nadella and Nvidia CEO Jensen Wong, who used his very first post on X to share the letter. It argues, quote, the United States should lead in building an open air ecosystem because it expands opportunity, strengthens competition and extends American technological leadership. Bloomberg's tech managing editor Sarah Fry is with us. The idea of open weight and open source, that's not new, but it was very, very interesting the timing of the heavyweights of this industry coming out almost in unison and saying we need to think about this area.
- [03:15]
Michelle Got
I mean it's a huge issue because right now, and they didn't say it in the letter, there is a really intense discussion happening, happening about moonshots. Kimi this is a model that just came out of, out of China that is pretty equivalent with US models and it's changing the way people think about it. Whereas previously the Chinese models were good open weight models and able to undercut US models on price and they were very popular but they didn't actually get to the point where the innovation looked like it was about equivalent with what you could get from us. And that's caused a lot of concern in Washington. Maybe some policymakers threatening to change things, restrict things. And of course US startups really depend on those open weight models. So if the US were to have something that was equivalent, that would really help a lot of, a lot of the companies. But you know, everything's getting built right now and we have a lot of dependence on these Chinese models. I'm very curious what's going to happen in Washington as we digest what this means for the market.
- [04:25]
Ed Ludlow
I don't want to trivialize this, but it was fascinating that Jensen Huang elected to create an X account and use his first post as a mechanism to communicate this. For Jensen, this isn't new. You know, he's talked about the importance of open models. Open weight AI is open source. The distinction is like if you use a closed model, you go via the API but you can't see the model, you can't download it in open weight. You can download and run the train model. The data code aren't necessarily public on open source. All of it's there available. You were absolutely right to frame this post, Kimmy. K3 but also with what happened with the OpenAI mistaken hacking of hugging face, it also raised some of the limitations of US open models because hugging face wasn't able to defend itself in that respect. What do you think happens next? How serious is this?
- [05:21]
Michelle Got
Well, I think that this, it is serious because the whole market is resting on this idea that all of this tremendous capital expenditure, investment, the build out of data centers, it's all going to end up having a return on investment for US companies. There's a whole other factor we haven't talked about yet, which is some concern that these Chinese models are built in part using unauthorized distillation of US models, including anthropics. Claude so if the, if all of that investment from the US companies in their future innovation is then just being used to, to boost what China can accomplish, whether it's through distillation or through unauthorized chips use, that's, that's a matter of big debate too. And that could really affect the ROI for these companies on the many, many billions that they're pouring in to build out for the future of AI.
- [06:20]
Ed Ludlow
That's probably the bit we don't know. You know, why did they do this and why now? Was it to counter distillation? Was it to try and get ahead of what happened with open air hugging face? We'll find out. Bloomberg. Sarah Fryer who leads the team here at Bloomberg Tech, thank you very much. Let's turn to earnings. Shares of intel, it's interesting now down 3%. When the earnings hit last night, we saw the stock in after hours go as high, as high as a gain of 13%. The chip maker delivered a stronger than expected forecast as demand from AI datacenters is fueling a surge in its business, particularly cpu. CEO Bhutan telling me CPU demand is now outpacing what is improving supply. Joining us now is Antoine Skyburn, head of Global Technology Infrastructure research at New Street Research. He has a neutral rating on the stock with a $115 price target. I want to get into the technology, I want to get into what intel is actually doing and well, but the stock, you know, I was sat here last night and the gains were massive. Then they eroded. Now we're down 3% with time. What has the market changed its mind about?
- [07:32]
Antoine Skyburn
I think, I mean, thanks for having me on the show. I think, you know, what's happening is the market is realizing that actually that's the, even the bull case is already priced in. Even if you take like an intel in 2030 where manufacturing is fully turned around, which by the way, we had indications of that yesterday on the print. You have a foundry EBIT margins up nine points sequentially. So they're headed really towards break even. Even if you assume, you know that in 2030 and that is fully recovered, they're going to still have, you know, some structural cost disadvantages compared to tsmc. And gross margins are never going to reach the same level as TSMC and in products, even if they're doing extremely well and even if, you know the overall agentic tide is, you know, lifting all boats, India is probably going to keep losing share to amd, is probably going to lose share to arm. You know, you have these hyperscalers in house Designs. You have Nvidia ramping in a Grace, Vera, etc. All of that is going to take share from Intel. And if you put all that together, even the bull case, you know, doesn't make much room to, to the current levels the stock is trading at.
- [08:48]
Ed Ludlow
Okay, Ed, calm down. Remind yourself and the audience that going into the print, the Stock was up 170% percent year to date. So that might be a part of it. What's interesting as well is that intel never said they'd fixed everything, just that they were making progress. The way that Lippu explained it to me is that, you know, their processes and production for their own products is improving, but they're still in a place where demand for CPU in particular is outpacing what is improving supply. Right. Antoine, you'll remember last quarter they basically left money on the table because they couldn't meet the demand. Do you recognize that kind of operational progress?
- [09:27]
Antoine Skyburn
Yes, I mean, we heard a lot of very encouraging data points on, you know, capacity increases on the call. First of all, you know, you have yields, of course, they're improving. That directly increases, you know, the, the output of the good chips that you can produce. On top of that, intel has a lot of shells that they've been building over the last few years that they can now fill up with equipment. All of that puts that in a good position, you know, to number one, as you said, you know, address the huge demand that there is for CPUs in this agency era and to potentially start addressing demand from external customers as well. You know, they targeted 15 billion external foundry revenues in 2030. Yes, and I think there is increasing evidence that is actually pretty tangible.
- [10:12]
Ed Ludlow
So let's talk about capex, which will be more than $20 billion now this year and grow over the next couple of years. Lit bhutan, the Intel CEO is cautious. He won't deploy CapEx unless he thinks there'll be a return. How did you interpret all that?
- [10:28]
Antoine Skyburn
Well, I think it's, it's very reassuring, you know, for investors to, to hear that. I think, you know, in order to, to generate that demand, intel still has to execute. Let's keep in mind that margins for Foundry are still in negative territory. Gross margins are probably also still in negative territory. So they still have, you know, a lot of progress to make to end up in a situation where they can actually really invest that Capex with the confidence that they're going to be able to sell those wafers and turn the profits out of selling those wafers. Now in addition, you know, like you alluded to the $20 billion comment. A lot of that is going to be of course for, for equipment because as I mentioned, they have a lot
- [11:07]
Ed Ludlow
of tools, not space. Yeah, tools, not space.
- [11:11]
Antoine Skyburn
Yeah, exactly. For we provide equipment. And now the question is what happens in 2027? And for that I think it's still open ended. You know, it depends on whether they can keep improving those yields, keep improving the cost structure of these wafers and get into positive margin territory for foundry.
- [11:29]
Ed Ludlow
Let's widen this out to what's happening in infrastructure. What do we learn from Intel's print about the AI cycle?
- [11:39]
Antoine Skyburn
Well, of course, like the DCI print is impressive, like they're growing nearly 60% the DCI business. I think an interesting data point is that intel also still has a lot of room, you know, to, to improve, you know, the roadmap on the XPU front. You know, we're talking about like a 2 billion run rate today for like everything that's not CPUs. You know, in the DCI segment they think they have visibility to 4 billion that's like orders of magnitude, you know, smaller than for example, like an Nvidia that's approaching a $400 billion annual run rate for their data center business. So I think that's, that's an interesting data point also that intel still, you know, has plenty of opportunities maybe to gain some momentum there on the CPU front. I mean it's an excellent read across for AMD if, if, if intel is growing that's that quickly despite I think a roadmap that's not that competitive. Like if you look at the density of the, of the chips that they're putting out, like the number of threads, number of cores, which nodes they're manufactured on. I think, you know, AMD has a much stronger roadmap. So it's definitely a strong read across for AMD on the CPU front.
- [12:58]
Ed Ludlow
Anton Scribe and of New Street Research back on Bloomberg Tech, thank you very much. Coming up on the show, Scribe Therapeutics, the company behind gene editing, CRISPR technology, IPO today. And look who's joining the show. Scribe Therapeutics Co Founder Scientific Advisor Jennifer Doudna. That's next. This is Bloomberg Tech.
- [13:23]
IDA Ireland Representative
With the highest number of young STEM graduates per capita in the eu. Ireland has the people and skills your company needs to succeed here. IDA Ireland, the national investment development agency, can help you find and nurture the people you need to internationalise and thrive. Our talent is just one of the extraordinary benefits Ireland has to offer. Learn more@ida ireland.com invest in extraordinary
- [13:52]
Public.com Advertiser
support for the show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip manually sweeping idle cash Putting on a hedge on Public you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public
- [14:48]
Public.com Disclosure Announcer
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- [14:52]
Andrew Feldman
Member FINRA and SIPC Advisory Services by Public Advisors, LLC.
- [14:56]
Public.com Disclosure Announcer
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- [15:02]
Optum Representative
let's talk about health care for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling the system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in home care. And then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients and those prescriptions. Optum is working to bring costs down, save patients money and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how.
- [16:08]
Ed Ludlow
Jennifer Doudna won the Nobel Prize for pioneering gene editing technology, crispr. Today, Scribe Therapeutics, the company she co founded, just raised 128.7 million in its IPO for a much bigger ambition, using CRISPR to prevent heart disease. Scribe Therapeutics co founder and scientific advisor Jennifer Doudna is with us now. I've been reading so deeply about this. I think the best place to start is that your lead therapy aims to lower LDL cholesterol with just a single treatment, but distinct. And unlike earlier gene editing approaches, you say it does not permanently edit a patient's DNA. Explain why that's such an important distinction and move forward in the technology.
- [16:53]
Jennifer Doudna
Well, great to be here, Ed. It's an exciting moment in gene therapies because as you just said, Scribe Therapeutics has a strategy that involves what we call EPI editing. It means making changes in DNA that aren't permanent, but alter the production of proteins. And we think this is an incredibly important moment in the field because it means we can now use this therapy safely and effectively for common disease.
- [17:20]
Ed Ludlow
Jennifer, may I ask, you know, in any ipo, there's obviously a reason to do it and raise the proceeds. Right now we where are you in the cycle in the process and what will you use those proceeds for?
- [17:33]
Jennifer Doudna
Well, Scribe Therapeutics is a clinical stage company. We're already in our phase one trial for the first indication. The funds that are raised today will help move that forward and progress these therapies so that they can be deployed much more widely.
- [17:49]
Ed Ludlow
At the start of our conversation, you explained that the technology difference when it comes to regulators, how important is that distinction going to be versus the sort of permanent editing of one's DNA?
- [18:03]
Jennifer Doudna
Well, Scribe is a company that was really founded on great science and has an amazing scientific team. They've invested the last several years in improving the technology to the point where it's safe and effective to treat disease as a, as a strategy for making non permanent changes in DNA. So we think that this is going to be an effective way to prevent cardiovascular disease in the future that will be so safe that you can provide it much more broadly.
- [18:37]
Ed Ludlow
That's what we're talking about. You know, let's bring it back to basics. Heart disease. And it's amazing, you know, millions of people across America and across the world take statins, right, Every single day. But then, you know, there's a lot of evidence, a lot of data to support that. Then they stop. And this is a one single treatment that you're working towards and I wonder just how important that will be for the behaviors of the patients receiving it.
- [19:05]
Jennifer Doudna
Right. We think about this a lot. I think it's very interesting to think about a way of treating or preventing disease that doesn't require taking a pill every day.
- [19:14]
Michelle Got
Right.
- [19:14]
Jennifer Doudna
That is really effectively a one or few time treatment. That means that people are free of having to remember to take a pill and they don't have to worry about those kinds of side effects. It's a really interesting moment Where I think we're going to see a real change in the way that medicine is delivered in the future.
- [19:34]
Ed Ludlow
When the Bloomberg Tech audience hear the phrase gene editing, you know, inevitably people have concern, right? What is it from a safety perspective that they need to understand?
- [19:46]
Jennifer Doudna
Well, the CRISPR technology is built around a strategy for targeting DNA. Precisely. With any technology, there's always risk. But I think what's exciting about Scribe's approach is that they've invested several years in ensuring that their, their strategy, this EPI editing approach, is really truly safe and effective for the indications they're going after. And as we discussed before, this is not a technology now that makes a permanent change to DNA. And I think that's a real difference.
- [20:16]
Ed Ludlow
You had one of the most interesting and engaging conversations I've listened to this year with Bloomberg's Emily Chang on the circuit, and you talked about AI and you had a level of skepticism about where I really is today, today, across drug discovery, its utility in your field. I know it's not been that many weeks or months, but have you changed your mind? Do you still hold that position on the limits of AI in your field right now?
- [20:43]
Jennifer Doudna
Look, I think AI is an incredible tool. It's an amazing technology that allows scientists now to accelerate the kinds of work that we do. That being said, it doesn't replace scientists. We still need innovators. We still need creative people. We still need the new ideas that come out of left field. And we don't see that with AI. We see it being a great way to accelerate our ideas and make it possible to do things faster. And I think it's a great partnership.
- [21:11]
Ed Ludlow
Jennifer, bear with me if you would, but we have some headlines that are just crossing that right now. Scribe is indicated to open at about $29 a share. The IPO priced at 15. So interesting because this was a difficult environment for biotech IPOs. We're also learning that the allocation about 75% of the shares to just 10 investors reflect on that. I mean, this must mean a lot to you, but clearly, you know, investors are very receptive to this.
- [21:42]
Jennifer Doudna
I think our investors really get this technology. They understand what's different about what Scribe is doing. They understand the quality of the this team, its leadership and its commitment to real science. And that's what we're seeing, I think, reflected in the marketplace.
- [21:57]
Ed Ludlow
Scribe Therapeutics co founder Jennifer Doudna. Thank you very much for your time here on Bloomberg Tech. Story. I just want to bring you real quick in the markets. BlackRock began marketing $12.3 billion of high grade bonds to fund a Meta data center project Testing Investor appetite this is Concerns grow about excessive infrastructure spending, a source told Bloomberg. The bonds are being offered by Soap Apollo investor holding company tied to blackrock and JP Morgan Chase and Morgan Stanley are running the offering, which is expected to price next week. It's time for talking tech first up, the EU escalated a probe against TikTok, accusing it of failing to protect the safety and privacy of teen users. The commission said TikTok's custom accounts for users under 18 can be easily found and viewed by other people online, which goes against the Block's content moderation rulebook. Plus, SoftBank is considering an acquisition of Gravis Robotics in an effort to target the AI technologies underpinning robotics, according to sources. A deal could ultimately value Gravis at more than $500 million, and SAP reported stronger than expected cloud growth as more customers adopt AI powered enterprise software. Bloomberg spoke with CEO Christian Klein earlier about that, but also how AI tokens are now managed like any other business expense.
- [23:28]
Christian Klein
In the R and D costs you see, you know, a higher token consumption as we are using AI to code additional features, but especially now additional agents, but vice versa. You also see a huge productivity increase of 30%. Obviously we are also managing tokens as part of our cost budget. You have a headcount budget, you have third party budget and you have tokens. So our managers in R and D in the go to market space, they have one budget and they have to manage that also according to the productivity assumptions we reflected in the budget.
- [24:03]
Ed Ludlow
After two postponements, all eyes are on Space X's Starship test flight today. The mission includes upgraded Starlink satellites that will intentionally burn up during re entry. The launch comes as Space X makes a major strategic bet on Starship. Bloomberg's learned the company is already turning away some potential Falcon 9 customers beyond 2028 as it shifts resources to its next generation rocket. That's all according to sources Bloomberg. Sana Pashankar broke the story and joins us now. Really interesting to work with you on this one. There's a lot of detail in there, right? Tell us about what we've learned. Space X's attitude is to those satellite companies coming to them wanting either a dedicated ride on Falcon 9 or a ride share ride. What do we know?
- [24:52]
Sana Pashankar
So what we know and what we've been hearing from sources and customers is essentially that Space X is fully booked through 2028 and they're turning away customers for dedicated Falcon 9 launches past that time point. So a Dedicated launch is when a satellite company will buy the entire rocket and launch multiple of their satellites to orbit. And they're also turning away customers for their rideshare missions, which is when multiple satellite operators can all, you know, put one or two satellites and hitch a ride to orbit to test satellites or if they only need a couple to get to space. And yeah, this is a really big deal. For a long time, Falcon 9 has commanded a near monopoly on the launch industry. It launches more than any other rocket in the world. So it's a, it's a pretty big deal that they're, you know, halting these reservations for now.
- [25:48]
Ed Ludlow
Son of the background point, not just in our reporting, but tonight as well with the test flight is Starship matters. Very quickly explain why starship matters so much.
- [25:57]
Sana Pashankar
Starship matters because it's key to Musk's ambitions for Space X, which are to, you know, build data centers in space. It's key to expanding the Starlink communications network and it also will be the vehicle that is intended to land humans on the moon and Mars.
- [26:16]
Ed Ludlow
Bloomberg Santa, passion car, really top reporting. Thank you very much. Hey guys, welcome back to Bloomberg Tech. It's been a jittery week, at least through the lens of technology markets. The NASDAQ 100 on a five day basis or over the course of the trading week, it's down about 810 of 1%. But it's actually on track for two straight weeks of declines, something that hasn't happened since the end of March and the index itself at its lowest level since the first week of May. A lot of that's the earnings story. There has been a lot in the world of AI about security incidents, about the debate on closed versus open and a lot of industry moves as well. Capex in AI infrastructure has been a dominant theme, but it really is on the the AI and software side where we focus. Major tech leaders took to social media to tout the benefits of open weight AI models in a letter signed by Nvidia Metta, Microsoft, Andreessen Horowitz and many others. This comes as Moonshot's Kimmy K3 has been shaking the AI industry just this week, spurring discourse on China potentially using US Technology to get ahead in the air race. Michelle Got a CEO of the Crack Institute Institute for Tech Diplomacy at Purdue and also a former Assistant Secretary of State for Global Public affairs under the first Trump administration, writes the US Won't be able to win the race simply by limiting China's technology. And joins us now. And frankly that's, that's where the debate is. You know, you will have seen the headlines this morning and the open letter essentially on open weight, the timing of that, there must be a reason for for it.
- [28:02]
Michelle Got
Well, what I think you're actually seeing, Ed, is a really good example of Silicon Valley in Washington D.C. talking past each other. Because if you look at that letter, the real debate isn't about open weight models. It's about Chinese open weight models, which unfortunately are the most available, most price effective option that's on the table right now. And especially for a lot of new businesses and startups that are trying to build their AI stacks. And so the real debate is on Chinese open weight models. And the problem there, right, is no, that presents national security risk. We know it presents corporate risk given all that we know about Chinese technology being untrustworthy. It's why we've banned Huawei. It's why we banned and then had to restructure Tick Tock. It's why there's legislation moving through the House right now about banning connected vehicles that are coming from China. And so there's a pattern here. And I think the focus on what do we ban versus what do we keep open is actually misplaced focus by both the private sector and the US Government. The focus should be on how do we turbocharge America's open weight ecosystem so we have a world class, robust, really price effective offering for the rest of the world so we can diffuse American AI as fast as possible and not only overseas, but here at home where businesses are trying to.
- [29:20]
Optum Representative
I.
- [29:21]
Ed Ludlow
On the here at home bit, you know, I've read the open letter as many times as I could before we came to air. And I'm thinking, what is the concern? What catalyzed them writing it and putting it out? One take is the concern that Washington just overregulates open source models, right. In a way that is detrimental to American interests. Where do you sort of sit on that, that debate?
- [29:48]
Michelle Got
Yeah, well, I think it's because open weight models, cheaper open weight models, have become really core to a lot of how businesses are developing their AI stacks. As you mentioned earlier, we just saw a big tech wipeout, $890 billion because AI is really expensive. Everybody is looking to see if we can keep up with this spending bubble. And so the cheaper, good enough versions are really important for a private sector to be building their AI stacks. The problem is it comes from an adversary and there is no really robust US trusted alternative to the Chinese open weight models that we're seeing. And then the Kimmy 3 launch this week catalyzed our awareness of that. And so the debate now is, is not really just open weight, it's Chinese open weight. And can we get an American alternative out there fast?
- [30:33]
Ed Ludlow
So Nvidia CEO Jensen Wong did a sort of an extended interview of Axios and, and basically said, you know, the top lines are that the Chinese models are excellent and that the open source models that are excellent to should be used. And so, you know, based on your line of argument that the risk is too great if the open model comes from an economic adversary. It comes down to how influential is Jensen Huang with this administration.
- [31:02]
Michelle Got
Well, I actually think it comes down to how fast can you we turbocharge an American open weight ecosystem. Look, all the things that he's in other Silicon Valley leaders are saying make sense. If you're looking at this purely through an innovation and a commercial lens, it makes a world of sense. If you then factor in the communist adversary lens, the risk calculus looks a whole lot different. And that's why these technologies are different. Look, we just spent the better part of a decade with businesses thinking about how they decouple and they de risk from China because of the supply chain risk, the financial risk, the corporate risk, the national security risk. And now we're talking about entrenching Chinese technology into the very foundation of our American companies. Stacks like that makes no sense. And so how do we focus instead on getting trusted American AI, cheap, effective, price effective AI into the hands of American companies. Companies and as much of the world as possible. That's where the focus needs to go.
- [32:02]
Ed Ludlow
Let's go back to the beginning. You know, your argument through the lens of policy research, reflecting on your time in government, is that at the end of the day, America won't win the race by restricting China. So you indicate that America needs to be proactive in its own approach, get its own house in order. How far does today's action go? What else needs to be done?
- [32:26]
Michelle Got
Yeah, I think, look, the President has this great group on his presidential advisory board with a bunch of technology leaders. I think they should get in a room as quickly as possible and figure out how they go on offense really quickly with American open weight AI. And by the way, get all of our allies on board. Because even if we ban and limit the use of Chinese technology, Chinese AI models here, if we're using AI models from America here, but the rest of the world is running on a Chinese AI stack, it's still a problem for us. And so I think they can rally around that. And look, we have a lot of lessons. When I was at the State Department, Huawei was a threat across the world and there's a lot of lessons to be learned there. And a big lesson is that we're not going to win on principle, we're going to win on price. So how do we get much more cost effective trusted American AI open weight models out into the world?
- [33:19]
Ed Ludlow
Now we're showing a post from Mr. Or Director Kratzios from a couple of days ago. We covered that story, the accusation that Kimik 3 was distilled from an anthropic model and used illegally. Nvidia Blackwell Systems. We've been over that. But just pointing that out that Mr. Kratzios is also the co chair of Picass along with David Sachs Jensen's on PCast, for example, Michelle Guy is CEO of the Crack Institute for Tech Diplomacy at Purdue. Back on Bloomberg Tech, thank you very much. So coming up, the air also shifts to speed. AMD and Cerebras unveil a new partnership and Cerebral CEO Andrew Feldman joins us next. Fast Inference this is Bloomberg Tech.
- [34:06]
Public.com Advertiser
Support for the show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public
- [35:02]
Public.com Disclosure Announcer
Investing Brokerage Services by Open to the Public Investing Inc.
- [35:05]
Andrew Feldman
Member FINRA and SIPC Advisory services by Public Advisors, LLC.
- [35:11]
Public.com Disclosure Announcer
Complete disclosures available at public.com disclosures let's
- [35:16]
Optum Representative
talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling the system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using Data and technology to drive the whole system so care is connected, not complicated for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in home care. And then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients and those prescriptions. Optum is working to bring costs down, save patients money and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how the
- [36:15]
IBM Representative
thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across hr, IT and procurement processes, we've reduced cost by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM.
- [36:51]
Ed Ludlow
Shares of Cerebra Systems are down about 10% right now. They had jumped yesterday on some news that AMD is teaming up with Cerebral Systems on a new server designed to slash response times, taking direct aim at Nvidia. Joining us to explain the deal, the technology, Andrew Feldman, co founder and CEO of Cerebra Systems. So this is how it's going to work. You basically have a Helios server and a Cerebra server in combination. How is that going to work and what is the sort of split on the workload?
- [37:28]
Andrew Feldman
Sure. Good to be back. Thanks for having me. The way to think about it is that the inference problem is comprised of two parts. The we call the first part processing the prompt, and we call the second part generating the answer. And those two parts of the problem have very different computational requirements. And that opens the door to address them with two different machines. The processing of the prompt, the analyzing the query, that part is a problem that can be parallelized. And for that type of work, GPUs are very, very good and Helios will be the best. The second part of work, the work which is generating the answer at an extraordinary speeds. Cerebrus is the best in the world, bar none. And so by bringing these two solutions together so that the Helios processes the prompt, Cerebras generates the answer. We create a single inference flow that is the fastest in the world and has this extraordinary throughput put.
- [38:44]
Ed Ludlow
You know, Andrew, I'm not trying to. I'm not trying to to make a scandal or a negative out of it. But like for you, like how does the sales channel work? Right. So AMD has like this pipeline of projects and those that infrastructure is like okay, we're going to use Helios systems, but now they can also get the Cerebras server alongside it. How have you guys agreed to split the revenue news? How have you guys agreed to do this in a way that is economically equitable? You know, it's a really interesting deal.
- [39:16]
Michelle Got
Sure.
- [39:16]
Andrew Feldman
I think speed makes markets bigger, it doesn't make markets smaller. This isn't about carving up something that's of fixed size. Right. Fast, fast inference is productive inference and where is productive people are willing to spend more and more, more and more. And so the first application of this solution will be in the Cerebras cloud and that will be later this year and shortly thereafter it will be available more generally, I think we have an enormous backlog. They have an enormous backlog. I think we have customers around the world where, who are demanding fast, fast inference at extraordinary scale. And the solution we're building is head and shoulders above anything else.
- [40:08]
Ed Ludlow
I find the technology approach really interesting. You know the, the parallel example is in video and Grok with A Q&GROK3LP X and like in that case it's integration of the GROK system into the same server design. Right. You didn't take that approach, did you talk about that like, you know, what were the options on the table?
- [40:31]
Andrew Feldman
Well, we don't quite know what, what, what Nvidia is doing. They haven't really delivered it to market yet. And so we, we, we are interested to see how that works out. What we were able to do because we use open standards based technology for our IO, we were able to build a solution with, with AMD quickly and easily because we sort of support open standards. Remember we've also done this with, with training from us and so we adopted the same approach that by being open, by being standards based. Right. Half the leading chip makers, AMD AWS with Trainium, are now using our solution in a disaggregated approach for high speed inference delivery. So I think the answer is by, by being open and by being standards based we can rapidly partner with other members of the ecosystem.
- [41:44]
Ed Ludlow
You've also been a busy guy. We were talking off, off air about how busy everything is. You know, you just did a very big ipo. Kind of interesting to know like who approached who? Whose idea was this?
- [41:57]
Andrew Feldman
Look, I've known Lisa for a long time. She was CEO when When my last company was acquired by amd, I watched sort of her do extraordinary things with that company. The returns over her, her tenure as CEO are mind boggling. And so we are in constant communication. We are close with her cto, Mark Papermaster. These are people we've known for decades. And so we're, we're in constant communication talking about how we might collaborate, what we might do together. And this was an idea that emerged from those discussions and made perfect sense
- [42:38]
Ed Ludlow
in the Nvidia Grok with a Q example which I appreciate, not your companies like completely separate but you know, the mechanism was an acqui hire. As you know prior to your ipo, we reported at Bloomberg that some of the fabulous chip names held talks or interest, expressed interest in, in also acquiring Cerebras prior to its listing. Did you discuss any of those kind of mechanisms with Lisa about the merits of her making an equity investment or some of the structures that AMD has deployed in other of their arrangements?
- [43:13]
Andrew Feldman
Sure. AMD has been an equity investor for quite some time. They were an investor in, in some of our, our mid and later stage rounds. And so, so we have been talking with them and, and engaged in discussions on how we might work together for a long time as we are with, with many of the players. And that's the advantage of being open, that's the advantage of not being a walled garden. That's the advantage of not having a proprietary IO technology but using standards based high speed Ethernet technology. We can engage with with amd, we can engage with us, we could engage with Google, we could engage with anybody who builds a part that would integrate into an extraordinary solution.
- [44:05]
Ed Ludlow
Andrew, really quickly I had a long conversation with SK Group chair Taiwan very recently and he said basically the difference between China's approach to AI and the US is China's going for the lowest dollar per token, whereas America is still in a place where it's focused on, on the highest quality tokens. From the non HBM standpoint. Would you kind of weigh in on that?
- [44:26]
Andrew Feldman
Yeah, we. Right. So we don't use HBO and that's one of the real advantages we have. So we can generate tokens for, for less because we're not dependent on this sort of supply chain constrained part.
- [44:42]
Ed Ludlow
Right.
- [44:43]
Andrew Feldman
I think it's unclear whether the Chinese model makers are actually developing for less or piggybacking on technology that other people have invented.
- [44:56]
Ed Ludlow
Right.
- [44:56]
Andrew Feldman
I think that's an open question what I don't have the answer to, but I know there's some very strongly held views that they are Stealing, distilling, I'm not sure. But what I do know is I don't understand their cost to build these models.
- [45:13]
Ed Ludlow
Right interest.
- [45:14]
Andrew Feldman
Open AI is one of our larger customers. We do have an understanding of the amount of compute they need to build and we have an understanding of the amount of compute that other frontier U.S. labs have. We don't really have an understanding of what the cost is. So the question is really are they making lower cost AI because they're borrowing other people's technology or do they have some really interesting inventions that allow them to, to make AI for, for less? That's an open question and one that relates to your previous segment and what we should do about that if it is the case.
- [45:49]
Ed Ludlow
And very, very quickly, you've seen the lesser. This morning leaders in US Technology emphasizing America's need to focus on open weight. Do you have a viewpoint on that?
- [45:59]
Andrew Feldman
Look, I think right now the market's been made by OpenAI with a fast follow by Anthropic and they have invested an enormous amount of money, a mind boggling amount of money and they have, they have made this market. And I think the followers both from, from China and others are trying to capture this with a fast follow strategy. And I think it's, it's unclear to me what the right approach is. I think obviously we want lower cost AI. What we can control at Cerebras is by building like we're doing with, with AMD solutions that deliver more tokens per unit power, that deliver more tokens per dollar, that deliver those tokens faster so they're more productive, so you can pay more. Right. The problem isn't that tokens are expensive. The problem is that it's hard to measure how much productivity you're getting from tokens. And what we know is that when you make things faster, they drive up productivity. And so these are the dimensions we can work on Ed. And we're, we're diligently working on them every day.
- [47:12]
Ed Ludlow
Andrew Feldman, Terribly Systems co founder and CEO. Thank you very much. With stocks soaring this year, Viking Global investors told clients that its conservative position on the sector sector was a quote, missed opportunity. The firm's flagship hedge fund gained just 2.6% in the first half of the year, trailing peers with greater exposure like CO2. And yet the firm doesn't plan to change course. Bloomberg's Hema Palmer broke the story. So they're sticking to their guns, but the performance is trailing their peers.
- [47:41]
Hema Palmer
Yes, a really interesting stance from Viking Global. This is a hedge fund that manages $56 billion. And they're taking a divergent view from what we're seeing from many of their peers that are really jumping on this AI beta market. And meanwhile CO2 really a lot more cautious, not partaking in a lot of these stocks. And we're seeing this in their performance with their hedge Fund up about 7.5 in the second quarter, but still only up 2.6 for the full year so far. And that's a great degree less than many of their competitors. Competitors.
- [48:16]
Ed Ludlow
So if they're not budging and they acknowledge kind of the performance and a missed opportunity, is it that they see some opportunity in their current positioning that's going to change their fortunes.
- [48:26]
Hema Palmer
So they're very concerned about the risks that they see in the markets. So they're concerned that we could see potentially a correction, some sort of sudden shock that curbs buying of these stocks that are highly popular. They're worried about the valuations that, that they're seeing. So they do partake in some investments. They are a buyer of Samsung, which has worked out really well for them. But a lot of their portfolio is in other things like consumer financials, industrials. And some of those stocks, some of those trades really aren't working as well as they would hope. Some of them, the firm says to investors, is potentially being unfairly considered an AI leader loser.
- [49:08]
Ed Ludlow
Very quick hammer. Historically good performance of Viking or bad
- [49:12]
Hema Palmer
performance, you know, historically strong performance. And because of their cautious tone a couple of years ago in 2020 and 2021, that saved them from a lot of the troubles we saw amongst their peers in 2022 when we saw that stock market crash when it came to tech stocks and private valuations. And now it saved them then. Investors may be hoping if there's a correction in the future, it'll save them. Today.
- [49:34]
Ed Ludlow
Bloomberg's Hammer Palmer with a must read. Thank you very much. That does it for this edition of Bloomberg Tech. What a week. More tech earnings coming up next week. This is what it looks like. Recap on the pod. I really recommend some of the conversations throughout today's show. This is Bloomberg Tech.
- [49:52]
Optum Representative
Health care doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person how you need it. Optum is helping make healthcare work as one for everyone. Learn more@business.optum.com these days it seems like
- [50:23]
Public.com Disclosure Announcer
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- [50:55]
IDA Ireland Representative
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