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Ed Ludlow - Bloomberg Tech Host
this is Bloomberg Tech. Coming up, Space X is selling investment grade bonds for the first time following its record breaking ipo. We'll have the details. Plus Micron strikes an AI infrastructure agreement with Anthropic to drive enterprise adoption and a lot more. And chevron signs a 20 year deal with Microsoft to power a West Texas data center. Could be one of the biggest in the US. Good morning. Monday, June 22, 2020 6X's inaugural bond sale. This is about repaying their existing debt, funding corporate needs and Bloomberg's reporting has been spot on. What we understand is that right now you have the same banks they've been working with on their existing financing going out, holding investor meetings, gaining gauging appetite. But we believe that they'll look at maybe raising around $20 billion through this mechanism. By the way, the stock is down for a third straight session, down 10% this Monday, trading below $170. Remember, this is an IPO that priced on June 12th June 11th traded June 12th $135 a share. Now why would a company sitting on $100 billion and more of cash need to tap the corporate debt market? Bloomberg Intelligence writing that quote, despite operational questions and considerable key man risk, they expect SpaceX's debt issue to be very warmly received. There's only one man for the job. Bloomberg Intelligence senior credit analyst Robert Schiffman. That's the story, right? Why would a company that has $100 billion of cash on hand do this? Explain.
Robert Schiffman - Bloomberg Intelligence Senior Credit Analyst
Well, I didn't think I could be more bullish, but every day I wake up and show up at Bloomberg, I'm more and more bullish on AI and I think this deal is just going to support that. You know, why do they need to raise more money? It's because over the next handful of years they're probably going to spend a lot more than $100 billion. In fact, their free cash fl probably going to be a lot more than $100 billion on the negative side. So they're going to need money because they're building the next hyperscaler business in space.
Ed Ludlow - Bloomberg Tech Host
Let's go to the investor demand or appetite for this. We had reported even prior to the IPO that SpaceX had managed to get investment grade ratings from, from the three main agencies. And in your react, you basically say this is how we think they'll stack up relative to their hyperscale peers who have a greater rating still. Why does all of that matter?
Robert Schiffman - Bloomberg Intelligence Senior Credit Analyst
Well, listen, nobody owns Space X right now from the bond side, so there's going to be enormous demand. When you have an inaugural bond offering like this, it's going to be a feeding frenzy. And quite frankly, I think three quarters of the people that are going to buy the bond aren't even going to know what this company does. It's going to be very much of a buy now, ask questions later. But what do they have supporting them? They've got very strong stable investment grade ratings. You do not have to worry about this name going to jump. You've got perhaps the greatest investor of our generation, Elon Musk, who I think has replaced Warren Buffett. And you have $100 billion of cash sitting on the books, plus tremendous upside across a diversity of businesses. My sense is if they raise 20 odd billion, you're going to have a book size that's well north of, of $100 billion.
Ed Ludlow - Bloomberg Tech Host
You mean the demand, $100 billion demand for $20 billion of supply. Just real quick, like trying to compare and contrast the equity story. The stock's down 9%, $167 a share for the equity investor. They read the prospectus, they listen to Elon Musk and everything that's being pitched is very far into the future. But is the kind of common denominator between the equity investors approach and the credit investors approach? Space X Trying to understand the path for capex. Does it work the same way?
Robert Schiffman - Bloomberg Intelligence Senior Credit Analyst
Listen, equity and credit are different. Equity is based on hope and future cash flows. Credit generally is based upon present cash flows and what leverage looks like right now. I actually do think that those are going to somewhat come together over time. This company is committed to reasonably low leverage below three times. They're committing to having $25 billion of cash on the books for the foreseeable future. And there's a hope of just absolute tremendous growth. Quite frankly, it's not so different than what Microsoft or Alphabet or Amazon is doing. And just remember in the early days of names like Amazon, they lost a lot of money too. You have to spend money to make money. This is what this company is doing. I think the bond market's going to be there to fund it and I think the equity market, when you start thinking about valuation, as all these revenues in particular come in, remember this company is going to transition from what is a satellite data business and aerospace and defense business to what's going to be a hyperscaler in the sky. I think there's nothing but upside when it comes to revenues and cash flows for this business. So bondholders and credit holders will sort of all be looking at the same thing a few years from now.
Ed Ludlow - Bloomberg Tech Host
Bloomberg's Robert Schiffman, senior credit analyst at Bloomberg Intelligence. Thank you very much. We talked a lot about Space X
Bloomberg Audio Producer/Technician
so far this morning.
Spencer Soper - Bloomberg Reporter
Morning.
Ed Ludlow - Bloomberg Tech Host
But the bigger market story is this return of tech leadership.
Bloomberg Tech Correspondent
Right.
Ed Ludlow - Bloomberg Tech Host
Chip stocks outperforming and leading again. Software continues to lag. There's a lot of focus on lower energy prices, what's happening in the Gulf and that supporting the growth trade. Joining us, senior Portfolio manager Tiffany Wade at Columbia Fredneedle. There's a lot to kind of put together in this morning's session, but again, technology continues to be the story in this market. Is that true for you?
Tiffany Wade - Senior Portfolio Manager, Columbia Threadneedle
Yes, that's absolutely true. We did see tech stocks take a bit of a breather, including semi stocks last week, but they're off to the races again this week and that continues to lead the market higher.
Ed Ludlow - Bloomberg Tech Host
Of course, for for investors of all types, the outlook for monetary policy and rates is important. It was really interesting. Nouriel Roubini on Bloomberg Television earlier basically saying now it's still tech. Just listen to this real quick. People obsessed with the fed, whether it's
Bloomberg Audio Producer/Technician
50 basis points higher with is right now.
Ed Ludlow - Bloomberg Tech Host
What's the difference?
Bloomberg Audio Producer/Technician
The key story is tech boom and
Paul Bagwell - Altimeter Capital Partner
that's going to be the most important first order impact of anything else.
Ed Ludlow - Bloomberg Tech Host
You know Tiffany, I grew up in the Bloomberg newsroom school of well, you got to understand the rate environment because higher rates discount the present value of future cash flows and future cash flows are one way that we measure the health and valuation of technology companies big and small. Small does the Fed really matter at all?
Tiffany Wade - Senior Portfolio Manager, Columbia Threadneedle
I think the Fed still matters a lot and it matters a lot for tech stocks as well. It matters a lot for high growth stocks. We did see a slightly more hawkish Fed meeting last week. Kevin Wash his first Fed meeting. However, you know, quite a bit has changed since the data they were looking at last week, including the MOU between the US And Iran. So I think we might see potentially some different news coming out of the next Fed meeting if oil prices continue to normalize.
Ed Ludlow - Bloomberg Tech Host
And in the background, of course, for the Bloomberg Tech audience, you know, there, there are headlines coming from the vice president and his participation in the talks between the United States and Iran. We're very soon going to start talking about earnings again. And I just wondered, Tiffany, from from Columbia thread, Neil's perspective, how important earnings momentum is going to be for for a market where technology continues to dominate?
Tiffany Wade - Senior Portfolio Manager, Columbia Threadneedle
We're going to get a first read on that from Micron this Wednesday. I think that's going to be very important to see if the momentum from these stocks can continue. We're going to want to see continued revenue upside from a lot of the semiconductor stocks. And we're also probably going to want to see continued capex, positive capex comments from all of the hyperscalers that will help keep the spending party going. For all of the associated infrastructure names related to build out.
Ed Ludlow - Bloomberg Tech Host
It's really hard in aggregate to kind of say where's the beginning, middle and end here. You know, I think you'd note right Tiffany, that last week some of the chip stocks, the picks and shovels took a bit of a breather and off we are again today with the Philadelphia Semiconductor Index outperforming and a gauge that's up 90% year to date. How long can that carry on for?
Tiffany Wade - Senior Portfolio Manager, Columbia Threadneedle
I think we're going to see this continue for another couple of quarters. The outlook for these stocks related to infrastructure spending is tremendous and the revenue and earnings estimates continue to be revised higher. And I think as long as that continues. You'll continue to see these stocks working. And some of the announcement we've seen, you know, with Micron, Anthropic and then also around, you know, Microsoft and, you know, more datacenter spending in Texas continues to, you know, reinforce the story that this spending is going to continue for another couple of years and probably continue at a faster pace than it has been for the last one or two years. So I think we'll continue to see those positive earnings revisions that will continue to push the stocks higher.
Ed Ludlow - Bloomberg Tech Host
We started the program today talking about Space X is inaugural bond sale, but I just use that as a case study that with capex both in equity, the market's being flooded, right? Alphabet doing its offering, the use of corporate credit to fund what's going on. How closely are you tracking these companies going to market to get the capital they need to fund these big commitments?
Tiffany Wade - Senior Portfolio Manager, Columbia Threadneedle
We're certainly focused on the outcome of these bond sales because I think it's an indicator of the appetite for the market for the amount of capex spending that the companies are doing. It's also an indicator of future capex expectations. So as those bond sales continue to increase in size, it can, you know, it means that capex spending intentions continue to rise. So it's certainly something that we're watching to indicate the health of the CapEx spending cycle and also the intention of a lot of the large companies around additional spending for infrastructure.
Ed Ludlow - Bloomberg Tech Host
Tiffany, real quick, what's the next thing you're watching for on your calendar?
Tiffany Wade - Senior Portfolio Manager, Columbia Threadneedle
I think it's probably earnings. Micron this Wednesday is certainly a big one that we'll be keeping an eye out for.
Ed Ludlow - Bloomberg Tech Host
And there's been some news this morning about Micron and a deal with Anthropic, which we'll get to later in the program. Tiffany Wade of Columbia Threadneedle back on Bloomberg Tech. Thank you very much. Now coming up, Matter invests $900 million into an Indian fintech startup called Cred with plans to appoint its founder as the new leader of WhatsApp. We've got more on that story next. And sticking with big tech names, also taking a look at shares of Alphabet, parent of Google, down 6% in the session, biggest drop since February. As it stands, a lot in the news flow has been about the departures from various parts of Google's AI initiatives. The latest being prominent AI researcher Google DeepMind vice president John Jumper said Friday he was leaving for Anthropic. That seems to be weighing on this stock. We'll keep tracking it. This is Bloomberg Tech.
Tiffany Wade - Senior Portfolio Manager, Columbia Threadneedle
All right.
Ed Ludlow - Bloomberg Tech Host
Some headlines have just crossed the Bloomberg terminal. Space X appears to have signed a deal with reflection AI worth about $6.3 billion. That's according to some reports out there. I think the company has also just put headlines out of its own. SpaceX can end the deal after three months and Reflection is set to pay Space x150 million per month for that compute as part of the deal. It didn't really do much to ease the pressure on the stock which is again down for a third straight day, but still above it's IPO price, $135 a share. Big Tech is turning to big oil to meet the electricity demand of the boom. Microsoft has signed a 20 year deal with Chevron to build a massive natural gas fired generating station for a proposed data center in West Texas dubbed Project Kilby. The power plants expected to power up by 2028 boomers. Kevin Crowley joins us for more from Houston. The scale of this is, is, is on paper pretty big, right? So it's talking about ramping up to about 2.6, 2.7 gigawatts. What do we need to know about this and the natural gas part of it? The Permian West Texas, Very interesting.
Kevin Crowley - Bloomberg Reporter
Yes, exactly. Well that's the, that's the key part of this. It's a huge power power plant to fund an enormous data center. But the really important part is it's right in the middle of the Permian Basin which, which many people know is, is the biggest oil fields here in the US but with all the oil that comes up, there's an enormous amount of natural gas that also comes and there's so much natural gas within the basin that actually often overwhelms pipeline capacity and has to be either burned off or companies have to pay people to take it away. So this is abundance of natural gas and that is what Chevron and Microsoft and their partner engine number one are looking to take advantage of here. They've got incredibly cheap natural gas that can, that can fuel the power station that will then power. This is big data center that Microsoft plans to build.
Ed Ludlow - Bloomberg Tech Host
You discuss in your report the bigger picture of what Microsoft's trying to do. Right. Microsoft has said it wants to double data center capacity of its own over the next two years. And in aggregate that's the direction that the United States is going in over the next decade. But they'd also had these prior commitments to match the sourcing of their power in terms of their commitments from renewable sources. This is natural gas. So how are they managing all of that?
Kevin Crowley - Bloomberg Reporter
Microsoft have said that they're pursuing kind of a diversification strategy. So, so they, they want, they want diversification both in terms of geography, but also in terms of fuel sources to renewables and natural gas. And I think they're pursuing nuclear as well. I mean, obviously natural gas is on, is on the fossil fuel side, so it does, does create a lot more, a lot more emissions. But we are seeing some of these big tech companies sort of diluting or walking away some of these prior commitments to 200% renewable energy just because of the sheer scale of the, of the demand and the ambitions that I design in AI that they have. There is, in this project, there are, there are guardrails to, to mitigate the emissions. And they do have plans to, to maybe build in some, building some solar, maybe some batteries at some point in the, in the future. But, but at the day, it's an enormous natural gas plant, so the emissions are going to, are going to be sizable. Associated with that.
Ed Ludlow - Bloomberg Tech Host
Chevron shares modestly higher. Microsoft shares modestly lower after this deal was announced. Bloomberg's Kevin Crowley in Houston. Thank you. Well, modestly, Microsoft's down 2%. Turning now to more news in big tech. Matter is shaking up the executive suite at WhatsApp and is in part a massive $900 million investment into an Indian fintech startup, Cred. So Metta is tapping Creds founder Kunal Shah to step in as the new global chief of WhatsApp to build out new revenue streams for the messaging platform. Wagner joins us with the story. It's not straightforward, this. Okay, so basically the news is there's, there's a new head of WhatsApp. But the mechanism that matters used to get there is also interesting.
Bloomberg Tech Correspondent
It is, and you're right, there's two parts to this. There's the investment part in CRED. There's the new executive for WhatsApp in Kunal Shah. And this is a strategy that you may be somewhat familiar with from Metta with this sort of like invest and recruit at the same time. This is how they got Alexander Wang from Scale AI last summer. They invested heavily in Scale and recruited Alex Wang at the same time. This is a very similar approach, smaller scale. This is a smaller investment than last summer's. But this is sort of their way of bringing entrepreneurs who have their own businesses who have, you know, a financial stake in a startup and enticing them to come work at a more established company like Metta.
Ed Ludlow - Bloomberg Tech Host
How's Meta sort of explaining this? You know, we put a lot of emphasis on the idea that WhatsApp can monetize in different ways, future revenue streams. Is there any kind of hint of what that looks like?
Bloomberg Tech Correspondent
Well, they're doing a handful of things right now, including ads, subscriptions, and business messaging. Those are sort of the three things that are going for revenue. What I think important here is that Kunal Shah being from India and having an Indian startup is not a coincidence. WhatsApp is huge in India. They see a ton of potential there from a business standpoint. And I think they thought that it was important to, you know, have someone very familiar with that market and very familiar with how WhatsApp is used in that region coming in and taking over. And so the hope is certainly that he can take those revenue streams that are sort of already in place, but, but grow them considerably in India, but also in other, other markets outside of North America.
Ed Ludlow - Bloomberg Tech Host
Bloomberg Tax cut Wagner with the Meadow WhatsApp story. Thank you very much. I want to go to China's battery metals market. Chinese lithium futures have plunged nearly 9% over the last two days over speculation that Seattle could soon restart one of the world's largest lithium mines. A preliminary preferred provincial land notice has some investors betting that the site may reopen in the second half of 2026. Now that supply volatility comes as Beijing tries to sharpen its geopolitical leverage over other critical minerals. Integral to making everything from iPhones to missiles. China has imposed new export controls on major U.S. rare earth producers, MP Materials and USA Rare Earth. The retaliatory move comes after the Pentagon blacklisted some of China's biggest firms earlier this month. Okay, coming up, Apple's design revival. Incoming CEO John Turner looks to restore the creative edge that defined the iPhone era. That's next. This is Bloomberg Tech.
EY Consulting Representative
You have invested in artificial intelligence. Maybe you have pilots or even proofs of concepts that show real promise. The next opportunity is scaling that success across the business. At EY Consulting, we help organizations redesign how work gets done so innovation can move beyond the nascent stage. By addressing architecture, operating models, and governance, we help AI deliver real, lasting value at scale. When AI fits how you actually work, that is EY Consulting.
IBM Representative
The 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 costs by millions, slashed 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.
Jake Silverman - Bloomberg Intelligence
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Yahara Anand - Bloomberg Tech Reporter
I'm Yahara Anand and it's time now for talking tech. First up, Tencent is giving WeChat an 8 upgrade. The company is testing a new assistant called Shallow with a small group of users, allowing them to complete tasks through text or voice. The move could bring AI to WeChat's more than 1 billion users and help Tencent compete with rivals like Alibaba and ByteDance in China's air race. Plus, Robinhood is looking to raise $2 billion through a convertible bond offering, tapping into a booming market for corporate fundraising. The company says about $300 million of the proceeds will go towards share buybacks, with additional funds earmarked for hedging transactions tied to the deal. And Lime is gearing up for its Wall street debut. The electric bike and scooter rental company is looking to raise up to $181 million in its US IPO, offering 6.7 million shares at Baton between 24 and $26 apiece. At the top end of that range, the Uber backed company would be valued at about $1.7 billion.
Ed Ludlow - Bloomberg Tech Host
Ed, thank you very much Jihyra Now Apple built its reputation on iconic product design, but the influence of the team behind the iPhone and iPad has faded over the past decade. Bloomberg's Mark Gurman writes in this week's Power on newsletter that the incoming Stage CEO knows a major design shakeup is needed and is getting ready to put his firm imprint on the team. Mark joins us now. And this is about the industrial design studio that in the era of first Steve Jobs and then Jony, I've for a very long time held a lot of power within the organization at Apple. What are you writing about in power on this changed? And why do you think the incoming CEO takes us back to that, that place of power?
IBM Representative
Yeah. Over the past decade or so, you've seen the Industrial Design Studio go from where exactly the future products are dreamed up, where the whole company would come in to rally around the next big thing leading to products like the iPhone, the iPad, the imac, the ipod, the Apple watch, you name it. And it's now more of a service organization where different teams, operations, engineering, they come in, they get what they need and they get out. It's no longer the central hub, the influential center of innovation for the company. And John Ternus knows that things need to be shaken up there. The head of the industrial design team, Molly Anderson, she's known as a great individual designer. She's known as someone who's beloved by her team. But it's not like Apple went out to look for, for the best industrial design leader in the world to take that position. They made that choice from a place of defense, not wanting more people to leave the team versus the perspective of a company that's worth $3 trillion plus that could go out and get anyone they want to lead design. In this post, Jony, I've era that's already been going on for nearly a decade.
Ed Ludlow - Bloomberg Tech Host
Mark, you've detailed recently the kind of roadmap on the hardware side for the but not just the rest of this year. But beyond that, is there a case study of where this, this kind of return to design focus plays out? We just have about 30 seconds.
IBM Representative
Yeah, I mean we would like to see bigger design changes. Right. For the first time in 20 years, you're going to have a meaningful shake up to the iPhone over the next few months with the foldable phone, which I'm calling the iPhone Ultra. But there's a lot more to be done. There's more, more product categories. Major changes are necessary to freshen up the AirPods and the Apple Watch. Those are categories that have essentially looked the same since 2016.
Ed Ludlow - Bloomberg Tech Host
Right. Blue Most Mark Gurman, who puts power on out on Sunday mornings and then comes on Bloomberg Tech Monday to go through it. Thank you so much. Coming up, Micron lands a key deal with Anthropic as AI demand keeps surging. Is so interesting to see Micron, a memory name, go direct to a frontier lab. We're going to go through that. This is what your markets look like. Kind of muted but outperformance in chips which has been the story of the year. Welcome back to Bloomberg Tech. Our top stories today, Space X is bond sale and Micron striking a partnership with Anthropic. Bloomberg's equity reporter Kyman Reichi here with details on both. Carmen?
Yahara Anand - Bloomberg Tech Reporter
Yeah, thanks Ed. So we're seeing a lot of red on the screen today here with Space X. Shares are down about 8% off the lows of the day. But if this continues, this will not a third straight day of selling in name after its record breaking ipo. So what we're seeing here this morning is that investors might be reacting to a few different things. One is this investment grade bond sale. The company look looking to raise even more money to spend on AI fund its sort of future growth after raising a record 75 billion in an IPO. The other thing we're seeing here is, you know, classic volatility that we see from IPOs, especially ones that have low float like we know is the case here for Space X. We also are looking today at shares of Micron. So this stock is looking a little bit better today, up about 4.4%. It's bucking the the broader trend down in the market today. What's happening this morning is that the company said that it has a strategic agreement with Anthropic. So it's going to work together on things like memory and storage architecture for AI and also gave some money to one of Anthropic's funding rounds. This company has been on an absolutely massive stock rally. The shares are up more than 260% from a March 30 trough here. And we're going to be watching this one one really closely because it reports earnings on Wednesday after market close.
Ed Ludlow - Bloomberg Tech Host
The invest common Reiner key. Thank you very much. Let's stay with Micron. Jake Silverman of Bloomberg Intelligence says Micron's new supply deal with Anthropic highlights just how tight memory chip capacity has become. He says major datacenter customers are increasingly locking in long term agreements to secure that supply. And Jake joins us now. This is the thing though. It's a deal between Micron and a Frontier Lab direct, right? Not, not the middleman that we call hyperscale. How unusual is that? How surprised were you to see it?
Bloomberg Audio Producer/Technician
It's definitely not typical for memory makers themselves to sign these kind of deals. But it's not necessarily uncommon for big customers to look for Supply assurances. Hyperscalers themselves have often done this. This in terms of how you think about wafer allocation from someone like tsmc,
Ed Ludlow - Bloomberg Tech Host
for example, in your react, you're talking about it being reflective of the situation, the state of play and how tight supply is. But this is good news for Micron, right? If you just go on the share reaction alone.
Bloomberg Audio Producer/Technician
Yeah, this is good for Micron in the sense that it gives them a little bit more visibility into the actual downstream demand, at least theoretically, based on what we're seeing from the agreement that they actually put out in their press release. So you know, Micron needs to build out capacity, right? The entire industry is supply constrained and this allows them to potentially build it out in a responsible way so that when anthropic is serving their customers, increasing their capacity not specifically of memory, but the chips to allow people to use their models. So now theoretically Micron can get an idea of exactly how many, how much chip demand there actually is.
Ed Ludlow - Bloomberg Tech Host
You write in the react. Note that this sets them up well for the next down cycle situation. You know, historically memory markets have been cyclical, right? Boom and bust. We talk about that a lot on the show. But there are loads of people that don't think there'll be a down cycle, you know, in the traditional sense because of the trajectory of datacenter building and investment. Just explain your point of view on that.
Bloomberg Audio Producer/Technician
Yeah, I think just if you look at historical trends, having covered memory for a while, we've always seen up cycles and down cycles. And I don't think that just because we're seeing very robust demand right now doesn't mean that we won't see price declines on say a sequential or year over year basis in the future. What these agreements might do though, on the other hand, is it might reduce some of the volatility. We've seen massive price decreases in the past during down cycles, such as 50% or so quarter over quarter. So we might see a reduction in some of that volatility. And at the same time, if you look at past cloud cycles, there are periods where capex flattens or declines slightly. And so that might be an opportunity for hyperscalers to get slightly better deals on the actual memory that they purchasing. So we don't necessarily think that the cycle is not going to happen again or down cycle, but we do think that we might see less volatility, more of a straightforward idea of what the demand levels will be over the next, say five years.
Ed Ludlow - Bloomberg Tech Host
Jake, as you know, Micron reports fiscal third quarter earnings after market close Wednesday what are your expectations?
Bloomberg Audio Producer/Technician
Yeah, yeah, yeah. We think they're definitely going to offset offer guidance results that are above consensus right now. We do think that they'll talk a little bit about some of their contracts, but I think one of the reasons that they make this announcement today with Anthropic is it's something that they can highlight to investors to give everyone an idea of what types of customers that they're signing to these agreements. But we don't necessarily think that they're going to give a lot of details in terms of, you know, we don't think they're going to give anything in terms of pricing. They might not say anything in terms of the length of these contracts or a lot of the very intricate details. But that said, I think they'll probably give a longer term view of how they see the market given the fact that there are more of these contracts being signed and memory prices continue to be very strong and the environment is very favorable for them at least through this year and we think at least into next year as well.
Ed Ludlow - Bloomberg Tech Host
And to recap, micron ups 4% on this supply agreement with Anthropic, but up more than 300% year to date. Jake Silverman of Bloomberg Intelligence with the analysis now coming up, the CEO of base 10 and one of its lead investors is coming on the show to talk about the inference startup's latest $1.5 billion fundraise. But this is really a conversation about the economics of AI and particularly as we transition increasingly to inference, the use of open source and getting the best cost dollar per token. Really, really looking forward to this one. What's next? Spoonbug Tech.
Jake Silverman - Bloomberg Intelligence
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
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Ed Ludlow - Bloomberg Tech Host
Nvidia is developing chips and software that will make humanoid robots safer around people pool. Humanoid Robotics are expected to generate $200 billion in revenues by 2035, according to Barclays estimates. But current safety systems can make the machines less productive. Nvidia's Halo software will give robots a much better sense of their surroundings so they can interact and even make contact with people. We're going to talk a little bit more about that later in the week. Air inference startup Base10 has raised $1.5 billion across two tranches, one at an $11 billion valuation, the other at $13 billion. Base10 specializes in delivering software and computing capacity to companies tapping open source, typically lower cost AI models. The firm's co founder and CEO to him, Srivivasta joins along with one of its investors, Altimeter Capital partner Paul of Agrawal, whose firm Co led the round and actually it was really interesting the list of, of participants that backed you. Let's start with, with the basic questions that your audience always has, which is wow, you know, $1.5 billion rounds, a lot of funds. But the story seemed to not change, right? Compute is a constraint. Talent is a competitive marketplace. I'm assuming that's where those, those proceeds go.
Base10 CEO - Tom Srivivasta
Yeah, absolutely. Look where with inference right now what we are seeing is there's a lot of demand for inserting intelligence everywhere we possibly can. This open source models are getting very good, right? And post training techniques to specialize those models for specific tasks are getting very good. And as the app layer comes online, you know, there's an enormous surge of demand for us. What that means is, look, we need to go procure a lot of compute to be able to fulfill that demand and also hire amazing infrastructure engineers and research engineers to be able to, you know, build the software layer on top of that.
Ed Ludlow - Bloomberg Tech Host
Just real quick, what's that like trying to acquire the compute? Like do you have any leverage in that market if everyone is supply constrained? How, how is the experience of being a company of base tens age and size going to Nvidia as an example saying we kind of need this?
Base10 CEO - Tom Srivivasta
Yeah, look we have a very strong relationship with Nvidia and you know, they've been very supportive of us over the years. Look, we, one thing that we have realized is that you cannot be reliant on one computer. You have to, you know, diversify. Not necessarily from a chip perspective, from a cloud perspective. So you know, we, we acquire compute from 18 different clouds. Now we sit in around 90 different clusters and that's the flexibility we need to be able to acquire, compute and fulfill the demand.
Ed Ludlow - Bloomberg Tech Host
I posted on X that you're both coming on the show and apparently Paul kind of put this question out there that if you could only invest in one part of the five layer cake, as Jensen calls it, what would it be? But ultimate has been so busy, you know, with the frontier labs at one end and other parts of the five layer cake at the other end. What was the thesis around base 10 and why you wanted to get in here to to co lead the round?
Paul Bagwell - Altimeter Capital Partner
Ed, it's good to be here. Some trade truths cannot be said enough times and one of those is that inference is going to be one of the largest, if not the largest markets, not any in the world. And why is that the case? You know, the early innings of AI were Q and A. Tell me about my trip. We've come a long way since then, you know, it's multi agent, they've got a long longer context. You go retrieve, analyze, synthesize, verify, then you go again and each request is kicking off hundreds if not thousands of inference requests. The second thing is, you know, I might correct something you said Ed. It's not just cost, it's capability, control and cost. Frontier models, the open post trained open source models comes very close to frontier model performance, sometimes even better for specific workflows control. As Satya Nadella said last weekend, you know you've got to compound your unique advantages as an enterprise. Your data, your knowledge, your know how in a way that you're not giving away your intelligence to, to on rent and that's what based on allows. And so to your question from this morning is like where does value accrue? Is it at the app layer? Is it at the model layer? You know, the way I like to frame it is look, the model layer is, is a phenomenal business for very few people. It's a game of emperors. You've got to be at the frontier to, to accrue a lot of value and it's, it's a knife fight. As you know. I've started joining, joking. There's four seasons to the year. It's anthropic OpenAI Space X Google with an evergreen of open source. And so, and so that's that part.
Ed Ludlow - Bloomberg Tech Host
So fascinating, right? If we could just go to open source when this story started for us, let's say 2022, but for you guys probably before that it was this idea that it was only the, the, the model, the largest models with the hundreds of billions of parameters that mattered. And in the world of open source the issue was that just didn't work. People couldn't make any real use of them. I go back to what just said, you know, you are making utility out of open source models but probably also at a slightly smaller scale of model. Is that fair?
Base10 CEO - Tom Srivivasta
Yes, look, I think if you look at you know, when you think about open source it's kind of gone through a bit of a journey, right? You know there's Llama three, maybe two or two and a half years ago and then there was a bit of a winter and then I think the deep seek moment last year really put it back on the map and there was definitely the capability gap shrunk. I think this is happening again just over the last couple of weeks with GLM 5.2 which is I'd say a frontier level model that is actually usable and it isn't Just doing well in the benchmarks. When people are using it, they are feeling that, you know, at the frontier capability for us it's just like how do we make these models very, very easy to use and it doesn't really matter what size they are if we work with small models, big models, massive models. What we are trying to give our customers the ability to run these models when they don't necessarily have access to the infrastructure teams of the frontier labs doing it for them.
Ed Ludlow - Bloomberg Tech Host
So let's go back to what you were talking about of cost but also capability and capability. You know, the other case study in this open source debate was matter kind of changing its narrative, saying, well actually we are committed to open source, but we, you know, at some point we need to be realistic about, about the benefit of closed models. What is, what is the point on the capability part? And actually take a moment, explain what base 10 does. Why, why is such an important, important player in that respect?
Paul Bagwell - Altimeter Capital Partner
Sure. Look, it's yesterday it was deep seek, today it's glm, it'll be something tomorrow. And as I said, it's seasonal. And that battle at the model layer is not, we are nowhere near the end game. What base 10 does is it helps customers like cursor, like a bridge, like open evidence, harness the power of the model underneath. Combine that with your unique advantage as an enterprise enterprise your workflow and deliver something that is best for that specific workflow. Now it's not just one model, it's typically a collection of portfolio of models that are fine tuned to deliver that and that compounds over time. And so based in is successful. As these models get better, it benefits us. And ultimately in the service of the app layer, which is, you know, the customers that we discussed who are, who are delivering AI to the customer.
Ed Ludlow - Bloomberg Tech Host
Jensen's been repeating a lot recently. Jensen Wong, the CEO of Nvidia. Sometimes you have to remind the audience just in case, you know, he wants to see his teams burning tokens. How does that apply to your customers? Right, so, so Paul just explained really clearly the value that you're adding. But the economics are really, really important to some of these companies.
Base10 CEO - Tom Srivivasta
Yeah, look, I think using tokens is obviously just what's synonymous with hey, I want us to be using AI. Yeah, everywhere.
Ed Ludlow - Bloomberg Tech Host
Yeah. It's in their interest for that to be the story right now.
Base10 CEO - Tom Srivivasta
And I think, I think for us, you know, what we see is like customers kind of go through the same curve over and over again is that, you know, they go very aggressively, they start using everywhere, they start to see gains, but they don't necessarily do it profitably and then they need to figure out how to do it profitably. And that's when they come to open source models. That's when they come to base 10. That's when they come to, you know, post trained models on base 10 to be able to do it better, faster and cheaper. And that's when you start to get both, you know, intelligence everywhere, but also unit economics that makes sense for your business.
Ed Ludlow - Bloomberg Tech Host
What I've been trying to reconcile is Altimeter is invested in, in the big frontier labs as well. And those big frontier labs plus Space X, depending on how you define what they are, would also say that they have, they have a role to play in that market. Where are we in this cycle of where they're just in the very big players? Where does phase 10 fit in that?
Paul Bagwell - Altimeter Capital Partner
Look, a lot of ink has been spilled on this debate of open versus closed. Let me, let me just take that head on the closed models. The frontier models are very, very good and they're very good for the use case that require highest intelligence, highest reasoning, new use case discovery. If you didn't want to think about just one model as a service, they're very good and they will always be very good for that. For a class of customers, that's not a long list. You know, as Jonathan Ross said, there's about 35 companies that drive 99% of all inference. The top five are the labs that you just listed. Top four, top five. The next 30, you know, that's people like Cursor, like open evidence, like a bridge, like, like Harvey. And for them, if you're, if you're not playing the game of the emperors and you know, you're thinking about how do I deliver something that is not rented from somebody else but mine that I can compound with. That's where, that's where post trained open source can help. And so you know, we posted this chart this morning about how, you know, Harvey, for example, achieved frontier capabilities post training an open source model, but obviously with a much better cost and control. Frontier as an example of what the next 30 are thinking about and then the next thousand are thinking about.
Ed Ludlow - Bloomberg Tech Host
Two hints for starter back on Bloomberg, tech founder, CEO of base tenant Paul Bagwell of Altimeter back again on Bloomberg takes really great tech. Have you here in person. Thank you very much indeed. Coming up on the show, Amazon is pairing prime day with pizza delivery. We're going to talk about what's behind the e commerce giants. Fast food pivot. Next systematic tech. Today's big number $26.3 billion. That's how much US consumers are expected to spend on Amazon and other retailers during the four day sale that we all know as Prime Day. That figure comes from Adobe. Amazon's facing headwinds though consumer confidence to competition. But the e commerce giant has a few tricks up its sleeve to encourage shoppers to spend, including pizza delivery. Bloomberg Spencer so far here with the latest. Okay, we're getting ready for Prime Day. Adobe analytics always puts out numbers like this. Put that 26.3 billion into context for us. That's big. It's small, it's growth. It's not, it's big.
Spencer Soper - Bloomberg Reporter
I mean, Adobe's predicting 9% growth from the four day Prime Day period last year, which was July. You know, it's always tricky to compare Prime Day to the year earlier because the date moves around and this is going to be the second year that they do a four day sale. But Adobe is predicting a 9% lift which is pretty sizable. And a lot of that can be, you know, it's counterintuitive. Even though there's a lot of things weighing on consumers sometimes that compels them to kind of save up money and hold off a big ticket purchase for a big deal. Big deal period. Which, which can raise spending. And Wal Mart and Target both have overlapping sales. So there's going to be just a lot of, a lot of deals going on those four days.
Ed Ludlow - Bloomberg Tech Host
Okay. The latest tech in depth. Amazon offers pizza in Prime Day. Experiment. Explain.
Spencer Soper - Bloomberg Reporter
So this is the first year I've seen this. The Amazon's offering $5 pizza from Little Caesars. So basically if you go to the site you'll see this pretty prominently, a Little Caesars emblem on the site and you can click over there to get it to redeem a five, a $5 pizza. And they're running that every day of Prime Day, even a couple of days before it. And seems to be something to get people to come to the site. You just another, another sweetener to get people to come to the site and check out the deals. Because Amazon really doesn't have anything in hot food delivery. You know, they had a Amazon restaurants thing years ago that they shuttered. They now have kind of a tie in with grubhub. But you know, when you think about grocery and Amazon really is its eye on the grocery business. A lot of people couple grocery and dinner. You know, especially when it's hot in the summer, you don't get the kitchen hot. So this might be a way to, to just, you know, get people to check out their deals and also cross something off the list that they got to get done done that night.
Ed Ludlow - Bloomberg Tech Host
Bloomberg Spencer so far with a look ahead to prime day, but go and read the tech in depth. That went out this morning as well. Thank you very much. Before you go, Disney's Toy Story 5 has gone to infinity and beyond. On its opening weekend, Woody, Buzz and their friends brought in $160 million in US box office sales, marking the best launch in that franchise's history and lassoed the title of best 2026 debut from the Super Mario Galaxy movie. The hall was at the low end of Bloomberg Intelligence is lofty expectations for the film and enthusiasm for blockbusters including Toy Story. Spider man the Odyssey is anticipated to feel a 10% year over year growth rate and the best summer for cinemas since the pandemic. All right, that does it for this edition of Bloomberg Tech. From here in San Francisco, this is what markets look like. A little softer than the NASDAQ 100, down a percentage point, half a percentage point, but still outperformance. In semiconductors, the stocks up almost a percent, a lot of that being the news flow around Micron and Anthropic Steel Space X down for a third straight session, but well above above its IPO price as it goes to the bond market for the first time. Check out the pod. You know where to find it. This is Bloomberg Tech.
Jake Silverman - Bloomberg Intelligence
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These days it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business. Instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI Agents identities, giving you a single layer of control, a single standard of trust. So whether an AI Agent supports a single user or your entire enterprise, with Okta you'll turn risk into opportunity. Secure every agent. Secure any agent. Okta secures AI.
This episode of Bloomberg Tech centers on SpaceX’s first-ever investment-grade bond sale following its record-breaking IPO. The discussion dives deep into the rationale behind SpaceX seeking additional capital despite its massive cash reserves, the enthusiastic investor response, and broader implications for tech company capital expenditures (capex). The episode also covers major news including Micron’s AI infrastructure deal with Anthropic, Meta’s strategic moves in India, Microsoft’s partnership with Chevron for data center power, China’s shifting battery metals market, and Amazon’s evolving Prime Day experiments.
Timestamps: 01:58–06:58
Details of the Bond Sale:
SpaceX is selling investment-grade bonds for the first time, possibly raising ~$20 billion to repay existing debt and fund corporate needs after a high-profile IPO.
Investor Appetite:
The sale is expected to be met with extraordinary demand, with a book size projected to be over $100 billion against $20 billion in supply.
Borrowing Despite Cash Reserves:
SpaceX is expected to burn through more than $100 billion for long-term growth (e.g., space infrastructure, scaling operations).
Credit vs Equity Perspective:
Credit investors focus on present cash flows and leverage; equity relies more on future prospects. SpaceX is pursuing both massive growth and prudent financial stewardship.
Timestamps: 07:04–11:48
Tech Outperformance:
Tech and semiconductor stocks continue to lead market gains, despite recent volatility and macroeconomic uncertainties.
Role of Fed Policy:
Fed decisions on rates still significantly impact valuations, particularly high-growth tech stocks.
Capex and Earnings Momentum:
Continued heavy spending from tech leaders is expected, supporting infrastructure growth and associated sectors.
Timestamps: 12:45–13:57
Timestamps: 13:57–16:26
Timestamps: 16:26–18:53
Timestamps: 18:53–20:05
Timestamps: 23:22–25:58
Timestamps: 26:42–32:15
Direct Partnership:
Micron strikes a direct supplier deal with AI lab Anthropic for memory and storage—a rare move bypassing hyperscaler intermediaries.
Market Impact:
The deal is good news for Micron, whose shares are up 4% on the announcement, and up over 300% year-to-date.
Timestamps: 35:52–46:07
Business Model:
Base10 delivers compute and software for open-source, lower-cost AI models, serving enterprises needing specialized AI with greater control over cost and data.
Investor Perspective:
Inference (AI model deployment) is expected to become one of the world’s largest markets—key for enterprises balancing cost, capability, and control.
Open Source vs Closed Model Insight:
Open-source models are quickly closing the gap with proprietary leading-edge models for many use cases, with cost and customization driving enterprise adoption.
Timestamps: 47:13–49:03
Prime Day Growth:
Expecting US consumers to spend $26.3 billion during the four-day sale (a predicted 9% year-over-year growth).
Promotion Innovations:
Amazon partners with Little Caesars to offer $5 pizza during Prime Day—a creative tactic to increase web traffic and add value for shoppers.
On SpaceX’s Market Impact:
“It’s going to be a feeding frenzy...three quarters of the people that are going to buy the bond aren’t even going to know what this company does.”
— Robert Schiffman, 04:29
On Tech Capex:
“You have to spend money to make money. This is what this company is doing. I think the bond market's going to be there to fund it and I think the equity market, when you start thinking about valuation, as all these revenues...come in...this company is going to transition from what is a satellite data business...to what's going to be a hyperscaler in the sky.”
— Robert Schiffman, 05:49
On Meta’s India Focus:
“WhatsApp is huge in India. They see a ton of potential there from a business standpoint…have someone very familiar with how WhatsApp is used in that region.”
— Bloomberg Tech Correspondent, 18:09
On Apple’s Internal Design Politics:
“It’s now more of a service organization...no longer the central hub, the influential center of innovation for the company.”
— Mark Gurman, 24:09
On AI’s Open Source Movement:
“Frontier models, the open post trained open source models, comes very close to frontier model performance, sometimes even better for specific workflows…that’s what Base10 allows.”
— Paul Bagwell, 38:56
On Amazon’s Prime Day Tactic:
“Amazon’s offering $5 pizza from Little Caesars…just another sweetener to get people to come to the site and check out the deals. Because Amazon really doesn’t have anything in hot food delivery…”
— Spencer Soper, 48:02
This Bloomberg Tech episode provided high-level analysis of capital flows and investment dynamics in the tech industry, from SpaceX’s bold financing moves to the infrastructure strategies of Microsoft and Meta. The episode connected these big business stories both to near-term stock market implications and to underlying megatrends: AI’s accelerating adoption, tech’s insatiable demand for infrastructure, and the tightening weave between global markets, policy, and innovation.
For full context, listen to the episode for nuanced discussion and further analysis of each headline event.