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- [00:00]
EY Consulting Narrator
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.
- [00:30]
IBM AI 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. Lets create smarter business.
- [01:00]
Hex AI Narrator
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- [01:34]
Bloomberg Audio Studios Announcer
Bloomberg Audio Studios Podcasts Radio News.
- [01:54]
Ed Ludlow (Bloomberg Tech Host)
This is Bloomberg Tech. Coming up, Space X continues to rocket eclipsing Amazon in value. This as it lands its $60 billion takeover of Cursor plus Anthropic meets with US officials to resolve a national security dispute with the Trump administration over its most advanced AI models and Sequoia partner Space X investor and I think Sean McGuire on set in San Francisco to go deep on the Cursor deal and Orbital data centers. Tuesday, June 16, 2026 SpaceX its third day of trading in the public markets and it continues to soar. It's all about valuation in the here and now. We are currently on track for SpaceX to eclipse Amazon in market value. It's been a volatile session. One point the stock up 17% and in just a brief moment eclipse Microsoft in terms of its market value. In the moment indeed. But here's the thing. When you think about Space X's relative value to Microsoft or Amazon, there's a catalyst in the news cycle and that is it will move forward with a $60 billion deal for cursor in the AI coding space. Let's get the details on that deal with Bloomberg's Natasha Mascarenas who covers AI and venture and is here with us in sf. Let's start with the details, the structure. There's also the idea that in April they had the right to acquire Cursor just days after going public. They are.
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Sarahi (Franklin Templeton Portfolio Manager)
Exactly.
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Natasha Mascarenas (Bloomberg AI and Venture Reporter)
I mean, in April we saw a first of its kind announcement, an agreement to have the option to acquire. Now we have the news that they are moving ahead with the agreement and they will plan to acquire Cursor. It's going to be for that price tag that we expected a $60 billion implied valuation. And the Cursor investors will be getting stock as a result of it. Space x stock, sorry, SpaceX stock as a result of it. Exact.
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Ed Ludlow (Bloomberg Tech Host)
So there's a big question here about like, well, who wins on the Cursor side? Cursor has been active in raising money in recent years. They had a lot of momentum. You have a pretty good understanding of who's on the cap table there.
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Natasha Mascarenas (Bloomberg AI and Venture Reporter)
Yeah, I mean, this has been one of the most explosive AI companies outside of OpenAI and Anthropic, if you ask me. This is the number one other company I've been focused on for the past year. We think about the biggest winners from this deal. When the deal does close, which is expecting in a few months, it's actually some of the same investors for Space X. Unsurprisingly, two of the biggest investors in Cursor are Thrive Capital and Andreessen Horowitz. And, you know, last week we, we heard them celebrate as well when it came to the Space X ipo. And so Thrive is expected to have a stake worth north of 10 billion, according to sources. When we think about the Space X and Cursor combination, and Andreessen, you know, heading into this had about 6 billion, billion worth of stake in Cursor. And so another kind of.
- [04:43]
Ed Ludlow (Bloomberg Tech Host)
We'd already reported that, you know, for Andreessen on the Space X ipo, this would be the biggest payoff in the. In the firm's history. Let's go to the AI bit of it. I think Elon Musk has been pretty honest that in the coding, Space XI had been behind your anthropics, your open eyes, even. What is Space X doing with Cursor? What's the plan here?
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Natasha Mascarenas (Bloomberg AI and Venture Reporter)
Yeah, I mean, people forget that Space X actually merging with Xi is still a recent move. Yeah, I mean, the Inc is still, you know, drying on that one. But yeah, I mean, listen, it's the same. It's the same goal. Elon wants to strengthen their talent. Cursor, I mean, when I was first writing about Cursor. They were bringing on people to their office for two weeks before they made an acquisition, before they made a hiring offer. And so they really spent a huge amount of time in recruiting the best talent in San Francisco, building a very unique kind of culture. And now Elon Musk is getting, you know, that highly vetted talent as he looks to make space SpaceX and AI company. And so there's a lot of interest in the talent. We'll see if all people do come on as a result of the acquisition. But it's hundreds of employees joining the Space X.
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Ed Ludlow (Bloomberg Tech Host)
And even before SpaceX I closed, there was high turnover Xi they had people departing from the founding group, etc. Boomers. Natasha Mascareness on the Cursor deal. Let's get more on Space X is surging valuation in the public markets. Bloomberg equities reporter Carmen Reinecke joins us with the latest. So right now on track to eclipse Amazon, you and I have been talking all morning about price to sales ratios. And then there's the volatility in the session itself. Explain it all.
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Carmen Reinecke (Bloomberg Equities Reporter)
Yeah, so there are two things that are really important here. The first one is that we have really low float actually trading for Space X. We know it was about 5% or less than 5% of total shares became available in the IPO. That can make trading very volatile intraday and it can elevate stock prices because there's just not that much float on the market. So that can elevate the stock price. But then the total shares outstanding, even ones that are locked up right now, is what's used to calculate the market cap. So it can sort of elevate things there. The second thing you brought up, price to sales. This is so important to think about. So SpaceX at about 2.7 trillion valuation. Right now it's alongside Amazon and Microsoft. But the total amount of revenue that SpaceX is bringing in tells a very different story. So last year in 2025, Space X had about $19 billion in revenue. And Microsoft in comparison had $281 billion in sales. So that's a huge difference. It's about 15 times more than Space X, even though they're valued right now based on market cap at a roughly
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Ed Ludlow (Bloomberg Tech Host)
the same Divers come Reinerke Space X up for a third day. A lot to factor in. Thank you. Franklin Templeton back Space X long before its ipo. Really interesting private public market investor in the tech space here in the Bay Area. Sarahi Franklin Templeton, portfolio manager is with us it's so great to have you on the program.
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Sarahi (Franklin Templeton Portfolio Manager)
Great. Thank you for having me.
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Ed Ludlow (Bloomberg Tech Host)
Timing is everything, right? Yes. Let's start with the cursor deal, if we may. So we knew that this could happen because they had the right to acquire CASA as stated in April. But they've moved very quickly, you know, since. Since the IPO on Thursday, Friday. What is it that you think Space X gets with with cursor? What do you think they intend to do?
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Sarahi (Franklin Templeton Portfolio Manager)
Yeah, you know, the company has been very clear that they want to have a role in the AI space and that they want to be one of the competitors within that space. And so with Grok, they have the opportunity here. And now with the Kershaw team, as you were just talking about earlier, they aqua hire a team here that they can ultimately come in and potentially give them a chance with with the competitors in the space. So I think it's brilliant you had the successful IPO and the ability to come in and do this deal right on day three now. So pretty big, pretty big acquire.
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Ed Ludlow (Bloomberg Tech Host)
I mean, the mechanics of that I find really interesting because Space X is valuation, actually its valuation today relative to Friday. It's a bit of an advantage, right, in an all stock deal. How do you feel about it, you know, the mechanism a $60 billion deal right now in how that impacts the stock as an existing investor.
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Sarahi (Franklin Templeton Portfolio Manager)
Yeah, look, we were already. We knew this was going to come, right. And so the fact that it's coming now, it makes sense with the fact that this IPO was very successful. I mean, they've done a fantastic job. The bankers here, Goldman, Morgan Stanley did a great job bringing this to the public markets. It actually opens up the public markets for other deals to come. And so it makes a lot of sense for them to do this cursor deal here now and ultimately take advantage of their stock price.
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Ed Ludlow (Bloomberg Tech Host)
Do you mind if we talk a little bit about Franklin Templeton's history with Space X? You know, maybe viewers of Bloomberg Tech will be a little bit more familiar of kind of like the mutual funds and private growth equity names participating in a lot of the themes we cover. Franklin Templeton's a name that comes up, but just how you got in and the journey now to being, you know, a public holding in the funds.
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Sarahi (Franklin Templeton Portfolio Manager)
Yeah, definitely. So I am, I work on team, the Franklin Equity team at Franklin Templeton. And here over a decade ago, we decided that it was time for us to invest in private companies, not only through our mutual funds, but also we have dedicated venture vehicles within our group and the reasons we did this was, as you've been talking about, the companies have been saying these companies have been staying private longer. So a lot of the value creation was happening within the private markets. But, well, we have, we have, we are based in Silicon Valley, we have the same capabilities. And so we decided we should not only take advantage of that and generate the returns and bring those to our shareholders, but also the insights that you get from investing in these companies, both from just investing in the companies themselves and the successful IPO here, you saw with Space X or just the insights and is disruption coming to some of our existing holdings and how do we think about the market leaders in the space and whether or not, whether or not these private companies will overtake them. So those insights, our analysts benefit from that. So this is something, you know, with Space X, we knew them when they were doing reusable rockets for cargo ships, but knowing them over time, our team met with Elon in 2016, I mean, even prior to that with Tesla. Right. But with Elon on Space X and understanding what he was going to do here, having that faith and then learning from him about AI, infrastructure, defense, space, the space economy, it's been an incredible journey for us.
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Ed Ludlow (Bloomberg Tech Host)
You make a lot of interesting points about how things have changed. The story started with, with reusability and the economics of reusability. And now it's something very different. If you just go on the TAM and the prospectus, but also like the public market investor view, like what is the proxy that you look at? I think we're in a space now where we're moving outside the Max seven. Yes, but like if it was in the software space, you'd go, okay, this is a private company where I see a proxy in the public market, Space X.
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Sarahi (Franklin Templeton Portfolio Manager)
We don't have anything like it. And look, it's been, it's been a huge discussion on what industry, how is, how is Gix going to classify this? Is it going to be in the telecom industry, Is it going to be in industrials? We started out thinking it would be an industrial entity and what are investors going to be selling to buy this? But ultimately you ended up, it's, it's now classified under communications. And look, our analysts covering it has to understand AI has been working very closely with our tech team, has to understand defense, has to understand space. A new economy here and we're all still just learning more and more about that. I mean it's a, it's a new frontier.
- [12:06]
Ed Ludlow (Bloomberg Tech Host)
Let's bring it back to the news of the day. And the cursor deal. You know, a lot of people will focus on the very sort of specific upfront coding story, but there is a story with the models themselves. And I just wonder how much you assign value to GROK and the future opportunity of Grok over at Franklin Templeton.
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Sarahi (Franklin Templeton Portfolio Manager)
Yeah, look, you don't. The way we think about it is just Starlink alone brings a lot of value for Space X and a lot of their endeavors within AI. A big part of it is funding some of that and you know, cash generation. Cash generation. And look, Elon has talked about this from day one. Gwynne talks about it. They want to go to Mars. They're doing everything in their power to make us multi planetary military that their goal here is to get there, whether it's GROK and AI infrastructure. You saw them doing deals with anthropic generating revenue here today to get to that goal. Anything that can get them on that path, I think is the right move for them.
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Ed Ludlow (Bloomberg Tech Host)
Sarah Rahi, Franklin Templeton Davy on Bloomberg Tech. It's so great to have you here and thank you very much. An update on a story brought yesterday. Nvidia's bond sale. The chip giant sold $25 billion in investment grade debt, making it one of the largest corporate bond deals of the year. Investor demand was strong with orders topping $85 billion, according to sources. Nvidia joins companies like Alphabet and Amazon, flooding debt markets with hundreds of billions of dollars of issuance as they build data centers and other infrastructure needed for AI's rapid expansion. Okay, coming up, Anthropic meets with US officials as it tries to resolve a national security dispute with the Trump administration over its most advanced AI models. We have more on that next. This is Bloomberg Tech.
- [13:52]
EY Consulting Narrator
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.
- [14:23]
IBM AI 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.
- [14:52]
Public Investing Platform Narrator
IBM support for the show comes from Public. Lately it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades. And others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth on public. You can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts? Yep. High yield cash? Yes again. They even have direct indexing. Public has modern design, powerful tools and customer support that actually helps go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by Public Holdings Brokerage services by public investing member FINRA SIPC advisory services by public advisors SEC registered advisor crypto services by ZeroHash. All investing involves risk of loss. See complete disclosures@public.com disclosures there are some
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Dario Amodei (Anthropic CEO)
players who are more trustworthy than others. What I think needs to happen is that the trustworthy actors need to need to get together and put the untrustworthy actors in a position where, where they kind of have to adopt the same standards. With a lot of experience, I've learned that there are some folks who don't do the right thing on their own. But if there's a majority of the industry that's doing the right thing, then I think the rest of the industry is, is kind of they're left in a position where there's not much they can do that, that then come along.
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Ed Ludlow (Bloomberg Tech Host)
That was Anthropic CEO Dario Amodei there in late April, weighing in on accountability in the industry. And now Anthropic is trying to work through a growing dispute with the Trump administration about concerns on foreign access to its most advanced models, which led to the company temporarily suspending global access. Senior technical staff met with Commerce Department officials on Monday as talks continue. Bloomberg's Mike shepherd joins us from dc. Shep, bring us up to speed. What do we need to know?
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Mike Shepherd (Bloomberg DC Reporter)
Well, what we need to know is this, that there so far is very little public sign of progress, progress in discussions between the government and Anthropic. The senior technical staff, as you said, did sit down with U.S. officials. But there has really been no evidence of a breakthrough, no evidence of really what remedies the company might need to pursue at the government's behest to solve this security issue. And we don't even really have a fully Clear picture from the US government side of what that is. The the company has pointed to this jailbreak concern. The idea that guardrails on its Fable 5 system could somehow be evaded, empowering that software into something that approaches the cyber cyber security capabilities of Mythos. And all of this is unfolding at this time of great urgency in the race for the U.S. of course the question is will it maintain its lead over China in Anthropic? Of course course is one of the top developers plays such a crucial role in that and then just add to it all the billions if not trillions of dollars in Capex that we are seeing poured toward this sector by different companies, not only Anthropic but the public traded, the publicly traded ventures as well, the Space X ipo. So much of that money is going to support the infrastructure needed to run top flight models like Mythos and Fable which right now are off the market.
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Ed Ludlow (Bloomberg Tech Host)
The Commerce department put in an export control Friday which basically blocked foreign national access to me first and Fable. And Anthropic response was like well in that case we'll take it offline for everyone because we can't on a case by case basis check user status. And many of their own employees are foreign nationals. But there is something broader here in Anthropic and industries relationship with the administration. Where do we stand in that? The litigation, the designation on supply chain risk.
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Mike Shepherd (Bloomberg DC Reporter)
Well this is just the latest flare up between Anthropic and the administration really since the start of the year. You're referring of course to the dispute right now with the Pentagon over the company's ability to continue providing the military with access to its sophisticated AI tools. There's a cloud gov AI tool that was approved approved for classified use by the military and in fact have been deployed as part of the US war effort against Iran. Now the Pentagon in this dispute with the company has really fixed on what Anthropic has demanded as two conditions of being able to continue its Pentagon work. And that is at once guarantees that there will be no surveillance supported by Claude and that there will be no further fully autonomous weaponry. Now the government says that look, we won't do either of those things. Those extra conditions are way too much. And that just presages a lasting feud between these two sides unless they can reach some sort of an agreement.
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Ed Ludlow (Bloomberg Tech Host)
Here the next Mike shepherd, thank you very much. As Washington wrestles with security concerns at home, the technology is also taking center stage at the G7 summit in France where global leaders and tech executives are meeting this week. Bloomberg's Tyler Kendall joins us live from France. And there's the story on the Bloomberg this morning about how US Western allies are now taking into account this Commerce Department decision with Anthropic. How's that playing out on the ground?
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Tyler Kendall (Bloomberg France Correspondent)
Well, I actually had the chance to catch up with the spokesperson for France's Foreign Ministry who told me that the Trump administration administration's moves here that you've been outlining just underscore the need for European allies to have what he called, quote, strategic autonomy when it comes to tech. It is no doubt going to be a focus here on the ground as these world leaders, including President Trump are going to be in the same room with some of these top tech CEOs, including from Anthropic as well as Open AI. And in fact, earlier today Bloomberg News was able to obtain a draft statement related to this meeting that is set to take place tomorrow which says in part that the leaders are expected to pledge to, quote, further discuss emerging opportunities and potential risks arising from AI, notably in the financial sector. It is definitely going to be a theme here going forward. A G7 official tells me that that meeting tomorrow will also focus on potential regulations that all of these G7 allies could come together on as well as respecting individual countries regulations when it comes to the tech. And another thread that we're watching very closely here is that just yesterday President Trump threatened a 100% tariff on France over the use of its digital services tax. This has been something that the Trump administration has long lobbied its criticism against European allies about. I had the chance to ask the French spokesperson about this. He did confirm that there are ongoing discussions about about the dst. But he said that this is not a moment for quote, antagonism.
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Ed Ludlow (Bloomberg Tech Host)
Bloomberg's Tyler Kendall and everyone France, the G7, thank you very much. Another story we're watching in AI Open Air's losses ballooned last year as the company poured money into the race. The Financial Times reports the ChatGPT maker spent more than $34 billion on research, marketing and other expenses in 2025, driving an eight fold increase in in net losses. OpenAI did not comment on the Financial Times report. Databricks day Data Summit 2026 is underway in San Francisco as the software maker competes with Snowflake. And Google is launching new enterprise AI products including genie, one new agentic coworker for Business Teams and Unity AI Gateway that helps businesses control their costs. Talent is proving the biggest expense for them, but the company's yet to tap the public markets this year amid other blockbuster tech Listings. Here's what CEO Ali Gazi told us yesterday.
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Ali Gazi (Databricks CEO)
So, you know, we're not, we're not said that we're doing any fundraise. I know that there's, you know, rumors about this, but we're always talking to investors. Why? Well, we're investing heavily into these new product categories. We just launching a completely new product for ours that's called Customer Lake, which is in the area of marketing. So we're, you know, targeting marketing folks, which is not an area where we used to be active. You know, two months ago, we launched a security product called Lakewatch. And we're getting into a security space. You know, it takes resources to get into these spaces. And all of these products that I mentioned, we're building it agentic first. So it's like they start with agents from the ground up. We're not bolting it on. That requires that you have AI researchers, as we all know. AI researchers, you know, don't come cheap. So all this requires funding. So we're always in talk with investors, you know, to be able to just be aggressive and expand and launch new products, do research, you know, go to more regions, be available in every part of the world. So, you know, that's, that's, that's why we require capital.
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Ed Ludlow (Bloomberg Tech Host)
Ali, let's, let's end it here. Earlier this month, you told me, you know, databricks in the end will be a public company. You want to be a public company, but that you think this is just a terrible year to go public. Do you stand by that? Has anything changed in your mind in the last two weeks?
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Ali Gazi (Databricks CEO)
No, I think that, you know, it's just there's three mega IPOs that have been rumored. One of them happened, you know, so letting those kind of go through the system and see how that sort of plays out and things stabilize a little bit. And I think that, you know, getting a little bit further in the sort of air revolution that we're going through, I prefer for the company to go public when, you know, water is a little bit more calm and there's a little bit more predictability. So, you know, I stand by what I said. I think for most of the companies, you know, it's probably best to wait it out. And that's also what CEOs that I know tell me that have thinking about IPO. They're saying, you know, I don't want to, you know, go between, you know, two mega IPOs like that.
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Ed Ludlow (Bloomberg Tech Host)
That was Databricks CEO Ali Godse. Let's go out to Bloomberg's Johara Nan. And in New York, for everything else, what we tracking you? Horror.
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Johara Nan (Bloomberg Tech Reporter)
Hi, Ed. Well, it's time for talking tech. First up, prediction market platform Cowsheet has developed a new agent designed to stress test the wording of its contracts. The company says the tool, known internally as Harrison, helps identify potential issues before they affect the millions of wagers it handles each day on events ranging, of course, from elections to sports games and award ceremonies. Plus, Robinhood is the latest fintech to downsize. The online brokerage is eliminating 300 jobs jobs, adding to a deepening wave of layoffs across the industry. The company says the latest cut is to, quote, further accelerate product velocity and remain lean and disciplined. No mention of AI. And several studios inside Microsoft's Xbox gaming division are in active negotiations to spin off as they try to avoid closure. That's according to sources. The talks come as newly appointed CEO Ash Sharma accelerates a broader restructuring of the business. Ed, I'll leave the gaming up to you.
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Ed Ludlow (Bloomberg Tech Host)
Thank you very much, Johan. Coming up, Sean McGuire, who led Sequoia's Space X investment, joins us to talk about the Cursor deal, Orbital data centers and so much more. This is what markets look like. Reminder. Kevin Wash Fed decision debut Wednesday. This is Bloomberg Tech. Welcome back to Bloomberg Tech. It's just the third trading day in Space X's life as a public company and my goodness, so many headlines. It's kind of been an interesting, volatile session and Carmen Reinecke made the point earlier in the show that you need to kind of look at the float and the volumes that are going on. But at one point in the session, we were really out of this world. Sorry, not sorry. There is a lot of numbers to go through and a lot to pass here. So let's check in on these Space X shares with Bloomberg's Cross asset reporter, Isabel Lee. Isabel, hi.
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Isabel Lee (Bloomberg Cross Asset Reporter)
And out of this world, indeed. You see the stock rallying for the third straight day and it's on track to surpass the market cap of Amazon and Microsoft to become the fourth largest company in the world. So you see the rally today pushing the market cap of SpaceX to nearly $3 trillion. So obviously this calms fears that the market will not be able to adjust an IPO this big. And obviously it bodes well for the likes of Anthropic and Open Air, which is waiting in the wings, all both valued at almost $1 trillion. And to be sure, the price action is driven by just a small percentage of shares. But still, it's so interesting and you look at the next page, this is the ETF world, which I really love to look at. So all of these issuers filed to launch nearly a dozen SpaceX linked ETFs. So they're both leveraged. They're all leveraged, rather. So they track space x 2 times to the upside and 2 times to the downside. And in total on Monday, all of them combined. So $1 billion in trading volume, which is easily a record for any single stock ETF for any new launch in a cohort like this. So the frenzy just really continues. And it's really hard not to imagine that because the windfall is just so hard to ignore. And you look at these companies, these are the ones that are gaining billions and billions in net windfall. Take a look at Valor Equity Partners. This is founded by Musk ally Antonio GRACIA. So nearly $70 billion at stake that they have Founders Fund. This is a venture capital firm led by Peter Thiel. It now has a $50 billion stake. Sequoia has 20 billion. They're one of the first companies to back space X in 2019. So first mover move there. And they were the first to put their trust in. Elon Musk among the first. And Anderson Horowitz, a $10 billion. So really lots of excitement and billions at stake.
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Ed Ludlow (Bloomberg Tech Host)
And Isabel out in New York City, thank you very much. A conversation been looking forward to for some time now. We're joined by Sean McGuire, a partner at Sequoia Capital. The firm is invested around $2 billion across funds into Space X. That includes an investment into X, the platform formerly known as Twitter. And all told, that amounts to a nearly 1 1/2% stake in Space X. Space X AI. There's a much bigger story than those two parts. The rocket part and the AI part.
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Ali Gazi (Databricks CEO)
Welcome to.
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Sean McGuire (Sequoia Capital Partner)
Thank you for having me. And we're both football fans, so maybe we even get some time for some football commentary, soccer.
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Ed Ludlow (Bloomberg Tech Host)
There is a lot to discuss, I think. Should we just start with cursor? Like it's right in front of us. The focus of this morning was. Oh, well, Elon Musk has been quite honest about X. AIs need to catch up in coding vis a vis anthropic OpenAI. What I'm trying to understand is, like, what this means for the models themselves. Do you. Do you have a sort of thesis on that?
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Sean McGuire (Sequoia Capital Partner)
Yeah, look, I've said this publicly, but I think about Space X as there's five layers of the company or business. Layer one is launch. This is foundational. It's kind of the future of the company. Layer two is connectivity which is you know, in its early stages with Starlink and direct to sell but kind of proven and I think the compounding is pretty easy to underwrite. Layer three is compute which today is terrestrial and in the future will be orbital as well. I think that the, the Google and anthropic deals kind of show show that that is very likely to work and I actually want to spend more time on trusted compute later because I think it's a very, very exciting and underappreciated part of we will of the company today. Layer 4 is the model layer. I think that's where probably rightfully so most investors don't know how to assess where Space X Space X AI is today. And so I think we should talk about that more. And that's where cursor fits in. And then layer five is all the other bets. It's things that you know, people today don't even know how to think about it. That's Terrafab. That's a moon base someday that has a railgun launching, you know, orbital satellites in space. But look on the, on the cursor deal I think people are underappreciating just how good that team is and also so how well they work with Elon and the company.
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Ed Ludlow (Bloomberg Tech Host)
Our last guest called it an acqui just it's a $60 billion aqua.
- [30:49]
Sean McGuire (Sequoia Capital Partner)
It's, I mean I don't think when A company has a 3 billion plus run rate reported number in, you know, 3 is a 3 year old company. I don't think it's only an acqui hire but I do, I do think that this is one of the best teams has ever been assembled in the cursor team. And I also think they've proven over the last few, few months that they can keep pace with Elon like it is. Unless you've seen it, it is impossible to explain the intensity and work ethic of Elon And Michael and the team have kind of shown that they can keep pace and fit into this much broader ecosystem adding value, you know, on the, on Terrafab planning there orbital satellites model layer, you know, cleaning up data to train models, you know, helping plan infrastructure for the future. It's just like it is such a strong team that can go all the way to the bare metal in terms of understanding everything needed to build a model of the future. And so I like no, it is not an acqui hire but I cannot stress how good that team is and for me personally, personally it makes me much more optimistic that SpaceX will win, or at least be one of the winning players on the model.
- [32:10]
Ed Ludlow (Bloomberg Tech Host)
There you're someone that's embedded in the teams. When I say embedded, I mean you're able to go in, work with the team, see what they're working on across Space XI X. And when I said that you were coming on the show, that was pretty much one of the questions that we got for you is how do you think Elon Musk takes that curse a team and integrates it and moves quickly? You know, there's a particular Musk way of doing things. But, but you know, this has happened three days since an ipo. It's pretty fast.
- [32:39]
Sean McGuire (Sequoia Capital Partner)
Look, I think there was a couple of months, you know, I don't know what the right technical word is and you know, I'm on live TV and there's a recent IPO, but I think there was a roughly two month trial period and I think that only 1% or less entrepreneurs could survive that trial period of working very closely with like
- [33:01]
Ed Ludlow (Bloomberg Tech Host)
us to pass the test.
- [33:02]
Sean McGuire (Sequoia Capital Partner)
Yeah, I think, I think Cursor passed the test showing that they can keep pace, that they can operate without making mistakes, that they can actually elevate what's already one of the most talented teams in the world. And so I don't view this as like three days after ipo. There's you know, something that came out of nowhere. I view this as there was, you know, many months leading up to that two month period and then two months of like deep, deep partnership. And so like I personally think the probability that this is an accretive acquisition is like 99.999% because the trial was so intense.
- [33:41]
Ed Ludlow (Bloomberg Tech Host)
Sean, before we get to the new cloud business, I think that's like really important and timely. We're in day three of trading as a public company and a lot of people will make a lot of the milestone of being worth more than Amazon. Maybe that happens at the close, maybe it doesn't. And I'm guessing you'll tell me that you'll distribute to the LPs when the time comes and you expect them to hold the shares. You know, what is your kind of longer term position on Space X
- [34:10]
Sean McGuire (Sequoia Capital Partner)
Men? Look for me on a personal level, and I say this to someone, I think I understand this business very well. Better than, you know, most investors, better than almost any investor. I am personally going to hold my shares in this company forever, like quite literally. I, I think that. And sure there are some things that could change politically or, you know, you know, in the macro ten years from now. But this is the biggest vision, the biggest mission of any company in history. Going after the biggest markets of any company history with the biggest moat. And so I just think the compounding is going to be. It's hard for people to even imagine
- [34:49]
Ed Ludlow (Bloomberg Tech Host)
the component part is the moat. Sean, sorry to interrupt you. The five layer cake that you've outlined. Which one?
- [34:56]
Sean McGuire (Sequoia Capital Partner)
So obviously great question. By far the biggest moat is launch, which you know we call people rocket scientists for a reason or at least in the past, you know, that was an expression like the engineering that has gone into building starship. I believe it's the, I believe it's the hardest single engineering project that any company has ever done. I think it's, to me it's meaningfully beyond like asml, like intrinsic complexity of building EV machine. I'm happy to go into this. So I would say moat number one is the launch business, which is just so far ahead of everyone else number two and, and for what it's worth, I think there's this kind of weird thing where I do think that people right now are really underestimating the terrestrial compute.
- [35:44]
Ed Ludlow (Bloomberg Tech Host)
So let's say that, yeah, I'll go
- [35:47]
Sean McGuire (Sequoia Capital Partner)
there in one second. And I think that the moat for terrestrial compute is not launch, it's the quality of the team that's been assembled and you know, in kind of this very heavy distillation process over, over, over 20 years of finding just bringing in the most talented people from Stanford, from MIT, etc. And only 1% or 0.1% actually survive this distillation process where they prove that they can work with the level of intensity while simultaneously level of team orientation without making mistakes, etc. So that team has figured out how to solve basically every hardware problem in the world. And when you apply them to something like terrestrial data centers, they're now like they're building data centers faster and better than anyone else. And so the team is a second moat that I know that seems like, oh, you can just go create a team. No you cannot because it took 20 plus years of distillation. But I think that we're in this weird metastable period where when we go five years from now, I think that launch will again be the moat because I think that orbital compute will be dominating net new inference compute, like just absolutely dominating. But I think for the next five years like the team feeds into dominating trust or compute. So is now you want to go to the trust.
- [37:07]
Ed Ludlow (Bloomberg Tech Host)
So the state play Is this the XAI team, SpaceX AI build datacenter quickly and I think your argument is that on a dollar per token basis highly competitively operate them. If you go on to a map of Tennessee they have Colossus 1, closest 2 and closest 3 and a big question a lot of people had was well hold on, it's amazing to get $2 billion per month from Anthropic and Google but why is that capacity not being used to train the latest greatest models at the model layer or run inference on what Grox already doing? Seemed like a blind of a business decision but longer term like it's hard
- [37:46]
Sean McGuire (Sequoia Capital Partner)
to reconcile my personal opinion kind of my assessment of the situation. First of all one the way I think that Space X in terms of, in terms of treasure Compute and you know you mentioned Amazon, Amazon and Microsoft are incredible businesses. I have massive respect for those founders for the, for the businesses for Satya running running Microsoft but a lot of their market cap comes from their cloud businesses and you know also for their legacy businesses in the case of you know, delivery or, or the whole Microsoft Office bundle and operating system But a lot of it is their cloud businesses. We're in a generational transition of cloud from kind of legacy CPU based jobs to AI cloud. I strongly believe that SpaceX Space X AI is the best in the world at building this next generation of AI clouds like not even close an order of magnitude better at building terrestrial compute in this era than anyone else. And it's not to say that other companies are bad, it's to say you have the best rocket scientists in the world are now using their skills to build terrestrial compute. And what that leads to in my opinion is I think people are really underestimating how much more compute is going to come online next year and the year after for Space X. And that you know means I really believe SpaceX is going to have a surplus of compute. And I think it's very rational and I'm as an investor I love that they are offering compute to Anthropic and Google because one it brings in a ton of revenue that I think in an IPO shows the world that all of this capex build out is not for nothing and it's not all or nothing based on the model layer there's this massive value that the company has a dial of how they choose what to do with it kind of next point I think that people are underestimating that most of that compute is kind of Colossus 1 which is roughly 10 miles away from classes 2 and classes 3. It's heterogeneous GPUs. Anthropic in particular has done an amazing job of being able to run inference on heterogeneous compute. Like there's a lot of nuances here
- [40:22]
Ed Ludlow (Bloomberg Tech Host)
anyways, and by that I think you know the explanation of different generations of GPU, Hopper, Blackwell, etc. We're going to take a quick break and we're going to keep the conversation going. We have plenty of time. Coming up, Space X has big plans for Orbital Data Centers and sequoia. Sean McGuire is going to stick with us and break down how and when that Space Compute becomes a reality. That's next. This is Bloomberg Tech.
- [40:48]
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- [43:51]
Natasha Mascarenas (Bloomberg AI and Venture Reporter)
certain, data centers just require an enormous amount of power in order to run
- [43:58]
Bloomberg Originals Narrator
them, also to cool them. And so they've essentially hit what is an energy wall. And yet demand keeps accelerating globally. Electricity use for data centers is expected to double by 2030. By 2050, it will likely represent a tenth of all electricity consumed on Earth. So what happens when artificial intelligence outpaces the power and land needed to sustain it?
- [44:29]
Natasha Mascarenas (Bloomberg AI and Venture Reporter)
3.
- [44:29]
Sean McGuire (Sequoia Capital Partner)
2, 1.
- [44:32]
Bloomberg Originals Narrator
The answer may be above Earth. In late 2025, space startup Star Cloud sent a Saturn satellite into orbit carrying an Nvidia H100 chip, the most powerful processor ever deployed in space. StarCloud One is not a data center. Not yet. It's a single prototype in orbit. The future that starcloud imagines is tens of thousands of satellites, each carrying chips like this one, working together to do complex, large scale computing in space, also known as orbital compute. For many, the vision begins with a prompt from Earth beamed into space through laser links. The request is then processed by AI chips inside a satellite bus, which is powered by massive solar arrays stretching as much as 4 square kilometers. Together, these satellites form a linked computing network that then sends results back to Earth in milliseconds.
- [45:35]
EY Consulting Narrator
Two years ago, when we first started talking about building data centers in space,
- [45:38]
Ed Ludlow (Bloomberg Tech Host)
people, you know, frankly thought we were a bit crazy.
- [45:41]
Ali Gazi (Databricks CEO)
And it does sound a little bit
- [45:42]
Bloomberg Originals Narrator
sci fi what sounds like sci fi is a response to a very real problem on Earth. Data centers require vast amounts of land, water and electricity. And as the AI systems inside them grow, grow more powerful, the heat they generate is becoming harder and costlier to contain. In space, on the other hand, there are no land constraints or permitting battles, not to mention access to almost unlimited solar energy if it can be made to work.
- [46:17]
Ed Ludlow (Bloomberg Tech Host)
So that was a segment from Bloomberg Originals looking at orbital data centers. And here on the show, Sean McGuire from Sequoia Capital. Still with us, the firm stake of around 1.5% in space X. And this is a big part of the plan. In the prospectus, the team is saying at Space X as early as 2028. In a moment, we're going to bring up a Bloomberg rendering of the design of. And that's actually the Space X1. Right. I think you're probably in the camp of people that think they can do this quickly. Where do you stand on your data or the center? Orbital data center outlook for Space X.
- [46:55]
Sean McGuire (Sequoia Capital Partner)
I stand incredibly bullish. Just incredibly bullish.
- [46:59]
Ed Ludlow (Bloomberg Tech Host)
Yeah, I'm not surprised by that. Yeah.
- [47:01]
Sean McGuire (Sequoia Capital Partner)
But, but like, I, I think it's rationally, rationally bullish. I think something that a lot of people are struggling with here is most, like, most people just never thought about what is the satellite? How do you build a satellite? What are the components of a satellite? What are the constraints around launching these satellites? And I think the people that have been following Starlink closely are very well positioned to assess because you can extrapolate
- [47:26]
Ed Ludlow (Bloomberg Tech Host)
out on both the economics, but also the engineering and physics.
- [47:30]
Sean McGuire (Sequoia Capital Partner)
Exactly. The orbital compute satellites are very similar in many, many ways to Starlink satellites. I truly believe in. Elon said this last week in a video on Orbital Compute that the intrinsic complexity of making a Starlink satellite is probably a little bit greater than an orbital Compute satellite. So I know it sounds kind of crazy, but Starlink is on the satellites themselves. Starlink satellites are more complicated than orbital compute satellites. That said, orbital compute satellites are bigger. For them to make sense, they have to be much bigger. You basically want to put a whole server rack in space. Just in terms of doing inference on a model, you kind of need a minimum size for it to be useful. And you can't launch these bigger satellites unless you have Starship. So almost all of the difficulty of orbital compute satellites is in Starship. It's in the launch vehicle. And so if you want to estimate when orbital compute is going to be scaling, it's really a quantity question around, like, when is Starship going to be scaling.
- [48:37]
Ed Ludlow (Bloomberg Tech Host)
We're showing the videos. This is, this is file right of starship. And you know, the basics of it are that on paper, you know, 135, 150 metric tons payload to orbit. And I think there's some idea that in the Future in iterations, 400 metric tons.
- [48:53]
Sean McGuire (Sequoia Capital Partner)
I think the company said, you know, 200 metric tons is pretty like pretty achievable for metric tons. Maybe, I don't know, it seems likely, but I don't know, you just make it. There's something with rockets where the taller you make it kind of the easier things become. The surface area to volume ratio and that benefits you with drag. So seems very likely. But manufacturing at that skills harder.
- [49:20]
Ed Ludlow (Bloomberg Tech Host)
Can you compare and contrast then? So you outlined in great detail why you're bullish on the terrestrial data center neoclass cloud business. Where does the orbital data center business compare over reasonable timeline for you?
- [49:32]
Sean McGuire (Sequoia Capital Partner)
Yeah, again, and I love the question, I appreciate the question. I think people are looking at orbital compute and they think, oh wow, this sounds so crazy. And I wasn't even, I wasn't thinking about it two years ago. So it must take a long time. And a lot of Elon's timelines in the past have, have been wrong, which you know, he says himself. But if you look at what an orbital compute satellite is, it's basically some compute element, whether that's a GPU or a TPU or training or you know, proprietary.
- [50:04]
Ed Ludlow (Bloomberg Tech Host)
You said you have reference designs for all of them.
- [50:06]
Sean McGuire (Sequoia Capital Partner)
Yeah, but so there's the compute and you want about a server racks amount of compute. There are solar panels, like that's easy, fully kind of proven space. SpaceX has huge experience building solar panels. And the third main piece are radiators. So this is what takes all the heat from the compute chips and radiates it into space via, you know, via black body radiation. Those are the three main things. And then you also have laser links to connect to other satellites or you know, connect to the ground and radio to connect to the ground of these things. Every individual component here is kind of fully, fully proven by SpaceX, except for the compute side. But that is not, it's just not that hard. And so the satellites themselves are pretty easy to make.
- [51:03]
Ed Ludlow (Bloomberg Tech Host)
That's a rendering again, a Bloomberg rendering of what you're describing.
- [51:06]
Sean McGuire (Sequoia Capital Partner)
Yeah. So to me it really is a question of when starship is flying. I don't, I don't understand why Space X wouldn't be able to have an orbital compute satellite up within you know, six months or so of the first storage Starship payload flight.
- [51:22]
Ed Ludlow (Bloomberg Tech Host)
We have 90 seconds left in the show. I can't believe it. We need to address the open air and anthropic elephant in the room, which is on paper they are very similar. If you read the Prospectus and the Tam that SpaceX outlined. Is there room on Earth and outside of the earth for all three?
- [51:39]
Sean McGuire (Sequoia Capital Partner)
I think intelligence is the most important. It's the defining capability of our time and I think there's unlimited demand for intelligence. I think it's very clear that Space X will be, in my opinion, will be the dominant provider of compute for intelligence. And I don't know what's going to happen on the model layer, but there's absolutely space for all, all of these companies to see.
- [52:05]
Ed Ludlow (Bloomberg Tech Host)
15 seconds. If you had like a kind of black swan memo right now for the firm Sequoia, what would the headline be? What's the biggest focus for you?
- [52:15]
Sean McGuire (Sequoia Capital Partner)
I think it's probably regulatory risk.
- [52:19]
Ed Ludlow (Bloomberg Tech Host)
Regulatory. Okay, let's leave it as a cliffhanger. And you're always welcome here back on the show. Thank you very much for coming in. That does do it. For this edition of Bloomberg Tech, I want to check on the markets. Actually in the course of that conversation, the NASDAQ 100 headed south. It's paired some of its declines, but we're down 1.2%. Space X is not at session highs, but it is up 10%. It is past Amazon on market value as it stands where we close. Who knows, Long time away. And maybe it will eclipse Microsoft and Market Cap by the close as well. Stay with us on Bloomberg TV throughout the day. What a show it's been. Recap on the podcast. Really appreciate all of you that do listen to the show as a podcast. You know where to find it on Bloomberg, Spotify, Apple and Iheart. From San Francisco, this is Bloomberg Tech.
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