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Bank of America Representative
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Bloomberg Tech Host (Ed Ludlow)
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Bank of America Representative
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Bloomberg Tech Host (Ed Ludlow)
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Bank of America Representative
What would you like the power to do? Bank of America Open or enroll your account@bankofamerica.com B of A rewards bank of America Corporation All Rights Reserve 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 IBM
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Narrator/Advertiser
Bloomberg Audio Studios Podcasts Radio News.
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Bloomberg Tech Host (Ed Ludlow)
Bloomberg Tech is live from the heart
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Narrator/Advertiser
of Silicon Valley with Ed Ludlow in San Francisco.
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Bloomberg Tech Host (Ed Ludlow)
This is Bloomberg tech. Coming up, China's latest AI breakthrough shaking up the industry what moonshot's Kimmy K3 means for the race with Open Air and Tropic and the chip makers powering it. Plus SpaceX gears up for a second attempt at a Starship test flight later this week. The stocks underperforming most of the other big NASDAQ IPOs. And Andreessen Horowitz signed defense investor and military vet Conor Love to the firm's American dynamism team. Love joins the show. Good morning from San Francisco. The surprise release of Kimmy came through K3 from China's moonshot. It's still everything that people are talking about reading about. We are rebr bounding in technology stocks modestly. We're off session highs where we opened earlier, remember chip stocks entered a bear market Friday in part because of all of the questions posed by what Kimmy K3 a 2.8 trillion parameter model represents. Some of those were like, well, if we have more efficient AI, do we need to spend as much on commute compute? Nvidia is an example of a name that's rebounding. A lot of focus has also shifted to the intense memory requirements for what is happening in open weighted models, Moonshot's gone from upstart to global contender almost overnight. Kimmy K3 drawing praise for rivaling the best models from OpenAI Anthropic. But demand has been so strong that the company says it's temporarily limiting new subscriptions as it adds to work, works to add more capacity. Bloomberg's executive editor for Asia Tech, Peter Elstrom is with us from D.C. there are so many reports on the, on the Bloomberg this morning, so many places we could start. But I want to go to one of the pieces that the team did about, okay, it's Monday morning. We probably went into the weekend thinking, oh no, we don't need to spend as much on compute hardware in that context. Now we have a piece on the Bloomberg saying this puts a lot of emphasis on memory. What's the team in Asia writing about?
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Peter Elstrom (Bloomberg Executive Editor for Asia Tech)
Well, yeah, let's, let's broaden out the lens a little bit here. What's going on is China is holding this world AI conference in Shanghai and we're seeing their company, companies come forward with new offerings in all sorts of different areas. Moonshot is certainly the one that got the most attention over the weekend. We saw this company that was probably not that well known outside of China, if at all. And all of a sudden people are paying attention to it. As you mentioned, its performance is very close to the Frontier models. 2.8 trillion parameters, essentially. You know that the synapses of this, the brain synapses of this model are very significant. But also you saw Alibaba come out with a new version of Glenn model that is very close behind its 2.4 trillion parameters. It's a very powerful model too. So I think the big lesson, the big takeaway here, that China AI is much closer behind the US in terms of AI capabilities than we really realized. If you thought China was six to 12 months behind before, now it looks like maybe they're only a couple of months behind and they're catching up quite quickly. And it's a broader selection of competitors that we really anticipated. People have been focusing mostly on Deep Seek, in particular maybe a little bit on Alibaba and then a couple of the smaller models. But now we're seeing companies like Moonshot come forward and they're very competitive and a lot of people didn't even realize that they were going to be in this race.
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Bloomberg Tech Host (Ed Ludlow)
There's some really important Bloomberg reporting on what Moonshot is looking at financially. We're going to get to that with Bloomberg's beta dipsholts in just a moment. But away from sort of the numbers, what do we know about the people behind Moonshot? Like, what do we actually know about this startup and its team that have been just thrust into the limelight in such a quick and short space of time?
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Peter Elstrom (Bloomberg Executive Editor for Asia Tech)
Well, the founder of moonshot is a 33 year old Yang Ji Lin. He graduated from Carnegie Mellon. He got his degree in the United States. He decided to go back to China because of the possibilities that they had there. And really before Deep Seek, he was kind of seen as the rising star within the AI universe. He's a big music fan. He named the company in Chinese after Dark side of the Moon, the Pink Floyd album, which apparently is his favorite. They have conference rooms. But beyond being this, this geek and this music fan at the same time, he's been at kind of the cutting edge of AI developments there. And he made a very conscious choice. Rather than trying to make a lean, efficient model, he decided to go very big with this version of, of Kimmy, Kimmy 3 and try to make something that was very close to the frontier edge that we're seeing in the US So I think Yang is somebody that we're going to hear more about, the same way that we talk about Deep Seek's founder, Leon. I think we're going to see more breakthroughs, more innovations, and people are going to start watching him much more closely than we've seen in the past. We had a nice scoop over the weekend also that Moonshot is planning on going public. So we're going to be able to look at the financials of their company in the way that we've seen some of the other Chinese models. And by the way, we haven't seen that from the US players so far.
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Bloomberg Tech Host (Ed Ludlow)
A lot of key figures critical to the Bloomberg tech audience just kind of remarked over the weekend that this could have been an American startup. You know, there's a lot of focus on the US his own policy with regards to talent, immigration. We'll get to all of that later in the program. Bloomberg's Peter lstr, thank you very much. We'll stay with Moonshot. Peter just mentioned it. The company isn't just making waves with its latest AI model. It's now setting its sights on the public markets. The startup is said to be preparing for a Hong Kong IPO that could come in the next six months following an absolute surge in demand. Its valuation above $30 billion right now, according to sources. Bloomberg's Bailey Lipschultz. All things IPO was so interesting to read through this One, let's start with the basics. What are we reporting? What do we know about how quickly they're moving to do a Hong Kong listing and any of the sort of valuation considerations around that?
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Bailey Lipschultz (Bloomberg Reporter)
Yeah, and you kind of nailed it on the head with the intro. So closing up around right now about $30 billion. Again, a small drop in the bucket relative to what we've been reporting around the anthropics and open eyes of the world here in the US and the expectation that in the next six months they could be pricing that IPO in Hong Kong. The main thing to keep in mind, Bloomberg has reported that Deep Seek is looking at a mainland listing sometime in 2027. So these two now premier companies in Asia, in China could actually be racing to go public. Kind of similar to what we're seeing with anthropic and open air. But Again, mainland China vs Hong Kong vs US listings open up completely different investing universes businesses.
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Bloomberg Tech Host (Ed Ludlow)
So go go into that in a little bit more detail. I find that really interesting. Right. A big part of the story over the weekend is that this is a Chinese AI startup, right? We are saying they're looking at Hong Kong as a listing. What are the kind of political considerations around that as opposed to the U.S. where do the pools of capital tend to come from if you do an HK listing?
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Bailey Lipschultz (Bloomberg Reporter)
HK listing opens up an entirely different investing universe. So you have the rest of really all of Asia. So you think about Hong Kong based investors, you think about people in Australia and Singapore and other really countries that could tap that listing. Again, US Investors sometimes do invest in Hong Kong, but similar story to what we tracked with SK Hynix. It's a bit of a higher bar to clear and there had been some consternation around that. Whereas on the flip side, a deep sea listing in mainland China, completely different investing unit universe. It's a really kind of local driven investing community. You do have retail numbers that are kind of eye popping. It looks a bit kind of like gambling and trying to get in on some of those options. So the big push and actually the big news is the fact that Moonshot wants to tap the HK market just again because that does open an entirely different investing universe and we kind of open it up more similarly to an Alibaba or some of Those other companies, JD.com that are listed in Hong Kong and also listed here in the U.S.
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Bloomberg Tech Host (Ed Ludlow)
bailey Lipschultz, thank you very much indeed. And competition among Chinese AI developers also continues to intensify. Alibaba just unveiled its latest flagship Quinn model, which it says is second only to Anthropic's latest system which sent Hong Kong shares of Alibaba rising on that news. The Sunday release came only days, of course, after Moonshot unveiled its latest K3 model. We have some breaking news crossing the terminal in the last few minutes. UK's Rachel Reeves has resigned as Chancellor of the Exchequer. In a post on X she says it's been, quote, the privilege of my life to serve as the Chancellor of The Exchequer, the UK's equivalent of a finance minister or treasury secretary. You can see there was an immediate response in the pound dropping against the $134 where it currently stands. Meanwhile, new Prime Minister Andy Burnham just told reporters the Labour government will use, quote, any flexibility within its fiscal rules. He said he would stick to the self imposed rules which were adjusted by Rachel Reeves two years ago to allow for greater capital spending. It's a dynamic situation in the UK government. We'll keep you up to date as things change. Coming up, the Countdown's back on SpaceX targets Thursday for another attempt for Starship's 13th test flight. We got more on that next. This is Bloomberg Tech. SpaceX is gearing up for another attempt attempt at a 13th Starship test flight. The company is set Thursday as the new launch date after last week's attempt was scrubbed. And right at the last moment, shares were down about 1 1/2 percent. This has been a broader story post IPO on Space X kind of underperforming. For more on Space X, Brett Lindsey, Missouri managing director and head of Industrial sector Research joins us. Recently initiated on Space X has an outperform rating with the stock, a price target of $200 per share. You know, I appreciate that there's a clear thesis, the core of your coverage of Space X. Right. But I wanted to get to the idea that I'm sat here at this desk during the Starship attempt last week and it was amazing to see how quickly in after hours trading the stock dropped. Right. 4% in the moment because the test was aborted. Right. The final moments, all of these future business lines on the side, NEO Cloud side, Starlink, Orbital Data center, they're all predicated on Starship not just working but being rapidly reusable. So can we just start there and sort of your response to tracking the cadence of Starship's development?
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Brett Lindsey (Mizor Managing Director and Head of Industrial Sector Research)
Yeah, you bet. Thanks for having me on. So yeah, this was like 13 recent delay was some, some minor technical issues that were identified pre launch. And I remind you this is version 3 so it is a bigger more powerful vehicle. They've debuted about two months ago. The automatic abort at ignition was really the function of four of the 33 Raptor engines on the booster didn't immediately light up and the onboard system caught it. It stood the vehicle down before the liftoff. And that's a safety system really doing what, you know, what it's supposed to do. Musk risk in the team, you know, they've identified the root cause. Within a few hours, two engines are being swapped out. They're already back on the pad. They're targeting, as you mentioned, this Thursday for a relaunch. That's about a week of turnaround on a pretty complex rocket. I think these development programs that you've seen historically at this scale, you know, from a diagnosis and fixed cycle, that's, that's relatively quick versus anything that's structurally wrong with, we know, with the ship.
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Bloomberg Tech Host (Ed Ludlow)
So, Brett, here's the thing. I'm reading your research investment thesis. Space X is not a rocket company. We're just talking about rockets. Explain your thesis.
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Brett Lindsey (Mizor Managing Director and Head of Industrial Sector Research)
Yeah, no, absolutely. I would say that the, you know, the enabler of, of the Starlink opportunity and the connectivity opportunity, longer term is going to be dependent on the success and the reusability cadence of Starship. Falcon 9 is the current vehicle they use this year. They've got really good visibility on some of the, you know, the payload to orbit, densifying the constellation on star for Starlink on the actual Falcon 9. But we do think long term it will hinge upon the success of Starship. You know, right now they do have a very, you know, big running start relative to the other competitive set. About 85% of all mass to orbit was, you know, was enabled by Space X over the last three years. And, you know, operational cadence will be important. These launches this year will be important. And they're, you know, they're making inroads in there, you know, we'll see on Thursday. But yeah, that will be a big enabler and gating factor for the success over the next couple of years.
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Bloomberg Tech Host (Ed Ludlow)
Within your $200 price target. How do you sort of break out each business line within that price target?
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Brett Lindsey (Mizor Managing Director and Head of Industrial Sector Research)
Yeah, no, it's a great question. So when we look at the, you know, the next three year roadmap, we're really taking a large discount relative to the AI platform. So near term, a lot of our price target is going to hinge upon the success of Starlink and then some of what they're doing on space with the government contracts and some of the Enterprise most recently Some of the contracts with, with the airlines. We do think there is pretty good line of sight here in the near term and we anchored our valuation on 2029 and actually took a pretty large haircut relative to what the internal plan is. And we're thinking that connectivity is more optionality around the stock and underwriting it on some of the near term fundamentals versus the long upshot on Orbital Data center in 2020, 30 and beyond.
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Bloomberg Tech Host (Ed Ludlow)
Do you model at all for any key man risk with, with Elon Musk, you know, how do you kind of factor that into how you value the company as much as anything?
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Brett Lindsey (Mizor Managing Director and Head of Industrial Sector Research)
Well that's, that's certainly a consideration, right? He's, he's a visionary. He's you know, very involved in the operations in really across every single segment and division within the organization. You know, all that being said, you know there is a, there is a blueprint that's, that's in place. The, you know, I'd say the Moats, they've been able to develop some of the secular strengths across the business and really what they have is you know, ownership within, you know, the launch capabilities in the US and across the globe. That is the key differentiator as we're thinking about some of the optionality with the other segments down the road. So yes, something always we consider but you know, he's built something from what was really a, you know, you know, a vision, you know, years ago, you know, over decades ago. And it's a, it's a real company with real moats and defensibility in our view.
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Bloomberg Tech Host (Ed Ludlow)
Brett Lindsey of Mizor on Bloomberg Tech, thank you very much indeed. Now coming up, this space infrastructure startup just found a way to address a bottleneck in space scaling. Quantum computing in lune. CEO and co founder Rob Myerson joins us next. This is Bloomberg Tech.
- [17:34]
Narrator/Advertiser
With the highest number of young STEM graduates per capita in the eu, Ireland has the people and skills your company needs to succeed here. IDA Ireland, the national investment development agency can help you find and nurture the people you need to internationalize and thrive. Our talent is just one of the extraordinary benefits Ireland has to offer. Learn more@idailand.com invest in extraordinary
- [18:03]
Public.com Advertiser
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Bloomberg Tech Host (Ed Ludlow)
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- [19:03]
Connor Love (Andreessen Horowitz Investor)
Member FINRA and SIPC Advisory Services by Public Advisors, LLC.
- [19:07]
Brett Lindsey (Mizor Managing Director and Head of Industrial Sector Research)
SEC registered advisor complete disclosures available@public.com disclosures
- [19:13]
Bank of America 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. IBM.
- [19:48]
Yahirah Anand (Bloomberg Tech Reporter)
It's time now for Talking Tech. I'm Yahirah Anand. First up, Cusp AI, a Bezos backed British AI startup has raised $450 million to accelerate the development of next generation chip materials using AI. The company is also launching the AI Materials Foundry, bringing together more than 48 organizations including Nvidia, Metta, Hyundai to speed up Chip Innovation. Plus, Deep Sea founder Liang Wen Feng's investment firm fell 16% after China's quant firms were hit with an AI rout. The volatility in Chinese hedge funds highlight the wild swings of a related stocks as bubble concerns intensified and Boeing says they will need until the end of the day next decade to bring its next generation jet to market as it continues to repair its finances for the huge investment and as customers keep buying its current model. CEO Kelly Ortberg spoke with our own Guy Johnson earlier today at this year's Farmbo Air Show.
- [20:49]
Bloomberg Tech Host (Ed Ludlow)
The market is not quite ready for the new airplane. The customers are telling us let's focus on the existing product.
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Brett Lindsey (Mizor Managing Director and Head of Industrial Sector Research)
We'd like to see better durability of
- [20:58]
Bloomberg Tech Host (Ed Ludlow)
that product in the in the marketplace. And as I mentioned we've got big backlogs and they're looking for us to deliver on those backlogs.
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Brett Lindsey (Mizor Managing Director and Head of Industrial Sector Research)
We are studying a new airplane and
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Bloomberg Tech Host (Ed Ludlow)
we'll be ready when the market's ready this startup is tackling a bottleneck facing quantum computing. After President Trump made the technology a strategic national priority, Interlin says it's discovered a new way to harvest helium 3, essential to cool the computers and to scale the industry. Joining us now is Insulin CEO and co founder Rob Myerson. I have to say, when this idea hit my inbox, I was intrigued. Interlin's goal is to harvest helium 3 in industrial quantities from the Moon. But in the here and now, there just isn't enough helium 3 for the quantum computing industry on Earth to scale. So you seem to have found a stopgap. What have you done?
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Rob Myerson (CEO and Co-founder of Interlin)
Well, that's right, and thanks for having me. We've devised a technique. Our team has gone back to first principles, crack the. Crack the textbooks, and invented a way to separate helium 3 using cryogenic distillation from grade A helium here on Earth. This is an idea that's been around for a while, but never pursued commercially. And as far as we know it, we're the first to demonstrate the ability to separate Helium 3 from Commercial Grade A helium.
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Bloomberg Tech Host (Ed Ludlow)
The Bloomberg audience is familiar with the use of helium and cooling and stabilization in the chip industry, for example. And so with the war in Iran and the Strait of Hormuz bottleneck, we came to understand that there was a shortage there. How real was this for you? Now, Rob, what's your solution looking like on a timeline basis?
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Rob Myerson (CEO and Co-founder of Interlin)
Well, so the shortage we're talking about is Helium 3, which is an isotope of helium that's extremely rare on Earth. It comes from the decay of tritium, and it's used to chill down superconducting quantum computing chips down to millikelvin temperatures. We, for decades secured our Helium 3 from tritium decay in the US and overseas, including Canada. But there's not much tritium made anymore, and tritium has a 12.3 year half life, so it decays to helium 3 and we're just not producing helium 3 anymore. And so Interlude has identified the Moon as a target market in the future. The sun produces helium 3 in large quantities. There's over a million metric tons of helium 3 on the Moon and its lunar regolith. And in developing that, that plan to go to the Moon and extract helium 3, we devised this, this technology we call cold capture to devise healing to, to separate helium 3 here on Earth.
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Bloomberg Tech Host (Ed Ludlow)
So it's the same technique we are. Yes, you heard right, Bloomberg's audience. We're talking about harvesting helium 3 from the moon. That's the ultimate goal, right, Rob? But I guess from an Extra economics perspective, you know, that technique has a higher yield on the Moon. Like, like get us to the point where this is real.
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Rob Myerson (CEO and Co-founder of Interlin)
Yeah, it absolutely will have a higher yield on the moon. We plan with our go to market in the early 2030s to produce 10 kg of helium 3 on the Moon here on Earth. By deploying cold capture to great a helium plants on Earth, we expect to produce about two and a half million kilograms of helium 3 annually. And we have customers that are already signed up to buy Helium 3 from us over well just under $500 million in purchase orders, binding contracts that extend from 2028 out to 7 to 10 years in the future. So we had to find a way to service those customers earlier. And by applying this technology that we developed for the moon to this Earth application, we're able to do that.
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Bloomberg Tech Host (Ed Ludlow)
Rob, just very quickly, have you a pathway or a plan in place to get your technology to the moon's surface? Who is the launch provider? Who's going to help you do that operationally?
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Rob Myerson (CEO and Co-founder of Interlin)
Well, we have a little bit of time to decide on that Ed, but we, we are looking to the Artemis program and launch companies like Space X and Blue Origin. But other companies that are building landers like Firefly Intuitive Machines and others, we, we plan to invest alongside the Artemis program, the NASA program to go back to the moon and then on to Mars and we will use that infrastructure that they developed. Now of course add the infrastructure we need to harvest large volumes of helium 3 from regolith is infrastructure that also can help NASA build a moon base, build roads and build do construction on the moon that will support large scale and long, long term lunar economy.
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Bloomberg Tech Host (Ed Ludlow)
Interlin CEO and co founder Rob Myers and thank you very much for your time. Now coming up, it's been a fascinating weekend in AI and there is a lot to unpack. Yep, Kimmy K3 but also bigger questions about the future of American AI. Mary D', Onofrio, partner at Crosslink Capital, joins us to discuss the next frontier tier in AI investing. This is Bloomberg Tech. Welcome back to Bloomberg Tech. We're rebounding in the technology sector when it comes to public markets. Remember, chip stocks fell into a bear market Friday in part because of questions posed by the release of chemical 3 by China as moonshot. We're off session highs right now, but the NASDAQ 100 adding almost a percentage point. The stock's up 2% and it's a lot of the compute names in video, but also memory names that are driving some upside in those public markets. Since Moonshot Released its remote last week. Everyone's debating what it really means. Does more efficient, I mean less hardware. Is China closing the gap faster than we expected? We where does AI's real value ultimately accrue? Joining us now is Crosslink Capital partner Mary d'. Onofrio. Focused on venture growth investments but across software, AI and infrastructure. And for the last three days I've said Kimmy K3 many times but it was interesting to like take a sort of straw poll of VCs, founders, people in industry of how they react to it so differently. Some people are very fearful, defensive. Others say this is very good for a whole very difficult job first thing on a Monday. But your reaction to what happened, well
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Mary D'Onofrio (Partner at Crosslink Capital)
Kim UK3 as you said, was, was phenomenal and it's similar to the deep seat moment we had last year. You know, 2.8 trillion parameter model. And what it demonstrates I think is that you know, China and frontier, pardon me, China and open weight models are closing the gap with frontier models. You know, obviously it's done, it was done based on their own benchmarking but according to the benchmarks, you know, they're fourth. And while you know, you can debate the merits of those benchmarks themselves, the productivity gains are tremendous and I think that in general it is, is, is part of the pathway towards more widespread open weight model usage. And in the context of enterprise budget, it's ballooning in AI. I actually think that it's probably a boon for ubiquity over time.
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Bloomberg Tech Host (Ed Ludlow)
When you think about your existing portfolio of companies, were you sort of like okay, how does this impact their trajectory? Is anything actually fundamentally change for the, the different pieces of the five layer cake that you're invested in?
- [28:43]
Mary D'Onofrio (Partner at Crosslink Capital)
I don't know if it, if it changes the cake itself, but I do think it's another demonstration, demonstration that models keep leapfrogging one another and if companies don't out innovate they're going to be leapfrogged too. Whether it's, you know, every single model seems to outperform the last and it's a matter of out innovating by creating modes of data, of performance, of customer resonance and otherwise. Unfortunately, you know, the innovations in both frontier and open weight models is, is tremendous.
- [29:15]
Bloomberg Tech Host (Ed Ludlow)
You're on the crossover investment team but basically focused on private and maybe later stage or venture growth investments. Seven years at Bessemer as well prior to being at Crosslink, sort of introduce us to your overall investment focus, your investment thesis.
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Mary D'Onofrio (Partner at Crosslink Capital)
Yeah, of course. So as you mentioned, I'm a partner Acrosslink Capital I help to lead the mid stage venture practice. I spend an asymmetric amount of time in vertical AI and infrastructure.
- [29:42]
Bloomberg Tech Host (Ed Ludlow)
What are some examples of what you call vertical AI and infrastructure?
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Mary D'Onofrio (Partner at Crosslink Capital)
Yeah, of course, so, so AI infrastructure is a place I spend a lot of time that's, you know, the physical and software systems required to build, train and run models. And in the first wave it was about how to build a scalable model and now we have those as we're talking about right now. And so in the next wave it's how to deploy them quickly, fastly, cheaply. Agents of course being one of, one of the ways to do so in an efficient way. You know, taking models as the reasoning layer, adding tools and infrastructure around it to connect outside data, data in apps and using memory in order to, to do it in a way that produces outcomes. And agent infrastructure itself has become a sector that I've spent a lot of time in, whether it's agent harnesses or the identity layer around it. One of my portfolio companies, Teleport, is a leader in that space and it's a place that I'm spending an asymmetric amount of time.
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Bloomberg Tech Host (Ed Ludlow)
I wanted to get to that kind of background on your focus to try and answer some of the questions that the Kimmy K3 moment posed. One idea is that basically by lowering the margins at the model layer, it's an enabler, it opens up the market a little bit, it's a driver of demand, essentially. Do you agree with that kind of thinking in response to this?
- [31:01]
Mary D'Onofrio (Partner at Crosslink Capital)
I do think that it demonstrates what a lot of even the inference infrastructure layer is demonstrating, which is, you know, as cost has gone down by 95%, does that displace the total dollar value expended by customers? And I would argue it probably won't because the migration will just be from workloads that are at the frontier, that are most expensive and of course that require the most reasoning capabilities and are the most advanced. But they'll go to cheaper, cheaper models that, that, you know, still provide the same amount, the requisite amount of compute for the question being posed, but do so at much cheaper cost while not sacrificing on things like latency and performance.
- [31:44]
Bloomberg Tech Host (Ed Ludlow)
It's interesting because like Kim K3 kind of pricing, 3D dollar per input, $15 per output. On the token side, like it's, it's quite in line with like what a lot of leading models are also priced. I found that interesting. Maybe we should talk a little bit about valuations. It's not a sophisticated argument, but when this all happened. A lot of people came out and said well, if a $20 billion Chinese startup can do a 2.8 trillion parameter model with these economic why are we signing Open air and anthropic evaluation of a trillion? You know, they looked at the sort of fundamentals of that. Is that the right way to think about it?
- [32:25]
Mary D'Onofrio (Partner at Crosslink Capital)
Frankly, I don't know yet and I don't think anybody knows yet because even, even in the context of those questions, Anthropic and open Air are still producing billions and billions of revenue. And it's not just from their, you know, they have first party businesses, they have third party businesses. And I, I think, you know, obviously the, the API opened for, for Moonshot but the open weights have not yet
- [32:49]
Bloomberg Tech Host (Ed Ludlow)
27th of July and it's worth noting
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Mary D'Onofrio (Partner at Crosslink Capital)
that because it's open wait doesn't mean it's free to run. And so I think that's a dynamic to these models that people potentially underappreciate as well.
- [32:59]
Bloomberg Tech Host (Ed Ludlow)
The argument you've just outlined is the same that Greylock saw Monomedi made on, on Friday on the show that you know, these are big, very robust businesses that have multiple revenue streams. You are focused on the private markets. But we've had some really interesting IPOs of late. You know, not just Space x but also SK Hynix doing its ADRs. I was in New York City for that. What does that signal to you?
- [33:24]
Mary D'Onofrio (Partner at Crosslink Capital)
I think it's two things. Obviously those are fantastic businesses and I think when it comes to what it says for, for the markets is that investors are really looking for anything having to do with the build out infrastructure. Obviously you made the reference to the performance of public market stocks today. But I also think it's one other thing for the capital markets which is that you know, we have this narrative that potentially the IPO window is reopening but is doing so with these long standing businesses with billions of dollars of revenue that are frankly older. You know, they're, they're, they're at the cutting edge, edge of innovation but they've been around for decades. And so I think it's saying, you know, there, there is a desire for things having to do with AI, but nonetheless investors are still, they're hardly speculative. Investors are looking for things that are relatively secure.
- [34:09]
Bloomberg Tech Host (Ed Ludlow)
Crosslink partner Mary Danofro making the debut on Bloomberg Tech. It's really great to have you here. Thank you very much. TSMC is spending at an unprecedented pace committing a record $265 billion to its U.S. u.S. Expansion. So with AI fueling enormous capital needs across the chip industry. The question becomes how will it pay for it? Bloomberg Stephen Engle our CFO Wendell Huang whether another trip to the bond market could be on the table.
- [34:37]
Wendell Huang (TSMC CFO)
Our fundamental belief is that we should be able to self sustain using our operating cash flow to support the capex and leave enough free cash flow to return cash to shareholder through a sustainable and steadily increasing cash dividends which we have been doing that in the past several years. We have very good track record of it now. From time to time we can go out to the market, to the bond market if the timing is right. We've been doing it. We've done a $30 billion fundraising in bond market a few years back. About half of it in US$, half of it in NT. NT is very cheap. Funding for US US dollar is becoming more and more expensive. So we'll see if the timing is correct. If the timing is right, we do not rule out that we can go to the bond market again.
- [35:42]
Bloomberg Tech Host (Ed Ludlow)
Well, given what you just laid out,
- [35:44]
Public.com Advertiser
would maybe a mix of more NT dollar denominated bonds be more likely or
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Wendell Huang (TSMC CFO)
yields to a high NT dollar Bond market is much shallower than the US dollar bond market. So it has its limitations.
- [36:00]
Bloomberg Tech Host (Ed Ludlow)
That was TSMC CFO Wendell Huang with Bloomberg Stephen Engle in Taipei. Now coming up, Silicon Valley is still betting big on defense. We're going to speak with Andreessen Horowitz. New signing Connor Love about the startup shaping the future of national security. Connor just joined the American Dynamism team. That's next. This is Bloomberg Tech.
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Bloomberg Tech Host (Ed Ludlow)
Investing Brokerage Services by Open to the Public Investing Inc.
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Connor Love (Andreessen Horowitz Investor)
Member FINRA and SIPC advisory services by Public Advisors, LLC.
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Brett Lindsey (Mizor Managing Director and Head of Industrial Sector Research)
SEC registered advisor complete disclosures available@public.com disclosures
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- [39:05]
Bloomberg Tech Host (Ed Ludlow)
venture firm Andreessen Horowitz is doubling down on its American Dynamism thesis and practice, adding defense and space investor and former army captain Connor. Love to the team and Connor joins us now, joining from Lightspeed. It's great to have you on the show. Day one one. You're very welcome. Day one on American Dynamism. You, you know, reading about your investments at the last firm and like how you've approached your career. You, you would call it American exceptionalism. Right. But there's a close alignment between those two ideas. Just reflect on what it was that prompted you to join this firm.
- [39:43]
Connor Love (Andreessen Horowitz Investor)
Yeah, well, first of all, thanks for having me. We're in a pretty amazing opportunity right now to invest really in the fabric of America. And when Mark and Ben and team kind of approached me, look, this is a category that four years ago, they didn't jump on the bandwagon. They said, hey, this is important to the fabric of America. This is important for the entrepreneurs and the technology future. For our nation. And when given that opportunity, you know, you kind of get on, you have to get on board and join the team. So it's been amazing, you know, so far just to dive in and get to know everyone. I think in the end when you take a step back and just look at the opportunity here, you know, as I said before, what's happening is a once in a generation opportunity where we're redefining what it really means to build in America. It's not just software primitives. I mean it's, it's things that are core to the fabric of America. It's defense technology, it's energy, it's many things. And so to join a team like Andreessen Horowitz and, and kind of continue to invest in back entrepreneurs in this ecosystem, I'm just really thrilled and excited to be able to do it.
- [40:44]
Bloomberg Tech Host (Ed Ludlow)
Do you mind if I ask a bit more about the back story? You know, you mentioned Mark Andreessen, Ben Horowitz, that they approached you. You know, how did this all come together?
- [40:52]
Connor Love (Andreessen Horowitz Investor)
It's actually funny. One of the partners, you know, founders of American Dynamism, Catherine Boyle, I actually spoke to her about seven years ago. I had the privilege of serving in the military and was actually forward deployed in Iraq looking for what the next opportunity was in my professional career. And I connected with her really in just kind of a haphazard, out of the blue way. And she said, hey, there's this company called Andrew. You should look at Andrew. Obviously everyone knows what Andrew is these days. But I think importantly, I just got exposed to Silicon Valley and I saw then what I know now, that really technology will be a force for good. Not just for the defense fabric of our nation, as I mentioned, but also just you can't have an industrial base in America if you don't have a burgeoning defense base. So it's, it's to me a once in a lifetime opportunity that is very much rooted in my background and just happens to connect at, you know, three in the morning with Katherine Boyle at, you know, when she was then at her previous firm.
- [41:50]
Bloomberg Tech Host (Ed Ludlow)
You've explained it right? It's not exclusively defense technology. American, American dynamism is broader than that. But right now andariel is, is the best known case study. Yeah, right. Cyronic. More recently in the news cycle. What is the next phase of American dynamism, do you think, Connor?
- [42:06]
Connor Love (Andreessen Horowitz Investor)
Yeah, well, I put it in that lens, which is you really cannot have a defense industrial base without an industrial base. And when you look into what goes into these autonomous systems, these new platforms. It's really the subcomponent, it's, it's really the parts, it's really the, you know, metal and the end components of what's going on. So when I think you take a step back and you look at, hey, obviously defense, we're, we're creating a new opportunity for Neoprimes to really capture and serve not just the United States, but also our allies. You see things like energy, you see things like core manufacturing, importantly you see things like space. Yes, there's a huge defense component to space, but as we put more kilograms of mass up to space in a lot cheaper way, you know, really it is, you know, kind of the next frontier of where we're going to be building not just for defense and kind of government use cases, but, but all other parts of the economy. So I think when I take a step back and I look at American dynamism, as we call it now, I actually just view it as it's a proxy for how some of the most valuable companies in the world are created. I mean, historically you look at Boeing and historically you look at, you know, all these, these companies have been important to America. They've been very important to the American individual. They necessarily have not always been the most valuable companies. Technology is changing that. Technology is saying you can be both important to America and our allies and be some of the most valuable companies in the world. And that's what we and myself at Andreessen Horowitz are really excited to invest into.
- [43:31]
Bloomberg Tech Host (Ed Ludlow)
Andrew is a big focus for the Bloomberg Tech audience. You will have seen the news this morning with Archer finally showing the autonomous veto platform. I think what would be interesting is, you know, you were, you participated in Lightspeed's Android investment and are clearly important part of the American Dynamism and a 16C more broadly portfolio. How are you going to approach that?
- [43:55]
Connor Love (Andreessen Horowitz Investor)
Yeah, well, I think I will say a couple of things about Andrew. The first thing is when you think they've got to their last product, you're wrong. There's, there's another product. And I think the beauty is when you have such a complex use case that is the kind of, you know, Department of War and the American warfighter, there are a lot of problems that need to be solved. So you know, to see this, this kind of partnership with Archer, I think is only net good for the American war fighter in the American public. I think when you take a step back and say, you know, really this market is massive, I mean there are a lot of problems to be solved in the defense space. I mean, there's everything from missiles and what Castellan is doing to ground autonomy systems. I mean, it is really a massively large market where there's actually a ton of technology problems to be solved below it. I think the underlying substrate that I think is important and what we look at Andreessen and I've looked at in the past is really what's happening in defense is this low cost autonomy thesis that is just, you know, it's playing out in the battlefield. Go look at what Saronics done in kind of the conflict in Iran. Go look at the front battlefield of Ukraine when you can introduce something that is literally 10 times cheaper. And as performance and en masse, it really changes the game in terms of deterrence and what you can do for our nation. So I think again, you take a step back, the market's big and I think there's going to be a ton
- [45:13]
Bloomberg Tech Host (Ed Ludlow)
of opportunity kind of really quick. You know, you mentioned Catherine and Erin, regular contributors to the show, but with you, somebody joined the team that is a veteran just in the 30 seconds we have. Would you reflect on that a little bit, the skill set and experience you bring?
- [45:28]
Connor Love (Andreessen Horowitz Investor)
Yeah, I mean there's, there are more impressive people that have done some pretty amazing things for our country that I want to put in front of me. I do think though, that time of service really just grounds me and why we are doing this. Like, like I said at the start, importantly, this is a category where you're not just doing good economically, but I do believe you're doing good for the world and for the American public. So having worn that uniform puts me in a position just to take a step back and say, hey, this, this means a lot. Not just for, for, for our shareholders and for everyone, you know, back in Andreessen, but also for America. So I'm deeply thankful and I'm going to keep doing it for decades.
- [46:03]
Bloomberg Tech Host (Ed Ludlow)
Connor Love, now on the American Dynamism team at A16Z. Great to have you on the show. Thank you very much indeed. Now coming up, Alphabet, Tesla, Tesla, intel and more posting earnings this week. We're going to look ahead. We're going to discuss what to expect. This is Bloomberg Tech. Okay, Tech earnings kicking off and we're expecting some big names this week, including Alphabet, Tesla and Intel. Investors will be looking for proof that billions in AI spending are starting to pay off, even as cheaper models from China have raised some questions. Bloomberg Intelligence senior analyst Mandeep Singh joins us on what to expect. And you know it's been so interesting to read the team's research. There will be short term a focus on CapEx, but I think looking past that, what is it that you want to see? What's the data point that shows this thing's real?
- [47:01]
Mandeep Singh (Bloomberg Intelligence Senior Analyst)
I mean cloud revenue is still the key metric when it comes to hyperscalers who are at the forefront of capex. And everyone is expecting those capex numbers to go up. I mean the question is, is next year going to be 30 to 40% or we are going to have another year of 50% plus increase in CapEx? I mean to my mind the numbers are getting very big in terms of trillion dollars in annualized capex from the hyperspace scalers. So there is a limit to how far they can go. But clearly you know, 2027 numbers will be higher and we are expecting positive upward revisions justified by accelerating cloud growth for from these hyperscalers.
- [47:45]
Bloomberg Tech Host (Ed Ludlow)
Let's stick with the Google parent is the case study. You know overall revenue growth is expected to be about 20% but Google Cloud I think 65% year on year growth. You know that's the story, right? That Google Cloud is where the traction with AI shows up.
- [48:03]
Mandeep Singh (Bloomberg Intelligence Senior Analyst)
Yeah, no you're absolutely right. And that's where you know the comparisons would be drawn to Azure and the fact that Google Cloud is growing at least 15 percentage faster points faster than Azure and AWS, I mean seems to to be. Things seem to be picking up and now OpenAI is deploying on Amazon AWS as well as Azure. So the impact of that on Microsoft, that's going to be front and center. But there is no doubt that cloud infrastructure is where the monetization will be evident. And look, all the Frontier labs are monetizing tokens but you're not going to be able to glean that from the earnings of companies. It's too early to see that token monetization being visible.
- [48:51]
Bloomberg Tech Host (Ed Ludlow)
This is what the week looks like. All kicks off Wednesday. Alphabet and Tesla, IBM of course pre released. But maybe we'll learn a bit more than intel on Thursday. Bloomberg Intelligence senior analyst Mandeep Singh, thank you very much indeed. A busy week for mandate too. As we head out, let's take a look at Today's big number. $264.01 million. That's how much the Odyssey, the new movie from Blockbuster director Christopher Nolan, took in sales globally in its opening weekend. It was the number one film in the US and Canada over the weekend with $124.5 million in ticket sales in North America, a large portion of which was generated from screenings in IMAX's giant auditoriums. Many of them were sold out many months in advance. I'm still yet to see it. That does it for this edition of Bloomberg Tech. A really big focus still on Moonshot's Kimmy K3 model 2.8 trillion parameters and a lot of questions posed for the world, for AI, for markets, for investors. We got through all of that in the program. To recap it on the podcast, you know where to find it on the Bloomberg terminal. As one audience member reminded me, we call it the Bloomy, but it's online to have a great week. This is Bloomberg Tech.
- [50:12]
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Mary D'Onofrio (Partner at Crosslink Capital)
gravis symptoms can pile up.
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Bloomberg Tech Host (Ed Ludlow)
Plans getting rescheduled, hobbies being left behind,
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Mary D'Onofrio (Partner at Crosslink Capital)
everyday tasks going unfinished.
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Bloomberg Tech Host (Ed Ludlow)
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