OpenAI Unveils First Custom AI Chip With Broadcom | Bloomberg Tech 6/24/2026 — Transcript

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1. 0:06>> BLOOMBERG TECH IS LIVE FROM THE HEART OF SILICON VALLEY
2. 0:10WITH ED LUDLOW IN SAN FRANCISCO. ED: THIS IS BLOOMBERG TECH.
3. 0:17OPENAI UNVEILS ITS FIRST CUSTOM AI CHIP CALLED JALAPENO,
4. 0:22DEVELOPED IN PARTNERSHIP WITH BROADCOM.
5. 0:25SK HYNIX PLANS TO RAISE $29 BILLION IN A LANDMARK U.S.
6. 0:28LISTING, TO INCREASE CAPACITY TO REESE -- MEET MEMORY CHIP
7. 0:29DEMAND.
8. 0:40CEREBRAS'S CEO JOINS US LATER THIS HOUR.
9. 0:41LET'S GET TO OUR TOP STORY. OPENAI IS TACKLING ONE OF AI'S
10. 0:47BIGGEST CHALLENGES, THE SUPPLY AND COST OF COMPUTING.
11. 0:53THE COMPANY UNVEILED A PROCESSOR DEVELOPED WITH
12. 0:55BROADCOM, WHICH THE COMPANY SAYS CARRIES A 50% LOWER COST
13. 0:58VERSUS A TYPICAL PO. THE FOCUS IS FASTER, CHEAPER AI
14. 1:03INFERENCE. SHARES ARE AROUND 2%. WE ARE OFF SESSION HIGHS, UP A
15. 1:11PERCENTAGE POINT OR SO ANY MARKET THAT IS KIND OF FLAT.
16. 1:17THIS IS THE BIG PICTURE. OPENAI'S COMPUTE CONSTRAINT,
17. 1:22RELIANT ON NVIDIA. THEY WANT TO DIVERSIFY.
18. 1:25WHAT DO WE NEED TO KNOW?
19. 1:33>> OPENAI WANTS TO OWN MORE OF THE INFRASTRUCTURE STACK AND
20. 1:35USE THE EXPERTISE IT HAS DEVELOPED INTO WHAT MAKES AI
21. 1:39MODELS RUN BETTER AND MORE EFFICIENTLY AND APPLY TO
22. 1:41HARDWARE IN THE SAME WAY WE ARE SEEING GOOGLE DO AND THE HOPE
23. 1:44WOULD BE OVER TIME THEY CAN BUILD A CHIP THAT IS MORE COST
24. 1:49EFFICIENT AND BETTER PERFORMING AND EVENTUALLY CUTS DOWN ITS
25. 1:53OWN COSTS. ED:
26. 1:55BLOOMBERG NEWS SPOKE TO THE CEO OF BROADCOM AND OPENAI'S
27. 1:58HARDWARE CHIEF. FROM BROADCOM, THERE QUITE A
28. 2:01LOT OF FIGHTING TALK. THEY SEE A LOT OF DEMAND WHAT
29. 2:08WAS INTERESTING TO ME IS THEY SEE A WORLD WHERE EVERY
30. 2:12FRONTIER LAB HAS A CUSTOM CHIP. WHY?
31. 2:16>> IT GIVES THEM THE VERSATILITY TO CONTROL THEIR
32. 2:22INFRASTRUCTURE STACK AND BUILD CUSTOM HARDWARE THAT MEETS
33. 2:25THEIR NEEDS AND HE IS SAYING THERE ARE NOT THAT MANY OF
34. 2:29THESE FRONTIER MODELS SO WE ARE TALKING ABOUT IS ANTHROPIC
35. 2:32GOING IN THIS DIRECTION AND THAT IS A POSSIBILITY.
36. 2:36YOUR OTHER POINT, HE SOUNDS BULLISH GENERALLY ON THE
37. 2:40PROSPECT FOR TRIPS LIKE THIS GOING FORWARD.
38. 2:41HE SEES NO LIMIT TO THE DEMAND FOR THIS KIND OF INFRASTRUCTURE
39. 2:45AND IS PREDICTING THE DEMAND AND ROLL OUT FOR THE TRIP NEXT
40. 2:51YEAR WILL EXCEED PRIOR ESTIMATES FOR SUPPLY. ED:
41. 2:57ON THE OPENAI SIDE, IT IS THE LATEST EXAMPLE BEING PREPARED
42. 2:58TO SPEND. DID WE GET ANY SENSE ABOUT HOW
43. 3:03THIS CUSTOM CHIP WILL RANK IN YOUR OVERALL PLAN FOR COMPUTE,
44. 3:09WHETHER IT IS BUYING NVIDIA CHIPS, ETC.?
45. 3:12>> THEY REMAINED TIGHTLIPPED ON THE FINANCING.
46. 3:21OPENAI -- OPENAI PLANS TO SPEND AND INFRASTRUCTURE COMMITMENTS
47. 3:26-- BROADCOM HAS PREVIOUSLY SAID THEY ARE STANDING UP A CHIP
48. 3:29FINANCING VEHICLE THAT COULD HELP OPENAI EFFORTS BUT IT IS
49. 3:32UNCLEAR IF THAT IS THE PRIMARY FINANCING METHOD. ED:
50. 3:41SK HYNIX PLANS TO RAISE $29.4 BILLION IN ITS U.S.
51. 3:43MARKET DEBUT, A DEAL LARGE ENOUGH TO RANK AMONG THE TOP
52. 3:47FIVE SHARES SALES OF ALL TIME AT A TIME WHEN MARKETS ARE
53. 3:50HUNGRY FOR MEMORY CHIPS AND SEMI CONDUCTOR COMPANIES ARE
54. 3:54RUSHING FOR CAPITAL TO EXPAND CAPACITY AND MEET THAT DEMAND.
55. 4:01THAT IS PART OF IT, RIGHT? EXPAND MEMORY CAPACITY AND
56. 4:04RAISE MONEY. THERE IS ALSO THIS IDEA
57. 4:09EVALUATION AND PRESTIGE OF A SITUATION WHERE YOU GET
58. 4:15EXPOSURE TO AMERICAN INVESTORS.
59. 4:18>> SK HYNIX IS A COMPANY WE DO NOT TALK ABOUT OFTEN ON THE
60. 4:22SHOW , OBVIOUSLY A LEADING MEMORY CHIP COMPANY BUT THEY
61. 4:25OFTEN PLAY SECOND FIDDLE TO SAM'S ON EVEN IN SOUTH KOREA
62. 4:27BUT WILL WE HAVE SEEN OVER THE PAST THREE YEARS AS THEY HAVE
63. 4:32COME FROM FAR BEHIND TO THE SAME MARKET CAP SIZE AS SAMSUNG
64. 4:35AT THIS POINT AND THAT IS LARGELY BECAUSE THEY HAVE BEEN
65. 4:40SUCCESSFUL IN MEMORY CHIPS FOR AI APPLICATIONS THAT WE HAVE
66. 4:43TALKED ABOUT BEFORE.
67. 4:49THE CHIPS ARE TECHNOLOGY FOR DOING THAT STACKING HAS BEEN
68. 4:51VERY GOOD. THEY HAVE NVIDIA'S BLESSING.
69. 4:57THEY HAVE BEEN ABLE TO JUMP AHEAD OF SAMSUNG.
70. 4:58SAMSUNG HAS STRUGGLED A BIT SO NOW WE ARE SEEING WITH THIS
71. 5:04FUNDRAISING THEM ANNOUNCING TO THE U.S.
72. 5:07THEY ARE READY TO RAISE THIS CAPITAL AND THEY WANT MORE
73. 5:09EXPOSURE IN THE U.S. AND THEY WOULD LIKE THAT
74. 5:11MULTIPLE YOU SEE WITH THE U.S. TECH COMPANIES.
75. 5:17IF THEY GET SOME OF THAT EXPOSURE, THAT MAY GIVE THEM
76. 5:18MORE OPPORTUNITY TO INCREASE THE EVALUATION. ED:
77. 5:25ON MECHANICS, IT WILL BE ON THE NASDAQ.
78. 5:26DO WE HAVE A TIMELINE AND HOW MUCH OF A SURPRISE WAS IT THAT
79. 5:30THEY PLOWED AHEAD WITH THIS?
80. 5:37>> THEY HAVE TALKED ABOUT WANTING TO RAISE MONEY IN THE
81. 5:38U.S. SO I THINK IN TERMS OF DIRECTION THIS HAS BEEN
82. 5:42EXPECTED. IN TERMS OF MAGNITUDE, IT IS A
83. 5:43SURPRISE. IT IS A LOT OF MONEY AND COULD
84. 5:47BE ONE OF THE TOP FIVE OFFERINGS OF ITS KIND EVER.
85. 5:52THEY PLAN TO START TRADING THESE ON JULY 10.
86. 5:56THEY STILL HAVE A COUPLE STEPS TO GO BUT THAT IS THE PLAN TO
87. 5:58RAISE THAT MONEY. IF THEY REALLY WANT TO SPEND
88. 6:04THIS MONEY ON TRYING TO SOLVE THIS CHOKEPOINT THEY HAVE HAD
89. 6:09IN THE AIR INDUSTRY OR MEMORY CHIPS ARE IN SHORT SUPPLY AND
90. 6:12PRICES SOARING, DRIVING PROFITS FOR COMPANIES INCLUDING MICRON,
91. 6:16THEY WANT TO BE ABLE TO BUILD ADDITIONAL CAPACITY IN SOUTH
92. 6:20KOREA AND THEY ARE EXPANDING IN UNITED STATES WHERE THEY HAVE
93. 6:21FACILITIES, TOO. ED:
94. 6:28THE AI HARDWARE STORY AND MEMORY ARE SET TO DOMINATE
95. 6:30MARKET CONVERSATION TODAY. WE HAVE THE PERFECT PERSON TO
96. 6:37SPEAK ABOUT IT, A PORTFOLIO MANAGER ON THE GLOBAL ROBOTICS
97. 6:38AND AUTOMATION TEAM. SHE MANAGES AN ETF, AND
98. 6:46ACTIVELY MANAGED ETF WITH SK HYNIX AND HIS KOREAN SHARES ARE
99. 6:48THE TOP HOLDING. WELCOME TO THE PROGRAM.
100. 6:54THE SITUATION WITH THE MEMORY MAKERS IS FASCINATING.
101. 6:57DEMAND IS EXCEEDING SUPPLY. HISTORICALLY, THAT IS AN
102. 7:01ENVIABLE POSITION TO BE IN AN SHARES OF THOSE COMPANIES
103. 7:05PROBABLY REFLECT THAT. HOW DO YOU SEE INVESTOR
104. 7:08APPETITE TO BE EXPOSED TO THE MEMORY TRADE?
105. 7:12>> SHARES HAVE BEEN FANTASTIC BUT MEMORY STOCKS HAVE STILL
106. 7:18GONE THROUGH -- OFFER A COMPELLING INVESTMENT CASE.
107. 7:24I DO NOT THINK IT IS BOTTLENECKS.
108. 7:26THERE IS STRUCTURE IN THE CYCLE, FOR EXAMPLE STRATEGIC
109. 7:31VALUE RISING AND CHANGING TO A PRIMARY DRIVER.
110. 7:37THINK ABOUT HOW CLOUD SERVICE PROVIDERS, ONE OF THEIR LARGEST
111. 7:41CLIENTS, THEY ARE STILL ADDING MORE MEMORY DESPITE THE PRICE
112. 7:43OF INFLATION BECAUSE THIS IS THE MOST COST-EFFICIENT WAY TO
113. 7:52MAXIMIZE PERFORMANCE AND WHEN TOKEN DEMAND IS RISING ON THE
114. 7:58BACK OF INFERENCE, I THINK THE BOTTLENECKS SUIT -- IN TERMS OF
115. 8:02CAPACITY IS BECOMING MORE CHALLENGING AND THIS IS A PLACE
116. 8:06WHERE MEMORY CAN COME IN AND HELP WITH THOSE CHALLENGES. ED:
117. 8:10DOES IT MATTER THAT INVESTORS WILL HAVE THE OPPORTUNITY TO
118. 8:13HAVE U.S. LISTED SHARES? HOW DOES THAT CHANGE THE
119. 8:17MECHANICS OF THE MARKET?
120. 8:25>> MORE EXPOSURE IS CLEARLY A POSITIVE INDICATION FOR ANY
121. 8:31COMPANY, ESPECIALLY WHEN YOUR FUNDAMENTALS ARE IMPROVING SO
122. 8:35SUPER EXCITING AND LOOKING FORWARD TO THE DEVELOPMENT. ED:
123. 8:42A COUPLE MONTHS AGO I SAT DOWN JENSEN HUANG AND SAID, DO EVEN
124. 8:45KNOW THE TECH -- TO EVEN NEED THE TEXTBOOKS THAT WOULD TELL
125. 8:48US MEMORY IS CYCLICAL? IT IS BOOM AND BUST. EVIDENCE
126. 8:54SUGGESTS IN THE CONTEXT OF HBO GO INTO DATACENTER, IT DOES NOT
127. 8:55BEHAVE THE SAME WAY.
128. 8:57>> I AGREE.
129. 9:05THERE IS A CERTAIN TYPE OF CYCLICALITY IN THE MARKET BUT
130. 9:07AT THE END OF THE DAY WHAT YOU NEED TO BE REMEMBERING IS THE
131. 9:12STRUCTURE SIDE. THINK ABOUT THE SUPPLY SIDE.
132. 9:15DESPITE THE FACT THAT ALL THREE MAJOR COMPANIES ARE SCRAMBLING
133. 9:19TO ADD NEW SUPPLY, THERE ARE THREE FACTORS YOU HAVE TO
134. 9:22REMEMBER. NUMBER ONE, MANUFACTURING
135. 9:28INTENSITY AND COMPLEXITY IS RISING HERE NUMBER TWO, CAPITAL
136. 9:31INTENSITY IS GETTING MORE EXPENSIVE AND NUMBER THREE, THE
137. 9:38DIFFICULTY OF TECHNOLOGY POINTING OUT THAT OVERALL
138. 9:40SUPPLY AND DEMAND BALANCE WILL STAY IN FAVOR OF MEMORY AND
139. 9:43THAT IS GREAT. ED:
140. 9:49I WOULD LOVE TO TALK ABOUT YOUR ACTIVELY MANAGED ETF.
141. 9:5460 MILLION DOLLARS IN ASSETS CURRENTLY.
142. 9:57WHAT I FIND INTERESTING IS THE COMPOSITION.
143. 10:01THERE ARE X MINIATURE DEPLOYER'S AND CAPITAL
144. 10:03EXPENDITURE RECIPIENTS IN THE SAME BASKET WHEN YOU LOOK AT
145. 10:04THE TOP HOLDINGS. IS THAT AN ACTIVE DECISION ON
146. 10:07COMPOSITION?
147. 10:12>> I THINK IT IS THE COMPETITION FROM OUR BOTTOM UP
148. 10:17CONSTRUCTION BUT THAT IS WHERE THE MAJORITY OF THE CAPITAL IS
149. 10:21INVESTED CURRENTLY AND ON THE ONE HAND THEY ARE BIG SPENDERS
150. 10:25TRYING TO BUILD NEW, COMPETITIVE POSITIONING IN THE
151. 10:31SPACE BUT ON THE OTHER HAND WE FIND A LOT OF EXCITING
152. 10:34OPPORTUNITIES AND COMPANIES THAT RECEIVE THESE -- THIS
153. 10:36CAPITAL. I THINK THAT IS WHY THERE'S
154. 10:40MORE TO COME AND WE RECENTLY CAME FROM ASIA WHERE WE SAT
155. 10:46DOWN WITH A NUMBER OF COMPANIES IN THE SUPPLY CHAIN.
156. 10:50EVERYONE IS TELLING US HOW THEY ARE SEEING EXTENDED VISIBILITY
157. 10:52FROM CUSTOMERS AND HOW THERE ARE MORE CONVERSATIONS ABOUT
158. 10:56LPA'S. EVERYTHING IS HIGHLIGHTING THAT
159. 11:01DEMAND CONTINUES TO EXCEED SUPPLY AND AI DEMAND REMAINS
160. 11:09ROBUST. ED: IT IS A COMPETITIVE MARKET.
161. 11:13HOW CLOSE ARE YOU TO THINKING ABOUT FLOWS?
162. 11:15PEOPLE GIVE YOU A LOT OF CREDIT FOR IDENTIFYING IT AS BEING
163. 11:18CRITICAL TO THE BROADER INFRASTRUCTURE BUILDOUT NOW BUT
164. 11:21WHAT HAPPENS NEXT? HOW DO YOU SEE THE WORLD
165. 11:26CHANGING IN THE NEXT SIX MONTHS TO 12 MONTHS?
166. 11:33CELINE: AT THE TOP OF THE STACK, WE
167. 11:37HAVE THE APPLICATION LAYER AND THIS IS WHERE WE ARE GOING TO
168. 11:42EXPECT LARGE OPPORTUNITIES FROM PHYSICAL AI.
169. 11:46WE THINK IT WILL BE A MULTITRILLION DOLLAR, LONG-TERM
170. 11:48OPPORTUNITY. IT IS IMPORTANT BECAUSE IT IS A
171. 11:55PRIMARY DRIVER FOR PRODUCTIVITY GAINS AND HISTORICALLY
172. 11:58PRODUCTIVITY GROWTH TENDS TO TRANSLATE TO MASSIVE ECONOMIC
173. 12:00EXTENSIONS. I THINK THE SAME WILL HAPPEN
174. 12:02FOR AI. ALL THE INNOVATION WE ARE
175. 12:06SEEING TODAY IS GOING TO OPEN UP SIGNIFICANT MARKETS SUCH AS
176. 12:14FULLY AUTONOMOUS TRANSPORTATION AND HUMANOID ROBOTS.
177. 12:19THAT IS WHY WE ARE EXCITED ABOUT IT.
178. 12:23THAT BEING SAID, IT WILL STILL TAKE YEARS FOR THIS TO TURN
179. 12:25INTO CORPORATE EARNINGS SO HERE'S WHAT WE FOCUS ON INSTEAD.
180. 12:32COMPANIES WITH VERTICALLY INTEGRATED MANUFACTURING CAN
181. 12:34SPEAK TO THE MARKET WITH SCALE AND DEMAND OR FOR OPEN-SOURCE
182. 12:40PLATFORMS THEY CAN EXPEDITE ACCELERATION ADOPTION AND
183. 12:44EVERYTHING AND LASTLY TECHNOLOGY COMPANIES THAT CAN
184. 12:50BENEFIT FROM MASS ADOPTION, SOMETHING TO WATCH ON AND
185. 12:51SOMETHING WE ARE STILL EXCITED ABOUT. ED:
186. 12:57REALLY GRATEFUL TO HAVE YOU HERE. THANK YOU.
187. 13:02COMING UP, META AND MICROSOFT LEADING THE SPENDING SPREE ON
188. 13:06FUTURE DATACENTER LEASES, ADDING TENS OF BILLIONS OF
189. 13:08DOLLARS LAST QUARTER ALONE. THE DETAILS NEXT.
190. 13:11THIS IS BLOOMBERG TECH.
191. 13:18♪
192. 13:28ED: TODAY'S BIG NUMBER 850 BILLION
193. 13:31DOLLARS THAT SO MUCH THE WORLD'S LARGE CLOUD'S COMPUTING
194. 13:35COMPANIES HAVE COMMITTED AND FUTURE DATA CENTER LEASES
195. 13:37LEADING THE CHARGE IN THE AI SPENDING SPREE IS META AND
196. 13:40MICROSOFT.
197. 13:46AN ASTONISHING STORY AND A CHART TO SHOW US.
198. 13:52WHAT I FIND INTERESTING IS THESE ARE FUTURES ESSENTIALLY
199. 13:56LEASES PLANNED OR ANNOUNCED SEPARATE FROM WHAT'S ALREADY IN
200. 13:58OPERATION WHAT THEY ARE ALREADY CONTRACTUALLY COMMITTED TO.
201. 14:02>> IT'S A REALLY GOOD POINT. TALKING ABOUT 850 BILLION ON
202. 14:07DATA CENTERS WHICH IN MANY CASES AREN'T EVEN BUILT YET.
203. 14:11THEY ARE WORKING THROUGH THEIR CURRENT PROJECTS THEY HAVE AND
204. 14:14THESE ARE THE ONES THEY HAVE COMMITTED TO LEASING ONES THEY
205. 14:15ARE OPERATIONAL. A LOT OF PEOPLE WONDER ABOUT
206. 14:19WHAT IS THE LONG-TERM SPENDING TRAJECTORY ON DATA CENTERS.
207. 14:25HOW LONG DOES THIS LAST. THERE'S $850 BILLION OF LEASES
208. 14:26THAT WILL BE STARTING IN THE COMING YEARS. ED:
209. 14:31WHEN I WAS READING THE STORY I WAS TRYING TO UNDERSTAND THE
210. 14:34FUTURE COST. IT'S AN AMAZING CHART BY THE WAY.
211. 14:42THE LEVEL OF CAPITAL AND THE COMMITMENT GROWS.
212. 14:45BUT WHERE DID THEIR CURRENT FINANCIAL HEALTH'S AND BALANCE
213. 14:47SHEETS STAND RELATIVE TO THOSE FUTURE COMMITMENTS?
214. 14:50IS THERE A CONCERN ABOUT THAT? BRODY: I THINK THERE'S A LOT OF
215. 14:54CONCERNS THAT SEEM TO ALWAYS EBB AND FLOW AROUND THE ROI OF
216. 14:59THIS SPENDING. IT FEELS LIKE EVERY QUARTER OR
217. 15:02TO THE GENERAL SENTIMENT FLIPS ABOUT WHETHER THE MARKETS WORRY
218. 15:03OR NOT. EVERY HYPERSCALER SEEMS TO
219. 15:10AGREE THEY MUST SPEND AN INCREDIBLE AMOUNT TO CATCH UP
220. 15:12IN AIN HAVE ENOUGH DATA CENTER CAPACITY.
221. 15:15I THINK ABOUT MICROSOFT WHO THROUGH A LOT OF 2025 SAID WE
222. 15:21ARE NERVOUS WE WILL PUT ON A LOT OF THESE LEASES AND HAVE
223. 15:24COME TO REGRET IT DEEPLY. A LOT OF THE BIGGEST TECH
224. 15:28COMPANIES AS WE CAN SEE ARE HOPING TO AVOID THAT SCENARIO.
225. 15:33>> MICROSOFT ADDING COMMITMENTS TO A TOTAL OF ALMOST 190 $7
226. 15:36MILLION. COMPARE AND CONTRAST ORACLE.
227. 15:41BRODY: ORACLE IS INTERESTING BECAUSE
228. 15:44THEY SIGNED A TON OF LEASES LARGELY FOR OPENAI AND HAVE
229. 15:47BEEN FLAT FOR THE LAST TWO QUARTERS.
230. 15:49WHICH SAYS THEY ARE DIGESTING A LOT OF CAPACITY.
231. 15:55CONTRAST THAT WITH META-WHO IS SIGNING AS MUCH AS POSSIBLE. ED:
232. 15:58LET'S GET OUT TO NEW YORK.
233. 16:03>> IT'S TIME FOR TALKING TECH. SOFTBANK'S MASAYOSHI SON SAYS
234. 16:10HE HAS NO PLANS TO RETIRE ANYTIME SOON AS HE LOOKS TO
235. 16:11CAPITALIZE ON THE AI BOOM. SPEAKING AT THE SHAREHOLDER
236. 16:18MEETING THE 68-YEAR-OLD VISIONARY FIRED BACK AT
237. 16:20SKEPTICS SAYING THE AI REVOLUTION HAS ONLY JUST BEGUN
238. 16:23CALLING IT A BUBBLE IS AN INSULT.
239. 16:27PLUS IN THE LATEST SHOWDOWN BETWEEN CHINESE BIG TECH AND
240. 16:33NATIONAL SECURITY, ALIBABA -- ALIBABA DEMANDING REMOVAL FROM
241. 16:36ITS BLACK LIST THE COMMERCE GIANT CALLED THE DESIGNATION
242. 16:40ARBITRARY AND UNJUSTIFIED FOLLOWING A CRACK DOWN EARLIER
243. 16:43THIS MONTH THAT ACCUSED SEVERAL COP -- TOP COMPANIES OF AIDING
244. 16:46THE MILITARY. TIKTOK PARENT BYTEDANCE IN
245. 16:51EARLY TALKS FOR A RECORD $20 BILLION GLOBAL LOAN.
246. 16:58THE MASSIVE BORROWING PUSH COMES AS A COMPANY WEIGHS
247. 17:00BOOSTING DATA CENTER AND AI CAPITAL SPENDING. ED:
248. 17:08THANK YOU COMING UP, DISCUSSING NEW FUNDING AT A $7.5 MILLION
249. 17:13VALUATION WHICH WOULD BE FOUR TIMES ITS PAST LATEST VALUE.
250. 17:16THIS IS BLOOMBERG TECH. ♪
251. 17:33ED: CAN AI REPLACE HUMAN EFFORT IN
252. 17:36THE REALM OF SCIENTIFIC DISCOVERY?
253. 17:41EMILY CHANG SPOKE TO JENNIFER DOWD AND THE INVENTOR OF THE
254. 17:45GROUNDBREAKING -- GROUND BREAKING CRISPER GENE EDITING
255. 17:47ABOUT THE FUTURE OF BIOLOGY.
256. 17:49>> BIOLOGY IS COMPLEX. WE ARE NOT GOING TO BE ABLE TO
257. 17:53SIMULATE OUR WAY TO AN UNDERSTANDING OF THE HUMAN BODY.
258. 17:57WE WON'T BE ABLE TO AVOID THE NEED FOR CERTAIN TYPES OF
259. 17:58TESTING. I THINK THERE ARE OPPORTUNITIES
260. 18:02TO INCREASE THE EFFICIENCY IN WHICH WE MAKE DISCOVERIES ABOUT
261. 18:07THE WAY OUR BODIES WORK IN THE WAY THEY INTERACT WITH DRUGS.
262. 18:11WHEN I THINK AI WILL BE HELPFUL THERE. BUT IT WILL COME DOWN TO
263. 18:16TRAINING MODELS ON DATA AND A BIG NEED FOR BETTER AND MORE OF
264. 18:18THAT DATA FOR TRAINING MODELS.
265. 18:23>> AND OPENAI EXECUTIVE SUGGESTED IF THE DISCOVERY
266. 18:28HAPPENS ON CHATGPT LET'S SAY A DRUG DISCOVERY THAT OPENAI
267. 18:29SHOULD GET A CUT OF SALES. WHAT YOU THINK OF THAT?
268. 18:32>> GOOD LUCK.
269. 18:37>> I'M NOT SURE THE ANSWER TO THAT YET.
270. 18:40LOTS OF PEOPLE ARE OF COURSE VERY HOPEFUL.
271. 18:42SOME ARE VERY HEIGHT FULL ABOUT IT. I THINK INNOVATION IS STILL
272. 18:48REALLY IN THE DOMAIN RIGHT NOW. I'M NOT SEEING CHATBOTS IN OUR
273. 18:52OWN EXPERIENCE INNOVATING. THEY CAN BE HELPFUL WITH
274. 18:55SUMMARIZING DATA OR HELPFUL IN WRITING REPORTS.
275. 19:00BUT I AM NOT SEEING CHATBOTS COMING UP WITH BRAND-NEW IDEA
276. 19:01FOR SOMETHING NO ONE ELSE EVER THOUGHT OF.
277. 19:05>> YOU'RE SAYING AI CAN INNOVATE.
278. 19:07>> I DON'T THINK IT IS RIGHT NOW.
279. 19:14MAYBE THAT WILL HAPPEN BUT I'M NOT HOLDING MY BREATH. ED:
280. 19:21EMILY CHANG SPEAKING WITH THE NOBEL LAUREATE AND FOUNDER OF
281. 19:25INNOVATIVE GENOMICS INSTITUTE. WATCH THE FULL EPISODE OF
282. 19:29BLOOMBERG TELEVISION TONIGHT OR ON BLOOMBERG ORIGINALS AT 8:30
283. 19:30P.M. EASTERN TIME.
284. 19:36HADRIAN IN TALKS MORE THAN QUADRUPLE ITS VALUATION IN A
285. 19:38NEW FILING. BLOOMBERG'S VENTURE REPORTER
286. 19:44TEAMED UP ON THIS ONE. LET'S GO THROUGH THE BASICS.
287. 19:46THESE ARE TALKS THEY ARE AT A CERTAIN STAGE.
288. 19:51THEY RAISE MONEY AT THE BEGINNING OF THIS YEAR IN A
289. 19:52CERTAIN VALUATION. WHAT DO WE NEED TO KNOW?
290. 19:56REBECCA: THEY RAISED MONEY AT A 1.6
291. 20:00MILLION DOLLARS VALUATION. THEY HAD CONVERSATIONS TO RAISE
292. 20:05IN THE LATEST ROUND THAT WOULD MORE THAN QUADRUPLE THEIR
293. 20:07VALUATION TO $7.5 BILLION. THE INVESTOR DEMAND ON THIS ONE
294. 20:10IS PRETTY SIGNIFICANT. SEVERAL EXISTING INVESTORS ARE
295. 20:15IN TALKS ON THIS ONE. WE SHOULD KNOW WHEN WE REACHED
296. 20:20OUT TO COMMENT HADRIAN SAID THE INFORMATION WE HAD WAS
297. 20:22INCORRECT BUT DECLINED TO PROVIDE FURTHER CONTEXT.
298. 20:26THIS IS AN AREA THAT IS EXTREMELY HOT WITH INVESTORS
299. 20:28RIGHT NOW. DEFENSE TECH BROADLY. THEY MAKE FACILITIES TO SPEED
300. 20:34UP DOMESTIC MANUFACTURING, THAT'S USUALLY OF INTEREST TO A
301. 20:37LOT OF FOLKS IN SILICON VALLEY. ED: THANK YOU FOR THAT.
302. 20:46I WOULD ADD THEY -- I WOULD'VE DONE THAT FOR YOU.
303. 20:47THANK YOU VERY MUCH. THERE SOME REPORTING ABOUT
304. 20:52WHERE THEY APPROACHED DEBT OR A LACK OF APPROACHED DEBT.
305. 20:58EXPLAIN THAT BIT. REBECCA:
306. 21:00BUILDING LARGE MANUFACTURING AUDIT -- OFTEN MEANS COMPANIES
307. 21:03NEED TO TAKE ON DEBT TO TAKE ON THE RISKS OF BUILDING THESE
308. 21:06LARGE FACILITIES. THEY HAVE MORE FACTORIES.
309. 21:12THE LATEST WHICH OPENED IN MARCH.
310. 21:14OFF THE BACK OF THE 2.4 BILLION DOLLAR CONTRACT WITH U.S. NAVY.
311. 21:21THIS UP TO ONE BILLION DOLLARS IS JUST EQUITY THEY RAISE.
312. 21:23IT DOESN'T INCLUDE ANY DEBT. ED: YOU DID A GREAT JOB EXPLAINING
313. 21:29WHAT THEY DOES. AN AMAZING FACTORY, GENERALLY
314. 21:35WHAT IS VENTURE CAPITAL ATTITUDE TO DEFENSE TECHNOLOGY
315. 21:39AND THIS RE-INDUSTRIALIZING AMERICA PUSH. REBECCA:
316. 21:43THERE IS TONS OF EXCITEMENT. INVESTORS INCLUDE INJURIES.
317. 21:47PETER THIEL'S FOUNDERS FUND.
318. 21:54THIS EFFORT TO SORT OF RESHORE MANUFACTURING AND THROUGH THE
319. 21:57CYCLE WHERE CONSUMERS AND COMPANIES CAN JUST RELY ON
320. 22:00PRODUCTION AND CONSUMPTION WITHIN THE U.S.
321. 22:08IS OF HUGE INTEREST. >> REBECCA TORRENCE TEAMING UP ON THAT ONE.
322. 22:11POTENTIALLY HITTING $7.5 BILLION VALUATION.
323. 22:17COMING UP LATER IN THE SHOW WE SIT DOWN WITH ANDREESSEN
324. 22:21HOROWITZ GENERAL PARTNER ON THE BIG BET ON SPACE X.
325. 22:23A CONVERSATION WE ARE LOOKING FORWARD TO.
326. 22:28THIS IS WHAT TECHNOLOGY LOOKS LIKE IN FINANCIAL MARKETS.
327. 22:34WE ARE ALL WAITING FOR MICRON REPORTING EARNINGS AFTER THE
328. 22:41CLOSING BELL.
329. 22:42RIGHT NOW THE NASDAQ 100 UNDERPERFORMANCE IN CHIP STOCKS
330. 22:45AND BITCOIN JUST SHY OF $61,000. ♪
331. 22:59ED: WELCOME BACK TO BLOOMBERG TECH.
332. 23:00IT IS A BIG MOMENT FOR MEMORY. THE BIGGEST HEADLINE IS
333. 23:01PROBABLY THE SK HYNIX WILL TRY TO RAISE $29 BILLION IN A U.S.
334. 23:02LISTING BUT THE AI TRADE IS GOING TO GET HIS NEXT CUE FROM
335. 23:02MICRON EARNINGS AFTER THE BELL. THERE IS A LOT OF LITERATURE ON
336. 23:03THE BLOOMBERG ABOUT THAT. THE STOCK IS DOWN ABOUT 1.3
337. 23:04PERCENT RIGHT NOW. IT IS ANALOGOUS FROM WHAT WE
338. 23:08SAW IN THE EARLY DAYS OF NVIDIA, MASSIVE GROWTH YEAR ON
339. 23:13YEAR ON THE TOP AND BOTTOM LINE BUT THE MARKET REALLY WANTS A
340. 23:15BULLISH SIGNAL. NOT THAT THE BOTTLENECK THAT IS
341. 23:20MEMORY IS UNWINDING A LITTLE ON THE AIR INFRASTRUCTURE BUILDOUT
342. 23:22BUT THAT DEMAND HAS STAYING POWER SO THAT IS WHAT WE ARE
343. 23:25WATCHING FOR THROUGH THE COURSE OF THE DAY.
344. 23:29ANOTHER TOP STORY, ELON MUSK IS RESHAPING'S'S HIS EMPIRE
345. 23:32BALANCE SHEETS. SPACEX JUST PULLED OFF A RECORD
346. 23:37BOND SALE, TAKING ON MORE DEBT WHILE LOWERING OVERALL
347. 23:40BORROWING COSTS ACROSS SUPPORTING BUSINESSES.
348. 23:45HOW DID IT GO?
349. 23:48>> VERY WELL. THE PEAK OF DEMAND, THERE WERE
350. 23:54$89 BILLION IN ORDERS FOR A 25 BILLION DOLLAR BOND DEAL,
351. 23:58ALLOWING THE COMPANY TO TIGHTEN OR GET LOWER BORROWING COSTS.
352. 24:01INVESTORS ARE EAGER TO LEND. ED: THERE IS A HISTORY LESSON IN
353. 24:04THIS.
354. 24:12HE TAKES TWITTER PRIVATE, XAI MERGES WITH SPACEX, AND SPACEX
355. 24:15DOES THE BIGGEST IPO IN HISTORY. IF YOU LOOK AT HOW THEY SHUFFLE
356. 24:18THE DECK WITH THE PROCEEDS OF THE BOND SALE AND WHAT THEY
357. 24:24PLAN TO DO IN PAYING DOWN EXISTING LOANS, IT TAKES US
358. 24:27BACK TO SQUARE ONE, RIGHT? PAULA:
359. 24:34THIS WAS ONE LONG WAY OF ALLOWING XAI TO BORROW AT THIS
360. 24:38BORROWING COSTS SO WE HAD THE TWITTER LBO WHICH ENDED UP
361. 24:40ADDING ABOUT $13 BILLION OF DEBT AND XAI LEVERAGED BOND
362. 24:46SALES WHICH ADDED 5 MILLION DOLLARS IN DEBT.
363. 24:49WHEN SPACEX ACQUIRED XAI THERE WERE $17.5 BILLION IN DEBT.
364. 24:58ALL OF THAT GOT REFINANCED. INITIALLY THROUGH A BRIDGE LOAN
365. 25:02THAT WAS THEN TAKEN OUT OF THE INVESTMENT BOND SALE TUESDAY
366. 25:06AND NOW INTEREST RATES ARE AROUND 5.5% TO 6.5%. ED:
367. 25:12WE BROKE THE STORY THAT SPACEX HAD IG RATES UP FROM THE THREE
368. 25:13MAIN AGENCIES. THAT WAS IMPORTANT.
369. 25:19THE STORY NOW IN THE AI SPACE IS BORROWING AND THE IG RATING
370. 25:21HAS PROVED TO BE HANDY TO SPACEX.
371. 25:27>> THERE IS SO MUCH NEED FOR CAPITAL INVESTMENT.
372. 25:28COMPANIES CANNOT DO IT WITH CASH FLOW.
373. 25:30THEY HAVE TO BORROW AND THEY ARE BORROWING ACROSS DIFFERENT
374. 25:33DEBT MARKETS BUT THE BEST PLACE TO BORROW IS THE
375. 25:35INVESTMENT-GRADE BOND MARKET BECAUSE IT IS LARGE AND A
376. 25:39CHEAPER BORROWING COSTS SO BEING ABLE TO GET THOSE
377. 25:42INVESTMENT GRADE RATINGS OPENS ACCESS TO CAPITAL AND MAKES IT
378. 25:46EASIER TO BORROW MONEY TO FINANCE THE AI BUILDOUT. ED:
379. 25:48THANK YOU.
380. 25:55IN THE EQUITY SPACE, SPACEX IS HIGHER, 150 DOLLARS PER SHARE.
381. 26:06SPACEX'S PARTNER IS ON SET WITH US NOW.
382. 26:10IT HAS PROVED TO BE THEIR LARGEST RETURN IN HISTORY AND
383. 26:12YOU ARE SOMEONE I WANTED TO SPEAK TO ABOUT THE COMPANY FOR
384. 26:13A LONG TIME. THERE IS A LOT HERE BUT AS AN
385. 26:20OPENING REFLECT ON THE IPO AND NOT JUST A MOMENT IN TIME BUT
386. 26:24WHAT YOU THINK IT SIGNIFIED FOR A VERY BIG AND DIVERSE COMPANY.
387. 26:32>> GREAT TO BE HERE WITH YOU. THE IPO IS JUST A MILESTONE IN
388. 26:36THE HISTORY OF THE COMPANY.
389. 26:42IT IS A GREAT EVENT FOR THE COMPANY TO ACCESS TO INVESTORS
390. 26:45AND CAPITAL THEY COULD NOT ACCESS BEFORE AND ONE OF THE
391. 26:48THINGS I'M MOST EXCITED ABOUT AS RELATES TO THE IPO IS THAT
392. 26:53RETAIL WAS ALLOWED TO PARTAKE IN SUCH A BIG FASHION.
393. 26:57IF YOU LOOK AT THE ALLOCATION TO RETAIL, AS A PROPORTION OF
394. 27:00THE OVERALL IPO, IT IS AROUND 30% SO IF YOU TAKE THAT PORTION
395. 27:05THAT WENT TO RETAIL IT IS ALMOST THE LARGEST IPO BY
396. 27:08ITSELF IN HISTORY OF IPO'S SO I THINK IT IS FANTASTIC.
397. 27:14RETAIL HAS PROVEN TO BE AN EXCELLENT GROUP OF BUYERS AND
398. 27:20HOLDERS OF STOCK SO IT IS A LARGE PROPORTION OF TESLA BUT
399. 27:24ALSO LARGE OWNERS OF THE MAG 7 SO IT IS EXCELLENT FOR SPACEX
400. 27:26TO BE ABLE TO ACCESS THAT. RETAIL IS LONG-TERM THINKING
401. 27:33WHICH ALIGNS WITH THE WAY HE THINKS AND HOW HE HAS BUILT
402. 27:34SPACEX SO I LOVE THEY ARE PART OF IT. ED:
403. 27:41THE QUESTION I GET FOR YOU MOST COMMONLY IS ABOUT WHAT WILL
404. 27:43HAPPEN. VENTURE FIRMS WOULD SAY WE WILL
405. 27:47REDISTRIBUTE STOCK AND WE EXPECT LOTS OF THEM TO HOLD.
406. 27:53THAT WOULD SEEM TO MAKE RETAIL HOLDERS IMPORTANT IN A COMPLEX
407. 27:54LOCK UP. IT WAS NOT STRAIGHTFORWARD.
408. 28:01>> THIS IS A STEP FORWARD AND HOW LOCKUPS ARE RUN AND I
409. 28:02EXPECT GOING FORWARD THIS WILL BE THE WAY IT IS RUN.
410. 28:12THREE BREASTS -- CEREBRAS DID SOMETHING SIMILAR.
411. 28:14THIS IS HEALTHY. IT ALLOWS INVESTORS TO BUY
412. 28:18STOCK OVER TIME AS OPPOSED TO CLIFF EVENTS.
413. 28:24WE ARE HAPPY SHAREHOLDERS OF SPACEX.
414. 28:28WE THINK ABOUT THE LONG-TERM. OBVIOUSLY WHAT MAKES US SO
415. 28:31EXCITED ABOUT THE BUSINESS IS ALL THE THINGS THEY CAN GO
416. 28:35RIGHT FOR SPACEX, ALL THE OPTIONALITY YOU HAVE SO WE LOOK
417. 28:38AT IT, YOU START WITH THE LAUNCH BUSINESS AND TO BE
418. 28:41SUCCESSFUL AS A SPACE BUSINESS YOU HAVE TO BE ABLE TO GET
419. 28:46THINGS TO SPACE SO SPACEX HAS THE INFRASTRUCTURE AND AN
420. 28:50INCREDIBLE WAY TO BUILD APPLICATIONS ON TOP.
421. 28:52STARLINK IS THE FIRST ONE. WE EXPECT THEY'VE ACHIEVED SOME
422. 28:58DE-RISKING IN TERMS OF WHAT THEY CAN BRING UP TO SPACE.
423. 29:01EVENTUALLY, THEY WILL HAVE RAPID REUSABILITY WITH MULTIPLE
424. 29:06LAUNCHES PER DAY. IT IS A FEAT OF PHYSICS
425. 29:10MAGNIFICENCE THAT THEY CAN TAKE SOMETHING THAT IS THE SIZE OF
426. 29:15-- LARGER THAN A FOOTBALL FIELD, SEND IT TO SPACE, AND
427. 29:20THEN REUSE IT AGAIN AND BE ABLE TO DO THAT THAT WILL ENABLE ALL
428. 29:21THE APPLICATIONS THEY WANT. ED:
429. 29:28IT ALSO NOW HAS A NAME AS OF LAST NIGHT AND ELON MUSK
430. 29:29ENGAGING WITH OTHERS. THERE ARE MANY OUT THERE THAT
431. 29:36BELIEVE THAT THE TIMELINE PRESENTED FOR ORBITAL DATA
432. 29:41CENTER, AS EARLY AS 2028, WE COULD SEE SOME PULL FORWARD ON
433. 29:45THAT LINK TO THE TRACKING OF STARSHIP.
434. 29:48WHERE DO YOU SIT IN WHAT IS REALISTIC NEAR TERM? DAVID:
435. 29:54THE BIGGEST HURDLE TO CROSS IS RAPID REUSABILITY OF STARSHIP
436. 29:58AND I THINK THERE IS A CONSISTENT THEME WITH ELON'S
437. 30:03COMPANIES WHICH IS PHYSICS HAS BEEN DE-RISK SO NOW IT BECOMES
438. 30:07AN EXECUTION QUESTION SO AS YOU THINK ABOUT TIMELINES WE FEEL
439. 30:11IT IS INEVITABLE THEY CAN ACHIEVE THESE MILESTONES.
440. 30:14IT IS A QUESTION OF HOW QUICKLY AND AT WHAT COST. IF YOU HAVE A
441. 30:18STARSHIP THAT CAN RELIABLY GET THINGS UP AND BACK TO SPACE, WE
442. 30:23THINK THAT IS THE MAJOR UNLOCK FOR BRINGING COMPUTERS TO SPACE.
443. 30:29EARLIER YOU WERE TALKING ABOUT CAPEX FOR AI DATA CENTERS ON
444. 30:30TERRESTRIAL GROUNDS. RIGHT NOW, IT IS GETTING HARDER
445. 30:38AND HARDER TO GET DATA CENTERS ON THE GROUND HERE.
446. 30:40I THINK IT IS A MATTER OF TIME BEFORE WE HAVE IT IN SPACE.
447. 30:44I THINK -- I WOULD LIKE TO REFRAME IT A LITTLE BIT.
448. 30:51I TALK ABOUT THEM AS SORT OF AIRPLANE SIZED GPU RACKS IN
449. 30:55SPACE SO THINK OF IT AS SOMETHING LIKE 72 GPU'S IN
450. 30:58SPACE WITH BIG WINGS THAT ARE SOLAR RAYS -- SOLAR ARRAYS.
451. 31:04THEN YOU CAN HAVE MANY OF THOSE IN SPACE.
452. 31:05THEY HAVE DEMONSTRATED THEY CAN DO THIS.
453. 31:11SO WE FEEL IT IS A MATTER OF TIME BEFORE THEY CAN DO THAT.
454. 31:15TO THE POINT ABOUT HOW IT IS GETTING HARDER TO DO THIS ON
455. 31:22THE GROUND, AT A MINIMUM ORBITAL DATA CENTERS WILL BE
456. 31:26INCREMENTAL CAPACITY THAT YOU CAN HAVE ON TOP OF WHAT WE HAVE
457. 31:27ON EARTH. AND THERE IS A CASE IN THE
458. 31:32FULLNESS OF TIME THE ECONOMICS GET BETTER THAN ON THE GROUND.
459. 31:36ED:
460. 31:42MASAYOSHI SON -- ANDREESSEN HOROWITZ HAS BEEN INVOLVED WITH
461. 31:45ELON MUSK COMPANIES FOR YEARS. FOR YOU, HOW MUCH WAS THIS IPO
462. 31:52A REFERENDUM ESSENTIALLY ON ELON MUSK HIMSELF OR HOW
463. 31:55CENTRAL TO THE FATE OF THIS COMPANY DO YOU SEE HIM BEING?
464. 32:02DAVID: ELON IS THE CENTERPIECE OF ALL
465. 32:04THOSE INVESTMENT THESES. HE HAS BEEN STRATEGIC AND HOW
466. 32:10HE HAS PUT COMPANIES TOGETHER AND HE HAS DONE WELL WITH
467. 32:12SHAREHOLDERS. HE HAS TAKING CARE OF
468. 32:16SHAREHOLDERS AND TAKES PRIDE IN THAT AND WE APPRECIATE THAT.
469. 32:21AS IT RELATES TO GOING FORWARD, HE HAS BEEN VERY SMART.
470. 32:26THE TEAM HAS BEEN SMART ABOUT CAPITAL ALLOCATION WHEN THEY
471. 32:30HAVE AND ACQUISITIONS THEY HAVE BEEN STRATEGIC.
472. 32:34IN TERMS OF PUTTING THINGS TOGETHER AND OBVIOUSLY THE FIT
473. 32:41OF XAI AND SPACEX TOGETHER IS UNDENIABLE SO WE EXPECT HE WILL
474. 32:44CONTINUE TO BE SMART ABOUT CAPITAL ALLOCATION AND TAKE
475. 32:45CARE OF SHAREHOLDERS AND WE APPRECIATE THAT. ED:
476. 32:50WHERE DO YOU STAND ON THE TRANSACTION EVERYONE CONTINUES
477. 32:53TO TALK ABOUT IT, WHICH IS A FUTURE WHERE TESLA MERGES WITH
478. 32:56SPACEX? DAVID: I GO BACK TO THE THINGS HE HAS
479. 33:00DONE IN THE PAST OF THE THINGS HE HAS DONE IN THE PAST AS HE
480. 33:04HAS DECIDED TO DO ACQUISITIONS OF HIS COMPANIES OR MERGERS OF
481. 33:08HIS COMPANIES WHEN THERE IS STRONG STRATEGIC ALIGNMENT AND
482. 33:11IT MAKES BUSINESS SENSE SO I WOULD NOT EXPECT IT TO BE ANY
483. 33:12DIFFERENT GOING FORWARD. ED: THERE'S THIS BROADER IDEA IF
484. 33:16YOU EXTRAPOLATE OUT FROM ELON
485. 33:22MUSK THAT EVEN AT THE GROWTH STAGE, PRIVATE COMPANIES STING
486. 33:25PRIVATE FOR LONGER, THAT THE INVESTMENT THESIS IS STILL
487. 33:28AROUND THE FOUNDER, THE PERSON AT THE TOP.
488. 33:31I DO NOT KNOW WHETHER YOU SHARE THAT VIEW THAT EVEN IF YOU ARE
489. 33:35TALKING IN THE HUNDREDS OF BILLIONS OF DOLLARS OF VALUE
490. 33:41THAT VALUE IS ASSIGNED TO AN INDIVIDUAL OR GROUP OF
491. 33:46INDIVIDUALS. DAVID: YOU CAN SEE REFLECTIONS OF THIS
492. 33:50IN PUBLIC MARKETS, WITH APPLE
493. 33:57UNDER STEVE JOBS, WITH META UNDER MARK ZUCKERBERG.
494. 34:00IN PRIVATE MARKETS, THIS IS A CENTERPIECE OF OUR INVESTMENT
495. 34:03THESES AT ANY SIZE. I REGIONALLY WROTE A PIECE THAT
496. 34:09SAID LATE STAGE VENTURE, WHICH IS OUR ASSET CLASS, IS NOT
497. 34:13ABOUT CAPITAL MARKETS. IT IS ABOUT LATE STAGE FOUNDERS.
498. 34:19ENABLING THEM TO THINK LONG-TERM AND MAKE BIG BETS AND
499. 34:22OFTEN THEY CHOOSE TO DO THAT IN PRIVATE MARKETS SO OUR ASSET
500. 34:28CLASS THAT WE PLAY IN IS ABOUT $5 TRILLION IN SIZE.
501. 34:33IT IS LARGER THAN THE RUSSELL 2000. IT IS 20% AS LARGE AS THE
502. 34:37NASDAQ SO THIS HAS BECOME AN ASSET CLASS AND I THINK THERE
503. 34:40ARE REASONS WE SHOULD EXPLORE. ED: WHAT WOULD YOU CALL IT?
504. 34:47DAVID: LATE STAGE VENTURE, LATE STAGE
505. 34:49PRIVATES. AND THE CENTERPIECE OF THE
506. 34:51INVESTMENT THESIS IS AROUND FOUNDERS AND THE DECISIONS THE
507. 34:53FOUNDER HAS TO MAKE. ED: A LOT OF KEY MAN RISK TO MODEL
508. 34:58FOUR. DAVID: THE MORE IMPORTANT THING IS
509. 35:02WHAT CAN GO RIGHT? WE ALWAYS ASK OURSELVES -- IT
510. 35:05IS HARD TO IMAGINE WHAT COULD GO RIGHT AND WE SEE THIS WITH
511. 35:10MATURE COMPANIES IF YOU LOOK BACK AT WHEN THE IPHONE CAME
512. 35:14OUT AND THE 2009 CONSENSUS ANALYST ESTIMATES FOR WHAT
513. 35:19APPLE WAS GOING TO DO IN 2009 FOR THE NEXT FOUR YEARS IN FAST
514. 35:24FORWARD FOUR YEARS, THEY BEAT THOSE NUMBERS AND THAT IS THE
515. 35:26MOST COVERED COMPANY IN THE WORLD SO WE LIKE TO THINK WITH
516. 35:31A GREAT FOUNDER AND TECHNOLOGY TREND, WHAT CAN GO RIGHT?
517. 35:36IF YOU LOOK AT THE LAST CYCLE
518. 35:42PRE-AI, THIS CYCLE OF SOCIAL, E-COMMERCE ALL PUT TOGETHER,
519. 35:46THE BIG STORY IS THAT BIG TREND ADDED ABOUT 25 TO 30 TRILLION
520. 35:51OF MARKET CAP AND I THINK ON THIS AI WAVE THE TREND WILL BE
521. 35:52BIGGER. ED:
522. 35:58YOU HAD A GROWTH TEAM THAT MANAGES $22 BILLION ACROSS FIVE
523. 36:04FUNDS BUT HOLISTICALLY YOU'RE BASICALLY IN THE TOP 15 PRIVATE
524. 36:09COMPANIES BY VALUATION, WHICH WOULD HAVE INCLUDED SPACEX
525. 36:10BEFORE IT WENT PUBLIC. HOW ARE YOU DEPLOYING NEW
526. 36:16CAPITAL INTO NEW COMPANIES WITH THOSE EXISTING INVESTMENTS IN
527. 36:22MIND? DAVID:
528. 36:23WE WANT TO BE INVOLVED IN THE BEST COMPANIES AT THE EARLIEST
529. 36:26STAGE POSSIBLE AND CONTINUE TO BACK THEM AS THEY NEED CAPITAL
530. 36:31AND OFTEN THAT HAS BEEN THROUGH LATE STAGE ROUNDS IN THE
531. 36:32PRIVATE MARKET. ED:
532. 36:38YOU HAVE A NEWER FUND YOU CAN'T OF PLOY CAPITAL OUT OF. DAVID:
533. 36:43WE HAVE FOR THE FUND, ABOUT A $7 MILLION FUND THAT WE ARE
534. 36:46DEPLOYING OUT OF CURRENTLY AND WE SEE A TON OF INTERESTING
535. 36:50OPPORTUNITIES SO IF YOU GO BACK TO THE MARKET WE ARE SEEING AND
536. 36:56LOOK AT OUR PORTFOLIO AND OUR LATEST FUND, OUR PORTFOLIO IS
537. 37:02GROWING OVER 100% YEAR-OVER-YEAR .
538. 37:06IF YOU COMPARE THAT TO SIMILAR SIZE COMPANIES IN PUBLIC
539. 37:08MARKETS, THOSE COMPANIES ARE GROWING ABOUT 20%
540. 37:10YEAR-OVER-YEAR SO WE PUT A PREMIUM ON FAST GROWTH AND
541. 37:14BUILDING ON THE BACK OF BIG TRENDS. ED:
542. 37:18IT LOOKS A BIT DIFFERENT WITH MUTUAL FUNDS AND PRIVATE GROWTH
543. 37:23EQUITY. DAVID JONES -- DAVID GEORGE OF
544. 37:26ANDREESSEN HOROWITZ, GREAT TO HAVE YOU ON BLOOMBERG TECH.
545. 37:33CEREBRAS REPORTED ITS FIRST EARNINGS SINCE GOING PUBLIC.
546. 37:35THE STOCK IS DOWN 17%. THERE IS A LOT TO UNPACK THERE.
547. 37:37THIS IS BLOOMBERG TECH. ♪
548. 38:09ED: CEREBRAL'S REPORTING QUARTERLY
549. 38:13EARNINGS FOR THE FIRST TIME SINCE GOING PUBLIC LAST MONTH.
550. 38:17THE SALES OUTLOOK BEAT WALL STREET ESTIMATES AND STILL
551. 38:18DISAPPOINTED INVESTORS. THE COMPANY CARVING OUT A
552. 38:23BIGGER SLICE. RIGHT NOW SHARES DOWN 17.5% ITS
553. 38:28BIGGEST DROP IN IT'S QUITE SHORT HISTORY AS A COMPANY.
554. 38:33WELCOME BACK TO BLOOMBERG TECH. THERE WAS A TIME WE WOULD TALK
555. 38:38ABOUT THE MERITS OF TOP DETAIL SERVER OWNERSHIP.
556. 38:42HOW OWNING THE CONTENT THAT WE TALK ABOUT MARGIN CONTRACTION
557. 38:45AND THE STOCK BEING DOWN 17%. THAT TO ME IS KIND OF THE
558. 38:48MISMATCH. THE OUTLOOK ON THE SALES SIDE
559. 38:50BEATING WALL STREET ESTIMATES. A LOT OF PEOPLE ARE TRYING TO
560. 38:54UNDERSTAND THE SEQUENTIAL MARGIN DECLINE.
561. 38:59THIS IS ABOUT RAMPING OUTPUT FOR CUSTOMERS. IS THAT TRUE?
562. 39:03ANDREW: WHAT WE DID IS WE PUT FORWARD A
563. 39:07PLAN IN THE START OF 26 AND SHARED WITH INVESTORS AND WE
564. 39:10ARE AHEAD OF PLAN. DELIVERING RECORD REVENUES.
565. 39:18UP 92% YEAR-OVER-YEAR. AND FOR OUR CLOUD BUSINESS UP
566. 39:21100 67% YEAR-OVER-YEAR.
567. 39:28WE BEAT MARGIN CONSENSUS SUBSTANTIALLY.
568. 39:32AND THEN WE GUIDED FOR FULL YEAR FOR GROSS MARGINS WOULD BE
569. 39:3310% BETTER.
570. 39:41WE ALSO SHARED INTO Q2 AND Q3 WE WOULD GO BACK TO SOME OF OUR
571. 39:45CUSTOMERS AND WE WOULD RENT BACK GEAR THAT WE SOLD THEM TO
572. 39:47TRY TO KEEP UP WITH DEMAND AND THAT WOULD HAVE A MARKET IMPACT.
573. 39:55WE DID THAT TO KEEP OUR CUSTOMERS CLOSE TO BE SURE WE
574. 39:58COULD KEEP UP WITH THEIR EXTRAORDINARY DEMAND FOR OUR
575. 39:59PRODUCT. AND SO THAT WAS THE STORY.
576. 40:09ON EVERY METRIC WE PUT OUT WE ARE AHEAD OF PLAN.
577. 40:15>> HAVE THE PROCEEDS ALLOWED TO MOVE MORE QUICKLY RAMPING UP?
578. 40:21ANDREW: CAPACITY IS THE LARGEST CONSTRAINT RIGHT NOW FOR
579. 40:23EVERYONE.
580. 40:32AND WE'VE SIGNIFICANTLY INCREASED OUR ABILITY AND
581. 40:35PIPELINE FOR DATA CENTERS WHICH IS NOW VERY LARGE.
582. 40:42WE ANNOUNCED A DATA CENTER PARTNERSHIP WITH BELL CANADA
583. 40:43FOR 120 MEGAWATTS.
584. 40:49THAT WILL BE DELIVERED IN 2020 WE ARE PURSUING DATA CENTERS
585. 40:50ACROSS THE U.S. AND CANADA AND EUROPE, MIDDLE
586. 41:01EAST. THE VAST RESOURCES THAT WE HAVE NOW AT OUR DISPOSAL
587. 41:04GIVE US TREMENDOUS ADVANTAGE IN THE PURSUIT OF DATA CENTERS.
588. 41:12ED: WHAT YOU'RE TALKING ABOUT MATTER-OF-FACTLY AS BUILDINGS
589. 41:14NOT NECESSARILY IN THE COMPUTER. IT'S NOT WHAT YOU GUYS ARE
590. 41:16OFFERING. HOW DIFFICULT IS IT TO GET
591. 41:21MOVING IN AMERICA OR OTHER MARKETS TO PLANNING APPROVAL
592. 41:24GET THE CONCRETE AND THE LABOR, GET IT BUILT. ANDREW:
593. 41:28THAT IS THE IRONY OF THIS MARKET.
594. 41:34THE AI MARKET IS MOVING AT BLISTERING SPEED AND WE ARE
595. 41:37BEING CONSTRAINED BY DATA CENTERS.
596. 41:43THAT IS A PROBLEM THAT IS BEING CONFRONTED BY EVERYBODY IN THE
597. 41:44CATEGORY.
598. 41:45BY THE HYPERSCALERS BY THE NEW GENERATION CLOUD SPREAD
599. 41:53EVERYBODY IS CONFRONTING THIS PROBLEM. ED:
600. 41:59CEREBRAL'S DOES NOT RELY ON TRADITIONAL OFF CHIP HBM.
601. 42:03WOULD YOU EXPLAIN THE BASICS OF THE TECHNOLOGY AND HOW
602. 42:06INSULATED ARE YOU FROM THE MEMORY BOTTLENECK THAT OTHERS
603. 42:11ARE EXPERIENCING? ANDREW: BECAUSE OF OUR INNOVATIVE
604. 42:16ARCHITECTURE, BECAUSE OF OUR WAFER SCALE APPROACH WE DON'T
605. 42:18USE HBM. IT'S MADE BY THREE COMPANIES.
606. 42:26THAT'S MICRON, HYNEK'S AND SAMSUNG.
607. 42:28THERE'S A GLOBAL SHORTAGE IT'S EXTREMELY EXPENSIVE.
608. 42:31AND WE DON'T USE IT. SO WE HAVE A TREMENDOUS
609. 42:34ADVANTAGE THERE. THE OTHER CONSTRAINTS IN THE
610. 42:41SUPPLY CHAIN FOR MANY ARE CHOLOS WHICH IS PROCESSED
611. 42:43INSIDE OF TSMC. WE DON'T USE IT. THE THIRD IS CAPACITY WITH THE
612. 42:48THREE NANOMETER NODE.
613. 42:54IN THEIR TSM FACTORY THAT MAKES A THREE NANOMETER CHIPS.
614. 42:56WE DON'T USE IT WE ARE AT THE FIVE NANOMETER NUMBER.
615. 43:02OUR ARCHITECTURE HAS ALLOWED US TO DELIVER THE FASTEST
616. 43:03INFERENCE IN THE WORLD BY AN ORDER OF MAGNITUDE WHILE
617. 43:08AVOIDING THE MAIN SUPPLY CHAIN CONSTRAINTS FACED BY OTHERS IN
618. 43:14THE FIELD.
619. 43:16>> CAN USE A HAND ON HEART NOT JUST WINNING BUSINESS BUT HAVE
620. 43:19YOU BEEN ABLE TO GO TO A CUSTOMER AND SAY WE CAN GET
621. 43:22THIS COMPUTE ONLINE FASTER THAN OTHERS FOR THOSE REASONS YOU
622. 43:26OUTLINED. ANDREW: FOR SURE.
623. 43:28ED: ANY CASE STUDIES? ANDREW:
624. 43:36WE SIGNED OUR CONTRACT WITH OPENAI ON DECEMBER 24.
625. 43:42AND HAD THEM IN FULL PRODUCTION ON FEBRUARY 1.
626. 43:44THAT'S UNHEARD OF. ED:
627. 43:51THIS MORNING OPENAI IS OUT WITH JALAPENO INTELLIGENCE PROCESSOR.
628. 43:56EVERYONE IS COMPUTE CONSTRAINED. HOW DO YOU INTERPRET THE
629. 44:00FRONTIER LABS GOING TO CUSTOM A SIX ALONGSIDE THEIR OTHER
630. 44:05COMPUTER OPTIONS. ANDREW:
631. 44:07ONE OF THE THINGS WE'VE BEEN SAYING IS THIS MARKET IS GOING
632. 44:12TO BE MET WITH A HETEROGENEOUS COLLECTION OF ARCHITECTURES FOR
633. 44:15HARDWARE. THIS MARKET WILL NOT BE
634. 44:18CONSOLIDATED AROUND GP USE. THERE WILL BE A SIX FROM
635. 44:24HYPERSCALERS, FROM LABS AND THERE WILL BE COMPANIES WITH
636. 44:29PIONEERING ARCHITECTURES WHO ALL OF US WILL TAKE BIG BITES
637. 44:32OF THIS ENORMOUS MARKET. I THINK ONE OF THE THINGS
638. 44:37THAT'S DIFFICULT TO GET YOUR HEAD AROUND IS HOW BIG THE
639. 44:41COMPUTER MARKET IS RIGHT NOW. ONE OF THE THINGS AI DOES IS IT
640. 44:46MAKES TRACTABLE FOR COMPUTE MUCH OF THE WORLD AROUND US.
641. 44:49AND THAT REALLY WASN'T THE CASE PRIOR TO AI.
642. 44:54>> IF THE WORLD IS SIMPLE AND IT'S MONEY THAT GREECE THE
643. 44:57WHEELS TO GET YOUR INDUSTRY GOING CAN WE SEE YOU COME BACK
644. 45:00TO CAPITAL MARKETS IN SOME FORM JUST TO MOVE QUICKER?
645. 45:04>> WE HAVE MORE THAN 9 BILLION ON THE BALANCE SHEET.
646. 45:08SO WE ARE PLEASED WITH OUR POSITION THERE.
647. 45:13BUT OF COURSE WE ARE ALWAYS SCANNING WHAT THE CAPITAL
648. 45:16MARKETS BOTH EQUITY AND DEBT FOR WAYS TO ACCELERATE OUR
649. 45:20GROWTH. ED: HOW ARE YOU JUDGING SUCCESS FOR
650. 45:23YOURSELF. WOULD YOU PUSH THE MARKET TO
651. 45:27GET CLOSE ATTENTION TO? ANDREW:
652. 45:33I THINK IF MY MOTHER IS PROUD OF ME THAT'S THE BIGGEST THING
653. 45:36YOU CAN ASK FOR. I THINK FOR MARKETS, I THINK
654. 45:44WHEN YOU LAY OUT A PLAN THAT IS AGGRESSIVE AND YOU CRUSH IT.
655. 45:47THAT'S HOW YOU FEEL GOOD ABOUT BOTH YOUR ABILITY TO EXECUTE
656. 45:51AND YOUR ABILITY TO PREDICT YOUR OWN EXECUTION.
657. 45:59WE ANNOUNCED YESTERDAY THAT WE WOULD BEAT OUR FULL YEAR
658. 46:03GUIDANCE THAT WAS 10 GROSS MARGIN POINTS ABOVE CONSENSUS.
659. 46:09YOU OUGHT TO BE PROUD OF THAT AND CONTINUE TO EXECUTE AND SET
660. 46:14EXTRAORDINARILY HIGH BARS AND THEN CONTINUE TO BEAT THEM. ED:
661. 46:19ANDREW FELDMAN THANK YOU VERY MUCH INDEED.
662. 46:24ANDREW ALLUDED TO IT, MICRON IS THE BIG ONE AFTER THE CLOSING
663. 46:25BELL. YEAR ON YEAR INCOME GROWTH 1200% YEAR ON YEAR, THE BAR IS
664. 46:31VERY HIGH. THE MARKET IS VERY ANALOGOUS TO
665. 46:38NVIDIA WHAT WE SAW IN 2022 TO 2025.
666. 46:42MASSIVE GROWTH BUT INVESTORS ALWAYS WANTING MORE.
667. 46:45THE STOCK DOWN INTO THAT. ANOTHER STOCK WE ARE WATCHING
668. 46:48TODAY U.S. FAST FOOD CHAIN WENDY'S SURGING
669. 46:53AS MUCH IS 42%, BUT WHAT DOES THAT HAVE TO DO WITH TECH?
670. 46:58IT APPEARS WENDY'S HAS BECOME THE LATEST MEME STOCK TARGET.
671. 47:01SHARES SHOT UP THE RANKINGS. TOP OF THE PLATFORM'S TRENDING
672. 47:07LIST. SPARKED BY A NOW DELETED POST ON RED IT'S WALL STREET
673. 47:10THAT'S PERFORMING DUTCH FORUM. THAT DOES IT FOR THIS EDITION
674. 47:13OF BLOOMBERG TECH. RECAP EVERYTHING ON THE
675. 47:18PODCAST. YOU CAN FIND ONLINE. THIS IS BLOOMBERG TECH. ♪