¶ Intro / Opening
Bloomberg Audio Studios, podcasts, radio news.
This is Bloomberg Tech coming up the biggest AI export restriction yet and Tropic disables access to its most advanced models for all foreign nationals. The US concern jail breaks in the code in video, is seeking to raise at least twenty billion dollars from its first corporate bond sales since twenty twenty one. We'll have the details. And SpaceX shares throttle up on day to trading, adding to a blockbuster public market's debut on Friday. And this is what
markets look like. Hello, Welcome to Bloomberg Tech Monday, June fifteenth. There is a big focus on what is happening between the US and Iran Later in the show. We'll get to that. But SpaceX in its second day of trading up eight percent and it's putting a big spotlight on the AI trade, on AI infrastructure. Then aw's that one hundred's off session highs, but we're again close to records, and the narrative is that there is feel good in this equity market. Let's get to our top story. A
¶ US Restricts Anthropic AI Access
major escalation in Washington's approach to AI. The US government has ordered Anthropic to block foreign access to its most advanced models after officials flagged security vulnerabilities and it's new to released Fable five system and Mephos five to two. Talks r underway between Anthropic and the Trump administration joining us now our AI editor Bloomberg, Seth Figman and in DC Bloomberg's Mike Shepard and Shepp I want to start
with you. This came from the Commerce Department. Explain the export restriction and what the government asked of Anthropic.
Well, this all dropped right as everyone was still so focused on the SpaceX ip IPO. Five twenty one pm on a Friday, a letter a directive to Anthropic saying, look, we are concerned about foreign nationals having access to two of your most advanced models, essentially the key products that the company would want to pitch as it's heading into
this nearly trillion dollar IPO. And this really marked a huge shot across the bow once again for this AI developer from the Trump administration, and in essence it forced the company's hand and Thropic had to deny access worldwide to these two products Fable five and Mythos five in
response to the government's move. Now, this in a way It really marked not only an unprecedented step for any administration, it really marked a break from what the Trump administration had laid out just a little more than a week ago with that order, that executive order, the President Donald Trump sign that was aimed at cybersecurity and AI and that it included language that said this does not should
not be interpreted as establishing a licensing regime. Yet an effect, what we are seeing is that the government is blocking the release of these models over the kinds of safety concerns, in essence, the vetting that the government had wanted to see done on a voluntary basis, and yet it is setting its foot down now over security concerns and essentially holding off the release of these two products.
Seth this was an action directed at the use of the models Fable five me PUS five by foreign nationals, but Anthropic made the decision to close off access to everyone. What was the explanation that the AI Lab gave.
Yeah, Well, they're saying access to foreign nationals not just in other countries, but those residing in the United States. And it seems that Acanthropic made the decision that this was unworkable to allow this model to remain on the market for those restrictions. So they've pulled up while they continue to talk with the government. Now there's a certain
irony here. You know, two days before this move, Anthropics and Dario Medea had come out and said, you know, he thinks the government should have the ability to ban models that pose certain risks. Two days later, the government took a step has effectively caused a model or two models to be pulled from the market. But in this case, you know, Anthropic is saying it's essentially misguided and the risks outlined may not be as severe as the government's right.
I think they are seth and Frobic saying there's a misunderstanding here. The issue that the government laid out is something called a jail break in the code. It has to do with guardrails that are placed on the models themselves. Could you explain to the Bloomberg Tech audience what the jail break concern?
Is important to note that at this point we have not seen the research that Anthropic and former White House or David Stacks have alluded to that implies that there is some kind of jail break former ability. What we understand is that it seems to be pretty narrow in nature. It may actually be something that enables cyber defenders to
use the technology to spot and protect against flaws. But what Anthropic is saying is, if not some universal jail break, some wider flaw that could be breached in a potentially damaging way. And it seems to believe that the government is either overstaving or misunderstanding the nature of the risk.
Here, Mike, real quick, what's happened behind the scenes.
Well, that is what we are trying to find out next, of course, and we want to first know what remedial steps the company could take at the government's behest, what those might look like, how long that might take, and whether the company really would follow suit. We don't know how long this will unfold or if there will even be a legal challenge, And also we have to look at the politics of this abroad. The President just arrived in Geneva for the summit in Evion with other G
seven leaders. AI is on the agenda, and now it will be a more urgent issue, especially as we see economies including the European Union, examining the question of tech sovereignty and the concern that they have about perhaps over reliance in US technology that may be at risk of being taken away from them at a moment's notice.
Bloombergs Seth Figmann and Bloombergs Mike Shepard in DC, thank you very much. The industry weighs in for more in
¶ Industry Reaction to AI Export Controls
the impact across the AI ecosystem. We're joined by Joel Pinot, chief AO officer at Cohre, a frontier AI firm focused on LMS and AI applications for business customers, and shep just set it out pretty clearly. At issue here is whether or not the government should be able to say you can or you cannot use a particular piece of technology because of the concern that was outlined. What is Coher's position.
On that, indeed, And you know co Here's a company that's fully focused on developing models and a gentic platform for enterprises and government, and so we've been talking to that segment of the market for a number of years now.
What we've been.
Hearing is that customers want the ability to really control their tech stack. They want to make sure that the technology runs in a predictable way, that it's stable, that it has high guarantees in terms of confidentiality and security, so there's a number of companies and governments already who are opting for on premise installation where they can control the model and they can control all of the software stack.
Clearly know all the news from the last few days is a huge wake up call for others across the industry. The fact that models which a few days before were presented as some of the most capable in industry suddenly are no longer accessible means that there can be a lot of volatility in terms of access to the technology, and that's got to be a big concern for companies.
Joelle, This news hit five twenty one pm Eastern Time Friday, So I appreciate it's been just a couple of days over the weekend, but has Cohed had any inbound right If there are entities that can't get access to meet those in fable five, maybe they use you.
I would say, like huge number of inbounds. It's coming from business customers who are looking to diversify the set of technology that they can rely on, both for the core models and we do build our own models and for the orchestration and governance platform. A large number of inbounds from governments around the world especially outside of US and China. Governments are concerned about their own ability to access the technology, but also the economic trajectory of companies
and citizens within their frontiers. And then of course a lot of inbound interest from investors who are wondering what does that mean. We know there's of course the big IPOs coming, a lot of volatility from that point of view, and a lot of people who are just trying to understand the situation and see what have the news changed in terms of what should be their investment strategy.
I had asked Seth to explain the concept of a jail break in the code, right, that is the reported issue that the US government had with me FOS in Fab five. Explain technically how that works and how you'd approach I guess explaining it if it was you that was dealing with the Commerce Department on a restriction like this.
Yeah, And so the concept of a jail break can be used pretty loosely, but quite specifically. There's a sense in which a particular system has some guardrails around the intended use of that system, and a jail break happens when someone manages to infiltrate the system in ways that weren't intended. So in this specific case, we can imagine, you know, from Meethos to Fable, anthropic hasts put in some guardrails that circumvent that prevent the ability for the
model to be used to create cybersecurity attacks. So we can presume that the specific jail break that was identified is the ability to go around these defenses and in fact make the model produce outputs that would that would leverage some of the cybersecurity capabilities of the model.
Something the Center of Anthropics response is that many of their own staff wouldn't be able to access this technology based on the restriction, right because many of their staff are foreign nationals. It also highlights a world dependent right now on US technology. You're a Canadian company, I get that, But what's your thinking on that issue, the concentration of leadership in the field of small group of US companies. Maybe you dispute.
That, No, I don't fully dispute in the sense that, like where we sit today, there's literally, you know, four countries in the world that have the ability to train Foundation model US China, France, Canada. Right now, even in those companies in the US, there's a large number of foreign nationals. The you know, inbound talent into the US has been formidable force for the progress of this technology.
So this is going to be a big challenge. And the other thing that's worth mentioning is, in many ways, a lot of the developments in AI of the last few years, you know, are at this level of ideas and concepts. Sure we have the models, but really the recipe for training these models sits in the head of
a relatively small number of people. But there's, you know, a large enough amount of circulation between the various companies that we can assume that the capabilities to do that exist, not just at asan tropic.
Joelle Pinot of Cohre, thank you very much for your time. What is our top story today? Now coming up, in Vidia heads back to the bomb market after a five year absence. Why is the AI giant looking to raise billions of dollars while it's sitting on a mountain of cash. That's what the stock picture looks like. Be right back.
¶ Nvidia's Strategic Bond Sale
This is Blimberg Tech. Today's big number twenty billion dollars. In Vidia is looking to raise at least that in its first bond sales since twenty twenty one. According to sources seven trenches maturities from two to thirty years. The proceeds will be used for general corporate purposes, including refinancing existing debt as in Vidia joins other AI leaders like Amazon and Alphabet in raising large amounts of capital to fund AI related infrastructure. But why does a company so
flush with cash need to borrow more? Bloomberg Intelligence reckons that it's to focus on funding partners, b I Senior Credit and List. Robert Schiffman joins us, Now, when you publish the react, that's the bit that jumps out of me off the page, right, Why would they do that? Well, they have a track record of investing in the kinds of startups that rely on their technology. Extrapolate on that thesis.
Yeah, well, listen, you can never be too rich. It's a good problem to have. Quite frankly, in Video does have a cash problem. They have too much of it. So people are scratching their heads this morning thinking why are they raising more? Listen, you take money down when it's available. There is so much money chasing after this
AI build out. They're going to put in the highest quality names that they can, and I think in Video is just taking opportunity here to basically borrow at effectively a zero rate, at least from a whack perspective, to
give them more financial flexibility. I think they're likely to pour money, probably back into street strategic partners like open Ai, like Anthropic, and who knows, maybe a SpaceX, which is likely to do their own bond deal might come to in Vidia for some financing down the line as well.
There's like the smart cost of capital angle to this. The shareholder return story has changed recently with Nvidia. You know, I'm a student of your work, right, It's not that unusual for companies flush or cash to just say, like, okay, this is an interesting thing for the finance or with the treasury team to do. Explain the kind of nitty gritty of that.
Well, listen, you know, the weighted average cost of capital is what they're looking at. The weighted average cost of debt when you have a five trillion dollar equity market cap is basically zero. So you could take money, borrow it from from bondholders, and use it for equity or equity style investments at a little or no cost. I think you're going to see more of this. You sell a lot of this from Apple over the years.
We're not used to.
It now though, because most of these other companies have now turned free cashual negative and they need it for funding for their AI investments. That's not what Nvidia needs. And Video is probably going to generate a couple hundred billion dollars of free cashrow over the next year, so they're swimming in the money. But again, when people are willing to give it away for next to nothing, you're going to take it and you're going to give yourself that financial flexibility.
Robert Schiffman, who leads our credit research of Bloomberg Intelligence,
¶ SpaceX IPO and Market Dynamics
thank you so much. Let's turn to SpaceX, who shares our extending gains for their second day of trading following the company's blockbuster public market's debut Friday. The trading offers this other glimpse into investors demand for what was one of the world's most private companies. And then they did the biggest IPO in history. There are some mechanics to what's happening in the market next joining us as Stephanie Aliaga,
JP Morgan Asset Management, Global market strategist. You know, the big anxiety in the days leading up to the IPO was this great rebalancing of the passive funds. Because nasdak Russell Indicas fast tracks SpaceX's inclusion, it's day two. Shares are still higher. But how much does the market need time to digest before it has to undertake that rebalancing.
It's a great question, and that's exactly the point. You know, this issue of all of this issue and sitting the market doesn't happen all at once. You know, relative to the size of how much supply of SpaceX there will be in the market right now, we're just looking at a small fraction of it. Right four and a half percent was that first day's volume, and that's going.
To ramp up over time.
We think that six month mark is really going to be the point where you might see more volatility just to give in a greater supply in the markets, and then that increasing over time gradually over the over the course of the year, particularly given the S and P taking a more temperate pace there, but given that longer term horizon, I mean, that's key here. You know, this is a market where we are looking at a large
bump in terms of IPO issuance this year. This year projected around two hundred and sixty billion dollars, but for a market the size of sixty five trillion dollars that is less than one percent of the overall market cap of the market, a market that is also fifty five percent greater than it was in twenty twenty one. So we think so long as the market continues to trunk along here with robust fundamentals, we just had a really
solid earning season. This AI capex boom continues to funnel earnings growth and revenue growth across the market, and households remain in pretty strong buyers retail activity is strong. We think that this is a market that can digest this increase in issuance and its issuance that we have really been strapped for for a number of years.
I want to go back to something we show them the screen a minute ago, and it's basically more of an fyi that in the end, they sold more than the five hundred and fifty five point six million shares and raised more than seventy five billion dollars. Right, this is basically an instant exercising of the green shoe, eighty three point three million shares raising proceeds of eighty five point
seven billion. This has been a story that started to about a race to IPO, SpaceX and now likely anthropic and open AI, and it quickly changed to a story about race to capital. Alphabet came in massive equity offering in Nvidia, tapping the corporate bond market. Do you see a race to capital?
I think the economics around the AI boom continue to mount. Now, obviously these companies are all in different pieces of this value chain in are raising capital variety of different reasons, but it is something that investors are going to have to get used to. I think, you know, we as great as the balance sheets of some of these companies are.
This AI wave is just getting to be that much more expensive, and all of the revenues around AI will eventually come, but this is going to be a multi year phenomenon, and right now we are ramping up to spend significantly more around AI infrastructure and all of these different pieces of the value chain. I think that points to the need for selectivity. Not all that glitters is gold.
These companies do vary in their financials. We think at large, the fundamentals of this market and of the companies you know, spending the most and raising issuance in various markets is still robust, but you want to make sure in your portfolios that you have some proper diversification, just given that you know, the leverage and the economics around this AI wave are definitely beginning to diverge.
¶ Private AI Markets & Tech M&A
Stephanie, we've just got thirty seconds. But how closely are you tracking private markets because there are competing stories right There is also the staying private for longer because you can like, how much do you track that?
Yeah, well, we think that that theme is still very much alive and well, I mean, you are going to get likely some big, high profile AI names, but the IPO markets are still going to be very selective. And a lot of the companies building in this AI race, whether it is robotics or even semis, but also particularly the application layer and building AI for healthcare, AI for logistics, all of those companies are in private markets right now.
And of course not all that glitters is gold. I mean, market returns there can be quite volatile too, But when these companies eventually reach public markets, a lot of that growth has already happened, and that is a reason for investors to make sure they're looking beyond just public markets and their portfolios.
Stephanie eliagro JP Organizet Management. Thank you very much. A quick update on the Anthropic story. A US official has just confirmed that unpropping executives will be meeting at the Commerce Department today. Will follow the story as it develops and bring you the latest. Now coming up, Fox has agreed to buy device and streaming company Roku in a deal that would create a new TV juggernaut. We've got
those details. Next, this is Bloomberg Tech. Fox has agreed by Roku in a deal that values the streamer at twenty two billion dollars including debt. The tie up will create the third largest player in the US television market by viewership. Bloomberg Deals. Michelle Davis joins us with the deats. Interesting one. I've got a Roku TV somewhere in my house. What's this about. What's the strategic play from Fox? Yeah, this is a.
Really interesting deal because Roku is seen as kind of the last big aggregator out there that everyone was wondering when it would get taken over. The founder for years has controlled the company and there's always a question as to does it make more sense to aggregate content and be the platform on top of which you know, content streams, or does it make sense to be a really big streamer that generates most of its revenue that way? And by buying Roku, Fox is basically saying we want to
make sure we are that neutral third party platform. Roku makes most of its money on advertising, which is an area that Fox had kind of fallen behind its competitors on in this you know, new streaming central environment, and so that's a lot of what the value is going to be coming from here for them twenty.
First century folks down significantly take me into the terms like where we're at in the process.
So the deal, it's a cash and stock deal that the shares are down on the news of course, because you know, investors don't always love to see a stock deal. At this point, the deal values rocud about twenty two billion dollars enterprise value, so that's including debt. Of course, if Fox shares continue to decline up until the deal closes, that will mean that some of the overall value for the deal will be a little bit lower than twenty two billion dollars. But this really caps off a multi
month process where Roku had been exploring strategic alternatives. The founder, Anthony Wood as if we were just talking about had been thinking about, you know, what's next, succession planning and Roku and Fox actually have a long history. Fox had invested in Roku years ago before the IPO. They sold out of their stake at the time that they bought to be but by buying Roku, they're kind of the
two companies are coming back together. The founder will have a role on the board of the combined company.
In books, Michelle Davis, thank you very much. In other m and A and US sales Force has agreed to by aifirm, Finn for three point six billion dollars. Finn's customer service tools will complement Salesforce's agentic capabilities. According to the company, AI is a key part of the software maker's growth strategy as it works to boost investor confidence. Salesforce shares upper percentage point right. M and A has been at the heart of the Salesforce story for a
little while. Now we'll keep tracking it. Coming up. City's head of pan Asia Internet Research, Alisha Yapp, joined us to break down where China's tech market stands in a big global race. It is halftime. People will be right back. This is Bloomberg Tech Welcome back to Bloomberg Tech. This is what the technology sector looks like. There is a big focus on the outcome of what's happening between the United States in Iran and some sort of deal. We'll get at the details on that in just a moment.
SpaceX is trading for just the second day as a public company, up eight percent, one hundred and seventy three dollars fifty five cents a share and rising. We'll keep tracking that story. There's a lot of factors going into the biggest IPO in history. Let's get out to Geneva.
¶ G7 Summit & US-Iran Deal
Global leaders are arriving in France for the G seven summit, and this time the usual geoplogical guest list has tech additions. The chief executives of major AI companies Open Ai Andthropic Google are all slated to attend the gathering commes just days after an unprecedented White House order forced Anthropic to block foreign access to its most advanced AI platforms. But first on the agenda the US and Iran. The two countries reached an interim deal to reopen the Strait of
Hormuz bliomers. Tyler Kendall joins US Now live from Geneva Tyler.
Hey, and well, at this point, we're waiting for some firmer details from either side about what is in this potential memorandum of understanding that we did here from the Vice President Jadie Vanced earlier today, who said that they are going to try to get that text out before this potential signing ceremony happening here in Switzerland on Friday. So far, we know that the main pillars of the deal are what we've been tracking for weeks, which of
course includes reopening the strait of her moves. But there is still some big questions here about how Iran feels its role is going to be connected to this going forward, after Iranian state media earlier today seem to indicate that Iran wants to continue to impose fees and have some sort of grip over the street even after a deal is signed. We also have questions about what economic relief will look like and ultimately what sort of curves Iran
will agree to in this deal. Though it is our understanding that this is going to be a phased agreement where those negotiations come later, and while the conflict in Iran is dominating the conversation already here at the G seven.
As you mentioned, President Trump has some really important meetings scheduled for later in the week on Wednesday, where we will see this base to based meeting with G seven leaders and these big tech CEOs, and that meeting is going to be just as much about the potential opportunities around AI as well as those potential risks because ed Bloomberg News has now confirmed that senior staffers for Anthropic are meeting in Washington today with members of the Commerce
Department after this unprecedented move by the administration to threaten that export band.
Grin Books, Tyler Kendall, n Geneva, thank you very much.
¶ China's Tech Sector & AI Development
There's also a massive ways of news across China's tech landscape today. Social media powerhouse Jaohongshu is reportedly gearing up for a blockbuster Hong Kong Ipo this month, while shares of AI model maker GPU's skyrocketed following a major price
target hike from JP Morgan. But despite all this heavy corporate activity, City Group warns that global investors are still treating China tech as quote a source of funds, with Wall Street dumping local stocks to fund the global AI hardware tradeing US now as Alicia, Yeah, head of Pan Asia Internet Research at City Group, And let's start with that thesis. I find it so interesting. There's a big distinction between newsflow and activity China's tech sector and deployment
of capital or finding capital to deploy elsewhere. Explain what you're arguing.
Yeah, So, I think the reason why we mentioned it is because I think the investor interests, especially for those you know from the US and Europe so outside of Asia, and even for those that we speak to in Asia
they're based in Asia. The there's so, I mean, people have interests, but then somehow we know that they've been underway uh China Internet specifically or even too many that you know investors that share with us, they're actually uh using you know, internet as a source of fun obviously to to find the hardware trade in Korea, in Taiwan and Japan, partly because I despite Internet, for example, Ali Baba by doing their heart full stack of ai uh.
But then because of their core business are not really doing as well are you know, they've been you know, investing aggressively on food delivery for example, they've been dragging the profit. So a lot of investors give us uh, you know, the feedback is that why should I border so much of that while I have to deal with the core business is not a pure play and I mus as well just play directly into some of the hardware ings. So that's why this has been you know, happening.
And we've seen the last few weeks, I mean sorry, the last few months. You know, China internet sector has not been performing despite the valuation is actually getting quite attractive.
Right, Alicia. The story of the first half of this year was Chinese internet giants and frontier labs moving very quickly to try to close the gap with American technology companies. Does your research show that that gap is closing, Yes.
I think indeed, especially for example, take you know Ali Baba Kuan model, you know since three point five and then three point six, three point seven. Now we're actually seeing there's a huge step up in terms of the model intelligence. And then same thing for you know the independent lab for example Minimax they recover and also I think ten Cent the latest model are and three that they released at the end of April. This are also increasingly closing the gap with the frontier model.
The story and the data that we track in the US is capital expenditures on the hyperscale side, and then how real is the agentic AI deployment on the enterprise side. Take that story to China, how is that playing out in that market?
So I think from the Kapex point of view, and think many of us aware that I think China side is not spending as you know, as high as what the US hyperskill is indicating. Partly, I think there's a lot of cost components. It's cheaper right in China. Partly I think there's also some of the assisting capacities that's already built up the last few years is actually able
to support that. And then in terms of the agendic right the future agenda workflow, we think that you know, you know, Ali Baba's trying in terms of the coin versus the assisting you know application for e somebod the
Talbo or the AMAP. But then I think over time, we do hope that Tencent at the end of the day could actally come up with their AI agents insidech Ad which they are obviously testing on it, and then with the next versions of the model if it's intelligent enough, because I think they're going to train a lot of their proprietary data into the next versions of the model and then hopefully that could actually you know, ensure the AI agents also working within the Vita ecosystem.
Another big story overnight from China was a group based planning to overhaul the Alipaid super app, but to bring in an agentic AI user face you brilliantly set out kind of what's happened one aged twenty twenty six, what does city think happens in China's tech sector in the second half of this year.
So we hope that for example, you know, company like ten Cent or even you know and to someone sense some of this super app that if they're actually able to bring up the agendic workflow working within the super app, which allow a lot of the enterprise that have mini programs for example, they're able to use agent within that ecosystem, then most of these enterprises would be able to stay
within that ego system in a way. Then hopefully you know, things could take off, especially for the super app environment, that they can become the AI power ecosystem that we are looking for, and hopefully that could help to re rate you know, the leaders like Tencent or Ali Baba. Then in that sense to help the entire sector to get the fund flow rotation back. Yeah.
Alicia Yapp, head of pan Asia Internet research at City Group, big focus on China tech right now, appreciated. Thank you.
¶ Future of Data Centers: Orbital vs. Submarine
Now coming up, should we be sticking data centers in Earth orbit or should they be under the ocean. We're going to speak with Mike Schrope for a founding partner of gigasale caps. He might recognize the name former meta cto. He has a thesis. This is what the Nazak one hundred looks like. We're back nearer toward session highs and again of almost three percent, a lot of momentum. The
index is near record high. Is a big part of it is kind of feel good from the SpaceX ipo Friday, but also of course what was outlined by Tyler from Geneva about a US Iran deal. This is blimberg tech check back in on SpaceX shares hire second day of
trading after a blockbuster public debut Friday. That performs help booth confidence in a broader AI rally and it marks the start of a shift from two decades of shares disappearing from public markets to this new era of stock abundance as the likes of Open Ai and Anthropic also
prepare for IPOs and other companies sell new shares. Bloombos Common, Rhinokey has been all over it, and we expect in the next days, weeks, and months a bit of volatility should we start, would like to hear and now I hope you had some of a weekend to digest what happened Friday. But right now that the net takeaway is what cormen about this IPO.
The net takeaway is very positive. We see shares up a second day here. It was up about eight percent the last time I looked at my terminal, extending gains from Friday's first day of trading. And this gives the company a valuation of about two point two trillion dollars. So it's already launched itself into one of the top companies, the one of the biggest companies in the stock market.
So the takeaway was really positive.
You know, investors into the IPOH there was solid trading, nothing went horribly wrong, and that's kind of given investors the ability, one just to be very enthusiastic about the AI trade. That's supported by what happened over the weekend a potential piece deal with Iran, and investors can hopefully start to shift their focus towards a FED meeting on Wednesday.
Com and you and the team are out with the big take. And basically there's going to be a lot of new equity that hits the market and it's going to change the story of like the last two decades. Explain that to us, give us the key numbers that we need to know.
Yeah, so this is a really huge deal. Basically, over the last few decades, there's been you know, twelve trillion shrink you know, equity taken out of the markets as company buy backstock, which is a key way that they once spend you know money down on their balance sheet and you know, return value to shareholders. It's been a major support of the stock market and especially these big companies.
So what's happening now. I mean, we see IPOs like SpaceX's record IPO on Friday, as well as equity issuances from companies like Alphabet, Meta and Oracle bringing equity back into the market, so growing the total number of shares that are available in a way that actually it can be diluted for stockholders. So one point five trillion dollars in shares coming back into the markets this year. That's
according to a JP Morgan analysis. And really what the signal is these companies are saying, one, we can go to the equity markets. There's investor, you know, desire demand for our shares, and it's a good way to raise money to spend on what we need to do to build out more capacity, more data centers, to use AI in a way that will hopefully be a creative to earnings going forward.
The most common rhinicky thank you very much so. One way that Moss games to drive revenues and profit is to build out of all bit data centers, a complicated and expensive ambition that our next guest says may only be achievable by SpaceX. Instead, others should turn to submarine data centers to save on things like energy costs. Microver Hoped add tens of millions of square feet of cloud
computing capacity. As the former CTO at Meta, He's now the founding partner of Gigascale Capital, a venture firm making some early stage bets on those companies that are more focused on climate impact. But you put yourself in one bucket or another. I guess orbital data center or data centers where the ocean is the playground. Present your thesis to me.
Well, I don't think it's an either or. I think it's a little bit of all of the above. For space, it's very hard and expensive to get there, and I think nobody but SpaceX can do it with their vertical integration and launch costs at wholesale. Otherwise, economics are just tough. You know, I can put a ton of mass in the ocean one hundred times cheaper than I can put it in orbit. So I think you've got a lot of room to go in terms of using huge energy resources.
We've got ten terot lots of power in the Southern Ocean that's completely untapped, unused. We've also got you know, I built a lot on land, tens of millions of square feet. I don't think we're anywhere close to done using solar resources on land. Between solar and batteries, I could put together a new power plant in twelve to twenty four months, you know, in a pace that's faster than gas or launching into orbit. So I think there's a lot of different ways to do this. I think
SpaceX is going to do space based data centers. I'm bullish on on land solar plus batteries plus next generation and in the ocean with companies like Panhalasa.
I think we therefore need to kind of understand the lasting and ripple effects of SpaceX's IPO, right, which is, you know, the prospectus could not be more clear. Here is the plan orbital data center. But when you're in private markets putting bets on earlier stages, you know, if someone comes to you with a deck and it says, I too have a plan for orbital data center, do you bother? So you just say, well, SpaceX has got
that covered. There isn't a need to fund this concept, this idea, this plan elsewhere.
I mean, I'm in the business of looking at everything, so I'll always take a meeting to understand, to see if I've missed something, and I'll update my priors if I see new information. Every time I've looked at the math, the economics on space based data.
Centers, it's doable.
It just like it's extraordinarily expensive because you have to pay for launch, you have to pay for radiation hardening, you have to pay for radiators large enough to get rid of the heat, because these servers produce a lot of heat, and once you add up all those costs, I just don't see how it's cost competitive with current on land or current ocean. You'd have to assume a dramatic increase in the price of building stuff on land
before you want to go into space. Again, unless you're SpaceX and you get all of those things that wholesale costs, in which case your costs are very different. So I'm not wholly no, but I'm skeptical when people pitch me on these ideas.
Mike, if we measure the economics of and we're just showing what SpaceX presented the other night, the design the economics of the space based data center is a dollar per token basis, how does submarine data center compare on paper?
Well, again, I think you have to look at all the assumptions into that, and you know, when I've done the modeling in math, if you just sort of do some basics on this, it is against about one hundred times cheaper currently to put a ton of mass in the ocean than it is to put that same ton of mass in space. So I think you have a huge cost advantage when you look at the ocean, you
have almost unlimited free cooling in cold seawater. You know, in space you can radiate heat, but that requires building radiators or rating into a vacuum.
It's expensive.
So again, I don't see how the math closes for anyone who's but SpaceX, who again has everything at wholesale costs, already launching large volumes of starling satellites. So I think it's a great business for them. I'm just like not clear on how anyone else can compete on costs.
So our starting assumption is right. Now the world is compute constrained, right. You weren't Meta for a long time. Meta is going to be one of the big capital expenditure deployers. Do you see Meta being open to a world of submarine data center as a solution or looking at orbital data center as an alternative.
I think all of these providers, you know, will look at these technologies when you show tokens being generated.
You know, once I'm out a terminal, I.
Can say, here's a chat experience with a live webcam of a little booie bobbing in this southern notion, or you know, a feed from the live satellite and saying this is where the tokens are getting generated.
I think everyone's going to perk up and add more attention.
Until then we're talking about theory because no one's still either of these things.
But I think that you know, at the end of the.
Day, people want reliability, they want availability, and they want okens now. So if you can provide people compute now, then they're open to it.
And reminders of the audience that SpaceX said the earliest deployment of orbital data center is twenty twenty eight. Mike Trope, founding partner at Gigascale Capital, thank you so much and as allys continue to be on SpaceX, we bring you some of the biggest investors in the company. Tomorrow, Sequoia Capital partner Sean maguire joins us a conversation you don't want to miss now coming up, we're going to discuss the newest update on the long awaited AI capabilities of
¶ Apple's Siri AI Breakthrough
Apple's Siri paron. This is Bloomberg Tech. Apple's Serie AI is catching up to its chatbot competitors, pulling the tech company out of an AI slub two years after making promises of AI functions. Series newest features center around it's so called personal context and on screen awareness technology. Bloombers Mark German got the access and joins us. Now this
is so interesting. So you've had time to to use Apple's Serie AI in a way that you can explain where we're at with it in power on Over the weekend, you detailed the most important parts. What what's it been like?
Yeah, Seri AI, Apple's revamped Siri. You want to call it Serie two point zero, you can do that. Here's what I'll say. It fulfills the promise of Siri that the company made fifteen years ago when it debuted the first version as part of the iPhone for us in two thy and eleven.
It's terrific.
It's on par probably with recent versions of Chat GPT, Google, Gemini and Claude. It's not perfect. There's a lot it can't do. You can't do in depth research like you can do on chat GPT. You're not going to get major PDF summaries of very long documents. You're not going to get tax preparation, you're not going to get Excel and powerpoints slide decreation. But for ninety five percent of people they use chat GPT in Gemini for web AI, search,
for historical information, for asking questions about anything. It could do all of that, plus actually do the things that Seria has been supposed to do, like correctly player music or correctly navigate your places.
This is a big win for Apple, just as people use chat GBT for the most part. Right now, the title of the Power on Apple's new series is just good enough to ease AI crisis if I put the emphasis in the right place quick.
It is just good enough because it's not exactly as good as the competition, but for ninety five percent of people, and to meet the needs of the majority of the Apple userbase two billion plus strong, it does that.
Bloomberg's Mark Gunman a Power on every Sunday. You've got to read it and then Mark will be on the show give us the details that we need. Thank you very much. A quick check on shares of SpaceX, so the gains in the second day of trading now up to ten percent, giving SpaceX as it stands a market cap of around two zero point three to two trillion dollars just day two as a public company trading in
the public markets. But we talked throughout the hour about the lasting effect this will have in not just the next few weeks, for the next few months and years. That does it for this edition of Bloomberg Tech. Those conversations really worth recapping. There's a lot happening in capital markets, across public equity, across debt, and it's the biggest technology companies in the world that are dominating that news flow
and that market move. Check out the podcast. You know where to find it on all the Bloomberg platforms, as well as on Apple, Spotify, and iHeart. From San Francisco, Day one, This is Bloomberg Tech