Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is a live from Coast to Coast with Caroline Hyde in New York and Vla Loow in sentrancs. Go.
This is Bloomberg Tech coming up.
Anthropic plans to spend fifty billion dollars to build AI data centers in the US.
Plus data center demand helps AMD shares jump as it predicts accelerating sales growth over the next five years.
And Woop is considering a potential IPO in the next two years, according to its CEO. We'll have the details. Okay, let's get onto our top story. Anthropic plans to spend fifty billion dollars to build custom data centers for AI work in several US locations, including Texas.
And New York.
This is the latest expensive pledge for infrastructure to support DAI boom. Bloomberg's AI editor Seth Figeman joins us for more. There are some details worth understanding and knowing about in what Anthropic plans to do with this fifty billion dollars, over which timeline and with who.
But there's also some consideration.
Around how big this fifty billion dollars is relative to the rest of the field.
That's right.
You know, I think in one sense of you had said a year or two ago that a four year old, unprofitable startup was going to commit fifty billion dollars to infrastructure project and say that's enormous and possibly insane. But when you compare it to the one point four trillion
that OPI has committed, it feels much more measured. And I do think that is very much the subtext of a lot of this Anthropic is clearly taking a page from Open in terms of the scale of infrastructure required to build what it wants to build, but I think it also wants to show that it's perhaps a fiscally or more fiscally responsible company and doing this in order of magnitude less.
At the moment, they've raised thirteen billion dollars recently, they're worth one hundred and eighty three billion dollars, and they've been really good track record with business and enterprise sales three ondred thousand business customers. But what's interesting is the business they're doing with other people. They're using a UK company to build out in the US.
Seth, that's right.
I mean Fluid Sac is really not a household name here. I mean, it's part of that emerging sector of neoclouds, but not nearly as well known as Corewave or even Nebuus. But you know, it's an up and coming company that we've previously reporters and talks for a large amount of funding, and it's been central to a French effort to build a supercomputer over there. But again more untested perhaps than some other partners you might announce here.
It's one of the stories where it's what we do not know that's worth consideration. So they're not telling us, you know, the total gig and what figure for the footprint in the United States. And at the same time, you know they're heavily reliant on these hyperscale partners Amazon, Aws and Google to give them the compute they need away from this this plan to build fifty billion dollars capacity.
Yeah, and I think again, if you look at their nearest rival of Panaya, sort of it takes everything and everyone to build what they want to build here. And so while they want to potentially have a bit more control and ownership over some of the data centers that they build in the coming years, they're still going to be relying on those big tech partners and the neo clouds and pretty much anyone else in this industry to meet what they imagine to be a pretty intense amount of computing needs.
Here Blum, meg Seth, Fiegeman is a great breakdown. Thank you. Look those intense compute needs, those AI bubble hopes, there's still been questioned by the market, at least on the day. Let's check in on the nastak. It's unpressureed by three tens percent. Even though we've got some significant moves to the upside of the chip set to end. You're going to get to it. But at the moment, we're still
trying to digest potential end of the government shutdown. We're still trying to digest really where some of the AI return on AI is eventually coming from.
Ed There are some outperformers, and AMD is probably the starkest example. Are almost ten percent more than nine percent. They had their base of annual Capital Markets Day or Investor Day, and what they said is that top line revenue growth is going to be annualized thirty five percent
over the next three to five years. But in that key data center category eighty percent KAEGA over the same time period, and the question we've asked so many times on this program, is is AMD meaningfully going to close the gap on Nvidia for AI accelerators or GPUs for data center The market really likes what it heard. Global Foundaries actually had a really strong earnings beat in the
third quarter, particularly on the bottom line. Again, another sort of smaller scale contract manufacturer chips like TSMC, but the stock down three percent all in all. At the index level, the Philadelphia Semi Conductor Index or socks up one point two percent. But there is like this weird kind of treading water right now. Bigger picture because of the government shut down and AMD, as you know, carry is probably doing a little.
Bit to boost at the index level.
It is. Let's just get the context of all of this and drill down into what has been some cautious optimism in tech stocks in an end of course, to the US government shut down potentially in sight. Nicolas de Danvier is with us here, is the head of North American Equities for Columbia Thread Needs. I've got a call seven hundred and fourteen billion dollars in as it's under management.
Nick.
It's wonderful to have you here in the studio.
Thank you for having me Caroline, and.
You've got this great take on what the drivers are going forward. You call it tire. But we are still trying to digest trade. We are still trying to think about interest rates. I think you go into what's happening with inflation, but earnings. What are we hearing from earnings to vindicate the AI run up that we've had of late?
Hey looks thus far, right.
I think it's fair to say that earnings have been really, really good. If you look at the performance of the hyperscalars in particular this most recent earning season, you are seeing a growth and there I say, return on some of this capex.
All you have to do is look at what's happening with META. Right.
When you look under the surface, you are seeing that the AI is enabling better ad effectiveness, right, And those are some of the early things that we want to start to see as investors to validate the spending.
What's been interesting is investors didn't give much of a longer rain to META beaten up in this earning season because they'll take on more debt. They're thinking and committing to that capital expenditure. What do you want to hear from Zuckerberg, do you want to hear that optimism or do you want to sometimes hear that he's going to be sensible with the money spending too.
Hey, look, investors are doing exactly what we should be doing right now. We're asking questions. And why are we asking questions because Caroline, even in the world, with one hundred billion dollars is quaint right, We're talking about really big numbers here, So investors are rightfully saying, Hey, help me understand the pace of the spending. Help me understand how do I think about these returns flowing through?
What's the timeframe on that?
And Mark, do you really need to spend all of this money right now or should you take your time now?
Zuckerberg would say.
We absolutely have to move forward because this is going to matter for the future of the company, and if we don't do this spending, we're going to fall behind. But investors are going to ask questions, and that's precisely what we should be doing.
Nick, it's great to have you on the program. Let me give you some really big numbers. Four point seven trillion dollars market cap for Nvidia, top line growth overall fifty six fifty seven percent data center, maybe even better the E in your acronym. It cannot get any bigger the next Wednesday. How should the market brace for that in Vidia print either to the upside or to the downside in terms of disappointment.
Look, I know that there is a focus and we like to look at these earnings sort of on a real time basis, But what the market is really going to care about, ed is how is in Nvidia talking about the future?
Right?
Caroline was just pointing out that we've had lots and lots of CAPEX commitments, and what investors want to hear is what is the pace of that CAPEX coming through their revenues? And Look, I know we're going to focused on a backwards looking view in terms of the quarter, but what we should be thinking about is is the pace of their competitive positioning? Are they going to be
able to maintain that? Are they going to be able to maintain this revenue trajectory that there are and at least in a short term, I think they can.
You're the head of North American equities, right, you probably take a much broader macro view, but when you do have a company like this who's not just technical waiting at the index level is an important consideration, But like the psychological weight that the Gensen one puts on the market, how do you prepare for that? How do you translate that for your clients?
I think what you have as an investor is focused on the things that you can do best right and what is our competitive advantage, if you will, from the perspective of Columbia Thread Deedal, what we can do is study the market, understand the competitive dynamics, and be able to weigh through who the winners and the losers are going to be. Now is Jensen's commentary? Is that going to matter for investor expectations? It will, But to the
extent it creates noise. I think what we have to do is be ready to take advantage of that on behalf of our clients.
And so in this moment, if there is weakness, and we have seen some pockets of weakness, look quantums come off. We've had some of the more sort of risk prone, maybe the unprofitable side of the text been pulling back a little bit nuclear maybe we've got less excited about that. Are they buying opportunities or are you thinking that you actually want a little bit of a healthy correction of some of these CEOs of financial companies's been talking about.
Hey, look, Caroline, I would segment out the market. I think there are places where there is fundamental strength, and to the extent you see weakness, it's probably a buying opportunity. And I would separate out the places of the market where really what we're talking.
About is speculative appetite.
Right, the quantum stocks have melted thousands of percents, but for most of these companies, they don't even have many revenues for a few years running, right, So I would not necessarily describe that segment of the market as a buying opportunity. But for the healthier places, the places where you can model out real revenue growth, you can see where the cash flows are going, there's probably going to be opportunity as the market continues.
To be weak, opportunity. And I think the opportunity we keep hearing about, the limiting factor we keep hearing about is utilities and is energy. But also the key limiting factor for many is going to be the place of interest rates, and where they go.
Yes, yes, let's go to interest rates. So in your acronym, we've done a lot on the E.
Right.
What we always say on this program is that higher rates discount the present value of future cash flows, and we try and help the audience understand, like, why do we track.
The FED on Bloomberg Tech?
As an investor who's looking at this technology sector, why do you look at the FED?
Do you care? Help us understand?
Hey, look, we absolutely care, right, And I'll take you back again to these really big numbers, trillions of dollars that we're talking about. So the FED matters a lot from the perspective of is there going to be liquidity in the marketplace? And obviously the FED, in terms of the short term interest rates, is going to dictate the pricing on that.
Capital. So yes, the FED matters.
I would point to the audience that there's been somewhat of a pivot four or.
Five weeks ago.
I think it was relatively consensus that interest rates were heading lower. We're now in somewhat of a data fog, but the little bit of data that we've seen.
Suggests that we might be on hold.
So in the short term, I think you're going to see some countervailing winds, if you will, and the long term you would expect interest rates to start to come down we're seeing in terms of economic performance.
Let's end the conversation by you telling us what's going to happen in the balance of twenty twenty five twenty twenty six for the technology sector, your crystal ball.
Please look.
I think for the next few weeks it's going to be all about investors trying to figure out where are the returns going to come from.
Let's look through the tea leaves.
Let's see the early evidence that this capec is capex is going to pay off.
So I would expect that.
That's going to drive a lot of the conversation for the balance of the year. But I'll fool you forward into twenty twenty six. I think an important conversation, and one that we haven't spent a lot of time on thus far, is are these CAPEX numbers one time in nature or are we about to get on a CAPEX treadmill, which is akin to telecoms of the nineteen eighties. If it's the former, I think the market will do well
through that. If people start to believe the latter, I think you have the real possibility of seeing some nervousness from investors.
Nicholas Choanbier of Columbia, Fred need or great to have you on Bloomberg Tech.
Thank you ver so much.
Coming up.
Fitness wearable company says it's looking to potentially IPO within the next two years.
We're going to get that story next Carot.
What you got in here and now, and we're checking out airline stocks because we have heard from Sean Duffy. Here's the Transportation Secretary speaking to reporters saying the US aims to start lifting flight cuts in a week once the government opens. We're up more than two percent across the board. This is bloombg Tech way Mo. It's begun offering rides that include highways in San Francisco, Los Angeles, and Phoenix. The company is also widening at service area
in the Bay Area in the coming weeks. It's all offering rides across Silicon Value more broadly. Bluemost consumer app reporter Natalie Land joins US now and why is rides on highways such a step.
It is a big deal because it can cut down trip time for a lot of customers.
Right now, before.
Freeway access was available, you know, Waymo had to plan routes avoiding the highways and you know, navigating the narrow city streets and lengthening trip times a lot.
Naslie.
We were talking with the team this morning right about is this the first time that a genuine robotaxi service, no safety driver is going on a freeway or highway and charging af fair.
The answer is probably yes.
Just explain that footprint in those markets s FLA and Phoenix area against what others have will have not yet done.
So opening the freeway access would connect some of way most existing markets like SF down South down all the way to San Jose and even to the airport. And so this would make them very competitive against traditional taxis and ubers and lyfts and make it, you know, not different from regular right hailing and compared with Tesla which currently still have safety monitors in the cars, whether it's
within city trips or freeway trips. So Waimu is really the first one that's offering like a fully drive less experience for customers.
So I'm flying into Phoenix. I've got a nice little airbnb that I've booked, and I'm taking my way home to my airbnb and now I'm gonna be able to get instacar ordered there as well, you've been a busy reporter. What's happening over at Airbnb with instacart.
Yes, so Airbnb is piloting this kitchen stocking service with Instacart where hosts can receive your instacrat order and then pre stock your Airnb and so you can make use of that kitchen while you're in a short term rental.
And so this is a.
Three month pilot that will start next year, and Airbnb is incentivizing hosts to provide the service by giving them some cash.
Incentives both Natalie Lung, thank you very much. Let's get to another story. Fitness wearables company Whoop says they're considering a potential IPO in the next two years.
That's according to CEO Will.
Ahmed, who spoke with Bloomberg Samantha Kelly and Sam joins us. Now, we've been tracking closely with you, in particular on this program. It's not how should I put this unusual for a CEO of a closely followed startup to say, you know, we're thinking about an IPO or a listing in the not too distant future, but give us some of the background context of why that conversation came up.
Sure, so, This is something that he's kind of hinted at before, but this is the first time he's really outlined perhaps in the next two years. He pointed to the fact that the company is pretty much a standalone business at this point, has hardware, software as accessories at peril, its own proprietary technology, and he said that it's really gotten to a point where they can move forward.
And you know, you raise the question if you think about a big.
Company that really owned the idea of personalized health at the moment in the public space, what comes to mind? And he said, well, is the company that he wants people to think of when the time comes.
I do feel like the health and gadgets in health offering is just go ever more competitive though throughout well Ahmed's journey talk us through what the product ROMap looks like for that couple of years timeframe.
Absolutely, yeah, to your point, a lot of companies now are really stepping it up, doing a lot of the same type of type of features and type of results and data. But to your point, as far as product roadmap goes, one of the areas that a lot of companies have yet to master is the idea of continuous glucose monitoring. A lot of these devices they monitor your goug host levels. A lot of people with diabetes. This is something that they need to do, and the technology
behind it is quite clunky. It's very invasive. It usually involves needles and the puncturing the skin. A lot of companies want to perhaps change the form factor. Group is one of these companies. They say that they are interested in not only taking that information and using it as part of you know, it's overall dashboard, but also to figure out a new form factor that makes it easier,
more seamless, and is non invasive for users. Another area is what he calls a operate health operating system, so basically something that you can come to and do a
little bit of everything. And similar to how an AI model perhaps might predict the next word if you're using you know, a chat, GPT or something like that, WOP has its own AI models and what it wants to do is to look at predictive health, so perhaps taking all the information and being preventive when it comes to heart attacks, strokes and other things down the line.
Also some ongoing conversations therefore with the us FDAGS, Sam Kelly, you always bring US the greatest reporting, Thank you very much.
In Dean, real quick, I want to go back to the story of soft Bank selling out of its Nvidia steak entirely five point six billion dollar steak now gone. This is SoftBank's US listed shares down almost six percent AE what delayed reaction to that news of twenty four hours ago, but overnight in Japan in Tokyo those shares also dropping. And again we're going back to a story we did well yesterday. But this isn't concern about Nvidia. It's just more about soft Bank and what.
It's up to.
Karen good reminder. And meanwhile, it's talking tech now and first Up and video partner on high. But it's offering a rosy outlook for twenty twenty six, citing AI as its key growth driver that the company reported a better than expected seventeen percent jump in net income for the September quarter. Gairman Jung Lu struck a tone of cautious optimism,
saying the company remains very positive about AI. Plus. JD dot Com says it's not record sales during China Singles Day event, but they rewarded forty percent jump in shoppers orders. This version nearly sixty percent or the sale define concerns over week consumer spending amid persistent deflation in the country, and shares of Infinian, well, they are soaring after the company forecast a return to growth for revenue in twenty
twenty six, driven by global AI data center boom. Of course, Hbergs Guy Johnson spoke with Infinean CFO svensch Niner.
We just raised the guidance for our AI revenue for this year from one billion to one and a half, so we are more than doubling in this fiscal year and it will not end in twenty six. We expect the addressable market for Infinian for powering the AI data centers in the magnitude of eight to twelve billion, so it's a significant idiosyncratic growth driver for the company going ahead.
The AI boom has also led to rising demand for electricity and plans to build out nuclear power.
Facilities to meet that demand.
But despite billions in investment, hardly any of that power will be ready.
For a decade. Our nuclear energy reporter will wad here with more. Well, that's the story. That's the reporting.
Lots of investment up front and you got to wait a long time to get more.
Yeah.
The thing to keep in mind about nuclear is that everything moves really slowly, you know. I mean, any of these power plants are major construction projects, so already that's a slow thing. And then it's nuclear, so you know that they are going to take their time because it has to be safe. So it's a very slow moving industry. There's huge demand for it now. There's as you know, there's amazing demand for electricity now, all these big tech
companies they want electricity yesterday. But what we're going to see in the near term is a lot more gas power.
That's so interesting And just briefly, will we're here to talk about SMRs. We here talk about new nuclear, but it's actually retrofitting or it's all nuclear plants that are coming back online.
Yeah, so there's a push to reopen some of the nuclear plants that closed and earlier in this century. You know, I was tracking them for years and more than a dozen reactors closed in the decade through about twenty twenty two, and we're seeing several of them getting restarted. They were way too expensive to operate when people didn't really value it, but now they are willing to spend a lot of money, especially the tech companies, because they've got these big, deep
pockets they can spend money for it. We may see the first one of those come online January February or early next year in Michigan.
The Palistates plan.
All eyes peeled on your reporting will wade. So it's great to have you on around Nucleimer.
Welcome back to Bloomberg Tech.
AMD is probably our big story and mover of the day, best performer both in terms of percentage gain and points on Nasdaq one hundred and the Philadelphia Semiconductor Index.
The story is really clear and it's investors day.
It says top line overall thirty five percent annualized growth over the next three to five years, but in that key AI data center category eighty eight zero percent kieger over the same time period, and clearly investors like it. That ten percent gain, it's basically biggest jump in about a month. Global Foundaries is a US based contract manufacturer of chips. It reported pretty strong earnings. Actually in the
court have just gone for the stockdown six percent. I guess mixed feelings are high bar coarter that kind of thing. But right now, with the effort of this country to re enshore manufacturing ASSEMIS. We tend to take a close look at it and then at the index level. We were talking about this earlier in the program Carro where AMD is probably artificially boosting a little bit the picture on the socks right now, which is up one point
six percent. But as we discussed with some brilliant guests throughout the show, government shut down the big E for earnings next Wednesday and video those are probably things that we're bracing for.
Meanwhile, though, the AMD story is all about data centers, isn't it. We've got yet more breaking news on that front Meta shares. They're currently off by two point seven percent. But this is as a social media giant is also planning to spend yet more money, more than a billion dollars on a new AI data center in Wisconsin. Now, the announcement actually can Bloomberg's reporting from April about the plan.
Let's get a reminder on it. Kurt Wagner joins us, who covers the company and almost feels a drop in the bucket of what the ultimate capex that Mark Zuckerberg is currently saying is going to spend. But this is big for Wisconsin.
Yeah, it's big for Wisconsin, and it's a sign Caroline that this is just a you know, snowball that continues to roll downhill in terms of AI infrastructure for Meta. Right we're now talking about data centers in Ohio, in Texas and Louisiana. This one in Wisconsin that they just announced it this morning, and so these are you know, projects that aren't even going to be really online and
operational for several years. It just gives you a real sense of how much this company is betting on the future, betting on AI and wanting to control this stuff themselves, right, not necessarily going out and paying another tech company to use their data center, but really trying to own that infrastructure themselves.
That's where I wanted to go. So the headline right now is a one billion dollar day center in Wisconsin, but the bigger figure is six hundred billion dollars. As Karen pointed out, over a period of years, Meta is not a hyperscaler. It's a technology company social media focus that also has an AI lab within it. Just explain why Meta thinks the best approach is to build its own infrastructure and have its own compute available to its teams internally as much as anything else.
I mean, my read on this ed is to go back more than a well over a decade ago when Meta really missed out on the mobile phone right. And Mark Zuckerberg has spent now years and years and years reliant on Apple and Google primarily to distribute his products to his users. And we see this with I think he regrets that he's talked about regretting that he's talked about the challenges that come with being reliant on another
major tech company. And so we see what they're building around their own hardware in terms of AR and VR with glasses, where we see what they do around their own data centers. I really think this is very much a control thing. This is something that the company has been burned on in the past. If you ask Mark, and you know, they have a chance to control their own destiny a little bit with this AI infrastructure, and so I think they're leaning into it because of that.
Kurt, what happens next with Meta?
Right, they had these big projects, like there's this map that people show on the social medias of Meta's data centers occupying New York City in Central Park. Just give the sort of headline summary of their total ambitions.
Yeah, so you mentioned that's the data center in Louisiana, This one that could be as large as five gigawatts of power and compute. Ultimately, I think this is a company that, as we've talked about, is building several different data centers in order to spread this out. But I think the big thing for them, quite frankly data centers aside, because those are still a few years away.
They need to show.
That all of this talent that they spent billions of dollars on over the sum these these AI researchers and engineers are going to deliver a world class model, and so we will see that at some point I imagine in the next six months or so, where they will come out with a new model that they need to be on par with you know, Open AI and Google and other top class models to sort of show that it's not just building the infrastructure, but it's actually capitalizing
on that talent and having a product to deploy to people that that sort of reflects this investment on infrastructure. So the data centers are years off, I think more urgently, you know, the pressures on them to deliver a real world class model here in the next six months.
Blue vers Kurt Wagner, thank you very much. Let's get back to that AMD story. Shares absolutely surging up almost ten percent over the course of the day. That shows the training over a couple of days. It sees accelerating sales growth over the next five years, driven by strong demand for its data center products. CEO Lisa Su updated investors on AMD's long term outlook, a mid rising concern
of massive spending, some of which Kurt has outlined. Let's get to bloem mazine King who leads our coverage to semiconductors.
Clearly, this is a positive.
Market reaction to AMD saying, here's what we see for the next five years. But that eighty percent Kaga compound analyzed growth for the data center business, that's the headline, really, isn't it.
Yeah.
I mean there were a lot of headlines, a lot of numbers, and if you actually look at what happened as they were speaking, stock really didn't do very much. Then after hours, when the management were on stage and we're being questioned, they put in a strong performance and that's really when the start started to pick up. And that's what the analysts and investors have reacted to really in.
Was enough articulation given by Lisa Sue as to if open aiy is good for the money longer term. She was asked a lot about some of these nervousness, about these circular deals about nai bubble. In other kind of words, yeah.
I mean you're right, she was asked about that, sort of talked around it. Then the analysts were like, now, come on, you've got to help us out here. And what she said really was, look, if everything happens as though it is laid out, as we get the users, the amount of models deployed in everything, the money's going to be.
There real quick. The money going to be there. I believe.
Lisa Sue is asked by some of the analyst community about the relationship with open AI and they pose the question that we tried to some weeks ago when she was in the seat you're in, is open ai good for it?
And she said yes, don't rule them out? Was her strong, strong sort of retort to that push.
Than king, we love it, Thank you very much. Md on an absolute.
Ten startup for Terror has just closed a two hundred and thirty eight million dollar funding round that raises its valuations more than a billion dollars for Terror's Autonomous technology is used for battlefield vehicles that can operate individually or as a swarm, to conduct surveillance or to carry items such as missiles. Here discuss for terra Ceo Josh Arajo. Josh, you join us from the webs summit in Lisbon. Thank
you for being here on Bloomberg Tech. I want to bring back some of that video of the technology and we'll get to the rais, but just explain the autonomous system, the payload and the swarm effect that we were just discussing.
Yeah, so what we're providing or really enabling, is the use of any vehicle to carry any mission capability into combat and support of our men and women who are are serving our country.
So you think about you know, a lot of.
Investment in defense tech has happened in many other domain space, air, maritime, but really where the wars are fought and more wars are won, or by the men and women on the ground doing the hard, dangerous work of our ground combat forces. So this technology is really you know, in support of them.
It's what gets us excited, gets us up in the morning, is to go deliver you know, really mission critical life saving technologies that takes them out of harm's way and allows them to accomplish those missions really from anywhere in the world, and particularly from a much safer position than writing in that vehicle.
The two hundred and thirty eight million dollars Series C is split between equity and debt. What is it that you need the funds for in scaling and deploying your technology to the battlefield.
Yeah, so if you look at the priorities for the Department of War and Secretary Headset had a really great speech last week. I've had the pleasure to be there. Really, what they're indexed on is speed, scale and capability. So how do you get more capability into the hands of war fighters faster and at scale. So what this fundy
is being able is really to do just that. Everything from acquisitions and M and A. We recently acquired Gotene, which really brings more capability tightly integrated to the war fighter. We're using to invest in additional capabilities. If you look at these vehicles on the screen, those are now mobile data centers with comms compute sensing that are now fully distributed on the battlefield.
Will deliver more.
Than two hundred systems into operational combat environments this year. So it's how do we take more capability and leverage that compute comms and sensing at the edge to bring additional payloads, additional sensing, additional firepower, and really help those missions close for those men and women that are out there defend in our country.
Just let's just talk about the underlying technology, the innovation that you brought here. Because you're kind of outfitting these existing vehicles with your own sensors. How are you working with partners and what is it that you brought that no one else really had.
Yeah, I think it's our ability to work with vest in class capability, best in class partners, So traditional defense primes, they are excellent at building vehicles at scale, so we can take their capability made it with our technology, which is really the compute sensors, the autonomy software, leveraging the latest and greatest in AI to enable those vehicles to do really complex missions.
And it's not just.
Hey, I have a vehicle that can drive point A to point B safe, It's how do I have that vehicle or system really close the gap for an entire mission, whether it be a mind clearing mission, a ship and addiction mission, a resupplied mission, and have multiple vehicles coordinate together where there would otherwise be a human doing that.
So that requires a pretty unique insight into how military operations work on the technology that needed to enable that, and so it's really working with best in class partners.
We want to bring the.
Best in class of defense tech the defense primes, and then it helped integrate those into a cohesive system that really serves that again, that eighteen to twenty five year old who's out there on the front line, standing there for a nation's defense.
You've been building this business since two thousand and two, Josh, and I just want to get your context on how much has changed just in the last few months. Say yeah, because we're on track for a record amount of defense tech investing we've got As you talk about Department of War really thinking about bringing on startups, does that feel seismically different.
It seems it's a lot has changed.
But if you look at back when the company is founded in two thousand and two, the threat that was really facing you know, PREE nine to eleven was was near peer competitive threats, tank on tank battles and autonomy and robotics We're looked at even back then on how do you deter a near peer conflict? How do you prevent the next large scale warfare from happening? And that's really through robotics and autonomy. So you fast forward to today,
we're now several years into the Ukraine Russia conflict. We're looking at tensions in the Pacific theater, and again we don't have the size of the military both in terms of distance and space to go occupy and deter and project the firepower to deter the next conflict. And so it's just you know, what's old is new again, it's how do you leverage capability and technology to do that.
I think we have the benefit of today that we didn't have in two thousand and two was very low cost, very capable compute orders of magnitude more compute that's available to do this, technology sensors, an ecosystem of technology providers that are folk on the defense industry. And if you look at how the defense industry and Secretary Hegseth said in themselves last week, is we have to get back to the rapid innovation, rapid deployment of capability at scale.
We used to do that back in the World War two and beyond. We've lost that along the way, and that's really that emergence is coming back, which is exciting.
Josh Rajo for Terra Ceo, joining from Lisbon websummit. We appreciate it, Thank you and coming up. Investors. I AI to help Cisco reach dot com levels. We're closed about thirteen percent off of those numbers hit back at the beginning of the century. Visibly bagtet.
Cisco reports earnings after the closing bell. Investors are watching for signs of gains from its AI investments, though some on Wall Street remain wary will ever read it's dot com era peak despite being pretty close. Bloomberg'sdina Bass joins us, that's kind of been the story of Cisco for.
A little while.
You know, back in the day it was the big technology company, and present day we're kind of waiting for it to get involved and see benefit from all the things that others are pulling ahead in.
Is that a fair preview.
Absolutely.
Look, when I started as a reporter more than twenty five years ago, it was right around where BusinessWeek dubbed Cisco one of the four horsemen of the Internet era, and you know, those horsemen, all to varying.
Degrees, ran out of steam.
Cisco's trying to use AI to reltigate that and to get back into a leadership role. But when you compare it to some of the other company, the other AI bets, the other AI companies, it's, you know, with their forecast increase in revenue and profit is quite a bit more modest.
You go to August when it had its fiscal fourth quarter report and they talked about the one billion that they saw in the AI sales coming from fiscal twenty twenty five. How better can they articulate what they're providing in the AI ecosystem right now?
Dina investors probably want to see just something that's a little bit more sustained and just you know, continued winning deals,
continued development of the products to capitalize. So what they've basically been doing is you know, redoing their networking products, a bunch of their software to really take advantage, you know, particularly on the networking side of the opportunity to connect server cs, to connect you know, data centers in between different data centers to better position those products for enabling
AI workloads. But you know, that's a competitive space that's a space where Broadcom fleas as well, and where Broadcom is is you know, definitely better known. So it's really kind of a you know, show me consistent performance, consistent deal winning, and a consistent roadmap of products that are going to go where the AI market you know is not just now, but we'll be in the future.
And show me a return to the highs in the eighty dollars price tag that we saw back in the or naughties. Dina Bas, we thank you so much for thing Cisco, and look, Cisco is aiming at AI data centers. We're just talking about it. Kim Forrest, spoke, a Capital partner CIO, says, actually, the build out of a data center will take a lot longer than all street things.
You're joining us now on the theme of the day, I think it has been all about data centers, whether it's fifty billion coming from Anthropic, whether we're thinking about Meta continuing its focus in Wisconsin. But why do you think it's too much too soon from the wall streets perspective, Well.
For a lot of reasons.
Living in a virtual world, as most of Silicon Valley does, it's really hard whenever they have to, you know, go out into the real world and do physical things. And that's what we're talking about with data centers. We need power, we need really kind of exotic they're kind of boring buildings, but they need to be very uniform and there's only certain kind of people that can build them, and then
we have the demand. So I've seen some reports maybe I bloomber about how some data centers that are already established or having problems, you know, selling their capacity.
So we have a lot of physical world problems.
But I think my biggest thing is is I'm not a believer that we really need all these data centers. I think human beings are incredibly smart and are going to work around what we're doing now, which is the brute for force method of training large language models. I believe in AI, just not AI as it's presented right now.
So Kim, there's the rub, right because you're not just saying that we've got utilities issues, power issues, supply chain issues. You're saying we're going to innovate ourselves out of that all we go to the United States or is it going to be Asia.
Well, right now, it looks like Asia was first on track with the whole deep seek product that they came out with.
Right, we can quibble about if.
They unfairly used open AI to leverage, but they did leverage and that's the most important part. They thought out of the box as opposed to saying, you know, we need to have this state of Texas be one big data center. I'm using hyperbole here, but you know, they
thought about how can we do this differently? And I think ultimately it's a good race between the US and the West in general and China about who is going to be able to come up with usable AI that doesn't you know, break the bank and cost every last dollar that Microsoft, Meta and Face and the rest of them have.
Kim, you've presented your thesis. So as an investor, custodian fiduciary of your clients, how do you invest to support the thesis you've just outlined?
Sure, well, I think we have to have many options. Right, we do own some in video, but we.
Also own a m D Micron and believe it or not, Intel AI is real and AI is going to.
Have very bim Sorry, may I just interrupt you? Like the AMD story today, the whole thing is predicated on the idea that they do participate in some massive data center build out. And you just said we don't need the data centers.
Well, there's going to be some data centers, but not as many as are planned currently.
And I think that's the big thing that even you know, last week's big.
In the world of AI was the Brad Gessner and Sam Altman interview where you know.
They're saying, where are you getting the money? Sam?
So, I mean, there's a lot of concern about the whole theory of we need all of these data centers, but surely.
They have over time we need them. But here's an AMD currently trading and evaluation that is pricing in an enormous data center boom that will come to light or are you thinking, actually, MD at this price is reflective of perhaps not such a significant build out.
Well yeah.
And the other thing is is whenever we discover that we don't need the brute force method, these chips will be instrumental in that.
Right.
So I think we're going to deploy money, it's just differently than the way we're currently thinking.
How about that, Kim Forrest.
The both of Capital Partner is Caroline made the point of this is the key to a conversation today and we're grateful for the robust conversation.
Good conversation. That does it for this edition of Bloomberg Tech.
It does. You should go back and listen to the conversation. This is all of it. Don't forget to check out the podcast. You can find it on the terminal as well as online on Apple, Spotify and iHeart we're going to keep on banging that druma about the AI infrastructure build out. We give our cynics such as what we've just heard from Kim Forrest, and we have those. I think it is significant. Look, AMD is significant move today.
Ed Yeah, Look it's actually only his biggest jump in a month.
But that was the whole point.
It's them outlining growth tied to the build out of data centers. And what we're trying to understand is will in the end we need all of them. That's what your markets look like. This is Bloomberg Tech