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Apple to spend five hundred billion dollars in the US and boost hiring as it seeks relief from Trump's tariffs.
Plus Microsoft cancels some leases for US data center capacity.
According to td count analysts, has the company's AI.
Computing strategy changed.
We discuss and a look at how Elon Musk's of federal worker orders to justify their jobs as dividing the Trump administration. But first we check in on markets that once again full we were down hard on Friday. We continue on the lower side of by nine ten percent, bouncing off our lows, but still near the inter day woes of the day on the Nasdaq one hundred. Dig
into what's the point higher and the drags. More broadly, Apple has been bouncing around on the back of its news that we're currently up six tens percent on the juggernaut that is going to be investing five hundred billion dollars here in the United States, and they deed adding twenty thousand jobs, but less than forty billion per year increase on previous spending habits.
Is this all that new we're going to discuss.
But Microsoft really the watchword of the day when it comes to a point stragger off by more than a percentage point. This is as Microsoft is potentially in an oversupply position coming to its data center capacity. A Friday note from Tdcawen via Channel checks they say they're avoiding leases in the US totally a couple of hundred megawatts.
They're checking on the fact that there might be a pullback and converting certain statements of qualification and note today they say they may be shifting workloads, reallocating from the US from abroad. Microsoft has thus far declined to comment on this particular note, but they do reiterate their spending target. Let's talk it through with one of the analysts on
those notes, TD Cowen's Michael Elliots. It is great to have you on, Michael and short to us about the nuance you have been speaking to potential suppliers here and with channel checks what for you discovered, Yes.
So I flagged for you that going back to September of twenty twenty four, we started to identify i's like pullback on the part of Microsoft related to activity that they had in certain markets in the US that continued in October of twenty twenty four, and as we highlighted in a report that we published in January, we really did see Microsoft take a step back from the market in a more meaningful way related to Davis on leases that they were in process on, not things that had
been fined, but things that they.
Were working on. You know, this is a continuation of that.
You know, we're seeing them pair bad on some of the incremental leasing activity that they previously were contemplating.
But I really want to emphasize here. You know, as we think about the.
Activity levels of the Microsoft, what we're seeing is we're still seeing them being active.
It seems like we're.
Seeing a shift in the location in which they're looking to take capacity. You know, there's been a talk from the Microsoft CEO around inference and the need for to generate revenue, and we're seeing them look for capacity in and around.
Their existing cloud availability zones.
Now I'll leave it to you to interpret, you know what that could potentially mean.
But I want to emphasize that we are still seeing them.
Be active in the market and in areas where we've seen signed leases be impacted.
It really has more to do.
With power delays at the facility level rather than a wholesale pullback from leases that they had found.
Michael, our own Bloomberg intelligence analyst, noted this morning that this report, along with such Jinadella's comments on a podcast last week, suggested that perhaps they're shifting the strategy more toward renting rather than building from scratch. How do you view this strategy?
Can you hear me?
Yes? How would you view the strategy?
You know?
So, what I would say to you is that historically we've seen a mix of data center leafing and self builds be done. It's the two of them are part of the go to market around data centers. You know, we've seen more leasing historically out of the third party data center operators with Microsoft, and we have historically and I think that's a function of the accelerated demand needs associated with AI. Now, over time, do we think that
Microsoft could shift more to a self build strategy? There's a potential for that certainly as a.
Bank and accelerate the development pipeline. But one of the.
Messages that I want to be clear here for your views is that we're still seeing broad demand strength in terms of overall data center demand. Right we see Microsoft is in the market, will be it to a lesser degree we're seeing or will be very active, particularly on the Hills of Stargate project. We're seeing in terms of Google, they're ramping their demands, same with Meta, while Amazon is said all in all, we're seeing very strong data center demand.
That's td Cowan analyst Michael Elias, thank you so much for joining us. Now, let's look at other stories today. Apple planning to hire twenty thousand new workers and produce AI service here in the US. That's along with a five hundred billion dollar domestic investment over the next four years. Bloomberg Intelligence analysts and Agrana joins us now to discuss arak break down what Apple's plans are for this investment.
So when you look at it, unlike the other big tech companies, Apples not ramped up its CAPEX so far because they're really in the you know, they believe in going out and renting some of this stuff from other cloud providers, you know, whether that's Aws or Google Lord, you know, you know, the other vendors that are out there. What it seems to me now that because of the importance of AI for their products and services, they want to do some of this in house. They talked about
AI servers, so we anticipate that to be an area. Second, we think it could be the AI models itself. They could spend a lot of money on R and D over there. And the third is, you know, semiconductor manufacturing, not manufacturing, but designing, and then you know, use those designs to get those ships manufactured with TSFC for example.
The crop say for many Anna Rag is how much things have changed or not. Can you just give us a view whether this is as certain analysts would know, once again Tim Cook being a rather good politician, or is this a general change in direction for Apple.
I think this is a little bit of both.
I think the bigger dollar amount is a bit staggering, to be frank. Now, some of that would go into a fund, They'll go into some R and D initiatives, so some of them may not actually fall down to the capex line. The way you know, a financial analyst would look at it because it could be an operating expense for example. But the AI server part will definitely hit CAPEX, and these guys generate about one hundred billion of them, so there is an impact on the free
cash flow line for investors. But I think it's a mix of both. There is a need for more high tech stuff to being in the US, but it'd be very difficult to do the lower and stuff in the US in my view. But you know, AI servers and A related investments are of importance.
Aneron do you have a sense of how much this is just lip service to kind of fend off perhaps some of the threat of tariffs for the company.
I think it's from an AI side of it.
They are behind.
I think I don't think anybody would would say that Apple has any of the you know, leading large language models or even small language models. Right now. They have said okay, they're going to use open ai for their particular products. When it comes to you know your crea question, it goes to open ai. We think down the road they would use other models as well. It's possible they're going to use Google's model, but there should be you know they should be making an effort to put their
own models in there as well. Now that's not easy. You can understand, you know how much money it's taken Opening Eye to come up with these models over the last several years. So I think, you know, if they are serious about AI on the in their products, you know they'll have to spend some money.
Braybag Intelligence Anna a grana, We thank you. Let's get all of this and the context of ongoing tariff concerns in the market. Epec Oskodeskia is with US senior market analyst at Swiss Code. Look, we analyze the Apple spending here in the US in the context of US China relations.
We think about AI spend.
What's happening over in China and Ali Baba in the context of China and US relations epech How much of this is a concern going forward?
Well right now, we obviously do.
How a world that has shifted its focus on geopolitical tension, so the technology war is just going to get for more heated from this from this point on. Especially, we thought last year that the Chinese delay was a cum but this year, with China coming back on the international platform with new AI models, and there is going to be some potential in this chip war and the trade war and the geopolitical attentions to take in other turn.
Now for Apple, we actually think that is it looks in the actual context of things that it looks like more of a political decision to us, and we believe that the geopolitically led motivations and business investments could eventually destroy long term, medium to long term value for a company like Apple.
In fact, what does.
This mean for earnings coming up next? I mean this week and video major infrastructure player chip making. Now you have tariffs as part of another added layer of uncertainty.
What are you expecting on that front later this week?
Well, you know what, we expect mb to Nvidia to post strong earnings later this week. And we actually believe that the high concentration of big technology names in Nvidia's client book is going to be a hedge, is going to turn into something positive for Nvidia, at least in the short term and in the context of geopolitical tensions. Because Nvidia has made around fifty percent of its revenues from big US technology companies that actually pledge to continue
to spend big on AI. So we think that Nvidia is in quite a protected position from this geopolitical tensions point of view.
The video was hit pretty hard earlier this year when deep Sea came out too the scene. How much of those concerns have actually died off at this point.
Well, we were talking about deep Seek a lot, actually, and it comes down to the same thing that I just said. The concentration of big technology shucks an Nvidia's client, but could eventually turn into a positive thing that could protect Nvidia's revenues from well cheaper options like deep Seak
is pretending to have. This being said, Deep Sek also said or DeepC is also believed to have used cheaper models of Nvidia chips in order to build his own model, which means that Nvidia is not necessarily well hits negatively Biden News.
It is just that is.
Most premium chips could see their own demand plateau. But even that in the short one, we think that the big technology companies in the.
US has got the MVS back covered.
This being said, in the medium to long run, these companies, these big technology companies from the US are working on their own custom made chips and that is a respector.
Apeg it feels as though the pressure on in Vidia spills over from Fridays when we're worried about ultimately compute capacity demand. The note coming from TV care and the issues of whether we're thinking that Microsoft is in some sort of overcapacity state here just weigh in on whether Wednesday and the numbers out of Nvidia might put that to rest or not.
Well, we believe that earning are going to be strong. We estimate that the revenues are going to be between thirty eight to forty billion US dollar range, closer to the top range to closer to forty billion US dollars on the launch of black Wild chips and on strong AI demand from the big technology clients.
We also think.
Actually that the forecasts are going to be optimistic due to the Stargate projects and the new pledges from the big technology companies to continue spending on AI. This being said, the overall market conditions start looking less favorable right now than they did last year, and in the sense the investors might become a little pickier on the profit margins, on the concentration of for big technology clients, on competition, but also on the supply chain and capacity constraints.
So where are you going to fall further? The nasda's currently training in the lowest in February. The third, if you're looking the nast that one hundred, it feels as though China and compute capacity is just going to keep pushing pressure on these valuations.
Definitely. We also think that the investors now start seeing potential in Chine, and with high valuations in the US technology stocks and this valuation gap, there is potential for more funds to feed into the Chinese technology stocks, even more so as two major risks for the Chinese technology big technology companies.
Has paid it.
The first one is the fact that the chip war has delayed the AI progress of the Chinese technology companies but hasn't stopped it. And the second is the waning risk of government where she Jimpin actually showed his support to the Chinese big technology leaders.
What's kind of the time horizon that investors should keep in mind if we're really going to start seeing signs of China really starting to catch up to American AI players.
I mean in terms of efficiency and most efficient models. I think that we are not there just yet. We need to wait at least a few quarters. I will say two to three quarters in nord to see what the Chinese AI models are worse. But in terms of business and the revenues, it's not the best model, most efficient models. They are going to make the biggest revenues. It is how these AI tools are going to feed
into services. And in the sense the Chinese technology giants like earlybud By intens and they do have huge platforms, they do have a huge reach within China and beyond China that could eventually turn their AI tools into profits without them being as efficient as US peers.
That's ipek Oscar dish Kaya, thanks so much for joining us.
El Musk has sent emails to over two million federal workers over the weekend asking them to defend their work or risk losing their job for the deadline to respond by today.
Now, this order is.
Actually facing pushback from other powerful figures within the Trump administration, with several agencies telling their employees to refrain for responding on the email commoes. MaTx Chafkin weighs in for more. Who is pushing back here.
We're seeing pushback from a number of federal agencies, the FBI being one of them, and the Department of Defense. We've also seen some agencies like the Social Security Administration say yeah, you should respond to this email.
You know, if you need any guidance, let us know.
So this is I'd say this is probably the pushback that we're seeing where where certain agencies are saying don't do this. Meanwhile, Musk is tweeting very loudly all weekend about how easy it is to respond to this email, how reasonable it is. I'd say this is one of the more significant fissures we've seen with Elon Musk and other figures within the Trump administration.
Max el Or Musk did this before at Twitter, as we've been mentioning on the show for the last couple weeks. There is a lot that we can draw from how he handled that situation when he did this back then. Did he actually consider the responses he was getting back from employees or did he just go ahead and fire them anyway, Well.
This is like a slogan that he used to challenge people at Twitter. Most memorably, he used it in a tweet at the then CEO of Twitter, Prague Argowall, who was sort of trying to push back gently against Musk.
He said, what have you done this week?
Now?
Now it's become this kind.
Of like I said, it's almost like a slogan, and Musk has made clear it doesn't seem like he even so much cares.
What people say.
In fact, he was suggesting that employees use a large language model chatbot to respond to the note. It's like it's like he wants them to know that he is running his Twitter playbook, and that Twitter play book involves mass layoffs and also this kind of super aggressive, chaos driven let's attack the previous regime and we're seeing all that. You can also see why if you're Cash Pattel, the new director of the FBI, you might not love some other person kind of stirring the pot.
In this way. But also there's the element of risk.
The FBI does really important and secret work that perhaps they shouldn't be having to vindicate all distribute on a note.
Right, I mean, the email did say please, don't you know, reveal any classified information, So I suppose on some level Elon Musk thought about that. But yes, one of the reasons we've seen from agencies and sort of people in government and a management perspective for saying don't respond to this is the risk that you send something that you
shouldn't have said that. You know, many jobs in the federal government deal with sensitive or even secret or top secret information, and so yes, that would be a concern as well.
Again it does it.
It's super unclear what the goal here is beyond just creating a pretext to let more people go. And that is the thing that Elon Musk has said over and over again. It's what he wants to do.
That's Bloomberg, Max Chaffin, thanks so much for joining us. Let's get to DC for more on Musk's impact, this time on the Consumer Financial Protection Bureau. The agency is one of Musk's first targets where hundreds of workers have already lost their jobs. Bloomberg's Tyler Kendall joins us. Now this blitz at the CSPB is well under way, Tyler,
what kind of response has this generated from Republican lawmakers? Well, Republican lawmakers, of course, have long targeted the CFPV, saying that it poses undo of regulations that they would like
to see more streamedline. And we should note that there's new Bloomberg News reporting that there also seems to be some concern among the acting head of the CFPB the current OMB director rus Vot Bloomberg News, saying that he appears to be voicing some concerns that this process might be happening a little too quickly here and that.
That could open this up to legal scrutiny.
Which at the end of the day, if it's not upheld in court, that could mean none of these changes
end up being enacted. We should note that a spokesperson for Vote does say that no such tensions exist, but it doesn't mean that there aren't still legal questions moving forward here, particularly considering we're not quite sure what legal basis Elon Musk has considering his role as an advisor to President Trump to enact such widespread job cuts, although it does appear that he does have the backing from the White House, considering that just last month, President Trump
suggested that he wouldn't mind if the CFPB was eliminated.
Whether or not there are indeed a word about the haphazard nature in which they're trying to take down and shut off the CFPB. There is a note in that same story that the Cato Institute is pointing out here that basically, you're taking away the police of Wall Street, You're taking away the police of big tech. How is woll Streem responding, Because I know you've spoken to Jamie Diamond on this.
Right, Thanks Caroline.
While I caught up with him on Capitol Hill a couple of weeks ago, and I asked him what his message to consumers would be if there is no CFPB in place, and he said that ultimately he feels that other regulators would pick up the slack, whether that be the SEC, the OCC, or the FED, and that ultimately he supports a holistic approach to restructuring financial regulators. But we should say on the other side of this, of course, there is big criticism, such as Senator Elizabeth Warren, the
ranking member on Senate Banking. This is largely considered to be her brainchild. She tomorrow is hosting a panel a forum to we'll get the way forwards here to see what sort of remedies they could implement in order to protect consumers.
We should not.
She did invite Elon Musk to appear at the forum, but we are not expecting him to be in attendance.
Tyler Kendall, we thank you from Washington. Now coming up process agrees to buy.
Just to Eat in an all cash deal.
The Dutch tech investor is on a path to become a food delivery giant. More on that next, but first, just check out what's happening in the world of crypto. It's affecting a lot of the single names that are related to the space. We're currently at ninety four thousand, five hundred dollars let's call it. That is well off
our one hundred and six thousand dollars highs. We're currently trading at the lowest since the start of January, got Robin Hurd, falling, MicroStrategy, some of the other crypto related names under pressure today. That's, of course, as the rest of the market remains concerned around China.
This is BlueBag.
Technology time now for Talking Tech and first Up Process is said to buy just Deep for four point three billion dollars in an all cash deal, making the fourth largest food delivery company. Globe Versus CEO for BC Fluency is looking for new sources of growth. He spoke about the deal earlier on Brimberg.
Many of the technology companies in Europe, they should be valuing more and they should be investing more.
So I think this is the right.
Price for the Just Teach shareholders because we're paying a good premium. But at the same time, as I just told you, the leader company in China is one hundred billion dollar company. The leader company in US is one hundred billion dollar company. We are invested in just it at the right price based on DCF, this is the right price to create a real, big, global leader plus.
Data based company.
Mongo dB says it's acquiring Voyage AI for two hundred and twenty million dollars and the cash and stock deal is meant to help Mongo DEBI customers build artificial intelligence
powered applications deploy them for high states uses. And Tesla is preparing a software update for customers over in China that will offer driver assistance similar to a full self driving future in the United States and will let tesl owners who have paid sixty four thousand and one for FSD well they can use driver assisted features on the city streets.
Jackie coming out.
Victoria Spinell from the Business Software Alliance will join us to talk about AI regulation under Trump and Warren.
This is Bloomberg.
Welcome back to Bloomberg Technology.
I'm Caroline Hide in New York and I'm Jackie Devalas in San Francisco A quick check.
On these markets because they are under pressure again from the NASDAK broader perspective.
But we dig into some of the key points. Movers underneath a.
Herd Apple on the higher side, committing five or a billion dollars over the next four or five years, We're going to be getting twenty thousand.
New York jobs in the United States.
Yes, this does really focus on the server building side of things.
BI really showing that this.
Is a shift and focus, even if perhaps it's just only a little uptick from previous investment rounds. You're looking at Microsoft down one point two percent. Are we seeing over capacity in data center? Her capacity for the Microsoft? More broadly, that is what TD Cowan asserts Microsoft saying they are committed to that eighty billion dollar spend or under pressure. Move on to the individual names that also
keep an eye on. When it comes to Palenteer now trading its lowests back at the beginning of February, we're down seven percent. It's still trades at one hundred and seventy one times future earnings.
This is an extraordinary valuation.
But with cuts coming at the Department of Defense, is Palenteer more broadly under pressure the market thing, so in video off by quarter percent.
Remember their numbers come on Wednesday.
Can they indicate the AI compute demands that are really being questioned in the market. Let's talk about AI demands, and let's talk about Ali Baba. The Chinese company is pledging more than fifty three billion on AI infrastructure over the next three years. The goal marks one of China's biggest AI infrastructure budgets. Ali Baba looks towards becoming a leader in the space. Bloomberg Intelligence analyst man Neet Singh
showing a big sell off. Look, fifty three billion, it seems peanuts and comparison to Microsoft and.
The others, but it is notable in China.
Yeah, and look, when you look at a company like Ali Baber, cloud business is about a six billion dollar run rate, So compare that to Microsoft around eighty billion and Amazon AWS said over one hundred billion. So it's still relatively small, but it's heading in the right direction in terms of growth rates. So remember cloud growths had decelerated across the board in the case of Alibaba is
picking up and it's driven by AI. So it's not surprising that Ali Baba and I expect Tenson to do the same in terms of ramping up Capex because they've seen the playbook in the West in terms of companies investing in Capex and that translating into cloud growth.
Mandy, it's not just about cutting a check. Talk to us about some of the challenges that Ali Baba could face as it undertakes such a significant investment.
I mean, look when it comes to you know, Ali Baba and tens and there's always that overhang in terms of, you know, what could happen in terms of the CCP and you know, change in regulation. So clearly that threat
is there. But I look at you know, the Capex opportun unity they have in terms of ramping up their cloud business, and it's pretty obvious there is a lot of demand from local companies like deep Seak to consume you know, cloud compute, and I think that's why this trend probably is one of the probably one of the earliest innings if I can think of, you know, if you go back in time in terms of how Microsoft and Amazon and Google have seen their cloud growth accelerate
over the past four quarters, I would expect something similar for from these companies.
But they can get access to the most powerful, most expensive chips, and Ali Barba look at the move today on the back of what Trump is announcing, wanting to curtail even further Chinese ability to buy technology to be able to push into chips.
Yeah.
Look, I think if they're investing in Capex, they are looking to source whatever compute they can get. They may not get the latest Blackwall chips, but whatever compute they can get to big that to build that big cluster and really ramp that up, because ultimately, your companies are going to use open source models, they are going to
leverage AI and what you need is compute. So as a cloud business, I think you're somewhat insulated at least from what's going on at the geopolitical level, and you know there could be restrictions, but they are the best position to build that large sized cluster in order to satisfy the needs of the companies.
That's Bloomberg Intelligence analysts Man Deep saying thanks for joining us. The Trump administration's focus on trade continues to impact tech companies. Apple is seeking relief from President Trump's tariffs on goods imported from China with more investments in the US. Trump also signed a memorandum on Friday to counter digital services taxes. Some countries impost on US tech giants.
All of this.
As the US is competing to lead the way in AI and quantum computing. Here to unpack the impact of these developments is Victoria Espadel, CEO of the Business Software Alliance. Victoria, it's pretty clear that President Trump has declared himself pro innovation, pro technology, but what do you make of the way he's going about it?
So, as you say, I think the administration has been really transparent about what their goals are in terms of innovation and competition, and it's interesting to see them approaching it in a variety of different ways. Some are focused on trying to promote US industry, some are trying to are focused on trying to protect US industry, But you're seeing this across trade. I think you're going to see it in the AI Action Plan that the administration is
going to be working on soon. We are hoping that quantum competitiveness will be part of what the White House is focused on. So I think you're going to be seeing this in a number of areas.
Your whole role is advancing enterprise software companies, leadership, and global policy, So how much are they having their voices heard when we see the latest impact on Digital Services Act. But then also what's happening with China and the impact that has on an Apple for example.
So it's you know, you.
Raise a Digital Services Act. It's true that that's an act that has more of a focus on social media companies, for example, rather than enterprise software. There are, but there are so many impacts that the attrump of administration can have, I think, including many in a positive way on enterprise software. Some of the issues that are front of mind are not ones that are going to be impacted by enterprise
so for example, speech issues. You know, there's a lot that's happening that's really positive from AI enterprise and AI software that's not.
Going to be impacted by those.
But on the other hand, I think the administration has a real opportunity to lead in terms of digital trade. I think you have a real opportunity to lead in
terms of AI adoption. And you know, there's so much there's so much focus and attention to building the large LM models, and of course that's important, but what we really need to have the broadest positive economic impact is AI adoption across a wide range of industries, and that is something that I think there's real potential for the administration to take the lead on.
And companies have been trying to think of Microsoft and really focusing in on the consumer applications with the mastaff as Soony when High for example, and proportion of him Victoria. What is it then that the companies that you're talking with, and that companies currently are trying to navigate and maybe be politicking as we see with Tim Cook, What do they really want? Is it clarity or is it actually that they do want change here?
So let's talk about AI and what's happening in AI regulation And I would say, you know, speaking for enterprise software, I think there are at a broad level, there are three things that we want. First, we are pro regulation. We think it makes sense to have regulation. What we don't want is bad regulation. And what I would characteris bad regulation is regulation that's unworkable, regulation that is addressing the wrong issues.
So I think that's important.
Second, there needs to be clarity. One of the hindreds is the innovation we have right now is there's so much churn the system. Is regulation coming is it not? Who will it apply to who will it want, and that is an enormous drag on a company's ability to innovate and plan forward. And then the third thing that
we need is consistency. The thing that is even worse than lack of clarity is inconsistency across different laws being passed by the US States, different laws being passed by other countries that are in conflict for on one another. And that is even more of a problem if you are a small company that is going to have even more difficulty dealing with those. So no bad regulation, clarity and consistency are three things that are critical if we are going to continue to move forward.
Victoria, you mentioned the small players. A lot of the headlines come from the big tech giants, But what do some of the policies that you're thinking about. How would that affect perhaps some of the smaller technology companies. Would it only benefit the large incumbents.
No, I think actually, in many cases, the biggest positive impact will be on the smaller companies, so they won't be held down by, for example, unworkable or inconsistent regulation.
I mean, there's so.
Much happening in the AI policy space, but here are two things that I would emphasize, and I think these will have an impact on all companies, including and perhaps in particular small companies. One is at the federal level, So in terms of what's happening here in Washington, DC, a focus on promoting AI adoption is something that we're expecting to see and there's been support for that in the past, but we're expecting a lot more activity this
year coming year on AI adoption. But the second thing I would say is that any company that wants to understand what is happening in AI regulation right now has to be looking at what is happening in the states. The US States, there's a tremendous amount of activity there.
We're very focused there.
You had Colorado pass the first comprehensive AI law last year, but now you have Texas, Connecticut, Virginia, California.
They all want to be next and that the states are going to move legislation and regulation.
So when you're talking about all companies, but in particular small companies trying to deal with this the regulation that's coming and trying to deal with inconsistencies that we may see there, that if that comes to path, that is going to be a big drag on innovation.
Great points.
Victoria Espinel from the business Software Airlines, thanks so much for joining us. Coming up, Steve Jang of kind Adventures joins us to discuss how AI policies impacting investment opportunities. This is really at an early stage company focus. This is bringing back technology.
On today's VC Spotlight, we take a look at the shifting AI land escape as players like deep Sea demonstrate potentially cheaper approaches and as the Trump administration focuses on US competitiveness in the sector. Steve John from Kindred Ventures is here for more. Steve, there's a lot of signaling of support, but help us understand what you're seeing from your perch to the cap table. Is this all talk or is this actually trickling through to some of the companies that you're seeing.
Yeah, I think the big question right now in the industry overall is open source versus closed source. And this is the overarching theme not only in model pre training and availability, but it's also a huge issue across the planet. So there's this inevitable movement that's happening where sovereign AI is a consistent theme in Asia, Middle East, EU, in the US and China. Right and China sits separately from a lot of the East Asian countries which are a
little bit more aligned and open to US models. So I think this overall trend that we're saying right now is trickling down into who can use these models and applications in industries in different sectors that are important and critical to each country and region.
What do you make of who is advising the president when it comes to AI policy? David Sachs obviously being the AI zar along with Crypto, he is a fan of open source. Do you think we could see potential action on that front where it can benefit some of those open source players here in the US?
Yeah, And I think you know, regulation in AI especially is a double edged sword. You want to promote open source to compete with closed source models, and the reason why is competition breeds progress, and that trickles down to
consumers to businesses that use these models. So that's good overall for everyone, But by the same token, there's also an issue with putting some guardrails around that so that there's some safety in alignment for national interests, for mission critical industry interests like healthcare, transportation, defense, and things like that. So it's a double edged sword for now, and I think David Sachs and his team have a good handle
on that balance and are weighing that. But I think that we want to promote open source models, we want to promote developer access to these models, but we also want to have some level of safety when it comes to these mission critical industries.
Are you okay with therefore? People accessing deep seeks are one model?
For example? Where do you think we are in the geopolitics of it all?
Yeah, And I think there's a lot of political bluster and fear that's kind of coursing around media, But really what it comes down to is deep Seek is an open source model from China that you can download today. The weights are exposed, so you can change the weights, you can remove all the censorship quote unquote alignment aspects
of that, and you can host it on US data centers. Perplexity, one of our portfolio companies is doing was the first company to do that and to provide APIs to developers that are a safer version of deep seek that doesn't have these issues. North Flank is another company out of the UK that is offering within thirty minutes for you to download and deploy your own deep Seek version of the model on AWS, GCP and Azure within thirty minutes.
So open source can be problematic if it's coming from a country or a region that you don't identify with. But the good thing about open source, the strength of it, is that you can download it and you can modify it and make it safe for your own purposes.
Another one of your portfolio companies was humane Ai, and we talk a lot about the models, the algorithms, but what went wrong here? This is kind of one of the few consumer applications you can feel in touch.
What went wrong from your perspective.
Yeah, Look, I think hardware is hard, and it's hard for many reasons that we well understand today. One is that it's capital intensive. Number two, you're dependent upon a lot of the software development that happens in real time while you're developing a much slower, longer cycle hardware and operating system roadmaun really big ideas, really you know, game changing,
see change platforms. To compete with Apple, to compete with Samsung, to compete with the existing operating systems requires a long, long journey, requires a lot of capital. And these things are hard and These are the moonshot bets that venture capital is built for and we embrace. So we want to see more companies, We want to see more founders take those moonshot bets and go for it.
Ken Inventure his managing partner, it's great to have you. Steve Jang an embrace of open source AI models. What is helping fuel interest in a cloud platforms such as Lambda. The companies just raised four hundred and eighty million dollars in its Series D funding round for investors such as in Video and arc invest Please to say the CEO, Stephen Valavan, joins us now four on eighty million. You're building out infrastructure, you're offering software tools to how do you spend this money?
Well, Caroline, thank you so much for having me. I mean, we're going to be spending this to continue to build out our infrastructure. As a company. We've got over a billion dollars of Nvidia powered systems deployed in our data centers across the world. We've invested over one hundred million
dollars in our cloud platform. We're going to continue to invest in those two areas, but we've started to expand above the stack, so we've got an amazing AI powered software platform that allows us to host all the open models. We've got hosted deep Seek, We've got hosted Lama uncensored deep Seek fine tunes that remove some of the censorship and sort of make it more aligned towards Western values. And really what we've done is, you know, it also hosted that as part of what we call land the Chat,
which is our hosted open source models. It's an AI chat assistant.
Anyone can go to.
Land dot Chat and basically get access to our one.
Okay, so help bring us and our audience clarity on where we are in terms of capacity, over capacity, undercapacity, it comes to data sentence, when it comes to compute, because you've got Microsoft some analyst at td con really well getting the market wandering about this once again.
Yeah, So this is the largest technological revolution we've seen in our lifetime, and it is completely fundamentally reshaping the way humans interact with computers. And so it's a really big deal. It's replacing all the traditional software that's been developed over the last fifty years and replacing it with a hybrid sort of human and neural software hybrid, and that is a big deal. We're going to continue to
see massive investments. You know, a couple hundred megawatts of data center contracts being pulled out, you know, roughly speaking.
To put that in context for the viewership, it's been four and five billion dollars of let's say, equipment capex that you're looking at, and that is, you know, not really as significant if you look at every single one of these companies looking at eighty billion, fifty three billion, you know, all these hundreds of billions of dollars that are being invested over the next couple of years every year, it's I don't think it's as significant as of a story.
Stephen.
This is a really big check for you guys, but it is getting harder to raise as a late stage startup, even when you are in the hottest sector in town. How is that affecting your roadmap? Do you see going public as the next step or partnering up with a different company, a larger incumbent player down the line.
We are building a long lived, iconic company that is going to be here for the next one hundred years. That's what we're that's our goal at LAMBDA, and what we're trying to do is really focus in on building a strong fundamental business.
You know.
So last year we shipped over four hundred million dollars of top line revenue. We are profitable, that is to say, we have a positive operating cash flow, positive EBITDA and so I think it's as back to basics. You know, all that matters is you build a heavy business. Right In the short term, the market is a voting machine, and a long term it's a wave machine. So build a heavy business and just focus on delighting the customer. It's pretty simple.
Let's talk about talent, because there are some concerns that cut to the National Science Foundation kind of broader implications on the pool that tech giants and also startups like yourself draw from. Jan Lacun mentioning on a post on social media this weekend.
That he was pretty concerned about it. What are your thoughts there?
Well, I think it's really good for us as a country to continue to welcome in the best and the brightest people from all around the world. I think that as a company, you exist within the environment that's set up for you, the rules and frameworks that asslp you by your sovereign entity around you. And so you know, we're just like every other company in the world going to be folks faith fased with like whatever the reality ends up being.
From your perspective, what does the landscape of compute look like in five years time.
I think that what we're going to see is with these models today it is just starting to crack open what I call one shotting, a pretty difficult computer programming problem. If you flash back, maybe just two years ago, right, you could generate a very basic application. It would have some bugs in you'd have to debug it. As a software engineer today, I can ask it to generate a full video game. I can ask it to generate, for example, the land of chat iOS application, and it generates it
in one shot with no errors. And so to me, it's applying that to every piece of software.
In the world.
We thank you for coming on, and I'm the CEO, Stephen benavan On a big fundraise and that does it for this edition of Boomberg Technology.
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