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Broadcom CEO Hocktan says the company expects AI chips to top one hundred billion dollars next year, the stock pushing higher on the earnings.
Plus.
Anthropic has resumed discussions with the Pentagon about the use of its AI models by the US military amid of feud over safety details.
US hour an industrial software startup, Nominal, is now valued at a billion dollars thanks to Series B funding led by Founders Fund. We speak to the company CEO and Trey Stevens of Founders Fund.
First we check in on these publicly traded markets. Then once again anxiety rips through. We're in a sixth day of conflicts with Iran and all prices are still and concern brank crude up three points three percent, supply chains being choked. We're going to get into that story later on, but it means that we're seeing inflationary pressures, worrying people about the Federal Reserve's ability to cut rates going forward.
We got jobs data tomorrow.
Then as that one hundreds down by tenth of a percent, two tenths of percent, let's call it bitcoin of by more than two percent.
What are you looking at?
Yeah, it's the difficult tension in public market, the Iran war, but also earnings is there.
So broad comes up five percent.
It's a big gain, but nothing sort of remarkable against recent history. The key data point is one hundred billion dollars just in AI chip sales in twenty twenty seven, which is remarkable because in the current quarter they'll do about ten billion dollars. In the quarter gone chip sales grew doubled basically one hundred percent from a year ago. There's a lot of momentum there, but it was a high bar. There's also anxiety about them executing. We need to dig into it.
Let's dig into it.
A Blueberg exuty supporter run A Stelca, who goes to all the analysts, reports the reactions to the numbers. Are they buying this one hundred million dollar figure?
So far?
It does seem like people are. People are pretty optimistic about the company's position with AI, and a lot of the AI forecasts at broadcome game we're seen as much better than expected. So there's certainly a lot of optimism, but like you said, we're not seeing the stock really go on a tier here the way we've seen in past quarters when they really surprise to the upside.
Part of this in the data is that there was an existing data point of backlog of seventy three billion dollars relating to AI, and they seem to be getting a lot of credit by coming out and saying we have line of sights quotes to this one hundred billion dollars through twenty twenty seven or on an annual basis twenty twenty seven, Like, is that just what the street is seizing on. Did they make an assessment of margins?
Did they make an assessment of the other parts of Broadcom's business, which is also software.
Yeah, I believe the software business disappointed at least mildly this past quarter. But I think the focus really is on the AI side of things. I've spoken to people who say that Broadcom just doesn't get the credit for a position in AI, especially relative to companies like in video, So this is obviously a very positive data point for them. Now, I think there are a lot of just sort of growing concerns out there about you know, capital spending on
AI infrastructure. Are we getting to a point where we're getting near peak earnings. There might be some of that that are sort of tempering some of the enthusiasm for Broadcoms results, But I think overall, anyone who is just looking at the numbers should be pretty happy.
Whomo's Ryan for the l Selca who all morning in Chicago has been across dozens of sales side notes and gave us the summary there. I want to talk more about broadcon Jomfienie Advisors, capital partner and portfolio manager about thirteen billion dollars that you manage for clients and broad cooms the top three right in terms of holdings. It's really interesting the direction of a six and custom silicon.
You know, how do you go from ten billion dollars of sales in the current quarter to telling your investors, oh, by the way, next year in excess of one hundred billion dollars just in chips.
That's believable to you.
It's an incredible ramp ed Ludlow, no question about it. But you know, when you look at the history of Broadcom, you know we've owned them we've owned this stock for clients since I arrived at the firm in twenty fifteen.
It's been a core holding.
It's been a leading.
Holding for many of our strategies on the equity side because of several things. One, they've always managed to maintain a deep moat in their products relative to the competition, whether it was for iPhone chips or storage or elsewhere. And their acquisitions have generally led to better cost savings than folks have predicted. And you know now with the diversification you know into software and that continuing to do well through VMware, you know, they have recurring revenue streams
through the software side, which helps maintain margins. And they've shown their ability to execute the fact that they've locked up capacity through twenty twenty eight tells us how good their visibility is.
So I want to seize on that pot. A lot of people ask me, like, what is it the brawl com actually does. So if you take goo Goll's TPU, for example, they co design the architecture, make it a manufacturable chip. But Rowcom is fabulous, right, And so that bit you just said, as far as I can tell, the value is not just in the design of the TPU, which they've been discrete talking about in recent years. It's the ability to scale and get it to market a scale. Is that how you look at it?
Yeah, that's that's definitely part of it.
Ed.
You know, their ability to work well with TSMC. I mean, it's not just up to TSMC to get these.
Designs to work.
It's very much a coordinated process of design with the manufacturing capabilities. So they have shown that they're very effective in helping TSMC get to high yields and that's behind the scaling capability.
But it isn't just the TPU or the XPU.
It's also the fact that they're selling the networking you know, technology along with these chips. In fact, with networking expected to grow faster, they're selling networking devices beyond their six customers to the broader ecosystem of AI based data centers.
They're becoming even more like in video in terms of just a full stack offering and in many ways going for the key competition that is designing the chips for the META for the open AI. Did you get enough certainty that relationship with Meta is really strong that they are going to be able to ramp in the way that they expect for open AI and these companies that want to build their own and not just wholly rely on in video.
You know, I think one thing we know about Broadcom is that they work very closely with their customers and that is what has given them visibility in the past. And it's that visibility they're pointing to now. They work on multi year roadmaps and so yes, when they say that Meta is continuing to work with them, you know, that seems like a reliable piece of information. There was
a lot of information on last night's call. But you know, beyond what Nvidia does, the networking capability that Broadcom brings to the table allows their customers not just to build right around the chip, but also to the connectivity to other parts of the server and the data center. And that's you know, that's a different line of products. And and then you look beyond just the AI business and you've got software that is separate and storage and other
iPhone and other technologies. Gives them a more diversified positioning relative to in video. We like in video. We've owned it for a long time for clients as well, and we think it's going to continue to grow. We think the pie is expanding so much at those room for both of them. But the visibility that that broadcom articulated, I think is really compelling, and I think that's why you're going to see the analyst community get more on board and raise those estimates.
Can you talk a little bit more how complementary it is to have the hardware and the software offering why VMware matters.
Yeah, So you know, the you know the role of the enterprise software is to not just be able to run AI for your company and use other AI models, but it's to integrate those you know, capabilities of AI to deliver insights into how you run your businesses right, And so that's it's not enough just to have the information, right, You've got to then pass that information through to your enterprise software to enable you to change the way you're
doing things within the business, change the way you're serving customers. So that's the integration that you know that they articulate, and I think is a pretty compelling story.
You know, hoc Tan historically has been mister m and A right, and I look at like how Nvidia has kept itself in the lead, not necessarily outright acquisition, but investments, Uh, you know, licensing agreements. Do you see Broadcom doing more of that, Joanne.
I'm not sure which direction you're going in with that one, Ed. I do see Broadcom continuing to look for M and A opportunities. I mean, right now, it's like they're flat out in terms of, you know, co developing these xpus. I don't know if they currently have the bandwidth to do any major M and A. They're you know, using up their capacity allocation at TSMC for what is clearly
a high growth, high margin opportunity. But one thing they have done in the past regularly is when any one area of their business got too large relative to the rest, they'd go find some other area in which to invest in which to bring in into the company. So, you know, maybe over the next couple of years, I would see that as a possibility. I don't see it as imminent.
At the moment.
They're investing in their shares and buying them back. Johanne Phoeni of Advice's Capital.
This aways great to check in with you. Thank you.
Look, let's turn to private credit now because black Rock It's marked down its loan to Infinite Commerce holdings to zero from one hundred to zero in just three months, having varned that tech company is dead at one hundred cents on the dollar. Look, the roughly twenty five million dollar loan to the so called Amazon aggregator is now can and worthless, marking the second sudden wipeout to hit BlackRock's private credit division in recent months. What's interesting about Infinite Commerce ED is.
It's also VC backed.
And look they're saying Black Crocks saying a lot of this business was written in twenty twenty one. Well, we just think about what the venture community has got in terms of liabilities to twenty twenty one equity and where that currently trades for them.
This is Caroline Hyde's stomping ground. So being a bit careful in going to the key risk in private credit. But the thing is that when you have a loan to a private company, it doesn't like trade every single day. The valuation kind of lacks and so before you know it, if something's gone wrong, then you get the piece of news that you just read out. That's kind of how I understand the market at least.
What's interesting is another credit offering, well, another partner that had.
Been lending to Infinite Commerce.
They mark that loan down in December, so maybe black person might flow to it.
Most read story on the Bloomberg in No Surprise and coming up in the program, talks resume between Antrotropic and the Pentagon over the military's AI use the details.
Next this is Bloomberg.
Tech Anthropic when it's resumed talks with the Pentagon over how it's AI models are used by the US military. Now, that's, according to a source, follows a feud between the two sides that had seen President Trump threatened to actually blacklist the company.
Let's get more.
The Bloomberg Tech editor Seth Figuerman and Dario Amanda had taken this dispute into the public realm. Now we understand perhaps some of talks going on in private again.
Yeah, it feels like some of the public rhetoric, which on both sides that sounded pretty fierce, may not be reflecting what's going on behind the scenes right now. Now, we don't know how much closer they are to an agreement here after the standoff last week, but it does suggest that Onanthropic side there's a cloud of uncertainty now
over its business. And for the Pentagon, we've known throughout that they've leaned pretty heavily on this model, and there's been calls both within the defense industry and in Silicon Valley. You're trying to de escalate the situation, So.
I guess we don't know what a resolution would look like yet, right, But could you just go back Sephan explain what the point of difference was originally between Anthropic and what Anthropic's red lines were and why the Pentagon, I guess labeled them a supply chain risk.
Yeah.
I mean, throughout Anthropic has been pushing for two key red lions, first on protections against mass surveillance of American citizens and the other deployment of autonomous weapons. It seems like throughout the negotiation they've gotten close. There have been stipulations on the contract that get close to it, but there have been certain wording differences that might be nu ones to usk AB, which Anthropic seems to feel are key to ensuring their appropriate safeguards.
Bloomberg's AI editor Seth Figmann, thank you very much that stick with AI because data centers have proven to be a target in the Middle East conflict. The war in Iran, a modern version of the wartime strategy of attacking an opponent's critical infrastructure. Bloomberg's Lonni Prince Lou is one of
the reporters who's been looking into this and joins us. Now, really we're showing kind of the map right now of the infrastructure impacted, but there are key sites in the United Arab Emirates and in Bahrain.
Bring us the latest reporting and what we know.
Yes, so basically after the Israelian US strikes, Iran retaliated and they hit three Amazon sites in the UAE in Bahrain. The other way around, there was also two sites hit in Iran, or what we know of according to our reporting, And what this tells US is that data centers are becoming as critical and as strategic as oil and ports when it comes to war and the functioning of the state during war times. So why yeah, yeah, yeah, And
why were Amazon specifically hit? They are of course wholly owned by the US software company, and there's been some reports that they may have hosted some military data.
This is a frightening story and at the moment we're seeing breaking news around the UAE telling to buy residents to seek shelter immediately due to missile threats. We go back to therefore, what operators of strategic infrastructure should do. How can these operators protect data centers right now and the people within them.
So obviously you have to evacuate some of these or operate on minimal staff going forward, I think you have to treat it as a military priority, so hard in your infrastructure, which is very costly. Maybe build underground in bunkers and caves. Yeah, but it's going to be have to have some sort of rethink as we go forward and think about data centers and how critical they are becoming also in during times of war.
What that means I think those Lennie Prince viah thank you so much for joining us on this important story. Meanwhile, coming up, we're going to talk more about logistics. The logistics firms H Robinson joining us to talk about integrating artificial intelligence into systems and dealing with an.
AI scare trade. Not to mention what's happening logistics in the Middle East. As a bloombog tech.
We're in Iran has put pressure on global supply chains in recent weeks. Global logistics stocks have also been hit, like other sectors by the AI scare trade. But one name that's been given some credit in the markets for its AI integration is H Robinson. How is the company managing both of those disruptive events? Dave Boseman, the company CEO joins us now here in San Francisco, and you are in town with a big focus on AI in terms of who you're meeting with, But you are when
I talk about c Is Robinson. Your job is to move goods from point A to point B. So let's start with the conflict in the Middle East. What are you seeing right well, how is it impacting you day to day so far?
Well, first of all, thanks for having me here.
Ed.
One thing that's happening right now is disruption in our industry is a reality. Global disruption is a reality, and this is just one more thing that we're seeing and that we are navigating with our customers. We're obviously seeing, you know, the airports within the Middle East are shut down. It was an estimate of about ten to thirteen percent of that capacity being affected.
Which an air freight in that context, correct air freight.
Out of the airports out of the Middle East. The Strait of Hanus has obviously been affected, and that's called some re routing of ships around the Horn of Africa. And just slowing down overall shipments with that disruption.
But again it's.
Something that we deal with, we've dealt with it before and will help our customers navigate through that.
This is a technology show, but you know, throughout the week we've been looking very closely at energy. You know, is there anything specific and distilled that you can tell us about diesel in other markets that impact your operations?
Really?
No, Obviously it's more of a wake issue. We look at oil prices really down the line. Obviously we have carriers that can be affected by potential prices down the line, but if that's something that we just keep an eye on, not something that is affecting.
Us right now.
So let's talk about how with one hundred thousand goods you're delivering every single day, Dave, how Ai and in particular lean Ai as you see it, supply chains helping you in this situation.
Yeah, Caroline, we are essentially and we are in town for a tech conference and when industrial being invited to a tech conference, and we feel really good about that, and we essentially operate like an industrial or tech built
company in an industrial space. We ship thirty seven million shipments annually and we have seventy five thousand customers that we deal with at Robinson and relationships with hundreds of thousands of carriers, and AI has allowed us to really disrupt the industry and disrupt ourselves by the way, and
we feel good about that. It's going to the bottom line because we have real customers, real shipments, and real data and that's allowed us to have a productivity increases of forty percent since the end of twenty twenty two, and it's just going to the bottom line. At the end of the day. We're the end user beneficiary of AI. There's a lot of talk right now, but a company like Robinson benefits from that in the industrial space.
I mean that talk.
Just take me back to February the twelve, when you saw your stock plummet about twelve percent because there was talk that some karaoke company that's pivoted into the world of AI logistics was suddenly going to eat everyone's lunch. Shape Like, how do you ground shareholders in the reality? What is it show that the innovation keeps on coming and that you're disrupting yourself and not allowing others to come and take that chet.
Well, Caroline, I look at that as perception and reality, and we're the reality in that space.
It's Robinson and not perception.
You have to have real, tangible things, and for us, our tangible things are our data, it's our engineers. That we are a builder, not a buyer, and we have things that are going to the bottom line. I was really really pleased that our investors, the analysts, the banks really came out and said it's Robinson that is actually the disruptor. And as Robins said, that should be up on this news and we agree quite frankly.
I'm trying to get a sense of what happens next for you a little bit. You know, we accept AI low as costs, so you have to make a decision if they're lowering your costs, do you keep that for yourself or you do something with customers And then you look at your specifically for tech, where's that going.
You've got to keep spending through it.
Yeah, this is this is amazing when you think about it. First of all, AI is driving that efficiency and that it just gives us that more competitive moat that we have. It's a deeper and wider competitive moat if you look at the numbers. Being an end user AI play a fun fact for you.
Our usage is up eighty five.
X eighty eighty five X.
We're up on our usage, but our costs are only up one and a half x, and so so we.
Get that benefit of that that end user. We don't spend a lot.
Our token costs is a little less than a million dollars, and so it's really about token costs for us. The agents that we build essentially have a marginal cost of zero because we are internal builder, and so all of this continues to drive a competitive deep mote for.
Us that is super hard to replicate.
That chart we're showing is what credit I was talking about that you're getting for being early early movies and AI. Okay, so two events. We have a conflict in the release and we have AI with disruption. But I know that our colleagues in research in particular like want to understand where we're at in the freight cycle and whether those two micro events or maybe macro events have changed the trajectory of what your industry was seeing.
Yeah.
Well, first of all, with seventy five thousand customers, we see a broad impact of what's going on in the world. And right now what we're seeing is with the disruption. Again, this has not been the only disruption. There is some caution from customers that they have on doing that, and for us, we watch two things. You have to watch capacity, which we've seen some tightening in the cost of carriers. But then there's the demand side, and specifically we look
at housing, retail, manufacturing, and automotive. All of those have been somewhat muted and we're really looking for those to be up into the right.
No major green shoot on that.
Certainly disruptions can affect that, but we're watching that. And at Robinson it doesn't matter. We have a system that wins at the low and we have a system that certainly will win.
At the high and we're excited about it.
And you've got more AI agents as well with Quinn. Come back and talk to us about those in the future. Dave Boseman, CEO the h Robinson, enjoy your time on the West Coast.
Thank you.
Now coming up China it bolsters it's AI ambitions. More on that next, this is blue meg Tech. Welcome back to Blue meg Tech. Another day of macro that affects the tech markets. Look, we're in a six day of conflict with the middle East. We've also had some resilient jobs data here in the United States with jobless claims. We've got non farm payrolls as soon as tomorrow. The market trying and digest what the reality is of the FED being able to cut into this perhaps more inflationary environment.
We're down six tens seven percent big tech roads. But there are some single names I want you to shine a light on because we are on the upside. When we look at Broadcom, we're up almost five percent for this name. Their numbers shining a light doing better in terms of earnings, but really it's the one hundred billion dollar commitment that we're getting from the CEO Hottan one hundred billion dollars in AI sales by twenty twenty seven, up from just twenty billion and twenty twenty five.
The market likes that.
Also for the shared buy back, I'm looking at Booking
dot Com up seven percent. In fact, the zoo host seeing this could be a waterloo moment if there are reports out there that chatchipt is not going to have a pay for in chatchipt, but actually you go to chatchipt apps to end up buying your Booking dot Com or other e commerce plays that could mean much better news in terms of disruption for companies like this, in terms of generator AI I'm looking at JD dot Com by one point eight percent, first loss in four years
for this giant in e commerce ED And we're talking China a little bit more.
Now, Yeah, because overnight shares of Chinese AI chip stocks were on the right is.
In its latest five year plan drafts, the Chinese government announced a pledge to speed up AI chip development. And some of those names have familiar to you, right, We've been talking about them at least in the recent quarters. Bloomberg Senior Tech editor Mike Shepherd joins us, Now, you know, the idea of the Chinese government having policy support for the chip sector domestically is not new, but I guess we now put some flesh on the bones of that
plan in this draft document. What's the kind of need to know on what China plans to do?
Well, we did see a little bit more flesh on the bones. And of course this also is part of an effort really under way since twenty fifteen to shift from low end manufacturing to higher end manufacturing, and especially when it comes to advanced technology and chip making. Really
is at the center of that. They really want to wean their dependence on US designers and providers like Nvidia and like advanced micro devices for those chips that would be powering artificial intelligence, which is an area that China has also, like the US, staked the claimant and this is giving wing to companies like Cambra con like Moors and others that have really tried to make leaps and
strides in this area of AI chips. We can look for further subsidies and further scientific support area in areas to help these chip makers. And it's not just chipso this is an effort that also focuses on robotics. It also focuses on batteries as well, and rare earths, and those are three areas where China already has a bit of a global edge, and it's even showing that it may use its advantage in those areas as potential choke points in negotiations with trading partners like the US.
Talking in the US, now, what China has also got leaps and bounds more of than the US is energy, many would say, and the ability therefore to not have to pass on costs of energy to consumers when they ramp up their data center.
Is that something that's front and centered here in the US.
Just want to go back to what President Trump said just yesterday having met with some of the leaders' tech CEOs in Washington about those energy costs.
Take us to, Mike.
Under this new agreement, big tech companies are committing to fully cover the costs of increased electricity production required for AI data centers, and that would be prices for American communities will not go up, but in many cases will actually come down and very substantially.
What was committed to yesterday.
Mike, Well, it's a great question, Carol, because the commitment is really something on paper that sounds really big sounding that they will buy or build any additional power that they need for all of those data centers that they are pushing as part of the artificial intelligence and boom. They will also work with states and localities on rate increases that might be affected by whatever they are trying to build in the way of all that data center infrastructure.
And they have also committed to fund any additional grid or other infrastructure that will be needed to support all that additional power supply. There is a catch though, and that is that none of this is really binding. What the company's signed doesn't really have teeth in it from the federal government to actually force them to follow through on any.
Of those pledges.
It will really be up to states and the utilities to actually enforce any of that compliance on the ground, either through regulation at the state level, and we have seen that in New Jersey with the freeze on rate hikes or in the negotiations over rate increases by utilities. Now, one of the other big questions is on the state side,
and that is permitted. And a lot of these companies that were present yesterday, that included Meta, micro Soft and open Ai, they all are interested in building their own power sources near those data centers. But what they need is support on the state side to try to speed the permitting. And that was another question that was left open during yesterday's conversation.
But it was also a central tenet of the AI Action Plan published last July, which shep you and I went through in some detail. Right, we'll get to it later in the week, Bloombergs Mike Shephard, Thank you very much, Carrie. Plenty of other news headlines.
Today, there is and it's time now for Talking Taget First up Nicey owner NYSE owner into the Continental Exchange, is acquiring a stake in a cryptocurrency exchange operator Okax and a deal that values the digital asset platform at two five billion dollars now. According to the statement seen by Bloomberg, I will get a seat on Okax's board.
Financial terms were not just slowed now.
Chares a stub Hub are plunging today after the ticket reseller posted fourth quarter results and twenty twenty six outlook.
The fell short of estimates now, and.
I say comparison's particularly tough this year, noting the absence of one tailor, Swift Tour that boosted sales in the prior period.
At least two firms have downgraded the stock, and Aura Health is acquiring Gesture.
Recognitions startup Double Point Technologies CEO Tom Hale says the deal will help shape the future versions of Aura's smart rings, potentially add in controls powered by voice.
And hand gestures. Terms they weren't disclosed dead.
Okay coming up Nominal CEO, Camera Record and founders from partner Trey Stevens joined us talk about the startups, Ladies' fundings, but also the effort to modernize US manufacturing through software.
So this is Bloomberg Tech.
Industrial software startup Nominal has raised an eighty million dollar Series BE extension led by Founders Fund that brings the company's valuation to one billion dollars at a time when the US is increasingly focused on modernizing and rebuilding its manufacturing capabilities. Camera mcords, Nomenal and Tray Stevens partner founds funded with us too in San Francisco. A lot of people say to me, I think you and I've discussed this in the past as well, that the industrial sector
kind of missed cloud and the cloud revolution. And if I was to try and summarize what it is you want to do, you want to build the platform that would account for that, it easier place to start would be like, why did you need to raise more funds to do that?
To move more quickly?
Yeah, well, thank you for having me ed. We've been busy since the last ten months when I was in the studio for our last financing. So we're building a platform for hardware testing and operations, a fully integrated solution for the modern era. Frankly, we hadn't touched the seventy five million of capital that we raised earlier last year. But when Founder's Fund approaches you, they approached us late last year with an offer to lead a preemptive financing,
I think you take it very seriously. They have a really unique position and vantage point in the industry, particularly for companies building hardware, and I think particularly an interesting insight into the work that we've been doing with Androil, particularly which we announced a few weeks ago.
So this is the joint up.
It was Trey that phoned you, presumably, so this is the intersection of what you're working on every day right with ander Rail as executive chair. But also like the types of companies you invest in through Founders Fund, I always know you separate those two when it comes to Anderil and Founders Funds backing of them. But what was the thesis for you with Nominal Why did you think that this was an important name to back?
Well, you know, there's been an explosion in enterprise SaaS. There's a literal infinite number of companies that you could bring on to help with enterprise software kind of problems inside of an organization. But any reasonable efficient organization is going to take an approach of trying to cut as much of that out as possible to minimize the spin for the org. So there are no nice to have nice to have Enterprise software is not not good at ANDROL.
You know, we have a incredibly intense process coming from my co founder Matt Grimm and our chief information officer Tom Bosco, who are constantly trying to weed out all of the excess spend. But in that same process you come across software that's critical, things that you really really need, that are it's worth the money, it's worth the time and effort. Nominal is one of those products that we
use inside the enterprise. We were already investors at Founder's Fund, but it certainly increased the conviction when you know that an organization that I obviously worked day to day very closely with was adamant that we needed to have our hands on this.
Cameron, your background is fascinating and also what's notable is how you talk about this mission critical necessity for the software that you're building at the moment. I mean, front end center is the geopolitical issue that currently confronts us. How are you seeing engineers leaning on the software at the moment, how much you thinking about this being ever more integral.
No, thank you, Carolyn. Yeah, I think we think of Nominal as building very serious software and building on Trade's point in an era where the last two decades saw a lot of very unserious software optimized for dot Com era sign ups, clicks et, cetera. But the engineers that use Nominal and trust it every single day, they're instrumenting hardware, they're automating very complex tasks. They're watching their hardware systems deployed in the field in operations, and so it has
to work. It is the definition of mission critical, especially at a time when that's increasing and the world is moving faster and.
Faster automating complex tasks. Trey.
That is at the heart of a disagreement that's currently upon us with Anthropic and the Pentagon, And we know that conversations have started again in private between those two entities. But how do you think about some of the ethical confrontation that consume a focused AI enterprise That focus AI is currently being confronted with with its use in the military. This is something you've had to think about first, almost ages ago with Andrei.
Yeah, you're absolutely right, you know, being able to give our warfighters the capabilities that they need to be successful not only in deterring conflict.
But in winning conflict.
If we would you get to a point where we needed to do, that is incredibly important. And I think there's nothing more ethical than engaging in good faith with our institutions, our democratic institutions, to make sure that American companies, leading American companies, leading American technology companies are sitting alongside in partnership with those democratic institutions. So, you know, super proud to do that at ANDREL and a know Cameron is super proud to do that at Nominal as well.
I'm trying to think how we can talk about what's happening in the war in Iran in the context of what normal actually does right. The defense sector is one of is a part of your customer base. And what I've been trying to understand when normal is is it the software that's manufacted is helping to manage the asset that is the factory or the output of the factory.
That's quite an interesting distinction because throughout the week we've been talking about the rundown of short range, long range munitions, the different technologies that the play in irom How would Nominal help make that process better.
Yeah.
Really, Ed, we're trying to own the end to end process. So really everything from the end of a manufacturing production line through to the experimentation R and D sort of lab testing of those systems, and then the end deployment. And a lot of the thesis behind Nomenal is those who have become very siloed operations and you gain huge efficiency, speed, scale reliability if you actually can link sort of a common data platform that entire process. I always say, I
said this last time I was on the show. The biggest I think tester and validator of advanced hardware systems is the US, the partner of war, and we're very proud to support that mission. For US, it's we are an engineering tool, you know, full stop, and so we try to give those who needed the best, most modern tools to support their mission.
Trey, you are the executive chair of ANDERIL. Could I ask simply if any aerial technology has been deployed or used in Iran and what the footprint is there and also where Nomenal kind of fits in in managing that process.
Yeah, I mean, we have all sorts of primarily counter airr systems that are present in conflict zones. So we are actively working day to day with the department in ongoing operations. Obviously can't give a whole lot of details beyond that, but you know, this is kind of one of the challenges of building a defense technology company is that you don't build for the wars of yesterday or the wars of today. It takes time to integrate these
things into concepts of operation. So the work that we're doing in the region is work that we've actually been doing for a long time. It's not that we just showed up, you know, in the moment of the conflict. And I think that a lot of this goes to the test and evaluation operations is you know, getting to preparedness so that you're not just building a technology demonstrator, but you're building something when it's resilient and that is
going to work in times of conflict. That requires a lot of reps and it's much harder to do than it is with just doing like a sim for software. These things have lives and debt, like they have human lives involved in them, and you can't afford to make mistakes.
So, you know, we're super proud of.
Partner with Nominal to make sure that we're ready, We're ready for game time. When when that shows up like it hasn't aroun.
Trey, can I also ask you.
Bloomberg reported this week that Anderil is looking to raise about four billion dollars with Andresen and Thrive Co leading the round. A comment on that, but also, what is it that Anderil needs funding for right now? You're building in Ohio, you're expanding in California.
Yeah, I mean, you nailed it.
The challenge is going from being a defense technology company where you're building thousands of things to being a defense manufacturing juggernaut where you're building tens of thousands of things. I can't think of a whole lot of companies in the last twenty years new companies that have set up mass scale manufacturing. Maybe Tesla is the only real example.
And role is on the path to, you know, trying to be number two in that in that space, and that's going to require a lot of capital, and it's going to require partnership from the Department to get that off the ground, which is Department of War, the Department of Work, which is where we are right now, and it will require partnership with companies like Nominal as well to make sure that we are fielding capable systems and we're scaling in a way where we're delivering a functioning
capability rather than just a technology demonstrator or prototype.
Cameron, I reference that you had a fascinating background. You worked at Androl yourself. You've been an investor yourself at Lux. You've also been heading up sale drone as well the defense. You're head of defense for sale drone on autonomous maritime companies.
So you've been thinking about all of these questions that currently investors, builders and the community written larger thinking about how what was the signal you think has been sent by the Pentagon with its feud with Anthropic and how does it make you feel building alongside the government at the moment?
Yeah, I think you know, we we at Nominal, we think a lot about where AI will intersect with our technology area, and I think the uh, the unfortunate reality is in the industrial sector, in the hardware world, much of the software and technology is so antiquated that it is just now I think becoming AI ready and AI adjacent, and we are working to help a lot of our customers, uh,
you know, operationalize that that technology. I think in terms of partnerships with the Department of War, the messages that we get loud and clear are you know, speed and scale are our paramount and Nominal plays a huge part in helping all types of uh, you know, companies fuel those systems to meet that resilient need.
Camera McCord, CEO Nominal and the Tree Stevens partner at Founders Fund. Fascinating to have you both join. We really appreciate it. Now coming up, El mask is putting millions into the Kentucky GOP primary.
How is it going off? That's next? This is bluembg tech.
Elol Musk told a jury that his twenty twenty two posts about putting pandsled by.
Twitch on hold was not one of his wisest.
Musk was testifying in a trial alleging he purposely drove down Twitter's share price during his negotiations to buy the Company's Max Chafkin joins us.
Now, it's not the first time that El Muscus.
Has his social media posts sort of breaked over the calls by this.
No, this is a long running thing, and in fact often in these cases his best defense is that he tweets a lot, and you know, his tweets are not always taken seriously, and you know there is something too that that of course came up during the funding secured dispute of twenty seventeen or twenty eighteen, when he threatened to buy out Tesla and then was accused of not
having the money. So I think it's going to be the same story we've seen over and over again, which is just that he has a tendency to speak his mind. Let's let's put it mildly on Twitter in ways that sort of don't fall traditional securities norms or sometimes rules.
Max lost August, you and I tried to dissect what the net result was from from Ela Musk going.
Into the White House.
Your latest for BusinessWeek is is again like his financial backing of certain races, this time in Kentucky.
Like what's the learning here? What are you writing it? Well?
So top line, ed, I think that the Musk Trump alliance is very much back now. Maybe things are uneasy a little not as not as kind of friendly as they were when he was had you know, constant access to the Oval Office and his child was kind of clowning around with the President of the United States. But he is certainly in the you know, in the circle of friends. Now, this race is interesting because the candidate that Elon Musk is backing, Nate Morris, is very close to JD.
Vance.
My sense is that Elon and Nate Morris do not have any you know, pre existing connection. This is really a jdv thing. He is kind of backing the person who is close to JD.
Vance.
And when you look at this race, it is kind of like a miniature version of the Jdvans thing. You have a candidate in Kentucky who is very well connected with tech donors. Nate Morris also connected to Peter Teel. He started a tech company called Rubicon, which was the uber of trash but not necessarily hitting it off with voters. The polls, I'll just say, have been a little bit spotty, including after this huge infusion.
Of money from Elon Musk.
Ten million dollars has gone into Kentucky advertising.
So do we think it's going to be effective?
Have we dissected whether it's effective in.
The past So far it hasn't paid off. But I'll say, number one, there are a lot of undecided voters. When you look at the polling, you know, between twenty and forty percent of the voters in Kentucky, you're STI undecided. So maybe they've seen a few ads, but they haven't made up their mind. That is one potential factor. And the other potential factor, and this is huge, cannot be underestimated, is Donald Trump. A lot of these races are essentially running for Donald Trump's endorsement.
That was JD.
Vance's plan and I think that's Name Morris's plan here. And the truth is that part of what Trump is looking at is can you raise money? And so that is something you can do with the world surges man.
You can Max Schaffkin across this for BusinessWeek and for our show.
We appreciate it. That does it for the decision A Bloomberg tech head.
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