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This is Bloomberg Tech coming up. Intel crushes earnings, the stock blaster, its dot com erapeak, and a phone call with CEO lit Boutan. Plus tech layoffs ramp up, with Microsoft and Meta making thousands of job cuts, as AI spending surges and open Ai comes out with a new model better at helping scientists and carrying out more complex tasks. Intel Intel shares have blown through their dot com peak to a stunning new record high, strong earnings and outlook. Yes,
but this has been an unstoppable train all year. Intel is up more than one hundred and twenty percent so far in twenty twenty six. That is the story. Intel guiding well ahead of the street thirteen point eight to fourteen point eight billion revenues for the current quarter consensus thirteen billion. Is this Intel back to its glory days? Has Lip Bhutan turned this company around? Bloombergsy and King
has led semiconductor coverage here since nineteen ninety eight. It's all about the CPU They're in the right place at the right time in a world where AI servers need CPUs. Is that the story?
Yeah, I mean, as we've said previously, the CPU is hot again. This general purpose product that was kind of the backup singer to the aaccelerators from Nvidia suddenly taking census stage again. And obviously Intel is the biggest producer of this. Do we know of Intel's back or not. We'll see once the market slows down and we'll see how competitive is. But right now everybody needs a CPU.
So in you and I spoke to lit Bhutan on the phone, and to summarize the situation with CPU is that demand is greater than their ability to supply the street with say, that's a good problem to have. But why is there this severe reaction in the stock? Right? You know the history of this company inside and out. If you look at other metrics, we're nowhere near the heady days of sixty percent margin. Try and explain what the confidence is here?
Yeah, I mean there are a couple of things. Obviously, the market tries to anticipate where a company will be in say, six months time, so there's an element of that going on. But part of this was that look you know, there was a lot of money put into until there was a lot of hope going in there, and we've seen that kind of fall short before. This time they delivered. This time the numbers were good as
good as, if not better than expectations. So there's kind of a bit of a relief rally going on here that you know, let's take Intel seriously again. But as we heard from the CEO himself, you'll remember this, He's like, look, we're not all the way there yet, We've still got a lot of work to do, and that was what he said a lot.
There was an element of modesty and caution that Litvoo certainly put across to us. Dave's the CFO was also on the call, and actually, if there's an area where they're cautioning, it's in that client category PC. Explain what Zinsner said, and also tuck in foundry there too.
Yeah, I mean this is a general phenomenon right there's just not enough memory chips in the world. And guess what the memory is going to go. The Isabela is going to go to the most expensive, the most profitable systems, which right now as data center. So that's bad for the PC second half of the PC is not going to be as strong on the flip side of things.
You know, Intel's foundry business, which is you know, the business of making chips, still losing a lot of money, Still got a lot of work to do to get to the level that it needs to be. And we need to see those big external customers get announced or start to appear in the second half of the year for that part of the business. And there's a very expensive part of the business to really have turned the corner.
I wasn't doing this in the year two thousand, when Intel is its last peak. You were, and you've led the way uncovering this company ever since. Blobozi and King, thank you very much. Chip stocks overall are unstoppable. The Philadelphia Semiconductor in next or socks is up for a record eighteenth straight session. In the moment, this is all about Intel pushing the gauge of global chip names higher.
Let's get more on Intel with Cody Acri, equity research analyst at Benchmark who's just blasted his price target from seventy six dollars a share to up to one hundred and five. Cody, why, what's the thesis?
Well, I think they hit their stride with lib Boo's turnaround, Like Ian said, with CPUs now starting to come back in the mainstream AI and inferencing in agentic demand, with CPU's becoming a core focus in addition to what we've seen from in Video's GPUs, we're starting to see CPUs take center stage. And on top of that, you're starting to get some real traction out of eighteen A and
Intel's foundry opportunity. So I think that a combination of both AI foundational CPU demand and Intel becoming a real alternative to TSMC for foundry options in the industry that is extremely supplied constrained from a foundry basis, I think all of that adds up to a brighter future for inter.
So I want to get into how solid what we learned about the foundry businesses. When I spoke to lit Boutan on the phone, I tried to get him to be absolutely explicit about terrafab. So Elon Musk has said earlier in the week that Terrorfab will use the fourteen A process. What did they mean by that? And lit Boo was very cautious. You know, he won't talk about customers. Let the customers talk about themselves. What he did say is that they're going to work on process technology. They're
going to bring manufacturing back to the United States. A you model in terrifab revenues into your model based on anything you heard last night.
No or really not.
All we see from Musk is a tacit endorsement that fourteen A, that eighteen A and fourteen A are making progress.
We think that.
Lip Bo's yield commentary yesterday was very encouraging, and the fact that they're seeing a six to seven times increase in eighteen A production expectations for Q two versus Q one on top of their yield commentary is very encouraging. And so I think that eighteen A sets the stage for fourteen A in fourteen AS where they'll start to
attract more customers. I think we've got companies like Nvidia that makes sense to be joining that, and then that is all going to be led by their advanced packaging. And I think they're talking about that in billions of dollars of opportunity, and Zinzener was very explicit about that yesterday, where that was now expected to be previously hundreds of millions and now billions of dollars opportunity, leading their founder charge.
Cody, this is a historic day. The stock has absolutely blown past that year two thousand or dot Com era record. We keep saying that, but the history of Intel is a company that has margins in the sixties, right, margins are nowhere near that. How are we gauging Intel's position in a turnaround plan and whether the turnaround is or is not complete.
Well, I think we're very very early days, and I think that's the basis for our our one hundred and five dollars price target, is that we do have that kind of room in their margin profile going forward back toward their prior peaks. Now, I think we're years from getting there, but I think that's the kind of room that Intel's left to move toward as they start to see better utilization of their internal fout we're seeing demand
for their CPUs likely to be extendable. We're still very early days and inferencing with agentic AI just really starting to get any kind of enterprise traction and the capit ex budgets the hyperscalers likely not seeing any signs of slowing down anytime soon, and so with enterprise influencing driving CPU activity and then foundery business hall in front of them. I think that there's a lot of opportunity for Intel yet to come.
Before Intel's owning school. The President of the United States talked about the biggest story.
Listen to this the capital of the world, and now you know Intel, and now they're coming back.
All the chip companies are coming back.
The United States is a shareholder of Intel. How much real support is the stock getting from the association and the positive relationship with this White House and the fact that the US did take a stake in the company.
Well, I think that it's it's a tacit catalyst. I think at best it is it's showing that Intel is a strategic asset of the US. That but from an industry standpoint, the capacity constraints in Taiwan are are palpable. Uh TSMC is the really only safety valve. Samsung is is only a distant second, and it's really focused more on memory than it is on logic. And so Intel really is the only alternative to Taiwan semi and to bring that back into the US is a real strategic
necessity for US manufacturing. And so I think that the US investment in Intel makes sense and strategically, it's it's the right thing to be doing.
Cody Acri, equity research analyst at Benchmark, thank you for their historical perspective. And I'm talking what's happening right now coming up Meadow and Microsoft cut thousands of jobs as AI spending surges. What it means for the tech workforce, that's always the next question, and that is next. This
is Bloomberg Tech. The Justice Department is ending a controversial investigation into building renovation cost overruns by the Federal Reserve, potentially clearing a path to confirmation for Kevin Walsh, President Donald Trump's pick to be the next FED leader. Bloomberg's Katie Lines and Joe Matthew, the Balance of Power team are standing by with more.
And thank you so much.
Here with us in our Washington, DC studio is the chair of the House Financial Services Committee, Congressman French Hill of Arkansas. Thank you so much for being here, mister Chairman. As we get this news that the probe, the criminal probe at least, has been dropped by the DOJ. The ig at the FED is now going to be taken this over. Is this the best possible outcome? And should we consider this now done and dust it well.
I think it's a good outcome.
It's something that I felt should be done for a number of weeks. I said back on January twelfth. I felt like the accusation that Chairman pal Was had committed some sort of crime connected with the building instruction or his testimony about it, was a distraction and that it would delay President Trump in the selection of a high quality new chair for the FED and the important economic policy that should be coordinated between the FED, the US Treasury, the legislative branch.
So it's a step in the right direction. I applaud it.
I hope it comes to pass, and I hope that then facilitates the prompt confirmation of Kevin Warsh Mister Chairman.
J pollmade clear that he was going to hang around as long as this investigation was underway. Now that it appears to be ending, do you expect that he will plan to leave the FED.
Well, that's a decision Jay has to make. But I think it was clear that upon confirmation to a chair and if there was not a continuing criminal probe, which Japause certainly doesn't think was justified, and many share that view, that he would leave the board at the end of his term, so let's see how this plays out. But the main thing I think is important is that treasure Secretary Bessett has a good FED chair that has the confidence of the President and who can continue to lead
economic policy. And for those of us in Congress, Chairman Scott in the Senate, our Financial Service Committee, the House, we want ability to conduct oversight of the FED, and it's very hard to do that when you don't have a permanent Senate confirmed chair.
Well, but on that oversight idea, do you think it's right that the FEDIG is the one taking this over rather than having the Banking Committee or the Financial Services Committee and that oversight capacity taking this on such.
A good point of view, the FEDIG is a very competent person who I think fully has the capacity to do it and the staff and the resources.
I know, speaking for.
Myself, I was very happy to help lead an independent view by the Congress. And I can't speak for Chairman Scott, but I think he would share that view that we're happy to conduct oversight as needed on the expense and the construction parameters around the fed's renovations.
What's your view about what's happening with the Ecchos building. We've all had work done on our homes that went way over cost and beyond the timelines. This is frequently the essence of doing really major renovations which are happening in that case to a very old building. Do you think that there's been irresponsible behavior or this is the cost of doing business?
I wouldn't be able to answer that question. Yeah, which is the President's a builder. He's got strong feelings about that, and he went over and took a look at himself.
And the issue is that when you are doing construction in the district Columbia, I can only imagine how expensive that is on parent emitting, required union labor, and historic renovations and archaeological remains and all those costs and the inflation that was unleashed by the Fed's own policy in twenty twenty and twenty twenty one, along with the rapid spending by the previous administration. So everyone, you're right, is facing, whether it's in your home or in a commercial contact.
But the President raised the issue of this seems disproportionately large, you know, compared to other renovation plans that he's seen personally here in Washington, d C in his own experience, so it you know, it deserves explanation.
The question is that Jay Pal do something.
Criminal about it, and I just reject that point of.
View, I think well, aside from the building itself, obviously, this now leaves major monetary policy trajectory questions if Kevin worsh is going to be taken the helm given what we have heard from him publicly, A person who used to be quite hawkish now seems decidedly less.
So.
He also suggested in his confirmation hearing that he would like to do away with the amount of flay guidance given by the Federal Reserve. And I wonder if you think that would be a mistake to, for example, not put out the summary of economic projections.
Well, the Fed has fine tuned how it conducts public between post meeting press conferences, forward guidance, the dot plots of the approved speeches that individual governors make, how many meetings a year they take, And I think it's up to the Board of Governors about that. There's no statute that says that they have.
Do you think we hear from them too much? Does it tie their hands? Because that's what Kevin worsh argues, right.
You know, I think that's his opinion. He's the chairman. Is see what consensucy has. I don't know that how much I hear from the FED determines what my opinion is about how the Feds are doing. You know, they have seven hundred pH d economists. Sometimes I think the market tells them where they ought to be a lot better than some of their economic forecasts.
Haven't been so great.
But let's see how the new chair, once he's confirmed, works with his colleagues to outline what the public position will be.
Yeah, I don't know.
Sometimes it's good to ask a community banker about his insights on these things. But the idea of a new regime, a new framework, a new approach to making interest rate decisions, makes you nervous or optimistic? Is that needed?
No?
I think it doesn't make me nervous at all.
In fact, I asked Frank Lucas of Oklahoma to chair a special task force in this Congress to look at the past decisions by the Fed's monetary policy and the treasury market structure. These are critical issues that we face right now, and so Frank has conducted oversight the size of the balance sheet, the focus on the dual mandate or should it be mostly focused on price stability? How
does it interact with the banking community on liquidity. So we've actually been investigating these questions ourselves, how the district banks participate. So the fact that Kevin comes in as a former governor, having worked through the financial crisis, and has his viewpoints on how the FED should operate, I think that's healthy. I think we need rejuvenation in our institutions from time to time, and that's why we have the advice and can confirmation process in the Senate, and
why these FED chairs have a five year term. Not everybody can serve four presidents, like Alan Greenspan can.
Well.
Of course, we're having this conversation and this potential turnover at the top of the FED at a time where the global economy, at least a portion of it is being held in a choke hold via the Straight of four News, as the US is maintaining a naval blockade Iran is still making it unsafe for commercial vessels to transit so long as that status quo remains. The President said yesterday he is in no rush to solve this.
He is all the time in the world. Does the economy actually have all the time in the world the situation, I.
Think it's I think we're all clear that the longer the oil fuel markets are disrupted by the transit and the Gulf, we have price concerns, volatility concerns, and the I'm watching that forward market in oil prices to see if they fully reflect that concern.
And I do think that, you.
Know, if the war can take use, it could be underestimated in the market. So the question would be I think the president, though, is right to do something that we've wanted to do for four decades, which is in the malfeasans murder mayhem at the hands of the Iranians, and stop their ability to have a nuclear weapon and stop their ability to harass their neighbors all the way to Paris, France through threats of a ballistic missile and their export of terror through their proxies.
These are important goals. They're shared goals.
Whether people are out in the press saying their shared goals or not, they have been long term shared goals, and so I do the command the president for taking that action, But we do have economic risks associated with how long it's maintained.
There's no doubt about that.
Mister Chairman. We really appreciate your being with us in our Washington bureau today. Thank you for your insights on this important story. The Jay dropping, the Powell probe and instant reaction from the chairman of the House Financial Services Committee, Congressman Frendshill of Arkansas, will send it back to Ed Ludlow.
The bos Katie Lines, and Joe Matthew. Thank you. Meta and Microsoft are making deep cuts as the cost of AI ramps up. The two tech beheem of supplanning layoffs all buyouts that combined may cut as many as twenty three thousand jobs. Meta there's already signal plans to trim roughly ten percent of its workforce and leave thousands of rolls unfilled, while Microsoft is rolling out voluntary buyouts across its US operations that could reduce its workforce as much
as seven percent. Here to discuss Bloomberg's Brody Ford covering Microsoft, Bloomberg's Riley Griffin covering Meta. Rightley, let's start with Meta. What do we need to know? The size and scope and then the rationale to cut back on headcount?
Well, let's start with the rationale because this year Meta is going to spend as much as one hundred and thirty five billion in capital express.
That's a wow.
That's a wow. And this is before earnings. Next week we could see that push even higher. So there's a lot of money being spent on AI and they are citing efficiency and investment as reason for cutting costs. With personnel, that's eight thousand potential employees facing layoffs and six thousand open roles. And Brody, the question I want to ask you is ever core Issi had put out an analyst note saying they estimate that's about three billion in savings for Meta.
Are these layoffs.
At Meta, the buyouts at Microsoft, are they really going to push the needle amid AI spend.
I think that they're probably just going to keep margins kind of flat, right, I think that's really the goal. I mean, Microsoft didn't stated in their buyout letter, but as you said, data centers cost a whole lot of money, and then the kind of traditional way to offset that spending has been cost cuts everywhere else. And you know, one of the most obvious places companies have been going is their workforce.
Right Berdie With Microsoft, this is voluntary it's what we would call voluntary redundancy over in Europe or the UK. A buyout here is that what Microsoft typically does. Why they going that route this time?
They've never done that before. I mean, they've done their share a big layoffs, right, so they're certainly not afraid to do that. But I think Microsoft often, you know, it tries to be seen as a bit maybe more of a compassionate big tech company. You see that in the way they communicate their environmental goals, for example.
But I think it's all part.
Of the same trend, right that companies are feeling like in this moment that their employees should be able to do.
More with less.
I don't think that it's straight up hey, AI is replacing people quite yet, but I do think companies are saying, well, I think we could probably get by with fewer folks these days.
With meta the story around which parts of the company get trims has been more important, right, Reality Labs refocus on AI cut back on the metaverse. When I was reading the reporting, I was trying to understand, like, where specifically in this very big company are these cuts taking place.
Yeah, that's a billion dollar question, ed. I am looking to see that too next week.
Right, if you are a better employee and you're part of these cuts and you're hearing this, please reach out to Riley and try and explain it to us.
I mean, it's a high anxiety moment at Meta, and we are hearing from a number of employees who are really anxious.
In this time. Reality Labs has.
Already faced cuts that's been separate from the ten percent that is coming in May, and there are questions as to whether or not this is just the beginning of broader.
Cuts throughout the year.
With something like ten percent, you've got to believe that this is pretty widespread. But we know that they continue to invest in Meta Superintelligence Labs, that unit that is driving forward the new models under Alexander Wang. I'd be reluctant to say we're going to see major cuts.
There, Okay, team, The way that we thinking about this is just two companies and we're trying to compare the level of cuts to capital expenditures. But Brody, like earlier in the year, software names were pretty impactive. Right, You've been coming on the show periodically with a very large range of companies. I'm thinking Oracle as an example. Is there a sort of broader theme here, industry wide of cut back, people cutting back and the rationale for doing so.
Yeah, absolutely, I think. I mean, we saw big layoffs across tech starting around early twenty twenty three, but this more recent wave in the last call it year, year and a half, I think is more tied to that GPU build out. I mean, the margin profile of these
companies has really changed. You went from selling software packages, which were among the highest margin product you know humankind has ever made, to selling GPU infrastructure that's notably less so, and so they've really had to offset this one way or another. You know, as you mentioned, Oracle last month laid off thousands of people, and largely it really hit those cash cow businesses. They felt, hey, let's milk these for margins while we build out our big data centers for open AI.
Brody, A question for you that I have is we've talked a lot about entry level jobs and how they're going away. Now we're thinking about bigger picture, higher up jobs. What is it going to mean for layoffs for more senior executives across tech companies?
Where could they possibly go?
Just quick, Brady, We've got to get gun it, guys.
A tough market.
You know what I hear every single day that it's taking a long time to find jobs. So it's yeah, it is a tough time in the tech industry.
Bloomberg's Brody Forward Bloombo's Ridy Griffin, two big stories about two of the biggest tech companies cutting back, Thank you very much. Intel's results confirm strong data center demand, but they also showed that Intel's foundry narrative is firming up. That's according to Bloomberg Intelligence. Let's bring in Bloomberg Intelligence
senior analyst can Jensbani with the BI react. Was so interested to see you right about this the foundry business to start there, because we could have just focused on CPU all day long. Just explain the thesis. What is so in that foundry business.
Well, to start with, we should be focusing on the CPU business because it's finally turning the corner. But yeah, on the foundry business, we are seeing like the correct milestones and the correct checkmarks where Intel eighteen A yields are improving. We saw that help with the big gross margin beat even better than the revenue beats that we saw in the quarter. The fourteen A based on the company is running much better in time where eighteen A
was in the past and we are. We have of course seen a lot of engagements and announcements from external customers like Elon et cetera. Right, so we're seeing them go in the right path. However, you know, there's a lot more wood chop left to chop here. We need them to continue showing execution because at the end of the day, you need to still come to the competitive cost optimized process. Otherwise these customers that are announcing might not deliver you products.
I spoke so let B Fan let B Tan on the phone congent. I tried so hard to get him to be specific about the details of the terror Fab agreement. And in your own research you basically say fourteen a terror Fab confirmed. How can you have so much conviction that that's the case.
Well, it's based on again what we have been having the discussions. But we do want to carry out even though the projects are confirmed. What the hanging part here is the magnitude of revenues we don't know right.
The timing of products.
So, like I mentioned, if you don't deliver on your execution very well, most of the revenue and products could not land winter and go to someone else.
This is an AI story at the end of the day, and we've done it in great detail. Now the CPU going into the AI server. Conjenserbanni from Blueberg Intelligence. His react is research is on the terminal. You've got to read it. Let's turn to a new entry in the public markets. Nuclear energy firm X Energy has raised over a billion dollars in an upsized IPO shares of the company, which counts Amazon among its bigg as backs. They were priced in the IPO at around twenty three dollars a share.
The indication is that they will trade way above that when they get going. Ex Energy CEO Play Sales joins us from the Nazdak. It's been about a year since I last saw you and sat down, and here we are, big IPO, Big IPO. Just reflect on it.
You know, it's really been It was great senior year ago at south By Southwest, but we've really had a good three year run at x Energy in terms of customer acquisition with now Amazon CENTRICA Energy Northwest. In terms of our regulatory achievements. We got our fuel facility license. It's under construction in oak Ridge, Tennessee. We proceeded with our first license for our fuel plant in Texas. We expect to get that around the end of this year.
So it's been a year of great progress and a great time for us to enter the public markets.
What are the status of those of those customer relationships, you know, one of the things that you and I went through is the reality of this technology, right and how quickly it gets built into the real world. What is the reality of it right now?
Well, our first project comes online in the twenty thirties, but it'll be the first of many, many, many to come. And the key with our technology, you'll remember, is it allows us to reinvent the way we build nuclear power plants, to completely change the way we build them. We start with a remarkably safe plant, the safest technology that's available. It's a meltdown proof fuel. The plant is elegant, it's relatively simple, less concrete, less, steal less parts, and it's
easier to build. And we have a backlog of over one hundred and forty units between just our first three customers, and so that gives us a pathway to build and build and replicate. And we all know I mean replication is the key to mass replication. Building the same plan over and over again is the key to making nuclear incredibly economic, incredibly boring, and incredibly financible. And that's what we're about at Accident Energy.
You're about to start trading in a big IPO. Don't make this boring clay. Just to update our audience, the IPO price at twenty three dollars dollars a share. What I'm seeing on the Bloomberg terminal is indications you're opening around twenty eight dollars a share. We'll see how that goes. The chronology is important. I think the Dow project happens first and then Amazon. Is that correct?
Yeah, the down project will come first and immediately followed by the Amazon project.
How real is the regulatory's approval of this? The foundation you and I have talked about the need to codify a lot of this. You have the support from the federal side of the government to get moving in the way that you want to.
The policy support from the federal government has been key to launching this new era of nuclear and to key part of that was the reform of the Nuclear Regulatory Commission. Historically, you know, the NRC had a very bad reputation of being slow cumbersome, a lot of red tape making it very difficult to build new plants. But on a bipartisan basis,
legislation has been passed to reform the NRC. Then President Trump came in and he put an amazing leader as the new chairman of the NRC, someone who has both the will and now the authority to move appropriately projects through the regulatory space.
Well, so again, real quick.
We got our fuel Yeah, we got our fuel plant license, and then we get then we'll get our first power plant license. You know, by the end of this year, in record time.
On both the.
Company does or does not yet have the license from the NRC for its design.
We have the license to operate our fuel plant. We will receive the license to begin construction on our first power plant around the end of this year.
As well. Play Cell, CEO of x Energy, price this ip at twenty three dollars a share, indicated to open twenty eight dollars a share, Thank you very much. The wars in Ukraine and now Iran have underscored the growing importance of autonomous aircraft and undersea vehicles, and Treason Horowitz is backing Ulysses, a startup building autonomous underwater vehicles, pointing
to a new frontier in ocean and defense tech. Aaron price Wright is general partner in Jason Horowitz just did that round in the last week or so and joins us on the show. Find this so interesting. I think over the course of the war in Iran, we focused a lot on drone technology and other missile technology, but with the strait of horr moves in particular, now that domain is becoming increasingly important. I think, just explain your conviction and thesis with Ulysses is a case study.
Yeah, first, thank you so much for having me. It's really wonderful to be here.
The ocean is a largely unexplored and unconcour unconquered territory, and it's kind of remarkable how little innovation there has been in maritime over the last you know, half century, despite how much it's grown in its strategic importance for the United States and globally. I mean, if you think about the beginning of the conflict in Ukraine, the first thing that Russia did was cut Ukraine's under sea fiber
so that they didn't have any Internet access. You know, you just mentioned we're seeing this again in Iran with the with the Strait and how much global tension and conflict that's caused, and expect something similar if that we were ever to be in conflict in the Pacific theater with the South China Sea. So you know, really this was a market in an area very much hungry for innovation.
If you look at our submarine capabilities, they haven't really advanced in half a century, acostibility, submarine vest and man summary, we're talking about one hundred and thirty people on a crew of a you know, multi billion dollar complicated machine that takes it decade to build. And these are people
who are putting their lives at risk. And many of the things that we need to worry about in the ocean today, whether it's on the commercial side, from inspecting oil and gas or deep sea mining or offshore wind or other assets, through to the defense space, like a lot of those use cases actually don't need manned crews to be able to accomplish really important missions.
I just want to point out, Aaron, if you bear with me that right now, the story in public markets is stocks are higher technology stocks, in particular on hope and optimism that over this weekend there will be peace talks between the United States in Iran, and we're here principally to talk about private markets, but I think there's been a bit of a disconnect right in understanding something that's happening live in real time, a conflict like the one in Iran, and how that's given momentum to the
industries and areas that you want to invest in. Has it got people moving?
Yes, it's a really really good question, and it has. I think it's been a real forcing function. It's put a magnifying gloves us up to our defense base and how ill prepared we would be for a major conflict. And it's helped speed up a lot of the procurement
processes and conversations with the Department of War. So we're seeing the Department of War come to our early stage companies and say how fast can you deliver one hundred, how fast can you deliver a thousand, how fast can you deliver ten thousand, and really start to change their thinking around what the requirements are, what matters, and how do we make sure that we have the production scale capacity to be able.
To fight into in a future conflict.
So I'm very hopeful for peace in the Middle East, and also you know, this has been a real wake up call for a defense department for we really have to do and how we have to support the defense industrial base in order to be prepared for a future conflict.
You know, even in the domain of the ocean and derail is an interesting case study as well, right that. You know, they have focused a lot not just on the technology autonomous vehicles in the water, but where they're
placed around the world. But one data set our Bloomberg Tech producers Oie Thomas always sort of tracks the declassified spends and where that dollar goes goes to Lockey Martin still in the in the aquatic context, is that the same story that even if Ulysses and Anderill do move fast, the legacy primes are getting all of the government spending.
Well, let's take Ulysses as the example. So this they didn't start the company as a defense prime. They started the company the first use cases of the company were seagrass planting, seafloor restoration, energy inspection, port inspection, and you know, essentially they were working on use cases that had very strong cost curves that where you know, their customers couldn't pay more than forty fifty sixty thousand dollars for a
unit to make the economics work. So they had to really focus on high quality engineering to build a very low cost and highly manufacturable, scalable product for their commercial customers. And you know, they have lots of operational experience in the field fielding these units for real.
Use cases in the ocean.
And you know, we're talking forty fifty sixty thousand dollars a pop for their for their uvs. And so the Defense Department comes and sees that, and they're like, you've got to be kidding me. We're you know, we're paying for the exact same thing. We're paying two three four five million dollars a pop. Are you're telling me I can buy this for forty thousand dollars? So they have they you know, they have work to do to catch up in terms of you know, proving out their tech
and real missions. But when you're talking about two or three orders of magnitude cost difference for virtually the same thing, I think it's just a matter of time before we see these defense tech startups start to catch.
Up to the primes erin It's been really interesting reading about you you know, not just you know, what you were focused on an index before andries, but you are a pallanteerion as well. I think just spend the last couple of minutes that we have talking about the American Dynamism team, but also your experience and industry and how that carries over in how you act as an investor.
Yeah, I think, you know, my time at Palenteer really shut.
Well.
It used to be hobbits, but I prefer volunteer is. You know, it really really shaped the way I think about not just technology, but technology's role in the world. Like Palanteer, the thing that I'm so grateful for really ran towards the fire and was like, we want to work on the hardest problems. They might be controversial, they might be really hard, they're not sexy.
And we want to go.
We want to go where the important conversations are happening and where the important things are being solved, and we want to be close to the problem on the ground, with our users, with our customers. So that's really shaped how I think about investing in technology today. First of all, you know the critical industries that power our economy. We're talking about manufacturing, energy supply chain, critical minerals, and mining, defense, aerospace.
You know, this is what the US economy has historically been based on, and yet largely these sectors have largely been not disrupted by technology for decades and decades.
So there's so much room for innovation to happen.
But to solve these problems, you really have to get into the meat of them. You can't solve mining, you know, from an office building in San Francisco. You can't solve energy unless you're really putting boots on the ground and understanding how our grid works.
So that's what we're very excited about.
Erin Press right of bend Reis and Horror. It's great to have you on the program. Thank you. Now coming up, tech earnings are underway and next week is a big one. We're going to discuss what to expect. This is Bloomberg Tech.
Some breaking news crossing the terminal. Google will invest ten billion dollars in Anthropic, according to the startup, with another thirty billion potentially to follow and Fropic said Google's committing to invest ten billion dollars now in cash at a three hundred and fifty billion dollar valuation, the same value it was at in a funding round in February, but not including the money raise. Bloomberg's AI report to sharing Gafari has the story and is with us now not
straightforward but potentially big numbers. What do we need to know? How is this structured?
That's right, So this is part of a bigger trend we're seeing where the big tech companies are investing some you know, eye popping numbers into the main AI labs, and Anthropic being one that especially is in a moment when it needs more compute as it's seeing its demand sore for products like clod code.
So up to forty billion dollars, we're just showing shares of Alphabet, Prayer and Google. They shut up when the headline hit that's not a surprise. How do we get up to forty billion dollars? How's it structured?
So there are certain milestones in place they have not disclosed what that is. Similar to what we've seen with some past deals between Nvideo and open Ai, and you know, it's always a potential in the future. Right when we're talking about beyond that initial ten billion. However, that ten billion alone is not to be discounted. Again, these are sort of unprecedented amounts that we're seeing these labs raised
on the strength of the demand that they're seeing. However, at the same time seeing high cost and high need for compute.
I find on propic to be and it's strategy to be so interesting. So if open AI's strategy was to spend a lot on its own infrastructure, to me, Anthropics seems to think, Okay, I need to do deals that get me capacity, but in a way that they don't need to spend that much money. Is that the right read on how they go about it.
I think that Anthropic has not been as flashy in the past, and some of its announcements. We saw Stargate and you know open Ai announce it in the Oval Office with President Trump. We've also seen you know, open Ai maybe talk about some of these projects a little earlier than Anthropic. That being said, Anthropics also its products have really fully taken off a little later than open AIQ, so they maybe at different moments and their kind of
curve of trying to get this compute. But as I've reported the past, open Ai has said that you know, they've been early to this and that they feel confident that they have secured this compute well in advance.
Of this current moment.
Okay, to recap, Google plans to invest up to forty billion dollars into Anthropic. It starts with ten billion dollars in cash now at a three hundred and fifty billion dollar valuation. Bloomberg Sherine Gafari with a big breaking story. Thank you. Let's look ahead to next week because there are a lot of big tech names reporting their earnings. Bloomberg's equity reporter Ryan Blastelica here to discuss from a market cap perspective. That is also a scary calendar, Ryan,
I mean where do you want to start? April twenty ninth. Wow?
Yeah, absolutely So on Wednesday, we are getting results from Microsoft, Alphabet, Amazon, and Meta that is basically the major four spenders on AI infrastructure. So that is going to be a critical day for US and the market overall, as we get new reads on how much these companies are expecting to spend on AI the coming year, as we get further insight into how much they're able to monetize their AI services, It's going to be a pretty pivotal day and week for the market.
Wait, I'm putting you on the spot a little bit here, But as anyone's done the math on the total market cap that's reporting on the twenty.
Ninth, I think it's on fifteen trillion.
Fifteen trillion of market cap in a single session. MG, let's get that as the big number on that day, Okay, because that is astonishing. What's this theme? Right? We've spent so many quarters Ryan talking about CAPEX. Is there any indication that will change that or are we just going to be zeroed in on that spending?
I think CAPEX is going to continue to be the main focus for investors. I think there's a little bit more optimism surrounding the ROI that we're seeing. We have seen big tech in general comeback in recent weeks. It seems like there is more optimism out there. But the spending question remains paramount because we've seen so much gains, in particular in semiconductor stocks over the past couple of weeks,
with the record setting a rally for the group. If where there is any indication that companies are going to slow or pause or otherwise you know, not keep boosting up their campbex, there could be some pretty broad ramifications.
Then April thirtieth, Apple, you know, I suppose the story is pretty simple. It's the first earnings report since the bombshell story that Tim Cook's stepping down as CEO in John Turnas is the air apparent effective September first. Is there any more to it than that?
No, I think it's going to be pretty interesting to see whether he indicates any kind of change in strategy. Obviously, Apple, compared to the other names in big tech, has not been nearly as aggressive with AI.
It's not doing the big spending.
But things have been going pretty smoothly there as far as getting pretty strong demand for the iPhone for high end phones in particular. So it does seem like steady as she goes. And if there's any change as far as the strategy goes, I think that's going to be something that people are going to be looking out for first and foremost the.
Most Ryan for Seeca with the earnings come and death and next week, thank you, let's get back to that breaking new Anthropic is going to receive an investment of up to forty billion dollars from Google. Initially, Google put ten billion dollars cash in. The stock rose to a session high. It's come off it as the news broke, but also hit a record at one point, will continue to track it as well as how the markets react generally to that this is a hot property, but there
are lots of players involved. What a show it's been. Recap on the podcast. You know exactly where to find it on the Bloomberg Terminal, online and Apple, Spotify and iHeart Happy Friday. Have a great weekend. This is Bloomberg Tech