Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive from coast to coast with Caroline Hide in New York and v Lovelow in Sent Francisco.
This is Bloomberg Tech coming up in video. Invests an additional two billion dollars in core. We've expanding their partnership to accelerate the buildout of AI factories.
Plus, ion Q continues its acquisition spree as the quantum company ad buys chip maker Skywater Technology in a casher stock deal worth one point eight billion dollars.
And gearing up for big tech earnings, Meta, Microsoft, Tesla, and Apple all set to report earnings throughout the week.
We have the preview and.
The markets are up ahead of those allportant earnings tests. We want to see whether there's vindication where the revenue and the profit lives up to some mighty valuations, particularly in the AI space. But we're up for a four straight day on the LASTAP one hundred longest winning streak. It says back in December when we had a five day run heading in to the Christmas period. So there is optimism, but not if you look at the US dollar. Not if you're seeing the search for safety in gold.
But we stick to our missing here in tech and what have you got ed?
We've got a deal and it's for in VideA to invest in an additional two billion dollars into core Weave. They're going to buy Corwave's common stock at eighty seven dollars and twenty cents a share. There is a technology sharing part of this, but the bigger picture is to accelerate the buildout of capacity. Bloomberg last night speaking on the phone with the CEOs of both companies. Bloomberg's Ian King, who conducted that conversation, joins us now on set. I'm
going to get to the circular financing bit. First, we asked him, is this circular financing? Him being gentsen One, the CEO of and Video. His answer was pretty simple that he's saying, this is a very small proportion of what core Weave's going to need to raise on an ongoing basis to bull out croacity, and it's in line with what they invest in lots of other companies take it from there.
Yeah, I mean, he said, look, whether it's core Weave, whether it's Xai, whether it's any of the others that he's open ay obviously that he's agreed to give a lot of money too. He's like, this is just a small portion. This is me just helping them out a little bit and showing faith in what they're trying to do. They're going to have to go and raise this money themselves. The market will basically sort this out. This isn't circular financing.
It's his argument, and it felt like the call we've seo. Michael and Trader came back and said, look, it's a drop in the ocean compared to the amount of infrastructure spend that we're having to do. But where do they strategically are like, why dig even deeper into their pockets to give money to call Weave at this time?
Yeah, I mean Jensen said that this is really a technology partnership that core Weave is a very early adopter of in Vidio systems. Tends to do them in the way that Invidia thinks they should be done, and this kind of serves as like a reference platform, so they like that. And also he just thinks a lot of demand out there, so the faster we can go, the better things get.
There's also CPU put the GPUs to one side. What Jensen one really wanted to emphasize, as far as I can tell from reading the transcript of your conversation, is that vera CPU is now going to be a standalone infrastructure product. Core weaves relevant here, just explain what he told you on the phone.
Yeah, I mean, as you know, Jensen never says anything without having carefully thought it through, so he really wanted to deliver a message that this is a standalone product as well as being part of the infrastructure. You remember, previous versions have been sort of integrated into and videos.
One of six chips.
Right now, Hey, you can use it on your own if you want. And that makes it a direct rival to some big real.
Quick carrot a m D under pressure, Intel also under pressure.
Is that a surprise?
It shouldn't be, no, right thinking.
We thank you so much for breaking down a really important story for us. And look there's another one in the world of AI semic conductors. Microsoft is rolling out the second generation of its own AI chip. So see shares up about a percentage point, not moving much on the news that is just dropping and Rooomberg's Matt Day is a person who covers Microsoft for US breaks that news. How important is it that yet another company is building their own AI chips.
Well, for Microsoft, it's it's really important.
They've got a bit later jump than their biggest rival of Amazon and Google and building their own. So can they see this as an important way to reduce costs to find another source of availability. So it's going to be a really really big test for their chips unit and for the cloud business.
We write in our in our Bloomberg story that it could eventually provide an alternative right to Nvidia's hardware. But the reality is, like all the other hyperscalers, Microsoft still depends on Nvidia. Just explain its scale of its compute and what it does rely on Nvidia four.
So in Vidia is the workhorse that powers, you know, the vast, vast majority of the AI workloads in Microsoft's data centers. You know, if you're using open AIS as a ch GPT consumer, chances are you're pinging and in video chip running in some Microsoft data center somewhere.
You know.
Now, like everybody in the industry, Microsoft would love to have some other options. Hence this effort with Maya to try to build a better mouse trap, one more suited for their data centers and one that ideally could could reduce some of their costs in the long term.
Tell us how it's rolling out, where it's rolling out first, and ultimately when customers going to be using it.
So it's not clear when customers are going to get their hands on this.
The first units are live today, Microsoft tells us in data centers near Des Moines, Iowa. More coming to the Phoenix area, but we don't have a date yet for what a wider rollout looks like, or you know, sort of crucially, what availability looks like. Because it's going to be a global rollout. Is this more of a kind of R and D step and future chips are going to are going to sort of carry the mail for them, So kind of yet to be seen how how broad they take this one.
Lumbo's Matt Day out of Seattle with the latest on Microsoft's latest day I chip efforts. Let's talk through the market reactions all of this with Kim Forrest, cio and founder of Bouquet Capital Partners, and go back to the Nvidia Core Weave deal. You know it's a driver in markets this morning. The explanation from Nvidia CEO Jensenong is that it is not circular financing because it is a small portion of core Weave's overall capital requirements. Are you
concerned about that? And what do you make of his response?
Sure, well, of course it's circular financing. You know core Weave as well as everybody else. Even Microsoft is a big customer of NVIDIAs. So if Nvidia is investing in its customers, by definition, it's circular financing. It is a good point that, you know, two billion is probably a rounding error for Nvidia at this point. But it's also true that core weave has to prove itself to the market and raise its own money.
Kim, We're saying circular financing the term as a bad word, bad phrase, is it right?
Yeah? Kind of?
You know, Jensen points out that core Weave is going to be one of their references accounts. What you ideally want is in a reference account is somebody that has worked with you is kind of pure and it has no inside kind of relationship with what they're recommending other than they use the product, they love the product, and you know, this kind of sullies the relationship the core We've had so much investment from the company that they're giving a reference.
For Meanwhile, many would say it's just because we cannot build compute fast enough. And in many ways, Nvidia more than anyone, sees the opportunity, and it's just piling money behind this to be able to get the end demand that it needs for the products that's currently building. Can are we likely to see through these sorts of technological partnerships as well as financial partnerships actually us get the compute out of the cype of speed that we need.
Sure well, you know we're going to see them until we don't. I'm not trying to rain on anybody's parade, but at this point it's all kind of you know, up in the air. Right now. There is a huge demand for compute, but like everything else in the world, somebody's going to overbuild and it's gonna, you know, be jarring and disappointing. I'm not saying that that's any time
in the future. I'm just pointing out the obvious that you know, Yes, this is a very symbiotic world with customers and providers and competitors all kind of working in the same pool. It's messy and it's like real life because it is. But you know, just be warned that this is not trees don't grow, you know, well, trees grow into the sky, but not forever.
Put it that way, Well, they're not going into the sky today for Intel and AMD because both of them under pressure that maybe his Jensen coming for their piece of the pie, the CPU part of the pie that everyone was very excited for them. Indeed, intell of late and they run up in their stock. Does ver brand the CPU on its own prove that it's a key competitive to them too?
Well, I think at first it's going to work in its own environment, and it may become a competitor, sure. I mean, I think the takeaway from all these announcements over the last I don't know, forty eight hours is that everybody's innovating, and that is excellent. I love competition. I'm a capitalist, innovate, try to outcompete, do it live
that way. But the fact of the matter is the CPUs that are the workhorses and just plain old cloud computing aren't necessarily going to be interesting or aren't necessarily going to look to Nvidia. And Vidia loves the highest priced product. That's what it does. And I'm sorry. The workhorse people need reliability, they need it to look the same across their platform. They need a lot of stuff that a new CPU chip isn't necessarily going to be
interesting to them. Now in the world of AI data centers, sure, but in the old fashioned ones that are going to have to persevere for decades, I don't know that that's really a competitor in video.
That's an interesting observation because the GPUs and the AI context are on base, and so if you're running those GPUs of x eighty six, you're gonna have to do some special software work to make the match. Let's put us one side. It is a massive week in the world of technology from earnings alone, we also have a FED meeting on Wednesday. Of those names that are reporting this week, what are you most concerned about and what do we need to be looking for in the earnings context?
Well, you know, what, how are things looking in the future. I don't really even care about how things looked for last quarter. I have to tell you I'm looking for the next six months, and I think especially on more consumer leaning things like Apple, that might be you know, the focal point for all investors is what new products are driving consumers to the company and are they meeting demand. That whole thing about how in demand are consumer items.
Microsoft has a little special issue. I think there's a lot of concern that AI maybe Claude is going to replace a lot of software packages that make businesses run. I don't know how true that is, but I think we're going to get a glimpse into how popular or you know, whether or not businesses are paying up for enterprise licenses, and that's always a concern.
Kim forest Cio, founder of Boka Capital Partnius, thanks for joining us across the spectrum of earning xance semis today. Coming up, going to the world of quantum I on TUCU. Niclode Massi is going to be joining us. How his company has just bought yet another quite the acquisitions free we talk about why once they get into semi conductors dis agree bay Tech iron Q Well, it's agreed to buy US based chip foundry Skywater Technology for around one
point eight billion dollars. Shares on the downside for r Q now they have been up earlier, we're seeing Skywater up more than five point eight percent. It's cash and stock deal and it's the largest in quite the string of recent acquisitions by the quantum computing firm. I and Q. Let's talk to its CEO now, Niccolo de Massi. What does having a US based chip foundry add to the speed of your own technology.
It actually does three exciting things for ian Q. The first is that it accelerates.
Our entire roadmap.
So we talked this morning on a public webinar sort of earnings call style about the fact that it's going to bring in the cycles of R and D design and packaging iteration we do to build our quantum computing chips and hence our full fault tolerant machines quite considerably. We're moving things in by about a year on our two million cubic chip, and we're moving full fault tolerant chips forward into twenty twenty eight, where we'll have them ready for scale up by the end of the year.
What's exciting also is this is a big bet for us on what's called the merchant.
Supplier play in the quantum industry.
So IMQ already sells our atomic clocks to a number of quantum computing companies in the US. This is going to expand our ability to supply the quantum industry. Our photonic interconnect quantum networking business is also built to cater
for multiple quantum computing paths and modalities. And last, but not least, of course, it's a big spread bet on the US semi country manufacturing tailwind that I think is already being experienced for critical industries as we rethink through supply chains, security and the important of keeping everything domestic insured security.
Does that help build and leverage the relationships you already have with the US government, for example, is that an area that you think is going to drive growth?
Oh? For sure.
The US Government's a very important partner in the Department of War, of course, is very important.
Skywater obviously does a lot.
Of work not only for the quantum industry as a whole, where I would argue they are far and away the leading, if not only quantum foundry, but Scott Ward also does work more broadly in classified programs, as does I INQ and so there's plenty of synergies on that vector alone. We look forward to doing more for our nation's government classified and not We look forward to doing more for
our nation's fortune five hundred companies. And this is a relationship really excited about because it increases the velocity and the frequency with which we can spin across all of our product generations, which means the further out we're talking, the more room there is to move things forward. And you're seeing us continue to spend money to move things to the left on our roadmap and win this geopolitical space race of our era.
Nicola continuing to spend money.
There's a lot of emphasis that this is Skywater with US only operations. Do you look at Europe and other jurisdictions and give yourself backing to go out and do another deal if you need to have a similar footprint and presence in a different market or geography.
Well, Skywater has a tremendous amount of upside capacity that we can tap into here, not just on the design engineering side, but on actual manufacturing. So we did this deal because we believe that manufacturability is paramount. Our ambition, as I think you both know, is to be both the Nvidia and the Cisco if you will, of the quantum computing and quantum networking in security space, and so our full quantum platform networking, sensing, security and computing all
has foundry requirements, all has sem country manufacturing requirements. What this deal does is it improves certainty, brings forward the roadmap, and of course make sure that we have industry leading costs. So I think this is going to be enough capacity for global production. Skywater focuses on high security, classified program work and US government work, and that's usually a standard that's accepted very internationally for the Five Eyes, NATO and our allies.
Nikolo.
In the global quantum race, how do you stack the US as a leader in field against the prospects of Europe and what you see being worked on in Asia.
Well, I fancy I Inq's chances, you know most, And first of all, I think that beyond I INQ, there's a very vibrant ecosystem in the US, and of course there is in Europe. The geopolitical race is I think very much between the US and our allies and what's going on in China, to be honest, and this is of course of paramount strategic importance, not just on the computing side, but also on the quantum security side.
These are all solutions that I INQ provides.
We're the only quantum platform company in history, and as you both know, we already have a strong foothold in Oxford, England, Geneva, Switzerland and Soul Korea with our offices that continue to expand to ensure that we're able to not just deliver those solutions, but deliver them in the right global and local way across government and commercial needs in every one of our allies.
Well, that was the other big deal that you did, Oxford Ionics, quantum chip technology that you're purchased, and I'm interested in how the relationships though, going back to Skywater are going to continue because they also serve other quantum competitors of yours. Will they continue to do so?
Absolutely, We are steadfastly dedicated to ensure that the quantum industry prevails. We respect everyone's pathways to market. At the same time, as I mentioned a couple of minutes ago, I Inq already is a merchant supplier on our own. We supply atomic clocks and photonic interconnects to the industry and networkain equipment, and so Skywater will be taking our existing merchant supplying business and accentuating, deepening and broadening that
with of course their chip's business. So rest assured, we see this very much as a bet on us quantum, our allies quantum. The quantum industry's supply chain needs doing. Those fulfilling those securely and a scale, and at the same time in a walled off manner.
I Inq's own roadmap, of course, will.
Also be accelerated and if supply chain domestically assured.
Nicolo very quickly, you said that this brings things forward by a year. There are people that just aren't familiar with quantum computing. How real is this going to be in the real world.
And well, we've been saying since we completed the acquisition of Oxford Ionics that full tolerant gate model quantum computing is going to happen by the end of this administration. This transaction obviously accentuates that, underwrites that, and assures that.
And so I think you're going to see in the next three years everything that we have promised on our roadmap come good and hopefully then some The reason why this is so exciting for us is that with Skywater, we can make quantum computing a mass market reality, and we can do that at a price point that's accessible not just for governments but also Fortune five hundred companies. And that's very much our goal to build the winning
quantum ecosystem across all solutions and product family offerings. That I INQ have security, sensing, networking and computing.
I on Qceo, Niccolo Demasi, is great to have you back on the show.
Thank you very much. The precious.
Building on crop AI and Elon Musk's AI chatbot, the European Union says it's probing X over concerns that it didn't prevent its chatbot from generating deep fake images that quote may amount to child sexual or boost material. Bloomberg's London based tech editor Olivia Solan joins us, Olivia, what's they need to know here from the EU probe kind side of this?
Well, it's another day another investigation into X from the EU. This time, yeah, it was about whether or not they did ex died a sufficient risk assessment to prevent harmful outputs from GROC before deploying it across the EU. This is a legal requirement under the Digital Services Act, which is a kind of set of rules around illegal and harmful content. And so yeah, there's quite a long list of investigations of X at the moment within the EU, but this certainly adds to it.
I mean you mentioned France has also been looking into it, ofcom in a UK way you sit India but Olivia X's responses, they've taken the necessary steps in some way. Of course, it's a unit of XAI. And this again builds tensions between the US and the EU in some government manner, right.
I mean, this has been a bit of a flash point in a sort of debate over free speech and control over big tech between DC and Europe. Clearly, I've been kind of checking to see if there's been a response so far from either Elon Musk or jd Vance or Trump on this particular announcement. So far, I haven't seen anything, but I'm sure it'll be something that will
come up in the coming days. Yeah, the Trump administer Dictoration has been very critical of this, of the EU in police trying to police content on these platforms.
Speech violation.
We just showed xce's statement, but it was a previous statement on how they go about removing illegal content, including.
Child sexual abuse material.
Very quick fifteen second, as does the EU probe have teeth?
It does.
I mean, they can find as much as six percent of global and your revenue if it's found to be in violation of the DSA.
And already they are hot on the heels of a separate one hundred and twenty million euro EU penalty coming access way. Previously bloom Beg's Olivia So long, breaking all down, We thank you so much. Look coming up defense docks. They're on the higher side of fact. They soared as governments ramp up spending on heightened geopolitical tensions. Were on that. Next this is Bloomberg Tech.
Welcome back to Bloomberg Tech.
We're halfway through the show, and it's a big week in the world of technology.
When it comes to earnings.
Tesla, which reports on Wednesdays, currently the lag it down two percent, but it's a bit of a calendar to track.
Now.
Apple's the most interesting, up almost three percent. Actually, it's on track for its biggest jump since October. People have been passing the third party data. There are lots of analysts out there that have said, by the recent dip because it might be better in China than we first thought.
When it comes to Apple, of course, you move past that moment in time carry that is earnings, particularly the court of gone and people want to know what's happening with Siri, what's happening with the AI version of Siri. Mark Gumman has done a lot of reporting on that, of course, but until the company says something material, that's still what the hopes and expectations of the street resting.
What are you looking at it?
That's an alphabet story too, isn't it. But I'm going to pivot away from the earning story just for a moment, ed, because we've got to talk about gibilitical tensions. We have seen the effect it's had on defense docks. They saw is you see in fact, the sector gained nearly we'll see forty four percent you've seen in the last one year. Basis, military contractors are cashing in as governments a wrap up the spending on fighter jets, Yes, on missiles, but also
so tech areas drones. And some investors really say that the rally is just getting started here with more as Bluemberg Equities Reporter, a Venice, Vanilla, Ramos and Avelie. Is it sustainable? What are we expecting in terms of revenue growth, profitable growth, fundamental growth on these earnings?
Sure, Caroline, thanks so much for having me. And yes, political developments are definitely a mayor driver of this sentiment. You know, the rally is driven by expectations that the sustain increases and.
Global defense spending.
Uh, this geopolitical instability, shifting alliances, ongoing conflicts are going to sort of like, you know, boost more this rally and continue this rally, and then these earnings this week are going to be really a test to what can actually happen. And you know, the Aerospace and Defense sex index is rising or rose about forty two percent last year, you know, pacing a little bit of the broader market.
Analysts are concern about certain things. You know, these stocks are in the political cross heres, just to get it that way, definitely, the well, the other concern.
Is, yeah, sir, let's do a bit more on the political process. When Caroline and I were in Las Vegas for CEES, the President on true social was very clear ahead of an executive order that he wasn't happy about defense company compensation, the compensation the CEOs at the head of these primes because they weren't delivering. That seems in Congress. With the massive run up in those stocks.
Sure, I mean, the the investor confidence right now, and that's very interesting. But the investor confidence right now when momentum is sort of like these companies are growing a little bit faster than what they the sort of like classic thought about or behind the defense stocks usually is or was, because a lot of these companies are moving into the technology play. There's a lot you know, modern warfare is increasing, there's relying on more reliance on drones,
on AI, on events, sensors, software, missile defense system. So once all these companies are sort of like tapping into that, investors continue to be a little bit more positive on this side.
And that is exactly why we have you on. Because of the tech focus that these businesses are having. We'll watch out for their earnings. Bloomberg's earlies, Vanilla Ramas, thank you so much for joining us. Meanwhile, US turn to wintry weather. It is blanketed most of the United States. It's leaving lingering effects too. Power grids, they're expected to endure increased stress from really brutal cold in the wake
of the damaging winter storms. Get this, more than eight hundred thousand homes and businesses nationwide are currently without power, and this is Concerns already have been growing around the US's power grids resilience in the face of rising AI power demands. No Ma's power Natural Gas reporter Laurine Malik has been very busy this weekend reporting all of this out. What's the effect on prices.
Yeah, prices got really high yesterday. Weekend is usually a lull for prices, and we saw prices around like one thousand dollars this morning. The Texas grid in like West Texas, where they're usually lower, was like two thousand dollars right And in Dominion in northern Virginia where there is that concentration of data centers, we got to like one thousand dollars as well. Spot prices are a little lower because real time demand seems to be affected by school closures
and businesses just everyone working from home. But it's going to be an extended cold and that's what's most concerning right now.
Gnorin out here on the West coast, we're used to a very similar story, but the opposite right in the summertime, extreme heat, the grid being under pressure and either the utility can or count cope. What is it like from a technology perspective or just operations perspective, that the grid can actually do to managing cope in scenarios like the extreme coal we've seen and weather on the East coast.
Yeah, I think what's interesting about the East coast and even down to Texas is they've also become winter peaking grids, not just summer like California, and so they're basically trying to take out all stops. You've had the Energy Department grant authority to Texas, New England and PJM, which is the largest grid that stretches from the mid Atlantic to the Midwest. They've granted them authority to run power plants
basically all out, irrespective of like emissions limits. The DOE also told erkat the Texa Grid Operator that they can use backup generators at data centers and factories to supply the grid, and last night PGM had a call with members to tell them that hey, we're going to We're putting in place measures to also do the same to use data centers in lieu of blackouts if things got that bad right now, they're expecting to have enough power.
Who bears the price? Who bears the cost right now?
Ultimately the consumers. Everything is passed on to consumers. How quickly will depend on your utility rate, but wholesale prices are often a pass through.
Cost alec Bloomberg busy weekend for you across what is an astonishing visual story as well.
Thank you very much.
Coming up.
Base ten CEO two he in Srivastava, and one of its back is Convictions Sarah Guard.
They join us.
As the startup more than doubles its valuation. We had the details next confirmation of that round. This is Bloomberg Tech AI inferant startup Base ten Labs has raised three hundred million dollars. The funding round lifts base tense valuation to five billion dollars, more than doubling what it was just six months ago. Based ten, CEO two in Shriver Starva and Conviction founder and partner Saraguar, who participated in
that round, join us here in San Francisco. I've been using a number of generative AI tools this morning to try and distill down what it is that Base ten does. I'm going to read you one and you can tell me and I won't say what engine was. Base ten provides the software and infrastructure that lets companies run AI models reliably at massive scale only once they're built. It's about being fast, stable, and cost efficient. Is that what
you do? And why did you need to raise three hundred million dollars to do it?
Yeah?
Well, the way we think about it is that inference is probably the largest market that will ever exist. Yeah, I think you see this like amazing set of companies like Cursor, a Bridge, Open Evidence, Notion kind of growing with the their infront workloads and you know to support the scale of these massive companies and you know, we're just arming ourselves there. More importantly, the amount of compute that we're going to need to support this is going
to be very large. And again computer is a capital intensive business and that's the business we're going after.
Lots of very interesting participants in the round. And Sarah, it's great to have you back on flimbog Tech. I was really interest to see Conviction in there, right, you know, the size of the round, the valuation is interesting, but you're all about helping founders build.
Up you know at Conviction. Why did you you want to do this?
Well, I'd say this is a very secular bet for us. First, we have invested in every round of Base ten since inception from my prior firm and then through Conviction, and so I think five million actually is a very small number.
Graylock was your prior firm at Graylock.
And then at Conviction, my current firm, five million dollars is a very small number compared to the opportunity ahead. I genuinely believe that, and so you know, we're we're looking at the difference when we make that investment. But I think from a broader perspective, in Nvidia and Base ten and Conviction, we have the same vision for what needs to happen to enable all of these AI native startups.
Inference engineering URL.
As a service, the optimization of models to make them cheap and efficient to run. These are like the three hottest jobs in AI right now. And one one thing Based ten does is take these capabilities and use in video capacity and make them available to everyone rather than just the labs.
Let's talk there for a little bit to him about you said, you're arming yourself for this opportunity, and inference in video is interested in investing. But how much do you end up using technology competing against Where do you see the future of what it is that you're solving for.
Yeah, Look, we've been partnered with in video for you know, almost five years now. They're you know, they're a big part of the future. We you know, we work really really closely with the chips. They provide. We don't see them as a competition. Honestly, we think everything's cab of a writing diet, and we want to we want to work with the you know, the biggest and best players and customers and suppliers and vendors and technologies, and in video is a big part of that.
Sarah to that point. It's an interesting amount of news we've had around in video today, whether or not it's another what people call circular financing, deal backing call weave, buying stock, indeed talking about a CPU, and indeed we've seen Microsoft announcing yet another CHIPAI version for themselves too. How does this bear out? Does everyone win? Are they going to be select winners? Well?
I think so far it looks like in Video is a pretty strong winner at the chip level. I do think that there are enormous investments in accelerators, particularly at deep Mind, but there are other legitimate efforts as well, and I think it all speaks to the overall demand
in this market. The reason people are making these really strong investments in other chips is because they're going to go spend billions and tens of billions and hundreds of billions of dollars trillions if you listen to Sam against this compute over the next decade, right and so I think the question of winners is the problem today is just meeting the demand, and all of these players are trying to come up with alternatives less about cost and more about creating more supply.
I enjoy reading about and learning about Base ten. There's a section on your website where you break down pricing and I don't know that might seem really mundane to both of you, but you basically have payers, you go at the low end right through to enterprise level deals.
Explain that kind of strategy.
You know, we've discussed with Cursor, the idea of per desk versus payers you go. It's actually a very interesting model.
Well, I think pay as you go pricing is fully align to ourselves with our customers. So we are only getting.
Made who are they are? Who are our customers?
So I think about the fastest growing AI companies in the world, so anywhere from a Bridge, Open Evidence, Cursor, no Sha, Gamma, Clay, all these companies that you've covered. I'm sure over the last year these companies are going incredibly fast, and you know they are using a lot of inference and by aligning ourselves on a pay as you go model. We only make money, you know, when they are getting value out of the models that they are training for their customers. And so that's actually a
very important part of our business. We think it's a very important part of the ecosystem. And it's all about being a long term partner to the best companies in the world.
And Sarah, what gives you the confidence this doesn't get commultitized or at least how sticky all customers When it comes to inference.
I think training is a job by job sort of buy right. Inference has the stickiest characteristics of any business I've ever seen. Right and so, you know, without giving specifics, the NDR on base ten is through the roof and we see customers. They come with us, they scale with us. They don't want to take on this enormous engineering burden of you know, these different specializations I described like the labs want the kernel engineers too.
They're very expensive.
Managing across ten different clouds is very expensive owning your own capacity. You know, Ed was just talking with two about the pay as you go versus the CAPEX upfront model. The application winners, they don't want that they want to go after new business and creating value for users.
There's a lot of energy in your industry. Still really cool to have you both both here in person. Deal flow hasn't slowed down at all. I wondered what the talent story is right now. Sarah's talking about the three kind of core roles hottest jobs. I'm assuming that a chunk of that three hundred million reflects the capital intensity of talent right now as well.
Yeah, we look, we've been very lucky to be able to attract really great.
Talent up until now.
That being said, as Sarah said earlier, like the folks that we are going after are very very in demand. There is you know, if you think about influence being this massive market, and there's big systems engineering and kernel engineering problem that needs to be solved, and probably there's you know, sub on thousand people in the world have solved this
at scale. Yes, they're just going to be very aggressive and you know, to win the ultimate prize for us, which is you know, being the inference cloud, the aws for inference, that target, it's a big target to have, and yeah, we need to be able to get that talent.
Sarah, I also know you as kind of Sarah the operator not necessarily just right writing check. Yes, we've been talking about is circular financing a bad word, for example with in Video and core Weave, But like, is there an opportunity here for you to look at the rest of your portfolio and your historic investments and say to some of these companies like you guys should work together.
What's the reality of that.
Well, I'd say base ten does have a lot of customers they've won within the portfolio, and one of the things that we do at small scale that's very related to this in Nvidia move of enabling its ecosystem and its customers is have an incubator. Base ten is a contributor to that. They give credits to startups. They're offering their expertise to these companies. We give people compute upfront as well, and it's to reduce the barrier to entry
for the next generation of application companies. This program is called embed and I think our entire investment is we want to see more of these AI native application companies win, which base ten does and in Video does too.
Two instru Vistava based ten CEO Conviction founder Sarahua, It's great to have you both here in San Francisco.
Thank you very much.
Carry There are so many more tech headlines out there today.
Boy, are there and around compute and such. We're talking SoftBank. First, it stopped talks to buy data center operator Switch.
Now.
That's according to sources. The company has been pursuing Switch for months, offering as much as fifty billion dollars, but the deal would have helped build out soft Bank Stargate AI infrastructure. Discussions continue, though, for a partial investment or a partnership.
Plus.
Samsung is getting close to securing a certification from Nvidia for its latest AI memory chip, the HBM four. Sources say the South Korean company has entered the final qualification phase after supplying samples to the US chip maker in September. Samsung is said to be preparing mass production for the HBM four in February, and shares of USA rare earth
there surgeon. The company entered a non binding letter of intent with the United States Commerce Department form boy six billion dollars in funding in exchange for sixteen point one million shares and warrants. Now. The company also raised one and a half billion dollars in private investment to accelerate domestic, heavy rare earth production.
From Wall Street to rural America. Today's AI is the economy, and markets have priced it like a miracle that can't fail.
Barth.
Investors are really banking on incredible growth Microsoft Meta Alphabet. They are just committing billions and billions of dollars to capital expenditures.
But in this burgeoning industry, what goes around doesn't necessarily come around. A precarious investment strategy is emerging.
Multi billion dollars circular deals.
Huge, huge sums of money are just being passed between these enormous companies, appouring hundreds of billions of dollars into the promise of II.
And the promise is huge.
So this is a structural shift, like electricity or the internet.
But AI, with all its potential, remains largely unproven for profitability.
Probably the biggest question in Cisco right now is are we in an AI bubble? And if we are, then well how big is this bubble and how bad would it be if and when it does burst?
So is this the dawn of a new age of AI powered growth or the biggest bubble ever?
You can watch the full episode of that Bloomberg originals place on YouTube and Bloomberg dot Com. We have another alleged example of circular financing just today in Video and investing another additional two billion into core Weave in Video co Jensen onong saying that it is ridiculous to call it circular financing because it is just a tiny portion of what Core Weave's going to have to raise overall, and it's in line with in Video's other investments. Make
your own mind up on that. There's also a piece on the Bloomberg about how in Video's rally of late shows that a year ago Deep Seek fears might be a little unfounded, and that is written by Bloomberg's Carmen Rhinicky Carmen, great piece, as always data focused.
What do we need to know here? What are you in writing about? Yeah?
I think the thing that's most important or interesting to watch here is how you know a year ago this Deepseek news came out and Navidia sold off. You know, almost six hundred billion dollars in market value was erased in one day, and it looked like maybe the startup or maybe a practice run for the AI bubble popping. But if you look a year on now, a lot of those fears are really unfounded. You know, the stock is
up nearly sixty percent since then. We've seen it just continue to grow revenue, and overall the AI ecosystem has also continued to develop. You know, a year ago in video was still by and far the kingmaker. It was seen as sort of the only show in town when it came to chips, and now we're just seeing so many more businesses sort of step up, come to the plate with their own chips, trying to not be so reliant.
And then you know, we're also seeing you know, more energy and construction and infrastructure stocks kind of come online. So while there still are concerns about some of the circularity here for sure, and even you know, the deal with Corey van Navidia goes deeper than just the most recent news, the overall sort of expansion of the AI trade is giving bulls sort of more room to run.
What do we need to see this week? Common For example, Microsoft today unveils that it's got yet its second round of its own AI accelerator. Pointed maybe it's trying to reduce its dependence on an Nvidia, but we're also going to see what is capital expenditure looks like how much is continuing to invest. That's going to be important for Nvidia's numbers that don't come until the end of February exactly.
Really, the biggest thing I think that investors are watching in these big tech earnings that we're seeing over the next few weeks is that capax line item. Are these companies continuing to grow or say that they're going to spend even more. That's really sort of paramount to the rest of the AI trade or how it continues to develop. And then on the flip side, I think investors will
also be looking for signs of ROI. Right, we want to know that all of this money is going to something that it's going to help the bottom line, that it's helping efficiency and to drive business forwards. So really two big things that we're going to be watching.
Bloomberg's Common Ryanikee, it's great to have you on. It's a great piece that you also are in on Bloomberg Originals. Meanwhile, that does it for this edition of Bloomberg Tech Ed.
Yeah, strong starts of the week. Hero has made it through the storm to the studio and there's a lot more to come. Recap on the podcast. You know where to find it on the Bloomberg platforms, Apple, Spotify, and iHeart Online.
Stick with us this week This Is Bloomberg