Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive from coast to coast with Caroline Hide in New York and v Lovelow in San Francisco.
This is Bloomberg Tech. Coming up. Tech helps stocks close in on record highs with Mag seven earnings.
Plus Bridget Mendland Northwood and raises one hundred million dollars to modernize space infrastructure on Earth.
And Amazon shuddering its physical stores but doubling down on deliveries Walmart, Uber and door Dash all drop.
Let's check out more broad moves on the market right now.
And because we have a wall of call it worry.
Whether you're thinking about what the mag seven is going to report, whether you're thinking about the federal rate decision on Wednesday, a lot for the market time digest, but still were pushed to record highs the S and P five hundred. We have up nine ten percent on the Nasdaq one hundred, and I know you're checking on individual movers. They've been helping some moves in the benchmark.
Yeah, an interesting deal up to six billion dollar partnership between Meta and Corning for fiber optic cabling to support Meada's data center efforts over a number of years. You know Corning, right, it's a key optics supplier to Apple, for example, But look at that stock absolutely flying up more than seventeen percent. There's a lot going on as
well in the semiconductor space. Micron is long term trying to triage the shortage of supply, investing a lot of money up to twenty four billion dollars over years in Singapore that's focused on land and then overnight and career sk Heinex the biggest move of the upside. Basically, there's dip buying, there's retail investors coming in, and there's a lot of focus. What's happening in the context of a US career trade agreement agreement where there might be exemptions.
Let's get to all of that. Bloomberg Senior Tech editor Mike Shephard joins us. Now, let's start with the Micron piece. Right, Like the story is well told if I say to myself on this program about the memory shortage and memory pricing situation. But Micron here is looking at where it can expand supply. It's looking at Singapore.
What do we need to know, Well, it's looking at Singapore ed and this is over a ten year period and twenty four billion dollar investment there. And what they're looking at a specifically is so called nand memory, and this is something that is in demand to meet the needs of artificial intelligence chips and processors more broadly, and it's an area of focus because for AI, the memory needs are enormous and they are not fully being met.
Of course, Micron competes with Samsung and s k Heinex in this memory market, and all three companies have warned of increasingly tight supplies. And this supply issue also has spillover effects. It It actually touches on smartphonemakers and PC makers too, because as those companies that we just mentioned shift their efforts to meet the needs of the AI data centers, the areas for PCs and smartphones risk going wanting in the SSD type memory and flash memory that
is needed for those kinds of devices. So we're seeing that expansion by Micron. This just comes at less than two weeks after Micron cut the ribbon on a one hundred billion dollar plant in upstate New York one that's been a couple of years in coming. So we are watching to see how much more these companies are going to be investing not only in Asia but also in the US.
As well, and how much more of our shares can fly. Just think sk Heinis at a new record high, even as we see the threat of well broader tariffs in South Korea. We know the chip makers are excluded, but sk Heinis in a record because it's going to be benefiting from Microsoft's push into AI chips as well.
Mike, Well, that's right.
And I'm glad you brought that up, Carol, because we saw the news yesterday. We all followed it so closely on this plan by Microsoft to introduce a new generation of its Maya AI chip. The Maya two hundred and local business paper in South Korea, the mainly business newspaper, is reporting that as many as six Skhinex HBM three
E units will go into each Maya processor. We don't know how many of these Maya two hundred processors Microsoft will ultimately have produced for its needs for its data centers and for other customers as well, but the promise is big, and it signals that there could be a lot of demand for this HBM THREEE processor that sk Heinex has developed to meet those AI memory needs, and it could be something else. Now you mentioned the threat
of additional tariffs. The President yesterday warned that the South Korea trade deal could be reworked to jack up the teriff freight on South Korean imports to twenty five percent. For now, we're not seeing anything effect memory, but we'll be watching that closely because there is a lot of pressure from the administration for more investment by South Korean companies here in the US.
Mike Shepherd breaking it down so well as always, we thank you AT's return to us stox right now because if you said, the near record highs tech shares have been leading the way again as we brace for earning season, it comes thick and fast. At Weekles's discussed it all with Christina who for Chief Market Strategists and Man Group, and we still have tariff anxiety. You still have the warriors of what the Friend's going to do tomorrow, and
yet we push higher. Is that the fundamental analysis we should have that their numbers are going to be good.
I do think the numbers will be good, but I think there could be obstacles as we move through the year. And first off, I would anticipate that if we do see a big increase or at least a substantial increase in yields on the long end that could very easily exert downward pressure on tech stock prices. So I think that could be the first problem. But as we move through the year, we could see problems with financing, some issues with Nimby.
Okay, so go there the financing you mean around AI data centers. You think about the anxiety building up around Oracle and the debt that it has to take on.
Absolutely, I think that that could very well slow down the AI data center build out. So there are a number of different things that could slow progress over the course of the year and really tamp down stock prices.
Christina, so stock's in near record highs and tech is pushing the way and the Nasdaq one hundreds up for a fifth consecutive session right ahead of earnings. Explain that that psychology of the market, why they would push the market higher ahead of what is a critical week for some of the biggest technology names in the world.
Well, there is an old adage buy on the rumor sell on the news, and I do think there is a lot of positive sentiment right now around these companies being able to meet and potentially exceed earning ze expectations. So I think that's what's happening right now. I also believe something else is occurring, and we have to recognize that the backdrop is an economy that is sputtering. I am in the minority in this view, but I do think the economy is facing some very significant headwinds right now.
We just saw consumer confidence reading that was the lowest since twenty fourteen, and I think what happens typically is in an environment like that, investors move to technology. They move to areas that are more defensive, that can perform well in a variety of different environments, the secular place. And again tech has been the poster child for secular place for some time now.
So in that sense, though like nothing changes, we write in our markets wrap on the terminal, which is like it's the first thing you read every morning, right, but it says, in spite or not, even a slide in
consumer confidence could stop the market rally. At the end of the day, we'll go into this earnings period at the same things capital expenditures and top line growth of the biggest companies, and then you'll come back or your peers will say well, these companies have really strong balance sheets and they're quite well diversified to weather an economic slow down. Nothing's really new.
Well, I think what is becoming increasingly true is that there is a divorcing, a decoupling between Wall Street and Main Street, and that is most obvious in the tech sector. So we can see strong balance sheets, we can see companies that are performing well. But and this is a big butt, we could see external forces like yields on the long end, the ten year treasure yield, if it were to get to five percent or higher, I think that would exert downward pressure, especially on tech stock prices.
So Christina, do you sell into that or do you just load up when the prices get lower?
And longer term? Still they committed to tech briefly, please, So.
I would say staying committed longer term to tech, but ensuring you're well diversified. You are taking some profit and moving your exposure because tech is not just in the United States, it's also in China, where valuations are significantly lower. So this is an opportunity I think to diversify portfolios.
Christina Hooper, chief market strategist in the Man Group. Thank you very much, Amazon is closing its Amazon branded grocery stores and automated grab and go markets, eliminating two centerpieces of its push into physical retail and caro. Very interesting here because actually Amazon's continue to push higher since the news. The main takeaway is not that they're closing fourteen ghost stores and fifty eight fresh stores. That's small footprint, but
actually even more committed to delivery. You tell me about the names that dropped in reaction, I.
Mean, isn't it interesting?
Well, exactly to your point, the fact that we see door Dash, we'll see other of those delivery companies maybe see it feeling the effects from all of this. But what's really interesting as well to sort of take on board is they're also deploying massive scale in terms of bricks and water in Chicago.
But it's alongside the.
Element that's also going to be helping delivery.
It's also going to be about warehouse space.
So they're just rethinking the way in which they put bricks and water on the ground.
Right.
Well, we're looking Walmarts, off, Ubers, off, door Dashes off. It really speaks to maybe Amazon investors thinking this is a sign of strength, a good pivot.
Yeah, And lastly, grocery commitment, right, Like, they're not saying we're done with grocery, they're just saying we're moving it online. And that's reflected in that market reaction.
Though it's quite like those Paler stores though, got to say rest in peace. Coming up, autonomous trucking startup Gatick.
Into a new deal. We'll discuss the self.
Driving companies growth with its CEO. That's next list blue bag Tech.
Autonomous trucking company Gatick has landed a deal with a major consumer goods company. Gatic's not named the customer yet, but says the deal will double its contracted revenue to six hundred million dollars over the next five years, joining us as Gatti CEO and co founder Galton Nrang. Look, yeah, I'm going to few the opportunity to day in the customer. I know that you're not going to. I've pushed you over a number of days. But I think the main thing our audience wants to get a sense of is
this is real. You have trucks on roads with major customers that are paying you, and therefore you're booking revenues on it. Take it from there and explain the reality for sure.
So as you know, God Think is in the business of autonomous route and today we're announcing that we're operating fully driver lists, faith only drugs with no safety driver, no safety observer across real faith operations, multiple markets.
To do it is small though, like ten trucks right now in today, by year end all one hundreds of drugs.
But very soon in the coming weeks, we'll have over sixty drugs fully driver lists on public roads doing daily commercial operations.
That's cool.
Talk to us how legislatively this has worked? Regularly this has worked? How have you managed to make this a reality? While yes, we see real impact from waymowing cars, but in certain states, in certain areas.
Where are you working so you know today we're live across multiple markets. This is Texas, Northwest, Arkansas, Phoenix. We work very closely with the regulators at the local, Lebel, state level, federal level, and from the early days we decided to focus on automating these regional networks, which is within the states, and that's one of the fastest ways to commercialize this technology.
Commercializing then to where we've talked about six herremillion, just one key customer.
What do you think your revenue run?
Right?
Is going to look like.
So today we're working with some of the largest companies across retail, grocery, e commerce, and distribution. So each of these customers have made multi year commitment. What's unique about these commitments is these are non cancellable commitments where our technology is now being absorbed across their supply chain at scale.
Those are the customers that you can name. We're showing them on the screen, Kroger, Tyson, Walmart. People will say, well, if you can't name this one, how real is it, I'm going to put it out there, right, because we're transparent on this show. The business model is interesting. You don't sell them the trucks. What is the business model?
So it's an autonomous transportation as a service model as a service as a service, yes, where we charge a fixed feed prodrug pert a year, and each of these commit commitments are multi year long. So we have revenue certainty from each of these customers and that's also very unique compared to some of the other models.
In our space.
You have some peers in industry. One of them is Aurora, right, there are some similarities and differences. One is that they're public. You're private, sure, let's talk about that first. I mean, you know, you've been pretty open that there's a route to the public markets. What would be the motive to do that?
So let me start with the fact that we have a lot of respect for all the peers in the space. But what has been our focus from day one is helping our customers move freight from their real how to retail stores and doing that at scale. And with this milestone, we have been able to prove that it's real, it's
happening at scale. So today, truly there is no safety driver, no observer on public roads and in our space, no one can make that claim today public well, we are well caplized today with the very strong runway and have clear line of sight towards profitability, and we're always evaluating all the options that we have and keeping a very close watch on the market conditions.
Partners From a technology perspective, obviously, in Nvidia, how much do you rely on on the hardware at the moment?
How much is that cost base? Where do you look for these partnerships.
So with our latest generation, generation three, the hardware is fully hardened and we're working very closely with the Nvidia with the Suzu Motors to mass produce these drugs, and towards the end of next year, Isuzu's production plant in South Carolina will be up and running and we expect to have these vehicles coming off the line at the big volumes. We're looking at tens of thousands of vehicles annually.
Caroline's really asked this, right, but we should go back to it, which is the regulatory environment. Yes, you know you've launched in these markets because you can. How much do you think we need this federal level framework for you to go from very small to something more substantial.
So it's really important to like have a nationwide av framework, right, So we work and we don't. Well, we're working very closely with the current administration to inform them, educate them on the safelod lot of this technology, and we expect to have a nation wide framework really soon.
Come back when you've helped work that one out. Golton Narraang. It's great has in time with the GETIC CEO. Meanwhile, elsewhere in vehicles, GM CEO Mary Barras As a regulatory.
Shift away from EVS.
We'll see slower adoption, but the company is still committed to its EV pipeline MEGS, Matt Miller sat down with the GM CEO, Mary Barrow, take a listen.
The whole industry.
We were on a p as that we were working to get to forty to fifty percent evs by twenty thirty. So now that the regulatory environment has changed and the consumer incentives have gone, there is going to be slower EV adoption. We're still committed evs and we've got a great portfolio that we're working on taking costs out. But in the meantime, we also have a great internal combustion engine platform, and you're right, full size trucks are one of the strengths we have, as well as full size SUVs,
mid sized crossovers. So we really have a strong line up across the board and that is really what is fueling our business success.
I have had as the host of Hot Pursuit of Bloomberg podcast about cars, the opportunity to drive a lot of your evs, from the Sierra EV to the Hummer EV to the Escalaid IQ and they're fantastic products. Are you not deterred that Americans aren't buying more of these vehicles? You know how capable, how capable they are you know how useful they are in daily life. What needs to happen for more Americans to buy these evs?
Well, I think the consumer is very rational when they're making a decision about what card by.
Let's remember it's one.
Of the most important and expensive decisions that they make. And one of the things we have to continue to work on to drive ev adaption is a more robust charging infrastructure, and that still is continuing to happen, So every quarter more and more chargers are available. I think we as people in their individual communities see that they've got a robust charging network and believe if they have to go on a road trip there's that as well, they're going to make that choice.
That was GM CEO Mary Barras speaking with Bloomberg's Matt Miller. Now coming up, we will dive into anthropics new tool and how it could broadly impact jobs. Come up next, this is Bloomberg Tech Silicon Valley leaders adjoining tech workers decrying tensions in Minnesota after two US citizens were fatally shot by federal agents. Anthropic CEO Dario Emma Day posting about the quote importance of preserving democratic values and rights. Open AI CEO Sam Altman wrote in an internal memo
to staff yesterday, that's what quote. What's happening with Ice is going too far. That's according to a Bloomberg source. The executives joined the chorus of other tech leaders, including LinkedIn co founder Reid Hoffman, Reddit co founder Alexis o'hanian, and venture capitalist Vinode Koestler, who have spoken out.
Karen one to watch now, let's shift elsewhere for Anthropic right now, because it is released a new version on its Claude chatbot called claud cowork. They can take actions on a computer on your computer. Bloomberg opinion columnist parme Olsen writes that this could have broad repercussions and potentially be painful for some white collar workers, even as Anthropic frames itself as the most safety conscious of the AI developers.
Parmi Elsen joins us, Now, so the redefinement of the engineering talent right now, the companies you've spoken to, How is Claudes products changing that?
Yeah?
I mean, first of all, claud cowork is the new product. And before that was claud Code, which is an AI tool for writing software programs, and that's been around for about a year and it's been getting rave reviews among technologists and coders who can use it to spin up a website within hours, and the people an Anthropic effectually use that tool to build this new tool. They did it in ten days. They didn't write a single line
of code, or very little code. And this new version is something that it's sort of like people have been talking about the word AI agents. That was a big buzzword last year, but it sort of fell flat.
There were issues with reliability.
This could be perhaps the first mainstream breakout of an AI agent because it does work on your computer, accesses files and applications, and not just saying that it does that people are actually using I've used it, and there's been a lot of general kind of excitement and buzz about this tool that is able to just take action, not just you know if you research in.
Part of the industry is paying attention. Like I think that CS Caroline was speaking to a Montenesia from General Catalyst. I think he summed it up pretty well.
Just listen to this, yeah, squad, it's it's really redefining the engineering department, and just think about the size of that market you might you spend on tools and engineers to be able to build products, and you know, the amount of progress is like Silicon Value companies now code self rights for most of what they do. I think it's a real transformation with clouds really enabled.
There there's a line in your Bloomberg opinion column, which by the way, is one of the most read things today on Bloomberg about the relevance to Microsoft. You know, Microsoft historically is very good at selling software that you could otherwise get for free. Just just talk a little bit more about that. You kind of flicked it.
I just looked at it because I thought Cowork is pretty much what Copilot could have been and probably should have been. Copilot is the AI tool that's underpinned by CHATGBT, GPT four point five or whatever the latest model is, and it has access to all your office tools, so it should be able to, you know, take documents from a particular folder and turn them into a spreadsheet, as claud Cowork can do, but it doesn't have quite that
same capability. So I think the speed at which Anthropic was able to do this and using an AI tool to build the software in the first place, really speaks to how effective AI coding has become. You know, coders are saying now they don't even write code anymore. They just talked to it in plain language. And the reason I think this is kind of meaningful for other jobs is coding AI coding a tool that can do that can generalize to other domains. This is what Anthropics CEO
has been saying. That's why they're moving into healthcare and who knows what other areas they will move into. But I think because computer code is such a perfect digital representation of you know, the behavior that you and the actions that you can take online. That's why it can be so good as a tool to do other things like operate a computer.
Bloomberg Opinions, PA me awesome with today's must read, Thank you very much, so coming up Northward raises one hundred million dollars in its latest funding. We speak with the CEO Bridget Menla. That conversation coming up next and you don't want to miss it. This is Bloomberg Tech.
Welcome back to Bloomberg Tech.
A quick check on these markets Nasdaq one hundred shows big tech is back on top. We're still almost a percentage point as we brace for mag seven earnings. Interesting move for bitcoin, we call it digital gold Well it's not getting the debasement trade that real gold is. At the moment, we're an eighty two hundred and forty six though, just up in the green ever so slightly. Move on to the individual movers. We want you to keep an eye on Amazon up almost one and a half percent.
They're closing Amazon Fresh Amazon ghost stores with some locations are going to be converted into whole foods market stores. Look, they are not moving away from groceries. They're going to sell them online and offline. But really this is about delivery once again. And you also have to look at what's happening over at Pinterest. We're going to dwell on that for a minute. We're off by almost ten percent. They are letting go of people less than fifteen percent
of its workforce. We understand that they're planning to reduce office space as well, and Bloomberg Intelligence is saying it likely suggests more aggressive investments in building AI capabilities. Let's stick in with blouemmeg Exiti's reporter around Verastelica, a company.
That has seen competition ride.
Maybe as we talk more and more about Agendaki, we're just talking about it in terms of anthropic For example.
Yes, good morning, thanks for having me. So pinterest is down quite significantly today. It does seem like there is a lot of concern that these workforce reductions and other steps that they're taking in terms of this restructuring, that maybe this pours in some weaker growth trends at the company. As I'm sure you know, this stock has struggled for quite a bit of time as it really just has a lot of difficulty going up against the bigger players
in the space, most notably Meta. So the stock is quite down, and I think people are sort of like wondering what's going to be sort of a catalyst or revive growth here.
Ryan, Data is fun. I really hope that you agree with that. And so I'm looking at the Bloomberg terminal. The Nazak one hundred is for a five day stretch the first time this year. It had a five day stretch at the end of December, so not that long ago. We're right on the cusp of huge earnings and tech is driving this market higher. Why great question.
So going into this recent rally, obviously there had been a rotation out of Tech, a lot of people looking elsewhere in the market, especially sort of cyclical parts of the market.
There was some concern about Tech's earnings.
Is growth decelerating or is this going to be enough to justify the valuations there. At the same time, people continue to view tech as really a port of safety in the market, continues to be very dominant and still has the highest growth among the S and P five hundred sectors. People remain pretty positive about his prospects, about
the potential of AI, all that is there. It's not surprising to me to see a little bit of people wanting to jump in buy that dip, you know, especially ahead of earnings.
The most ryan for Stelica. Oh sorry, carry, I got excited about the data thing I do with the earnings preview and embraced right, let's go to private markets for a second. Northwood has announced it's raised one hundred million dollars in new funding led by Washington Harbor Partners and Indres and Horowitz. The Southern California based company makes phased array and tenors and other things that help increase satellite connectivity here on Earth. Here with the latest is Bridget
Menla Northwood CEO. You know, Bridget, We've been fortunate to talk to you, you know, a number of times over over the last year. Actually, like this is less than a year from your Series A. And the thing that I've learned speaking to us future investors is that you move quickly, right, you move quickly on deployment of the tech. But you've also let's start by just asking like, why did you need to raise one hundred million dollars here? There must be a need for that capital.
Yeah, absolutely, thanks for having me again, It's great to be speaking with you all. For us, it's really about taking space missions further faster. I think you guys have been really tracking the developments in the space industry over the past year, both on the commercial side and on government side.
Domestically and abroad.
There's a ton of enthusiasm for what we can do in space and really changing our.
Perceptions on what's possible.
Oftentimes, there winds up being more friction and taking those space missions live due to the ground and that's something that has to change. We have to be able to push the boundaries on capabilities, and we have to be able to do that on a rapid time scale. So for us, what this funding represents is a significant amount of demand that we've seen from a wide variety of customers and being able to enable their missions to go
further faster. So this year has been a really exciting example for us to kind of show what that end to end concept looks like for Northwood. Many people do know us by our Phase raise, which is critical to how we think about the ground really introducing novel hardware
solutions so that we can do more in space. But we view ourselves as an end to end partner for these space missions all the way from the concept that they are initially coming up with to the time when their data is streaming live and actually you know, delivered to end users.
And we've actually done that.
We've gone from an initial concept of saying, hey, let's have dynamic links that you can access not just from low Earth orbit but all the way up to geostationary orbit in the same system, and then let's show how fast we can bring that concept into reality. And so you know, we're talking today as well about our contract that we close with the US Space Force.
Well, bridget let me jump in here. Like they know, it's a forty nine million dollar contract with the Space Force. You know, what will you be doing with them specifically? But also my understanding is that there is a link here between the money that you raised in the Series B and being able to kind of just execute on that contract.
Absolutely well, we've already executed on that contract across a number of milestones. So contract was executed and at this point there's been a three month turnaround time from kickoff of that contract to actually delivering links live in the field. So we have those links live in the field already, and so what the funding represents for us is, let's
scale that model, Let's do it more. Let's demonstrate how we're able to deploy a global network of this portal product that supports the dynamic links between lower orbit and geostationary orbit, but also serve up more space capabilities that we're getting a lot of appetite for. So the funding really represents being able to serve the appetite that we're seeing and hit larger production volumes.
We've been lucky enough to talk to some of your key investors and Mina has been on the show before from Washington Harbor Partners, and you put it to Ed that Northwood provides the only viable approach capable of scaling ground station capacity, but you're not actually technically the only approach that could be taken because you could also go to blue Halo for example. So what is your unique setting point, how you differentiate it from others that have been winning contracts.
Yeah, I think the way that we view our difference is really for space providers today, they wind up running two companies. They wind up having to run the space mission that they're supporting, but they also have to stitch together a complex value chain of different pieces of the ground.
You know, they have to think about ground hardware like you.
Mentioned, you know, blue Halo and other developer of phase or A hardware, but they also have to think about, you know, sites, global shipping logistics operations around the world. They have to think about the software interfaces in the network backbone attached to that. And so where we find ourselves really differentiated is we take on that full problem scope.
And I think you know, what we've connected with with MINA specifically on is the importance of being able to deliver the end to end solution and do it on a condensed timeline. And we feel like there's huge value in being able to do that, and that's why we've invested in that kind of differentiated approach.
You've kindly said, we've been focused on space for quite a while here on the show, and many are now training that advice on SpaceX.
But are you winning contract? How's your relationship being built with Starlink for example? Are the I any talks along that motion?
Yeah.
I think for us, we've seen significant interests from commercial as well as government use cases. The ambition and the challenge for space just continues to grow. And for ourselves, we've had contact with that company and with other companies, and we're excited to have our capabilities just kind of be the proof in themselves that we are the infrastructure provider that makes sense for a whole host of industry use cases.
Bridgie, I know you don't want to focus on this necessarily. You know, your former actor, platinum singer songwriter, you went away, turned to academia, founded Northwood right at the end of twenty twenty two, did a series A at the beginning of twenty four and now here we are, and I think there's a lot of interest to learn how big is Northwood now? How many people? What is your footprint? Where are you deployed around the world, because you have done it quite quickly.
Yeah, we're just around seventy people. We have sites deployed across two continents. At this point in time, we have a full production facility running not just our Phasory product, but two other hardware products that both fit in with that hardware stack as well as work and complement to it. So excited to be sharing those product lines as well. And this year is going to be a really big year for us. We're planning on deploying eighteen sites across
five continents. So just continuing to ramp up our production and the offerings that we can provide to the space industry this year, Bridget.
As you know, Caroline and I are very thorough on Bloomberg Tech. Just very quickly, the company did not disclose its valuation. Is northward at Unicorn status yet? Is that a milestone that you've achieved.
We will not disclose valuation at this point in time, but we're very.
Happy with where we ended up.
Nice answer, Briship Lendler of Northwood.
We always have to ask.
We appreciate you coming back, Thank you very much, indeed, congrats. Meanwhile, coming up the AI landscape, it shifts from general AI to highly specialized intelligence systems. We're going to be discussing that with constantin Ula, of course, a partner at Sekoia.
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Check out the Bloomberg Tech podcast. Find it on the terminal as well as online.
On Apple, Spotify, and iHeart this is Bloomberg. Moonshot AI has released an upgrade to its flagship model. I'm thing up pressure in China's domestic AI race look. The company's K two point five model is said to outperform its open source peers and can process text, images, videos simultaneously.
From just a single prompt now.
The release comes ahead of deep Seak's next major update, which has been teasing now four weeks ed.
What have you got. Let's stay on the topic of AI and not just general purpose models, but the rise of artificial specialized intelligence. Joining us now Constantine Buler partner at Sequoia, and this is your bet for the year. You think and where you will focus your investments going forward is in the area of do we call it asi specialized intelligence as a place to start, define that what is the difference? Absolutely?
Ad Caroline, Thanks for having me twenty twenty six is going to be the year all about AI capabilities in specialized areas.
And we've got a taste of this.
In twenty twenty five in some pretty big important categories.
Think about self driving.
We now have waymos on the streets of San Francisco and any other places and many other places, and those are operating ten times safer than the average human driver, ten times safer. Also, you see other specialized areas. Anthropic, for example, focused on coding and in twenty twenty five went mainstream with their cloud code product where developers can choose to work with cloud code agents to prototype and
even put software into production much faster. We're going to see a lot more of that in twenty twenty six. It's going to be specialized capabilities in many new areas.
Now, how big are the checks? Then you're going to have to write because what weimo Anthropy and even like in the legal sector, like a Harvey having common is that they are well capitalized at this point. They had to commit a lot of capital to train those specialized models in the first place and then deploy them absolutely well.
You mentioned to Harvey, I'm focused on the early stage investing and in the case of Harvey, they started really small. They basically focused on an area and they said, hey, this is an area we're going to be deep experts in. That's the legal area, and they focused on the actual user obsession. They now have over one thousand customers for the legal tech space, and they are kind of a right hand person to the lawyer. In fact, one of their customers said, I would sooner lose my coffee for
the year than my Harvey license. My sister's is a lawyer, she uses Harvey. She'd probably say the same exact thing. Twenty twenty six, We're going to look back at the end of the year and realize how many areas in AI we just couldn't live without.
Constantin Where is next?
Therefore, because you actually already have made these bets in these very focused areas and applications of AI.
We just named Harvey, but you're.
Also in eleven labs if you're thinking about the way in which we're going to interact with it from a vocal perspective and create ourselves. But Where's next hasn't been disrupted absolutely.
I'll give two tastes of what's coming next, one in the physical world, and then one in the digital world. In the physical world, were investors in a company called Vercata. They are the leading AI physical security company and they're basically an extension to those physical security guards who walk around a premise and can now monitor an even larger premis for physical security. They help investigations go thirty percent faster,
dramatically faster. And that sounds like a statistic, but let's make.
It very real.
They were working with a major airport that had a bomb threat and they were able to help close that investigation significantly faster, which means that the airplanes actually boarded, flights, got out on time, and passengers got to their destination.
We're going to see a lot of that now.
In the digital world. We work with a company called Expo. It's a AI penetration tester. They set out to get really good at finding vulnerabilities in websites and applications. Within six months, they became as good as a human penetration tester, a profession at finding vulnerabilities. Within eighteen months, they've actually
become best in the world. They're top ranked on hacker one, which is the global leader board for individual hackers, and they're finding major vulnerabilities at companies, reporting those to the companies, helping them patch them so that the bad guys don't get there. We'll have a lot more capabilities like that in twenty twenty six.
What's interesting is how therefore you're going to build and scale at the pace that's necessary. If there's a lot of capital looking for these more specialized areas, there are people building in it, how do you talk to your portfolio companies at this moment being like, you need to get that edge, you need to lead the market at this moment because there's an opportunity that's moving fast.
Absolutely right, Caroline.
And you know, we think about the word courage in twenty twenty six. There's been so much focus on the frontier four Open AI and Anthropic and Google and Xai. They're doing amazing work, and it can be intimidating for the early stage founder to say, you know what, I'm going to go up and build an amazing big company in the presence of these giants. But we encourage founders
to be courageous in twenty twenty six. They know areas deeply, know those areas specialize in that delight your customers, and there will be amazing opportunity. For example, in the healthcare space, we work with a company called Open Evidence, which helps physicians diagnose really complicated problems. In fact, my wife is a surgeon. She uses Open Evidence to help diagnose problems. She takes that extra time and puts it back into patients.
That was started by someone who said, you know what, the healthcare area is so important that it's going to need specialization, it's going to need these specific capabilities. And they've been absolutely right. That type of courage will continue to pay off.
In twenty twenty six, I started the week with my column about how there's no point using the term seed round anymore because some of them are in the hundreds of millions of dollars right out the gate with a team of a dozen people. That's the domain that you oper eight in. But it particularly in the field of AI. How much do you expect that trend to keep happen? You know, you keep saying I invest early, but you know that that actually you're not the only person that's
looking at ASI. And you know the whole point is standing up sometimes a research lab from scratch.
I loved your article the coconut round, right the coconut round or the avocado round or the mango seed round. Yeah, yeah, these massive seeds. I'll say, how we think about it? Sure, First and foremost, we don't think about the size of the seed. We think about the quality of the company. So we take a step back and we look at an AI business, and first of all, we might say, this is an AI business that does X, Y or Z,
and we'll cover the term AI. We'll put our finger over the term AI and say does it still make sense as a business even without AI?
That's test number one.
And secondly, if it does, then we say, is this the kind of business that we want to spend years really being company builders for? And once we go through those phases, then we look at the financing dynamics and the size of the round and we decide, hey, is this something that we want to do with that scale. I've consistently found that great founders are willing to pick the best possible partners and shape rounds that are smart for the business in the long term and then attract
more and more capital in the years to come. That's how we've been approaching these sizable seat rounds.
Constantine come back.
We always of it Constantine, Buna of Sequoia appreciate it. Now we turn our attention to France because the National Assembly there has followed in the footsteps of Australia, passing a bill last night to ban under fifteen year olds
from social media. Legislation now heads to France's Senate. The move, of course, comes as Meta TikTok YouTube they head to court in the United States over allegations that they misled the public about the safety of their apps, accusations the companies have rejected.
Ed coming up, there is no one quite like Jensen Wang. What does that mean for succession planning at Nvidia. We'll have that discussion next. This is Bloomberg Tech. When you see the future of AI is resting on the shoulders of Nvidia, But the future of the chip maker after its current CEO and co founder Jensen Wong departs one day, well, that's unclear. Bloomberg's semiconductor reporter in King has written a pretty wonderful piece. I mean, Jensen Wong has been at
the helm of Nvidia for more than three decades. He is the longest seven Silicon Valley CEO. There is no suggestion that he's wants to pack it in. But what you're writing about is nor is there any evidence that Nvidia has really done anything in succession either. Yeah.
I mean, you know, with a company that's become as important, it has to a whole industry and arguably the stock market and the economy as well. Usually like to have a better idea of who the people at the top are, and even people like myself who've been looking at this company for a very long time, it's him, right. The whole company is built around him, and that's all there is to it.
And what's really interesting is you interview people who talk about how flat the organization is and alsomate how difficult would be to run by.
Anyone else than Chansten.
One can he talks to who the other well key presidents are, but perhaps and not in line to.
Take the throne.
Yeah, I mean, you know, the way to do this is to think about things through Jensen's eyes, because he's explicit about this. He created an organization where he wants to know where he believes the CEO needs to know what's going on, and the way to do that is to have less of the traditional corporate structure and just a large group forty to fifty sixty depends on the day as to the number he gives you. Of people who don't directly report to him, they have responsibilities.
But we've spoken to Jensen quite a lot in the last few years. There are other people though, like collect Cress. The CFO is a highly capable person. But as you write in Silicon Valley and Tech, you don't usually hire the CEO from the finance department.
Correct, I mean, you know, has a good reputation on Wall Street. She was brought in and she's obviously presided over the company when it's been enormously successful. But this is a very technical job, and it's also a very dynamic job. He's on the one hand a science leader, and he's on the other hand an advocate and driving the whole industry forward.
And spends a lot of time on planes.
It feels like at the age of sixty three, Bloomberg zin king, thank you very much, I urge of yours to go read that Deep Dive. It's a great piece and video's lack clear successor for superstar CEO.
That does it though for this edition a Bloomberg techech.
Yeah, there's a lot happening in public markets and in private markets, but we are bracing for big tech earnings in earnest check out the pods so much to recap you know where to find it on iHeart, Spotify, Apple, and of course in all the Bloomberg platforms as well. Two days into an astonishingly busy week in the world of technology. This is Bloomberg Tech