Qualcomm Jumps on $15 Billion Data Center Sales Projection

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1:45Bloomberg Audio Studios. Podcasts. Radio. News. This is Bloomberg Business Week Daily. reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily Podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio. This is a different conversation. It's a different data center right now. This is about AI. But it's a valid question, right? So I will give you the same answer. that I gave when we entered the automotive business, when we entered the industrial business, and everything that we have been doing to diversify the company.

2:33Those are fast-moving markets now changing with technology. So where we really focus is not what the data center is doing today, but what the data center is going to be doing tomorrow. The data center is now moving to a Gentec. That's why you see CPU companies on the rise. You see demand on the rise. Good stuff there. Christiano Amon, Qualcomm CEO there with Romain Bostic and, of course, the host of Bloomberg Tech, Ed Ludlow, who kindly is joining us right now from our bureau in San Francisco. Do you want to point out Qualcomm shares are up about 7 percent? They're off their highs of the session.

3:06Micron, we're going to get to that, too. It's up about 17 and a half percent. I think it's at an all time high as we speak. Whoa, Ed Ludlow, where do we begin? Talk to us. Yeah, it's quite a lot. What do you think? Let's talk about Qualcomm. We just heard a snippet of the CEO. So let's do that for you. Yeah, credit where credit's due, right? You know, Qualcomm is the world's biggest provider of smartphone processors, a market that is not doing great right now. And they have made this entry into data centers. And what you heard from Cristiano among there was the answer to the question, didn't you already give up on data centers?

3:40And secondly, if you look at what they announced, Wall Street's clearly cheering what they've said about the future financial opportunity. But they're a little bit late to the game because these CPUs come online in 2028. Their accelerators, their custom AI chips for running inference workloads aren't here yet. And the problem is they're in this environment where NVIDIA absolutely dominates the market and whatever's left AMD comes up and gets the rest. But both of those companies have a new chip every single year. Qualcomm's chips are two or three years away. But, you know, he was honest about that.

4:16Like the market opportunity is absolutely ginormous. And they are very confident they're going after a very specific bit of it because their chips are nothing to be sniffed at. They're like highly performing, very efficient chips on a dollar per token basis or a dollar per kilowatt basis. Ed, you mentioned AMD. You mentioned NVIDIA. What about Intel, Broadcom, Google, Amazon? Can we throw Cerebris in there? Yeah, you absolutely can. I mean, the field is becoming more crowded in terms of the number of players. But based on current data, which you can say is just simply sales or its deployments, NVIDIA has a technical monopoly, which at Bloomberg, we believe a technical monopoly is more than 70 % of a market.

5:00So, you know, the opportunities there and clearly based on the share performance and also like what they said, right? You know, like they're going to do$5 billion of data center sales next year, fiscal or calendar 27. and that will go up to 15 by 2029. That shows progress for a company that has historically not been in that market. All right, so Micron? Yeah. Let's talk Micron. It was a thing that leading up to yesterday's results after the closing bell, every market guest that we had on said this is gonna be really important. So what was so important about the results that has this stock, I think, at an all-time high as we speak?

5:41yeah it's not about beating the expectations of the street micron reset the expectations of the entire industry and by the way guys i felt you both did a really excellent job to try and get the story from the earnings statement because that's all you had to go on at the time it was that supply was tight and it's going to be tight for a long time and clearly higher prices is what moved the needle for micron not necessarily selling more units and like that's exactly how the call played out. So the big wow number was that in the fiscal fourth quarter of the current period, Micron saw$51 billion of sales.

6:17And it highly relates to data center and high bandwidth memory. And the street was seeing maybe 43. But the bigger picture is like, that's the best position for Micron to be in, where there's very tight supply, they have pricing power, and everyone wants the thing you're selling. Compare and contrast, it's not good for the companies who are in the market that are trying to get hold of those chips. I just want to know, I'm leaving 731 because I love the praise. I feel like I've done it. When Ed Ludlow says we did a great job on a complicated company like Micron, I'm done. I thought we were going to talk about soccer, but that's okay.

6:50I'm good. I'm good. Love you. Love you. As always. And you also helping us always make sense of all of these reports. Ed Ludlow, thank you so much. Be well. Ed Ludlow, he's the host of Bloomberg Tech. Check it out on Bloomberg TV, 11 a.m. to noon, Monday through Friday. Stay with us. more from Bloomberg Business Week Daily coming up after this.

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9:00And it takes us to someone who's been innovating and disrupting as well and remembers all too well the boom and bust and changing landscape of the dot-com era. He's best known as the founder and CEO of Zynga, the social games company that IPO'd in 2011. But he's built and invested in so much more. And through every iteration of the internet, the 90s boom and bust, the social media boom of Web 2.0, and now the AI era. Carol, he's also a prolific investor. He is indeed. He's invested. You'll know these names, folks. Napster, SpaceX. and had he held on to his shares, his$38 ,000 seed investment in Facebook, now Meta, for about half a percentage of the company would be worth many, many billions of dollars right now.

9:38Smart investment, I would say. We're talking about Mark Pincus. He's got a new book out, and we know all this, thanks to the new book. It's called Life at the Speed of Play, Launch Products People Love. Mark Pincus joins us here in the Bloomberg Interactive Brokers Studio. Welcome, welcome. How are you? Congrats on the book. Thanks, thanks. By the way, I really am happy about the memory stocks. Well, why? Well, we're diving right into the AI trade. We are. Let's not mess around. I'd say that it's a pretty simple trade at this point. It's a belief. And either you believe that the AI infrastructure investment is going to pay off and keep playing out, in which case all of these companies are generationally undervalued.

10:28It's a generational buying opportunity if you're getting a peg ratio of 0.3 or less. Or you think that it's not going to play out and then you should stay away from all of it. I'm a believer. You are. It's funny because we just spoke with Ted Oakley. He manages money for Oxbow Advisors. He sent us a bunch of stocks and missing from there were tech names and memory names. He does own some tech, but he said, the memory got too expensive. And he said, I've been doing this for decades, many decades. I remember the 1990s. We sold Intel and I watched Intel stock go up for the next 12 months before then it went down.

11:03So he understands these cycles. Are we in one of those cyclical moments right now? Well, we'll know in the future, but it'll be, it's only cyclical if this, if these AI growth rates and numbers don't play out. If they play out, I think he would even agree that they're still undervalued. You know, Mark, one of the things that we're thinking, and we want to get into the book and talk about, you know, life at the speed of play and what it all means, but we are curious. You have been in Silicon Valley for all of the iterations of the internet. I'm that old. No, no. Seasoned, like a great wine. Like that's how I think it.

11:41Love talking with people who have seen cycles, right? And can sometimes figure out the silly from the stuff that really matters. How do you, like, how do we make sense? Like we see the money going in. We see the circular financing that makes us a little uncomfortable. We see the narrative around AI changing. I get it. Disruption. This is what happens. But help us understand, like, is this a boom cycle with no bust? Or is there going to be a breaking point at some point? Or for only maybe for some? If I had the perfect answer, I'd... You wouldn't be talking to us. Yeah. I would have held my meta stop too.

12:21You did okay. You did okay. How do you think about having seen some of this? I built a boring enterprise software company in the middle of the dot-com boom. It was called support.com, but it was actually an early SaaS company. We went public on the last day of the IPO window. So I'd say that then versus now, my peers and I thought it didn't make any sense during the dot-com bubble. We thought it was crazy what we saw going on around us. And now my peers, my smartest friends, think this makes a lot of sense. I mean, it was dark fiber then, and now it's like hot GPUs. I mean, it's actually being used.

13:08It was betting on a whole consumer that didn't show up or didn't show up yet. And now the investment, the infrastructure is going to enterprises who are bottom line oriented. And, you know, then it was eyeballs and now it's ARR, you know, it's actual revenue. So it's definitely not the same. I think what we do have is extreme volatility. And I think that the volatility comes from where it's hard to remember this level of growth market. And when there's this level of growth, like we've seen just this week and today, when there is a negative data point or even absence of more positives, it starts to be run for the hills and doom and bubble.

14:02And then when we see like Micron's numbers and guidance, all of a sudden everyone's bullish again. And we're going to keep seeing that. That's my take. One thing that you write about in the book repeatedly is that, you know, when you get into your whole background, Wharton, Harvard Business School, going and working for some investors that are household names to the Bloomberg audience. I mean, Steve Ratner, John Malone. I mean, these are legends. You are constantly saying you don't know how to code. You don't know how to write code. You built all these companies. What struck me about reading that was that that kind of doesn't matter now in a way that it mattered when you were building all these companies that you write about.

14:43How has the idea of like OpenAI's codex or cloud code from Anthropic, how does that completely change the game moving forward? Well, if you pull the camera back and even think more broadly, like how has the game of startups just changed and how is this another step function change? In each chapter, the amount of capital that you needed to get going has gone down, not up. When I was starting my first company, I had to recruit these government mainframe programmers, have them learn C++ and HTML. And I needed a fair amount of money to convince them to quit their jobs. And each of my subsequent companies today, you don't need that.

15:33You don't need as much capital. You don't need to go and necessarily recruit a whole team of the world's best engineers. It's being democratized today. Really, it's more possible than ever for somebody with an amazing idea who's willing to move on it now to really get somewhere in a far more capital efficient way. Yeah. I mean, I feel like we also saw that in the pandemic of people just being able to start things while they were home. I am curious about The Speed of Play Because that is on your book Talk to us about that and the importance of it Sure So there was a lot of debate With my co-author Carly My amazing editor Hollis On the title to the book It was originally called Proven Better New Which we can get into But that's kind of some of the core value in the book And I eventually said You know it's just that's not the whole gist of the book it's life at the speed of play and that's because it's both it's both the the place that we are moving into in this ai era it's it's it's really um i like i start the book by saying that that this is elon is the one person who's already been living his life at the speed of play and i definitely think he's having more fun than the rest of us okay he's also working harder i want to push back on this because carol and i talked about this he doesn't always look like he's having fun yeah he really I mean I think he's been really public about having this tortured existence and how difficult it is to be Elon Musk and the challenges that he struggled with uh personally I think more so than professionally do you actually think he's having more fun than the rest of us I do he's he's got an amazing sense of humor he's every time I see him he's joking laughing I I was with him um at a friend's house one night and it wasn't long after he had bought Twitter and it was basically like an hour of the best standup comedy I've ever seen.

17:39I mean, he, the way he talked about his experience of coming in to Twitter, um, and how insane the company was, was just, was just really funny. So, so my point of view, I mean, whether he's having more fun, who knows? Um, I think that, that what I, what we can see, you know, I said, maybe he's the one who solved the simulation, but we can see is that he can almost tweet something into existence that he said there, this traffic in LA is terrible. There should be a boring tunneling company. And then a few months later and a few billion dollars raised there was. And my point is to some degree, we all are on the brink of living a part of that.

18:24And the reason I call this life of the speed of play is that to me, what the book is really about is a product mindset. And I think that every, so many of us have an idea, but we don't know how to pursue it. Or we are pursuing an idea, but the odds of success are too low. Too many founders are failing for the wrong reasons. So a good idea is a good idea, but that's not enough necessarily to run with something and build something that lasts for longer or has some significant impact, correct? Yeah. And it might be that you have a good idea, but it's behind some obvious mistakes that you're making.

19:06The more junior product maker or founder is, and the less experienced they are, the more likely they are to do too much new, to just reinvent everything. You know, Steve Jobs talked about this. So the point of the book is I like to think that this book is like a cheat code that you can, whatever it is you're doing, you can change your odds of success and getting to a hit. It's the book I wish I had early in my career. So is this for founders? Like, who do you like think about? It sounds like it is for people who have an idea or want to run with something, right? This book is, every one of your listeners right now probably has some instinct.

19:46They have some sense. It's either a specific idea or a sense that something could be better. And the book is, the point of the book is that they should, when you think what should they do with that instinct, very few of them will act on it and turn that into a product or a company. and then their odds of success will be so low because they're going to take one shot on goal and it's probably going to miss. Well, I like how you write about that in the book because you use the idea of Uber as an example in the book. You had the idea for Uber in 2002. I did. SMS dispatching to a cab. Yeah. You're not Travis Kalanick.

20:29No. You did not start Uber. No. So you make this argument that I think a lot of people, everybody has these ideas. I had that idea doesn't mean you actually create the company. Why did, why was Travis able to do it? But Mark Pincus, who was in Silicon Valley in 2002, wasn't able to do it. I can't tell you why Travis was, but I can tell you why I wasn't. I didn't, first of all, I looked at the world as it existed, not as it could exist the way that Travis did. And by the way, in 2002, there wasn't a mobile, you know, smartphone then. And I thought about it in these conventional ways. Oh, I'm going to deliver your order to the taxi broker who will call a cab.

21:11I didn't ever think Travis's idea of the gig economy, I'm going to let anybody become a driver and have a driver within a minute of you. That was, that was brilliance. But, but I had an instinct, an instinct that we should be able to order a phone through our order a taxi through our phone. And, you know, the importance, the point I'm trying to get people to focus on the book is that if you assume your instincts are right, you know, 95 % of the time and your ideas right at best 25 % of the time, what would you do with that information? You know, it's like a time machine. You write about these instinct veins, deep sources of insight about human needs and behavior that can spawn multiple product ideas, even whole new industries.

22:02Is that what AI is right now? Like what we're doing? Is that what that is? Or is that? AI is beyond an instinct vein. I mean, AI is a fundamental shift in computing. I mean, the way that the internet was. And so, so I would. It's not apples to apples. Yeah. Yeah. No, it's interesting. You know, one of the things that I find also is some of the things you talk about like leadership, you talk about micromanagement is beautiful. And I think about how many times when you think about leaders that it's like, don't micromanage people. Yeah. I was told that so many times. Right? No, think about it. Like you bring in, you know, you know, experts or consultants and they're like, don't micromanage your people.

22:47Why is it so important? Why is it so important that you do micromanage? Because the point I'm trying to make here is that at the end of the day, what matters most is your customer experience, not how you delivered it. And so the point to me is deliver the best possible customer experience any way that you get there. And if it's through micromanaging, if you can guarantee the quality, if you can guarantee the delivery because you micromanaged, then by all means do that. I'm like, I don't care that McDonald's served 15 million burgers today. That doesn't make mine any better. I want the kernel cooking mine, you know, individually.

23:35Well, that's a major theme in the book is sort of throwing out this idea of the minimum viable product. I'm not going to repeat what the chapter's called because we're FCC regulated here. We're a family. Well, that chapter you can say was the MVP trap. Other chapters, no. Okay, cool. Yeah, great. There it is. um why what we've been sold this idea though of iterating and silicon valley sort of throws something sees you know see if what sticks and iterates on that over and over again why wasn't that ever right for you well the the original concept that eric reese had of minimum viable product and moving fast and being in the market is is a great concept it's just that we now, we don't, the point I make is that we no longer have time to go wait.

24:26The learning is too slow. If we build a minimum viable product, there's hope in the word viable, that this might be your launch product. And then you're going to invest more in that product than you should. And I like to say, just build it wrong before you build it right. Just build to learn, be whatever gets you signal from your customer the fastest is, and in the age of AI, we can prototype something or test something so much faster, but it's dangerous. What I'm seeing with AI is less that people are using AI to test and learn faster, but more build faster. And so if I can build something now in three months instead of three years that's so alluring that i might go do that but i don't have three months to to learn i'm wrong does that make sense i don't know that the viable word is is tricky well i think you had also shared in the book uh the example of twitch and building you know the founder of twitch their team was was changing their product every two or three days at that point yeah they were twitchy and that was that ended up being a good thing for them.

25:37Yeah. They got immediate feedback. Yeah. Well, they, I don't even know if it was getting any customer feedback. The feedback was just from themselves. It was, I don't like this product idea anymore. Let's switch. And so that's also important. And part of, I guess, part of the, what makes this so hard to be a founder, to be a CEO is that we're supposed to express confidence when we don't personally feel confidence, right? And so how do you come in on Monday and what if you just, what if you learned something in the past week that just said, this product isn't quite right or it's finally part built and you're like, I'm just not that into it.

26:19Do you go up to your team on Monday and say, guys, I know I got you to work nights and weekends for this, but I don't think this is right anymore. Or do you say, well, I don't want to demotivate my team. And so I'm just going to continue on this path for this whole product cycle, or I can't, I'm afraid to tell my investors who backed me that I was wrong. Right. And so the question is, are you more committed to the intellectual honesty or to harmony? I would say intellectual honesty. I mean, most people would not, I know, I know, but it's like, I don't know, at some point you need to be doing that.

26:55Hey, we're talking with Mark Pincus, founder of Zynga. He's got a new book out. It is entitled Life at the Speed of Play, Launch Products that People Love. Are there products? I mean, the product cycle, is it getting shorter or longer, especially when it comes to technology? Because I feel like there are things that people are so into and then they move on to the next thing and there's so much out there. How do you see it? Oh, from a consumer standpoint. Well, I say in the book that I think there's a metric that I don't know anyone but me who focuses on it and my former teams day 365 retention.

27:29So if a hundred people were using your product today, you know, or a year ago today, how many would still be using it today? And, and it's such a hard thing to build against because we don't have a year to wait. Right. But you never would have made your, that, that maybe works from a product perspective of building a company, but from a venture capital perspective, that doesn't work. You write about what attracted you to Mark Zuckerberg when he was a teenager still was that they were able to sign up, you know, schools 20 % on the first day, the next 80 % the next week. Like that happened instantly.

28:02Yes. Yes. I didn't know, but, but it turns out that this is, um, necessary, but, but not necessarily complete and sufficient is that, that if you have 60 % engagement, 60 % of your users show up every day, which has been true to this day with Facebook, the likelihood that you have high day 365 retention is highly correlated. It may not be the case, but it's highly, highly correlated. Did you know the minute you spoke with him that this was just something remarkable, meaning Facebook? Yes, yes. And by the way, so would you, both of you. So people who point to the fact that they invested early on in Facebook or these companies as a sign that they're a great investor, it does not necessarily mean that they are a great – that their judgment is so great because we all would have said, yes, their access is very impressive that they had and you didn't have.

29:10But here's what's so painful if you think about it. that story is less like kudos to Mark that he invested. And it's more like, like Mark, how is it like, think about this. How is it that in 2004, when I met him, um, I was doing tribe. I was doing one of the first social networks right before I started before he did. Yeah. How did I manage to fail? It's an act of willpower that I failed. It wasn't just Facebook. there was eight or nine social networks there was Bebo yeah tagged Myspace Friendster Friendster which I invested in they all worked I had I had to pick one idea that didn't work and and stoically heroically stick with it no matter what I don't care we are with Mark Pincus he's the founder of Zynga he's the author of the new book it's out this week life at the speed of play launch products people love.