Nvidia Invests $2 Billion More in CoreWeave, Offers New Chip

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break.

0:37So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens. It's smart, calm and to the point. And it fits into your morning. You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris. On Apple, Spotify, YouTube or wherever you get your podcasts.

1:02Bloomberg Audio Studios, podcasts, radio, news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. All right. In what could be, I guess, another one of these circular financing deals, NVIDIA Corporation today announced it's invested an additional$2 billion in CoreWeave, a cloud computing firm and key customer, to speed up an effort to add more than 5 gigawatts of AI computing capacity by 2030. There's a lot going on there.

1:43Let's check in with Anurag Rana. He's a technology analyst at Bloomberg Intelligence. Anurag, thanks so much for joining us here. What's your reaction to this additional investment by NVIDIA into CoreWeave? Yeah, if you go back in history and see when CoreWeave was going public, it was having a hard time getting a good pricing. And then NVIDIA kicked in and said, you know, we're going to be a part of this particular IPO. And I think what's happening here is this. NVIDIA is creating the chips and CoreWeave is helping them sell the computing using those chips to different public that's out there.

2:16Now, at this time, CoreWeave has a massive backlog of orders, but it, you know, needs to get funding done in order to convert that into data centers and then capacity. Now, you know, NVIDIA isn't giving them money straight away, but it's basically saying, you know, we have confidence in this company and it would help then CoreWeave go out and raise capital from outside. So I think it's a little bit more like spreading the NVIDIA ecosystem is what's happening right now. Looking at your research note, you note that CoreWeave has$50 billion in remaining performance obligations. What does that mean?

2:53Yeah, basically, it says this is kind of the contracted revenue they have on hand, which means, you know, Microsoft has said, you know what, I'm good for 10 out of that, for example. Meta has a deal with them. So they have this backlog of all these orders. But, you know, unlike other companies, you just can't go out and fulfill the demand. You have to create a very large data centers using NVIDIA chips. It then starts to work out or runs. And then you realize that$50 billion into revenue over the next several years. So what's the gating issue here for CoreWeave? Is it more access to more data centers?

3:28What's kind of the gating issue for them to fulfill that revenue? Multiple gating factors. One is actually the data center itself. For that, you need land, you need power. You know, the chip side is okay at this point because NVIDIA is there. But then also you need capital. I mean, CodeWeave is not a company like Microsoft or Amazon that has unlimited capital to create these data centers. It has to go in the market and raise capital. Before they went public, I mean, their cost of capital was north of 10%. Right now, after they went public, I mean, the cost of capital has gone down to about 8%.

4:00But the entire NeoCloud's arena, whether it is CodeWeave or whether it is Nebius, really depends on private credit lending or lending by other banks to really come up with the funding to create these data centers. So I also see in the news here today that Microsoft unveils latest AI chip to reduce reliance on NVIDIA. What's going on there? So this is something that's going on with all hyperscale cloud providers, you know, whether that's Google with its CPUs, Amazon with its chip, and now Microsoft launching. I mean, they have one chip, but the first generation was not, you could say, did not do that well in terms of, you know, reception from customers.

4:42What Microsoft is hoping here right now is, you know, for training, they'll still use the more powerful NVIDIA chips. But for, you know, running, let's say, a co-pilot, They could get around and use less powerful chips. And if they do that, they actually save a lot of money. You know, in our math, we think if Microsoft is going to spend, you know, somewhere north of$140 billion this year, more than 50 of that is going to go just buying chips. And so, you know, it's a very big ticket for them. And everybody needs to be doing this, frankly, in-house. So what's the next thing we should be looking for?

5:16We've got earnings coming up this week, Anurag. Just give us a little preview of kind of what you think the market's keying on this time around. The biggest thing we want to know is where are the use cases? What kind of AI adoption we are seeing across different sectors? And that's, I think, is going to probably be the most important thing for us. We have already seen that infrastructure spending is very high. Everybody has that big AI factory in place. But is the demand coming from, you know, non-LLM customers to deploy those? And that's really, I think, one of the biggest focus areas for us going into this earning season and probably all of 2026.

5:55So what do you think is the best positioned of kind of the big tech names that you follow for 2026 here? Because there's probably as much concern in the marketplace that this could be a year where the AI story begins to disappoint, perhaps. Yeah, I mean, if you think about it, the three companies that are probably most, I mean, better positioned than the others are really Microsoft, Google, and Amazon. Because not only do they have an emerging AI infrastructure business, but they also have a legacy cloud business. And one of the ways you deploy this technology is using cloud. So if you're building an application using one of the LLMs, you're hosting it in one of these cloud providers.

6:37And we've already seen that an improvement in growth rates for Microsoft and Google. And I think this year we see that improvement coming in for Amazon as well. Stay with us. More from Bloomberg Intelligence coming up after this. Hello, I'm Michelle Hussain. And for more than 20 years, I was at the BBC. Military withdrawal from Afghanistan. But all the time I was delivering the headlines, I wanted to go further than the news of the day. to spend more time with the people shaping our world. And that's what I'm doing here on this podcast. Speaking to people from Nigel Farage, Russia needs to be taught a lesson, to tech journalist Kara Swisher.

7:19And the tech industry is running wild. You know, they've gotten what they wanted and they've seen a huge run up in their stock prices. This will be a place where every weekend you can count on one essential conversation to help make sense of the world. So please join me, listen and subscribe to the Michelle Hussain Show from Bloomberg Weekend, wherever you get your podcasts. You certainly ask interesting questions.

7:50You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's return to a little healthcare here. We can check in with Sam Fizzelli, joins us from Bloomberg Intelligence. He's over there in London covering all the healthcare stuff for us. Sam, what's front of mind as you go into earnings season this season for investors in some of the biotech and big cap, big pharma companies? Yeah, so Paul, I think what people hope to hear and expect to hear is that all that MFN stuff is behind us.

8:32All the negotiations have happened. They're not worried about any talk of it anymore. And of course, what people are also looking for is what pharma is doing, looking into 28, 29, 30, whether some patent expiries, how good does their pipeline look? Are they still solidly behind it, et cetera? Do they have any negative things to say about any of their pipeline? And also listening out for M &A, right? M &A is what their solution to some of these issues they might have with their patents are. And therefore, that's what biotech investors are looking for in terms of what are the kind of commentary.

9:09Remember, Paul, we just had this up and down yo-yo with Revolution Medicine's share price, where there was a rumor that Merck might be wanting to buy them. And at J.P. Morgan, they said, look, we've got tens of billions of dollars to put to work. And of course, that's the sort of number that people were thinking about revolution medicine. And apparently they've walked away from each other. So we've done a lot of analysis on that. But that's the sort of thing people are going to be looking for. I didn't realize that Merck was this price sensitive. I mean, how much more particular, how much more price sensitive are these big tech, not big tech, sorry.

9:43In a way, they're kind of like tech companies, big pharma companies going to be at this stage of M &A. Yeah, I mean, there's price and price though, right? I mean, what we calculated here is that at about a$30 billion value for Revolution Medicines, the only way it would have worked is if you had the largest number that we might be out there already with in terms of sales going out to 2035 and assume a massive cash generation out of that, something in the region of 60%, 70%, 80 % cash conversion. doable. Novo had a few years of having like almost 100 % cash conversion. The point is, that doesn't usually work in a standard pharma company.

10:27So we just thought that number was too much. And it turns out to be what the company came out. Not too much, but too hard to justify. I mean, Revolution Medicine is a classy company. It's got a great pipeline. Probably it's going to change the fate of many people with pancreatic cancer. We'll have to wait and see the data. So there's a lot going for them. But price sensitivity, I mean,$30 billion is a small amount of money. M &A in 2026, Sam, should we expect it to be another robust year in the healthcare space? Yeah, yeah, yeah. I mean, biotech was pretty good last year in terms of pharma buying them and biotech buying each other.

11:03We had GenMap buying Mirrors. So I think that would be still the case, whether this deal happens or not, or whether it happens at$110 a share or whatever, whenever it happens. There's plenty of good assets out there. What also we're looking at for 2026 is IPOs. We've had a couple already. It's holding above the issue price. And I think people are hoping maybe we get 20 to 25 IPOs in 2026.

11:45needs better drone defenses. You've got questions about the business stories that affect your world. Let Bloomberg give you the answers. Here's why Europe is taking years to phase out Russian gas. Join Stephen Carroll for Here's Why, the podcast that drills into one news story each week. Here's why big tech's soaring valuations have some worried. And explains it in just a few minutes. With the help of one of our 3 ,000 journalists and analysts across the globe. This current transition with AI is happening very quickly. When people buy EVs, they generally are quite happy with them. Bitcoin is pretty firmly an institutional play.

12:20Look for new episodes of Here's Why every Friday on Apple Podcasts, Spotify, or anywhere else you listen. Here's why AI isn't taking your job, yes. Subscribe to Here's Why today, wherever you get your podcasts. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern. On Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. David Wu has been one of my favorite guests for years. He was the head of interest rates and economic research at B of A for many, many years, one of our long-term guests.

13:00And then he retired. He had told me even before he retired that he was planning to write a book. And this book is now about to be published. So David Wu joins us right now. He is a founder and strategist of Unbound Retail. on his new book, Merry-Go-Round Broke Down, a novel of guilt, greed, and globalization. David, good to speak with you. You now live in Israel. You've written this book. It's about to be published, except the world is very different than what it was when you first started writing this book. What stage of globalization are we at right now? Isn't it just de-globalization? I think, you know, honestly, Scarlett, I think is as dead as Dodo, actually.

13:38And the way I look at this is that I'm just hoping, and I know it's over, I'm just hoping that, you know, we're not going to throw out the baby with the bathwater. And this is the reason why I wrote the book, by the way, because I now want to basically take the war, the battle over globalization to the general public. This is why I wrote it as a novel, as opposed to another policy book, because I want to basically explain, I want to basically make accessible the story of globalization to every person in the street, regardless of their background, so that we can make a decision about which part we want to keep and which part we want to part with.

14:11So that's really the purpose of the book, because I think, you know, to be honest with you, I think for the world to be a better place, there's never been more important for everybody. I'm talking about everybody to understand the workings of the world. So, David, to the extent that globalization is at the very least losing prominence in global trade, some people would say the era of globalization is over i don't know what's changed in the last several years um because it really seemed to be on a post-world war ii pretty solid trajectory right i think for the most part i think you know the honest truth is if you if you look at what's going on right i mean we all know the us has not only been the guarantor of the rule-based global order that's been in place for whatever 70 years let's call it that, right?

15:00And the U.S. has also been, you know, the biggest beneficiary. Now, so the question is why all of a sudden the U.S. wants to walk away from this rule-based order? I think the answer is pretty obvious, which is that the U.S. was the main beneficiary as long as U.S. economic and military domination was total. And it's become very clear that this is no longer the case. And therefore, the U.S. decided that, you know what, we want to be able to reposition ourselves in a competitive way. This is why we want to basically do away with the rules. And this is why, in a way, you know, I mean, the whole Medora's extraction from Venezuela was not about the U.S.

15:37is trying to go down to Venezuela to promote democracy. I mean, this is really about an oil grab. It's about the U.S. It's China, no longer the U.S., that is the dominant trading partner for South America, the biggest sovereign lender. And the U.S. decided that's it. That's what we're going to do. So I think from that point of view, this is what it is. I mean, it's not about globalization or not. It's about the global, you know, I mean, I think it's about the root-based international order that has come to an end. I mean, I think from that point, I'm sympathetic to the view of, you know, Mark Carney, who declared this thing is over.

16:12Right. And to the U.S.'s credit or to President Trump's credit, he never pretended that this was about promoting democracy in Venezuela, right? It was always about oil, and he was pretty upfront about that. So in your book, David, Merry-Go-Round Broke Down, you have a number of different characters to really tell the story of globalization from their perspective. There's a director of a failing factory in China, a trader in London, a Japanese housewife who learns and perfects the yen carry trade, a Mexican artist who becomes an undocumented worker in the U.S. Which is your favorite, first of all, to write about?

16:44Which is the one that you think can survive in this next stage of globalization slash de-globalization? You know, the honest truth is, and I'm embarrassed to say this, is of course the hedge fund managers. I knew it. Because in a way, it's very sad. It's very sad. I mean, this is why we have a K-shaped economy right now. You know, people, the world could be going to pear shape, but somebody is going to make some money basically on the way down. And that's what it is. I mean, this is why, like, you know, I think from that point of view, it's actually the financialization of a global crisis that's making a lot of people very rich.

17:16And I'm not just talking about, obviously, you know, the hedge funds, whatever. I mean, everybody's trying to milk this cow because what is really going on? Also, part of this is that ironically, you know, as Trump tries to dismantle the order, the only thing that he cannot dismantle is the stock market. That's the honest truth. This is why it's taking Trump less and less time to tackle. And because at the end of the day, for him to go out there and win trade wars, he needs the U.S. stock market to cooperate. I mean, the honest truth is, the U.S. economy would have gone into a recession last year if it hadn't been for the stock market.

17:51So from that point of view, like, that's just what it is. And so people get it. People get it. This is why everybody and their grandmothers overweight stocks, everybody and their grandmothers overweight gold. So basically, buying stocks and buying gold has become the Trump traits of basically a second term. And it's about how he's going to dismantle the world, but he has to tackle when the stock market even has a little basically coughing context. This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 10 a.m. to noon Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app.

18:31You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

19:05www.catar.com economic forum.com.