Amazon Debuts New AI Chips and Models at AWS

0:01Bloomberg Audio Studios Podcast Radio News.

0:11Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech. Coming up, we go to AWS Reinvent in Las Vegas to discuss the cloud company's new chips, new models and new AI agents. Plus, Michael Dell donates an unprecedented $6 billion aimed at jump-starting the investment accounts for 25 million children in America. And Warner Brothers' Discovery receives a new round of bids with Netflix flashing mostly cash for its offer. We'll have the details, but first let's check in on these markets, which are flashing green. We actually have a bit of a reprieve after yesterday's sell-off.

0:52We're back into risk-on mode, tentatively so, across the benchmarks. We're looking at the Nasdaq 100 up 9%. Of course, NVIDIA leading the chart in terms of points, but all of some of the MAG7 really dominating on the day. You're looking at Bitcoin even getting a bid. Yesterday, it was woeful. Today, we find some sort of stability. We're up more than 5%. In fact, largely crypto is in the green. We also turn our attention to some of the key MAG7 that we want to look at in terms of their own events, their own announcements, and then looking at what's happening with Amazon. We're currently trading up 1.3%.

1:22We're getting a little nudge higher on some new news coming out about its own large language models, about updates, of course, to its own AI agentic focus. And key has got to be Tranium 3, all about its chips. Let's get straight over to Ed Ludlow. You're in Las Vegas at the reInvent event. Yeah, it's probably the Tranium 3 headlines that move the needle right. This is a push forward, an acceleration of bringing the latest generation accelerator to market called Tranium, but useful in both the training and inference use case. and much as Amazon has done in prior generations of Tranium, it's talking up the cost and performance metrics of it.

2:02Forex, the prior generation on price per performance. It was interesting when the headlines hit. I mean, we're up 1.5 % on Amazon. A small move lower or pairing some of the gain on both Google and NVIDIA. And this is the story, right? Amazon wants to expand the use of Tranium servers beyond one core customer, which is Anthropic. and they're giving evidence in this release. We'll get to it later in the day when we speak to Matt Garman in particular of the savings that those customers are made using it while also making sure they have capacity that is based in NVIDIA GPUs. And of course, the open AI deal that AWS has, $38 billion of it is predicated on availability of NVIDIA.

2:43I mean, the eye, the focus must be so trained on what's just been seemingly a positive thrust for Google when it all comes down to its own chips, right now? Yeah, in recent weeks and months when there have been reports about Google's TPU and the idea that Google Cloud will have a big third party use it, it's moved the needle on those shares. What universally right now the hyperscalers are experiencing are supply constraints, right? Supply constraints where they're basically saying this is out there in the real world. On Trinium 3, it is out there in the real world, by the way. General availability from today.

3:23And they've also talked about the pipeline through to Tranium 4, but you're right. It's all about TPU. It's all about chips, but it's also about their own innovations when it comes to large language models. Lest we forget, yes, they've got an integration of OpenAI and Anthropic Claude, but they've also been moving the needle on Nova 2. Yeah, Nova 2, an updated year-on version of its first kind of in-house foundation model, a variant of which Omni can take inputs, multimodal inputs of text, video image, responding kind. But that's going to be the question of the story today. You know, AWS is number one in cloud and cloud computing through scale, through leveraging infrastructure.

4:03But when does it become number one in AI? You know, not just being a place that hosts others' models, but has evidence that its own foundation model is resulting in something tangibly useful, particularly for enterprise customers. And I'm pretty sure that that's what those that have joined the show today want to talk about. Yeah, we've got so many conversations come up in this show, but you've got to be sticking around because we thank you, Ed. We're coming back to you because throughout the show, we'll have interviews. But at the end, we'll have a sit down interview with AWS CEO Matt Garman at 3 p.m.

4:32Eastern time. Meanwhile, look, this is all a story of infrastructure about big tech companies such as Amazon, but also Alphabet, Meta and Microsoft spending heavily on AI with expected capital expenditure of over$380 billion combined in their current fiscal years. That's going against big tech's mantra for the past two decades, let's call it, which is more about delivering growth while keeping really tight lid on spending. It's a real flip-reverse. Let's talk about it. Bloomberg's tech equity reporter, Carmen Reineke. And sort of you've all been assessing how investors take this sudden wild capital expenditure.

5:06Yeah, I mean, it has been the talking point and the thing that we've been focusing on the most with some of these big companies. And as you said, it really represents a change from how they've operated over the last two decades. They really had very capital-light businesses and were able to be very profitable, grow exponentially in some ways because of that. And so now having this shift, we're seeing investors reward it on some ends and then really punish it on others. So, you know, Microsoft, we saw, you know, jump after its latest earnings report. But Meta sort of got hit because Zuckerberg, you know, didn't explain enough about the return on investment of the spending.

5:41The other thing that's interesting is that this capital expenditures as a portion of revenue have jumped to a level that's not normal for tech companies. So for Microsoft, its capital expenditures are now 20 % of its revenue. And in addition, you know, Alphabet and Amazon, these spending to sales ratios are some of the highest in the market. Okay. So we now have to perhaps digest a period of higher capital expenditure. We're meanwhile worrying about some of the financing that goes on within it, some of the circular financing that's been the narrative. But today the market jumps. Why? What are you hearing from the investors you're talking to?

6:16Yeah, I mean, I think that last week was very interesting. I think we're seeing a little bit of debt buying, some more optimism and enthusiasm coming back into the market. There's a, you know, NVIDIA's CFO was speaking this morning. There's just a lot of tech news sort of coming back into the market that people are getting excited about. Well, we'll see if it holds. Santa Raleigh upon us potentially, Carmen Reineke. We so appreciate your time. Let's talk about the crypto markets because they too are recovering today after a heavy sell-off yesterday when Bitcoin slid as much as 8%. Let's take a look at strategy as well.

6:49The artist formerly known as MicroStrategy, heavy investor in Bitcoin, gaining some support after scrambling to calm its own investors, creating a$1.4 billion reserve to fund dividend and interest payments rather than having to potentially sell Bitcoin as a last resort. Newberg Senior Digital Finance Editor Anna Herrera is joining us once more from London. Anna, why today the dip buying? It's hard to know with crypto, as I'm sure you're aware of. And it's crazy to think that yesterday we were down 8 % and thinking of all the macro condition that might have been leading to that drop. So, you know, we were speaking to traders today and investors, and it seemed that although the price is up, the sentiment is still a bit cautious and volumes aren't as up as they were before.

7:36I think people are sort of assessing that crypto in reality has been on a downward spiral a bit since October 12th, the 11th when the price crashed. And so while today we're a bit up, in reality, we're still pretty lower than we were around a month ago when Bitcoin reached its record highs. I mean, negative Bitcoin funding rates still in anxiety, extreme fear levels with coin market cap sphere and greed index, there's still a lot of comfort needed to an investor base that's been beaten up, particularly the retail trade, who've tried to gain exposure, not just by owning crypto, but by owning crypto related assets, such as what leveraged bets on micro strategy, now called strategy.

8:16And talk to us about how much retail have hurt here as well as institutional. Yes, obviously, we know that people were trying to retail investors were trying to get exposure into Bitcoin and crypto through buying ETFs that were exposed to strategy or strategy stock itself. And that's fallen dramatically over the past year. And so, you know, they've been hurting. But at the same time, we've been trying to wait to see if more institutional buyers will come in and offset that. But it seems to be, from what we're hearing, a sort of wait and see mode, partly waiting until the Fed decision next week.

8:45So it's kind of in a way, same old with crypto. One day it goes down 8 percent, the next day it's up 5 percent. The asset class seems to be maturing and there's more ways to invest in it, but maybe not much has changed. Bloomberg, Anna Herrera, always great to have you. Thank you very much. And stay with Bloomberg because there's a conversation coming up you won't want to miss if you're in crypto. Fong Li, strategy president, CEO, coming up in the next hour on Bloomberg Crypto. Elsewhere in that ecosystem, not all is gaining support. We're watching shares of American Bitcoin Corp. Look at that, down 44 % at one point, down 50%.

9:18The Bitcoin miner, which counts Eric Trump as a co-founder and chief strategy officer, seeing multiple trading halts amid the volatility. Now coming up, we'll be joined by Colleen Aubrey, Senior Vice President of Applied AI Solutions over at AWS. We are live from the company's re-invent conference in Las Vegas. This is Bloomberg Tech.

9:52Good morning from Las Vegas. Let's talk about some of the announcements out from AWS. Colleen Aubrey is Senior Vice President of AWS Applied AI Solutions. And Colleen, you basically work with the full spectrum of the smallest startups to the biggest enterprise customers that AWS has and the public sector. And distilling it as far down as I can, you basically help them to take technology and innovate, make whatever they do better. Yeah, the mission I'm on is really to put AI into the hands of the business on a day-to-day basis and really make it work for their business in production every day, helping them to deliver better experiences to their customers.

10:29We have a new generation of AWS Silicon and server design. We have a new generation of Nova model. Yeah. And we have frontier agents. That's right. And I think you probably heard me at the top of the show. But I think the big question about AWS reInvent is, what is it in this year's offering that takes AWS beyond being the sort of number one cloud computing platform for capacity to giving something tangible, useful, that can improve a company's own technology? Yeah, there's probably two areas that I'd like to talk about specifically. For me personally, one of my products is Amazon Connect. and this started as a contact center application, but today, you know, I see it really as an agentic product that's actually looking at whole customer experience.

11:14And so for me, this is where we're putting our infrastructure, our silicon, our models, and now today, like, bringing that all together in a product that can work for businesses. So we launched 29 new features on Sunday, we announced that. And I would say there's four key agentic capabilities that come with that. The first is actually AI voice and allowing customers to interact in a very natural way using Novasonic and having agents actually resolve issues for them on their behalf and in the background. The second is actually putting AI to work as a teammate next to customer service representatives, helping them to actually get tasks done, complete the paperwork, the processes, provide recommendations and help them really have a better view of the customer so that the conversation they have with customers is much, much richer.

11:58The third area is actually combining what I call clickstream, which is the paths that Customers will take through websites and profiles to be able to present a much more specific recommendation on what a next step might be for a customer. And finally, one of the big issues for companies is sort of confidently putting AI to work in their business. And in this case, we've added observability where you can inspect how an AI is reasoning, how it's thinking, what tools it's using. So companies can really observe AI in the same way they would think about the people in their business working with customers.

12:33I want to go to point number two. You used the word teammates. Yes. But you've in the past talked about a hybrid workforce, people and agents. A lot of what's come out since Sunday night seems to reflect that. You want to increase the number of useful agents that also internally, we can talk a little bit about what you're encouraging Amazon teams to do. But the idea is that workforces of all types should get comfortable working alongside agentic AI. Yeah, I see a future where actually everyone is managing a team of AI agents. And I think our frontier agents with software developments, DevOps and security is sort of one of our first moves in that direction, where you actually have a teammate with a developer who's able to address complex problems, able to work over hours and days, be able to solve for whole objectives and to scale with that person.

13:25that the role changes. I think we all are managing AI teammates, a team of people that are all of AI people that are out able to, we can delegate to, we can inspect what they're doing, we can iterate with them, provide feedback. And for me, that's where I think we end up going. I think we're clearly moving that way in the customer service direction. And I think the developer experience is also clearly moving that direction. You're in a leadership position at AWS, but you have been with Amazon broadly entering your 21st year. You're part of the S team, the leadership team generally, internally within Amazon's many arms, is this like, particularly in the context of the technology you've released here at reInvent 2025, is this at a stage where Amazon teams are dogfooding this or it's just inherent the use of technology?

14:11You want your own teams to be, I think, AI native. Yeah, that's true. And I think what I observe within Amazon, certainly we're all very keen to get our hands on our new frontier agents. And that is something we've had in beta internally. and I think teams are very excited to use that in production. We use Connect within our own customer service teams, our seller support teams, our AWS support teams, for example, and so we continue to iterate and learn from that. And I would say broadly across Amazon, we've really tried to sort of embrace the chaos, to put AI in the hands of every person in the company and to see what they can do, how they can transform, how they work, what they learn.

14:50And so you have a lot of teams, sort of grassroots, sort of trying to solve for what is the new way of working using AI. And some of those experiments don't lead anywhere. And some lead in a place that's really meaningful. And then you have sort of this social contagion that happens that people learn from each other. Okay. AWS, number one in cloud computing in the sense of scale, infrastructure, deployment. Is it number one in AI? I think we have all the pieces in place. And we're well on our way. We're very, very focused. And what I really like about our strategy is that we're working all the way, all the way the full stack, you know, from clean energy, chips, data centers around the world, bedrock with real great selection, including our own models.

15:34And I think Rohit's making really fast progress on that. And I think for Swami and I really trying to put those, all of those pieces to work, we're out of the box that a business can get value. We've got a conversation with Swami coming up in a bit. Colleen Aubrey, SVP of Applied AI Solutions. for AWS. Thank you so much. Carrie. What a great conversation. Let's stick with Amazon as well because the company, which is vast, it plans to offer deliveries of hundreds of household items, including some fresh groceries or over-the-counter medicines within just 30 minutes. The test program has begun in Philadelphia.

16:07We understand it will begin there and it's home city of Seattle. Now coming up, the Dells make an unprecedented$6.25 billion donation to the Kids of America. More on that next. This is Bloomberg Tech.

16:34Michael and Susan Dell are donating$6.25 billion, gifting 25 million children in America$250 each in an effort to jumpstart their investment accounts for the future. The proceeds build on the Invest America Initiative, or Trump accounts, as they're known, which will cede$1 ,000 for every child born from 2025 to 2028. Let's talk about all of it with Bloomberg's Tom Maloney. And how unprecedented is this, this size of philanthropic gift? It's pretty unprecedented. I mean, there have been big philanthropic gifts before, but something going to cover 25 million children in the cover really is pretty unheard of.

17:11And a gift to go through the federal government. I mean, he's donating the money to the U.S. Department of Treasury. That's pretty unusual, too. So it's quite an unprecedented gift. Let's go back to what all of this is sort of sitting alongside, which is invest in America. We sort of saw that roundtable alongside other CEOs, a lot of them tech, who have been thinking about how to get money into the hands of children to invest in the longer term, Tom. That's right. Yeah, those were created as part of the one big, beautiful bill. As you mentioned,$1 ,000 for kids born between 2025 and 2028. And what Dell is doing is kind of covering the gap for children 10 under who aren't covered under that program and giving them$250 to be used for things like college or starting up their own business or a home deposit when they're 18 or older.

18:02now Michael Dell and his family and he's the 11th wealthiest person in the world but it's other tech moneyed people who've been putting this initiative to work and I think about really Brad Gerstner who has been the driving force initially behind what is this sort of invest America outreach he set it up back in 2023 of course we know him from Altimeter yeah that's right he's been working on this for a couple of years as you mentioned it predates Trump obviously you know, the name Trump accounts certainly got his attention and I think helped put it into the one big beautiful bill. But yeah, it's kind of an issue that Democrats and Republicans have been interested in something like this, a product like this that gets everyday Americans invested in the stock market from a very young age.

18:53It's kind of a bipartisan issue. Yeah. And Brad over at Altometer, he's been saying that this is a platform for every company in America to think about how they reward employees' own children. But it doesn't need to just be a company. It could be mums and dads, churches, synagogues, many to be putting it aside in a sort of tax efficient way, Tom. What's interesting is, of course, Dell stock has moved on all of this. And this comes after a truth social post. Yeah, that's right. Dell stock was up about 4 % last time I looked. Trump obviously singling out Michael and Susan Dell for their donation this morning.

19:27He was seemingly very happy about it. And, you know, when Trump tweets about something, it tends to move stuff in the market. So we're kind of seeing that. I don't know if it's going to last, but there you go. And of course, that contributes to the net worth of the Dell family on the back of that Bloomberg's Tom Maloney. It's been fascinating talking to you. Thank you very much indeed. Let's turn now to Warner Brothers Discovery. The company has received a new round of bids, with one from Netflix consisting of a mostly cash offer, according to sources. For more, Bloomberg's Michelle Davis, who covers M &A in media, joins us now.

19:59So can we break down how these are starting to look? Because they're meant to be sweetened. They've been sweetened, yes. So the bidding is heating up. Yesterday, Warner Brothers had asked for sweetened offers from all of the companies. So we know they received offers from Netflix, mostly cash. That was a big surprise because people were expecting it to be stock. You know, Netflix's stock has been doing pretty well. They have great currency, but they're also an investment-grade company, so they can't afford to raise a lot of money. We hear they're in the market talking to banks about tens of billions of dollars for a bridge loan.

20:29So there's Netflix, there's Comcast, which has also bid. It only wants the streaming and the studios of Warner Brothers, similar to Netflix. We're still trying to glean the details of that offer, but we have heard that it likely includes a little more stock than the cash offered by Netflix. And finally, Paramount, the one who kicked all of this off, they're the only bidders who have actually made a play for the whole company, we're hearing that their offer is also completely cash. They have backing from Larry Ellison, David Ellison, you know, some of the rich, wealthiest people on earth, and Middle Eastern money, as well as Apollo, are putting in some of the financing for their offer.

21:03And it feels as though that's been the narrative, that the Ellison bid might be one that is more approved of by the administration. But are there any blockers, are there any issues from a regulatory perspective for Paramount Skydance just getting any bigger, or any of these players getting any big at? Yeah, so the Warner Brothers board is really, I mean, they are in a position where they have lots to assess, but it's not apples to apples because they're evaluating, you know, a bid for the whole company in cash, a bid that might include stock and cash, but only for part. And then, you know, other structures that are unclear.

21:35For Paramount and Comcast, there's clearly lots of synergies that they could achieve by combining the companies. But there's a view that doing that, you know, to achieve those synergies, they would cut a lot of jobs, maybe thousands of jobs at the studios, by combining these studios. Netflix, their argument might be, we're not going to do something like that. And so it'll play better, you know, with labor unions and regulators. But Netflix also already has a lot of power. So it's a big wild card to see how the regulators are going to view that. Yeah, many are going to say, is YouTube being counted in the numbers, how we think about this from a regulatory perspective, from a state and federal perspective?

22:10Timeline, any sort of idea? We're hearing that they want to get this sorted before the end of the year. And that makes some sense because for the banks who are underwriting the loans, they don't want the loans on their books at year end because it's going to cost them a lot more money, which means the bidders won't be able to pay as much for these assets. So we've heard that there's a deadline of before the holidays. A decision could be made as early as this week. You know, the binding offers are in, so that means Warner Brothers could move quickly. But they're also giving themselves room to ask for more bids, you know, later on this month.

22:40Michelle Davis will be across the story. We appreciate it. Now coming up, we're going to We're going back to AWS re-invent. The conference is on in Las Vegas. We're going to sit down with Swami Sivasabramanian, vice president of Agentec AI for that company. This is Bloomberg Tech.

23:01Welcome back to Bloomberg Tech. We check in on these markets that are losing a bit of their earlier steam. We're still holding on to three-tenths percent higher, but remember we're up more than a percentage point in earlier trading as NVIDIA perhaps loses some of its edge in terms of points perspective. Apple leading the charge right now, Intel as well. I'm looking at Bitcoin, though, still holding on to its gains. Best day since May. We're now at the highest level, 90 ,299, since the end of November. So, a few days. But we're up 4.7 % as we see a little bit of shifting in sentiment. Let's look at Keyname that has shifted in sentiment.

23:32It was beaten up in November. Now we're still up 2%, let's call it. We're rolling over somewhat. But Palantir and other AI names have seen a bit of love today. It seems as though Palantir could be a trillion dollar company. That's what Dan Ives has been saying on the day. But really, he's looking at big tech and Mag7 to add 20, 25 percent in terms of share growth for 2026. But for now, we return to one of the key Mag7 in that pile. And it is Amazon. And its AWS event is upon us in Las Vegas. Ed, take it away. Yeah, thank you very much, Cara. Let's talk more about Amazon's agentic plans with Swami Siva Subramanian.