Anthropic Draws Investor Offers at Over $800 Billion Value

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0:45Bloomberg 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. Anthropic rebuffs investors, pushing offers on funding that would value it at more than$800 billion. Plus, Metra expands a multi-billion dollar partnership with Broadcom to design and build custom chips. And ASML, the supplier of cutting-edge chip-making machines, raises its full-year sales forecast as AI demand fuels growth. And that demand is fueling growth when it comes to the benchmarks. Today, Ed, despite the ongoing anxiety about conflict in the Middle East, but hope, optimism that some sort of extension to the ceasefire might be found, we are at or near record highs.

1:33The S &P 500 is at a new record high. If we hold on to these gains towards the close, we're up three tenths of percent. The NASDAQ 100, ever so close to a record high that it had last year, we're up six tenths of percent. But look at the length of gains that we have had. The NASDAQ 100 is now up for 11 straight days. It has increased by 13 % over that stretch. so long as Windows Street since 2019, Ed. Single movers, this is what's driving the market right now. Look at Broadcom up almost 4%. Meta's actually also pushing high. I think that's probably more in line with where the market's at right now.

2:05This is an expansion of an existing agreement. Broadcom works with Meta for their custom silicon. And later in the block, we're going to talk to Mandeep Singh, who leads our research at Bloomberg Intelligence. We're also going to take a look at some of the pictures from when I visited Meta and get into detail about what those chips actually are. In private markets is where the big story is right now. Anthropic is drawing investor interest at a valuation of$800 billion or higher. That would be a massive jump from its$350 billion price tag. It was just in February. Bloomberg's Natasha Mascarena is part of the team that broke this story.

2:42Let's be super clear. This is investors going to Anthropic and saying, you guys should raise money at this valuation. We want to do this. And Anthropic saying, we do not want to do this at this time. Yes, you're absolutely right. I mean, we've both been covering the AI boom long enough to know that the investor interest can soon turn into an actual deal. But in the case of Anthropic, I mean, they closed their employee tender at around half of this new valuation just earlier this month. And so right now we're seeing Anthropic pushback on those prices. But these are serious term sheets that we're hearing are even encroaching higher than 800.

3:20And investors think it's... On the valuation. On the valuation, yes. And investors think that that's a good deal right now. Natasha, what sort of amount would they want to raise? Could they need to raise? Because as much as they steal all the headlines with ideas that Opus 4.7 is coming soon, according to reporting, or indeed that we're seeing Mythos being very staged, rolled out, there is this concern that maybe it's staged because there isn't the access to compute. and that costs money. Absolutely. I mean, I think at this point, we don't know the exact numbers of how large the raise could be, but we do know that there is this time crunch that everyone is thinking about when it comes to Anthropic, the IPO.

3:59As we've reported, this is a company that has already been a high profile startup for the past two years, but now there's this really real ticking time crunch for an IPO as soon as October, as we've reported. And so I believe that we're going to see new capital talks continue pretty relentlessly until then. It's really just a decision of if Anthropic thinks it needs to secure that capital before it makes the jump into the public markets. To your point, the new model gives a real exact pinpoint reason to where the capital would go at this moment. Brilliant reporting as always. Bloomberg's Natasha Mascarenes, thanks so much for joining us on All Things Anthropic.

4:35Let's go from private back to the public markets. So you see Meta up almost 2%, Broadcom is up 3.6%. That's as they expanded that multi-billion dollar partnership with the chip maker to design and build custom chips to power social media giants' AI ambitions. Bloomberg Intelligence has said that the move, along with Meta's new Muse Spark model, shows stronger confidence in in-house chips for inference. Though Meta could face more pressure on spending returns without a cloud business. Mandeep Singh in Bloomberg Intelligence helps pen that note, joins us right now. And just talk to us a little bit, Mandeep, about, well, the desire to custom chips.

5:09What sort of edge does it give it when it's already dependent on AMD and NVIDIA 2? I mean, look, the proof is what Google has done with TPUs. And when you think about, you know, token efficiency, there is no better company than Google when it comes to how they have ramped up TPUs for both training and inferencing workloads. And now that Meta is getting more confident about its own model, they have redesigned the pre-training stack over the last nine months. They feel they are at a point where they are looking for token efficiency. And I think that's where they want to go the custom silicon route.

5:48It's worked for them when it comes to recommendation engines. And now they want to do the same on the accelerator side with Broadcom. Mandy, I want to look at the specific meta chips themselves. MTIA, Meta Training Inference Accelerator. These are some images that we took when we visited the MTIA lab last month. And basically how it works is, right, they work with Broadcom on the design and architecture of the silicon. And Broadcom then goes to TSMC. And what this deal represents is expanded volume commitment on that existing technology. You can check out Bloomberg's coverage of the specifics of the accelerators.

6:26At the same time, Meta is a big buyer of GPUs and other accelerators from elsewhere. That part of your research that you say they might be inhibited by lack of a cloud computing business. What do you mean by that if they're such a great buyer of capacity? Well, so think of it this way. if you are buying NVIDIA chips in volume, you want to rent them through your cloud business because for Microsoft Azure or Amazon or even Google for that matter, it's a big source of cloud revenue, cloud infrastructure revenue that these companies are generating in their respective segments. For a meta, if you're focused on token efficiency and you're buying the most expensive chips out there without a cloud business, That makes that ROI equation very hard.

7:17And, you know, they're at a point where they feel good about their model. They have three billion users to serve in terms of inferencing. They want to do it with their own chip. Is there ever a chance that with excess compute, it does start becoming more of a cloud company matter? I don't think so. So just because of the surface area they have with the family of apps, you know, WhatsApp, Instagram, the Core Blue app, 3 billion users. If we are talking about personalized intelligence and, you know, AI agents that really work for consumers, they have, you know, a lot of demand for inferencing that they can use their own infrastructure for.

7:59So to my mind, they should have done this probably a few years back in terms of starting a cloud business like Oracle did, you know, with this GPU wave. But probably it's too late now. Those MTIA chips, what they are useful currently is ranking recommendations in timelines. That's right. Really focused on inference. So the idea that they lease them out. You've got to come back and get more into that. Mandeep Singh of Bloomberg Intelligence. Top research. Thank you very much. Let's continue with this sort of AI demand story. Look at shares of ASML down 4.4%. Now, the supplier of cutting edge chip making machines raised its full year sales forecast, but that brought it in line with analyst estimates and attention already turning to what can be expected for next year, 2027.

8:44Let's discuss with Tammy Chu. She's the head of tech equity research at Berenberg. So it's kind of this contradiction, right? The headline is like really positive. Raising that guidance, raising that outlook, the demand is clearly there. The stock falls. And so like it seems like the expectations were high. People are already looking much further ahead in terms of that demand picture. What was your read on it? Sure. So that's a very good point. So basically, I would say don't forget that to start with, ASML is already up nearly 40 % year to date and semi-equipment segment has been one of the strongest, I would say, sub-segment in tech year to date in this year.

9:26So therefore, I would call the set of results reported by ASML today as solid. They raised full-year guidance by 4%. The Q1 gross margin was way above consensus expectation because of strong mix. At the same time, they confirmed that they are increasing their capacity to about at least 80 EUV tools from at least 60 EUV tools year on year in 2027. So I would say the set of results has been very strong. But at the same time, as the most, let's say, successful or high profile tech company in Europe, ASML is always well-owned and ASML expectation has always been elevated. So I would call today's share price movement as just lack of revision on the back of this solid set of results instead of anything which is worth.

10:15Tammy, can we just linger for a moment on what you just said? 80, 8-0 EUV machines. To a lot of people, they'll say, hold on, I don't understand that. This is the world's most important maker of machines in the chip manufacturing process. And they're guiding that they'll make 80 of them. Of course, the context is they're$400 million a piece. Just explain why that number is significant. Sure, of course. So those tools, you are correct, are sold for$230 million each. So those are probably one of the most expensive set of tools in the market or in the world. And I would say that it's important because we are moving from 60 in this year and we were at about 40 a few years ago.

10:58So therefore, from 40 to 80, they're already doubling that capacity. They can serve the market, which is showing that AI demand and memory demand has been super solid over the next, let's say, six months or two years. and going forward is likely to support the further expansion of AI market or memory market. So therefore, as a result, I would say that 80 number, it doesn't look like a big number, but don't forget those tools are 230 million each. And we were at 40 two years ago. Are they in any way supply constrained here, Tammy? I mean, some on the street hope to see the number 90 thrown around.

11:39Is there a limitation factor to them? Could they be making more? So in our view, we don't think that ASML will be a bottleneck. You are right that 90 was mentioned previously as the potential capacity number. But ASML has been super careful in terms of building capacity as per customer demand, because you don't want to end up in the situation that you built 90 tools or whatever the number is, but there is no demand for that. So therefore, as a result, I would say that 80 number is a result of ASML's discussion with customers. And that AT number, for the time being, is a reflection of ASML's agreement with customer how to serve the undermarket demand.

12:20And I don't think it's a limitation in theory. In my view, ASML can actually do more if the customer need more. And what ASML has been needing is just to hire more people, expand with their supply chain. So, I don't think ASML will be the bottleneck. Let's talk about the demand constraints or fulfillment, because it feels as though it's insatiable in terms of need for chips and therefore needs for equipment. But they had exposure to China. How has that continued to unfold? So from a China perspective, China used to be 40 % of their business two years ago. And now with the non-China business being growing strongly, China is about 20 % of the total business.

13:01And China has been stable, I would say. China was slightly better than they previously expected. And China will be stable in this year. But in this quarter, the four-year race was purely because of non-China business was stronger than expected. So going forward, I would say ASMO will be continued to be driven by this non-China business AI investment memory shortage to further continue as the case for the next few years. And China, I do have the view that China will be flattish and China is working on their localization, of course. So the demand for China is not likely to fall off the cliff. So therefore, as a result, in conclusion, over the next few years, ASMO will be driven by both factors, which non-China business will likely to be the key driver.

13:46Talking about 230 million for EUV. I mean, if you think about TwinScan, EXE, some of the people I talk to, you go sub 2 nanometer, they can get 350 million for that. We'll get back to it at another date. There's a big project. It's called TerraFab. it's basically on paper but it says that in the future there'll be one terawatt of compute capacity put through fabs operated by tesla spacex and xai that would on paper make them one of the biggest buyers of asml's equipment have you and the team modeled for that being real or for you is it still an idea uh i mean we would love to and um you're absolutely right so asml do have a version of a machine which costs$350 million, which is called HiNA.

14:36That probably will be seen when TerraFab is ready to take equipment. So for the time being, we haven't put TerraFab in our numbers. But as per our understanding, the intention is real. And there has been discussion already within the supply chain about TerraFab. But for the time being, it won't be something happening in the significant way from a number perspective over the next two years. So therefore, we haven't reflected that. But I do hope that we can put that in numbers in two years. We love the numbers. Tammy Chu, thanks for joining us. Head of Tech Equity Research at Berenberg. Great to have you with us.

15:12Now, we've got a key conversation coming up with the IMF Managing Director, Kristelina Guglieva. As the IMF spring meetings, they are underway in Washington. We're going out to Francine Lacroix in a minute. This is Bloomberg Tech.

15:36Let's talk about where the IMF is right now. Spring meetings are upon us in Washington. Francine Lacroix is alongside the IMF Managing Director, Christine Nagyurgieva. Please take it away, Francine. Yeah, thank you so much. I'm so delighted to be really here by the host of the whole show, where everyone from around the world shows up. Christine Nagyurgieva, thank you so much for joining us. Look, the IMF and your world economic outlook, everyone here has read it three times just to understand exactly what the dynamic is. You've downgraded your forecast, but there's also a scenario where the world economy skims recession.

16:11How likely is that? Depends on the longevity of the war in the Middle East and the scale of the infrastructure destruction that happens in the countries over there. And that is the big unknown. We now have ceasefire. I pray it turns into a durable peace. And in that case, we can see a somewhat faster recovery. But the uncertainty has been profound. And we all need to learn to operate in an environment of high and permanent uncertainty. But even if there's a ceasefire that stays, and there's some kind of diplomatic resolution, is the market discounting the real impact on the price of oil and therefore inflation?

17:00Well, let me just say that even if the war ends tomorrow, it would take quite some time for the recovery to kick in. Not only because of the infrastructure destruction. Tankers are slow-moving vessels. Because a tanker that leaves today would take 40 days to reach the Pacific Islands. So we have to keep in mind that the impact is already baked in. Why are markets so optimistic? I think part of the reason is because there is a high concentration of financial assets in the United States. The U.S. economy is doing well. It is relatively not so impacted because the U.S. is an oil exporter, not importer.

17:55And that creates that picture of dynamism and vibrancy. But I can tell you that's not the story of the rest of the world. In the rest of the world, already there is a lot of pain. So, I mean, does that mean that the market is mispricing, that all this market exuberance is actually misplaced? What it means is that markets are geared by events in the largest economy that are really positive. The United States is the only large economy that has high productivity growth. And markets are seeing that. Technology optimism is here. Markets are rushing on it. But should there be more caution? I would argue yes.

18:38because what we are seeing in terms of supply chain disruptions is already quite significant. And with every day that passes, that hunger is not living for a destination and that delays the rebounds of the world economy. How much do you worry about governments trying to over-adjust if inflation expectations goes up? And actually, how much of a mess would this be? It's such an important question. So look at what is happening. Short-term inflation expectations have moved up. Not by much, though. We have increased our inflation projection from 3.8 % to 4.2%. It is up, but not dramatically. And very important, long-term inflation expectations don't budge.

19:31They are well anchored. May they stay this way. So it is very important that central banks act carefully. Those that are in a good position of credibility, they can take wait and see attitude. They also have to signal, we are prepared to act if it is necessary, but please don't rush. My worry is because of 22, now central banks may say, let's move faster. And that could be very dangerous because it would suffocate growth. I mean, we're looking back at every IMF, World Bank meetings. Since 2020, there's been something. 2020 was COVID. 2022, of course, it was the Russian invasion of Ukraine. Then you had tariffs.

20:17I mean, it's shock after shock. So it looks like a layer cake. Shock upon shock upon shock. Except it is not at all tasty. I can tell you that everybody has to absorb reality. And reality is we are in a more shock-prone world. Shocks will continue to come. What does it mean? For fiscal authorities, build buffers. When you are in good time, don't waste your resources. For monetary policy, calibrate policy carefully. Be prepared to act if and when necessary. And everywhere, countries have to be much more alert to the high uncertainty within which we operate. Agility, adaptability, this is what we have to do.

21:11MD, how worried are you about the UK? This was one of the countries that was downgraded the most. They are downgraded, but also we see in the UK a very mature approach to policy. The UK is very careful not to go into indiscriminate spending. And Bank of England is very clear around the approach they're going to take, the right approach to this situation. Actually, we see the UK in terms of fiscal response as a good example for others, because many other countries are rushing to throw money they don't have out of the good intention to help people. It has to be targeted, it has to be temporary, and it has to be done within the fiscal boundaries of countries, and the UK is doing that.

22:00The UK is also a country where there is a recognition that your best defense is growth. Pro-growth policies are going to be your buffer for the future. Not easy, but certainly the government is aware of it. Not easy, not easy. I also wanted to ask you about, look, the U.S., again, President Trump is going after Jay Powell, saying, look, he'll fire him, he doesn't step down from the Fed. I mean, we go back to this idea of central bank independence. How problematic is it, especially in a time where actually central banks have a very, very difficult job at hand? We have decades of evidence that independent central banks are an economic asset.

22:41They serve well when they have the opportunity to make decisions and the space to make decisions responsibly. And I can tell you one very interesting fact. Central banks in emerging market economies outperform their advanced economy peers. they have built that independence and strength of data-dependent policymaking. Again, markets seem to look through a lot of these concerns. Does that worry you that the function of almost keeping things in check is working differently? On one level, it is good that the economy functions because getting into panic is not going to help. So good functioning of markets is helping.

23:29We have seen tightening of financial conditions, by some, but not by much. We have seen currency depreciation of some emerging markets. Again, not dramatically. As long as we have a trajectory for the war to end and for economic activity to restart, we are in a very good place. But if we have prolonged periods of time, it will be hard to keep optimistic. I also wanted to ask you a little bit about some new countries or old countries that are trying to access some of your programs. I wanted to start with Venezuela. So is the IMF ready to recognize the acting president to start negotiations? At this point, Venezuela does not have recognition by majority of members.

24:17This being said, we are prepared to engage actually at a junior technical level. We have been approached in good faith by the Venezuelan authorities, they desperately need help. Because, as you know, the economy shrank from this to one third. They have risk of hyperinflation knocking on the door. Eight million people are outside of the country. So once our membership decides, even when they decide to recognize, we are ready to go. Soon? It is a matter of membership. I can tell you one thing, that there is an understanding among the region, the neighbors of Venezuela, Brazil, Colombia, Mexico, Chile, they don't want a failed state.

25:09They want Venezuela engaging with the funds. MD, thank you so much for joining. I'll send it back to you in New York. Francine, a fantastic interview as ever. And we've got more coming from you. Next up, the ECB governing council member. This is Bloomberg Tech.

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26:32Welcome back to Bloomberg Tech. The European Central Bank is facing a pivotal decision at the end of the month. Inflation risks are building daily as the Iran conflict drives energy prices higher. Bloomberg's Francine Lacroix is standing by with Joachim Nagel, Bundesbank president and governing council member of the European Central Bank. Francine. Yeah, thank you so much. I'm so delighted to speak to Joachim Nagel. Thank you, Governor, for joining us. Look, you've said that a hike in April is an option if the inflation outlook sours. Are we there yet? Well, I think it is a very opaque situation.

27:08I think, I believe from today, from this point, I would say there's not enough clarity what will happen in April. But I still keep the position that we should have all the optionalities that are necessary to tackle the situation. And we will take into account the data we will have in April and then we will see. And I understand things fluctuate on an hourly basis. But what do you need to happen to support a rate hike in April? Well, what I see is that discretion around the Strait of Hormuz is a very essential one. This is the heel of the world economy. So this has to be resolved. And I believe this is ongoing, this uncertainty.