Anthropic’s AI Spending Surges as Microsoft Rethinks Copilot

25:49Welcome to Agentic Revenue. Adio is the CRM for this world. It meets you where you work, compounds every customer signal into context, then acts on it across your pipeline to let you move at unmatched speed and scale. With agents and automations for every job in revenue, Adio orchestrates your work around the clock. Built to handle the scale of your workloads, extensible with API and MCP, and with the infrastructure to keep up with your most ambitious agents. Loved by high-growth startups like Granola, Modal, and Etched, Adio runs the work behind every win. That's Adio, the agentic CRM, the intelligent system that never sleeps.

26:24Picks up leads at 2 a.m., catches renewals before they slip, hands you the answer before you ask. Try Adio free at adio.com slash iHeart. That's adio.com slash iHeart.

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27:14I'm Yahaira Anand. Citadel's latest target for finding talent is Silicon Valley. The hedge fund is expanding its quantitative investing operation and targeting researchers from AI labs such as Google DeepMind. The firm's head of quantitative strategies says AI raises the bar for researchers who can develop investment ideas and turn them into profitable trades. Tim. Yahaira, thank you so much. Well, coming up, Microsoft changes its course on Copilot. Details on that right after this. You are watching Bloomberg Tech.

27:58Welcome back to Bloomberg Tech. I'm Tim Stenevec in for Ed Ludlow. But first, a check on the markets. Bloomberg's Nora Melinda joins us now for more. Hey, Nora, what you got your eye on? Hey, well, we're seeing a bounce when it comes to these major indexes, both the S &P 500 and the Nasdaq 100 higher after that earlier session low that we saw driven by consumer sentiment data that fell to a four-month low. We're also seeing oil pulling back. So maybe investors kind of reassessing how they're viewing the inflationary picture long term. But I do want to take a look at one of the laggards, that being Tesla.

28:30We've been talking about it a lot this morning. Shares down by more than 1%. And this really coming after, it ramps production, but specifically a lot of the focus right now is on the Optimus humanoid robot, where we know we've been seeing some production snags, specifically as it relates to the hands on those robots. And lastly, wrapping things up, I'm looking at shares of Microsoft in focus, higher by more than 3%. Now, this is all due to the fact that the company is actually stepping away from the race when we think about chatbots. So maybe some changes happening over when it comes to co-pilot.

29:02All right, Bloomberg's Nora Melinda, thanks so much for that. Let's continue on those changes with Copilot. As Nora mentioned, the company Microsoft rethinking its AI strategy and stepping back from the race to build your personal chatbot. It's rebooting Copilot, merging its consumer and workplace assistants into one product. The move comes as Meta's new Muse Assistant gained traction with its debut this week. Bloomberg's Matt Day joins us now. So, Matt, I'm reading your story about this, and I'm thinking like, okay, this should be no surprise to anybody who has followed Microsoft for the last 15 years.

29:34It could have been Panos Panay before he was at Amazon introducing the Surface line of products more than a decade ago saying, we are about productivity. We're about getting things done. What's going on here? Yeah, that's right. It's really back to basics for Microsoft AI. You know, this time a year ago, they were talking about building a companion for everybody, you know, a chatbot-like experience, an intuitive AI that could, you know, fulfill your hopes and dreams and be a companion for you. You know, so much of that is out the window. They've said, listen, this is a productivity tool at its core.

30:04People turn to Microsoft for, you know, Excel, for PowerPoint, for getting stuff done, for filing your taxes, which is a point they made in talking about their new functionality this week. So really reemphasizing their corporate customers and then those sort of, you know, prosumer type cousins that Panos might have mentioned years ago. Do we have to look at this in the context of Microsoft's investment in open AI and the relationship that it has with the maker of ChatGPT? I think it's really inseparable that Microsoft thought that they could at one point pull off a sort of ubiquitous chat bot.

30:33That was born of that post-ChatGPT moment where they were the ones with early access to the latest models. They thought they could maybe jump out to a lead in new spaces, maybe find some new customers. I think we've definitely seen a little more sober look for Microsoft as that relationship has evolved and as the market has evolved, right? I mean, you mentioned Muse just coming out of nowhere, and suddenly everybody's using it. Matt, it's a great story. Check it out on the Bloomberg Terminal. Check out all of Matt's reporting on the Terminal as well, not just Microsoft, but Amazon as well. Bloomberg's Matt Day joining us out there in Seattle.

31:05Let's stick with Microsoft. The company's top AI executive, Mustafa Suleiman, says that leading labs and the government need to do more to safeguard AI. Over the last two months, several leading developers have disclosed models inadvertently breaching third-party websites. Our colleague Shireen Ghaffari spoke with Suleiman about the risks and asked about the argument that some have made that these incidents are just a way for AI companies to build marketing hype. It's just a strange example of the time that we live in, isn't it? That there's like so much lack of trust and cynicism that that would be one of the explanations that is so popular.

31:46I don't think there is any evidence of that. I mean, I obviously know most of these people and it's not like we're on the same team. We compete adversarily all the time, but I just don't think that's in their DNA or in their style. I've certainly not seen that in a decade of knowing both companies and all the founders and most of the leadership involved and both of those companies, Anthropik and OpenAI. So like, I don't see any evidence of that. And it also doesn't really make that much sense. I mean, they're growing their revenues incredibly. They're exploding in terms of their product market fit on both sides.

32:20Like, I don't think just it doesn't make any sense. They deeply care about safety. And they might make mistakes or have the wrong judgment. But I don't think it's like some cynical attempt to like distract us or a psyop or whatever, as some people have said. In your humanist code of conduct, you state that, you know, people matter more than AI. Do you think some AIs are valuing the AI itself more than humans? Or maybe another way to ask this is what do you think is the most novel in your humanist approach, given that all the AI companies now say that they are doing this for the benefit of humanity or trying to advance humanity?

32:59But what do you think is different in your approach with Microsoft and this code of conduct? Yeah, actually, they don't. I mean, we're saying something very specific, which is that the purpose of AI is to serve humanity and accelerate human flourishing and make us all happier and more productive and live better lives. I think there's broad consensus on that. But what we're adding to that is unless we can prove ahead of time that we can control it, then it'll be a failure as a technology and we should reject it. nobody wants to create something that we can't control, and that should be a red line.

33:41So what we have to prove to regulators, to the industry, to the public more generally, is that we can harness all the benefits whilst minimizing or eliminating the risks. And that needs widespread industry agreement on because not everybody is prepared to sign up to the idea that AIs should be subordinate. some people hold out the possibility that this is the natural evolution of our species and that we're going to become substrate independents and you know some people suggest that we might mind upload and live in silicon instead of in biology and that that is the future of of you know of humanity and i think that will be a very very dangerous idea if that really takes hold Well, there you have it.

34:32Bloomberg Shireen Ghaffari speaking with Microsoft AI chief Mustafa Suleiman. Well, coming up, Matt Weigand from Excel joins us next to discuss how the firm is deploying capital from its latest fundraise. Also, we'll talk the IPO landscape. All that and more next on Bloomberg Tech.

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37:31Picks up leads at 2 a.m., catches renewals before they slip, hands you the answer before you ask. Try Adio free at adio.com slash iHeart. That's adio.com slash iHeart.

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38:23The AI spending boom is showing no signs of slowing down. But as billions pour into models, chips, and data centers, investors are asking where the biggest returns will actually be. Joining us now is Matt Wygand, partner at Excel, focuses on late-stage tech investments, including AI infrastructure. Matt, good to have you on the program. Big, big, I think it's fair to say to a lot of people, $3.5 billion, this fund raised globally, just a couple of months ago, back in August, actually, for emerging global AI startups. I think a lot of people would know your investments in Anthropik, Cursor, Perplexity, and the like.

38:59What are you seeing as the opportunities on the application layer in this cycle? Yeah, Tim, first, thanks for having me on. It's great to be back with you guys. Excel's been investing for the past 40 years across the technology ecosystem. We've seen many of these cycles, and this AI cycle has us incredibly excited. We started out investing heavily in infrastructure, then in models. And as you ask about applications, we think the last mile of delivery for applications presents an amazing opportunity for companies like Lagor on the legal side or even Cognition on the coding side. So translating the power of these models into actual value to the enterprise, we're seeing just a number of really interesting emergent technologies.

39:41You know, I wonder what you look for as a venture capitalist in terms of moat with this type of, with the application layer. Because if people are using maybe the same underlying models to provide similar services, how do you know which company will be the one that will be able to keep, I don't know, competition away or will be the one that actually will win in it? Yeah, Tim, when you think about knowledge work, there's the ability to augment in knowledge work and to provide value more than a search-based experience, much of the way that consumers interact with AI today. But when you think about actually automating away tasks inside an enterprise, automating away enterprise knowledge work, that's where the last mile really matters.

40:26And incumbent in that is also permissioning and rules-based access controls for a lot of these technologies. This is the ditch digging that a lot of the application companies that we're investing in are focused on today. You know, you mentioned that Excel's been around for four decades. You've been at the firm going back to 2013. We can, I guess, kind of think of that as like Web 2.0 and really the rise of the application and the mobile app and a lot of what we've seen technology built on over the last 16 years in Silicon Valley. when you talk to folks who have been at the firm for 40 years and seen many different cycles, what's the context that they can provide about what this cycle looks like?

41:08Is this the biggest thing we've ever seen coming out of Silicon Valley? Absolutely. It's definitely the biggest thing we've seen coming out of Silicon Valley. And we've seen these cycles build upon each other and become more and more important with each incremental cycle. And they're always disorienting when they start. And there's a lot of questions. There's a lot of hypotheticals about where the technology will go. But if you just look at, I saw a stat just this week that across SpaceX, OpenAI and Anthropic, you're looking at potential economic value that exceeds 45 years of technology IPOs leading up to this point.

41:43And that's just in the first four or five years post a chat GPT moment for AI. So we're still incredibly early, but we're seeing growth like we've never seen before. Is there a crowding out that happens with the biggest players? SpaceX is now public, but with Anthropic and with OpenAI, because they have raised so much money and the valuations have been for private companies, just been so extreme. Well, I actually think that's the fantastic thing about this technology cycle is you do have early leadership at the frontier for AI capabilities. But what you're seeing now is a huge ecosystem of open providing value to enterprises and applications, particularly around cost, sovereign data and overall control of the model.

42:26So I think we're going to see a rising tide here that's going to lift both the frontier models as well as overall open source to allow enterprises to adopt this technology. You said control of the model. So I think it's a good opportunity to talk AI safety. It would be remiss if we didn't talk about this a little bit. I mean, this is sort of the main theme that's coming out of technology in the U.N. right now at the U.N. General Assembly. And we saw Sam Altman at the White House last night at the state dinner with Xi Jinping and President Trump. I'm just wondering how you view a question that to many people has become existential about this technology.

43:04Is it really a threat to humanity? look i think what we're seeing from the frontier models is progress around that capability accelerating which is fantastically exciting but it also means that alignment needs to keep pace and the language you're hearing from the frontier right now is that we need to put more focus around alignment and i think that's absolutely correct any technology that is being invented whether it be the automobile it be cloud and shifting workloads to the cloud required a commensurate investment in alignment to ensure that we're secure. And that's a responsibility not just at the frontier, but companies like CrowdStrike in our portfolio are thinking deeply about this.

43:44So I think we're going to see an ecosystem of cybersecurity as well as AI companies meet the moment to ensure that we can take all the benefit of this technology and leave behind some of the risks that we're talking about today, the hypothetical risks that we're talking about today that could emerge. You have got, I mean, Excel is like the poster child for a global venture capital firm, and we're talking offices in Silicon Valley, London, Bangalore. This new fund announced last month includes expansion for funds targeting the US, Europe, and Israel, and India investments. Do you think we need some sort of international framework of rules or regulations or standards for AI?

44:22I think the most important technology companies in the world of AI are going to be the ones that develop trust with their customers, And that's point one. At the end of the day, regulation will arise and always does arise for every technology that comes to the market. And I do think that there will be alignment frameworks and regulation that does show up. But I think first and foremost, if you want to build economic value and real value for your end customers, you need to develop that on the back of trust. And so the winners in this era, the companies that we care deeply about and spend time with are the ones that put trust first.

44:54They're not releasing something that they think is going to cause harm to society. They're not releasing something that could potentially be a cyber risk. They're building trust. So that's a metric now when you're going out and looking at all the companies that cross your desk. That's a metric now that you're considering for investment. Absolutely. We back founders and we care deeply about the culture and values of the companies that we back. And so we spend a lot of time thinking about what a future state looks like for their company and the ecosystems they play in. And so it's of paramount importance to us when we partner with these founders.

45:26Matt Wygan, partner at Excel, joining us from San Francisco this morning. Matt, appreciate your time and joining us on Bloomberg Tech. Well, as demand for elder care grows in the U.S., so has the opportunity for technology that can help care for a population aging faster than the industry can hire workers to support them. Bloomberg Tech's Ed Ludlow took a look at how humanoids are stepping in for this week's episode of Wall Street Week. This is Abby. How's your afternoon going so far? Very good. Short in stature, colourful in appearance, and perhaps at the forefront of elder care. Anything special making it a good day?

46:02Or just one of those nice ones? Well, I'm meeting you. Oh, you charmer. You've already made my circuits light up. This humanoid robot, designed to be emotionally intelligent, lives in Northern California. Oh, Abby's coming. Where she visits an elderly care facility once a week. She's been coming round the mountain when she comes. to interact with residents living with dementia. Today was one of our group sessions here at Eschaton, our customer. And Abby comes to the group sessions and she does a variety of activities. So today she opened and closed with Tai Chi. And then in between she takes song requests.

46:40What song were you belting out with everyone? Ooh, we were singing Coming Around the Mountain, Abby. Oh, that's a classic. Did you throw in a big yeehaw for good measure? Abby is just one of more than a dozen humanoid robots introduced in just the past three years. Some are built to perform everyday tasks, while others are for entertainment. Abby was designed with a more specific purpose, helping care for an aging population. Jennifer Haroon is the COO of Abby's creator, Andromeda. There are many robots that are being built for utility. Right. And they sound great. Moving things, lifting things.

47:17Exactly. Doing your dishes, folding your laundry. That's fantastic. That is, you know, for others to build. Because we're really focused on companionship and also we find that our customers, they care about the well-being of their residents. And that's why they're so interested in utilising Abby and she can really work together with the staff. Of all the use cases for humanoids, elder care might be among the most promising. It starts with the money involved, which in the US is a staggering sum. If we look at overall expenditures for long-term care needs, it's on the order of about$350 to$400 billion per year.

48:04This is about 1.5 % to 2 % of GDP. Gopi Shah Godha is the director of the Retirement Security Project at Brookings Institution. For every 100 people who are age 65 and over, there are about 24 people providing care on their behalves. And 20 of those are unpaid family members or friends, while four of those are formal home care or nursing home workers. As we know, changing demographics, smaller family sizes, people moving farther from families, more women in the workforce, all of those are putting pressure on the supply of people, family members available to provide care to those who need it. Check out the full episode of Wall Street Week later today on Bloomberg TV and Bloomberg Radio, 6 p.m.

48:56Eastern on the Terminal 2 and online. Coming up, Meta knocking on the door of a$2 trillion valuation as excitement around Muse sends shares soaring. We've got the details next. This is Bloomberg Tech.

49:23Let's take a look at today's big number,$2 trillion. Meta now within striking distance of that market value after a stunning rally so far this month. The stock on pace this September for its best month going back to 2013. It's been fueled by excitement around its new Muse AI Assistant. This month through yesterday, up more than 30%. Bloomberg Equities reporter Ryan Vostelica joins us now. Wow. Ryan, I was looking at some charts of meta platforms when it went back to, when it changed its name from Facebook to meta. I mean, the rally that we've seen since it pivoted from what I think many people would argue it's disastrous run into the metaverse, into AI, has been absolutely stunning, particularly over this past month.

50:13What can you tell us? Yeah, so there's been a lot of optimism around Muse, which is Meta's new AI agent sort of assistant product that came out earlier this month. It's done very well in terms of downloads. It's gotten some very strong reviews. It's really been making waves across the market. We've seen a number of consumer stocks really fall as people worry about, you know, is Muse going to be able to disrupt their business models, canceling subscriptions and so forth. It's reignited the AI trade as people think, wow, maybe these agents are really catching on with the public. That will require more CPUs, more infrastructure.

50:52And of course, it's really been helping meta. It's really helped to validate the idea that all the spending they've been doing on AI is paying off in terms of products that people want and that it will be able to monetize over time. Ryan, less than six weeks ago, shares were down 18 % for the year. This was after we got that disappointing revenue forecast in late July. The stock was among the worst performers, the 50 worst performers in the S &P through August 18th. Did investors just forget about that guidance? You know, I think the fact that we have this new product coming out, some people call it just a game changer for the stock.

51:28Now, I don't think analysts are really raising their estimates quite aggressively yet, because I think the process of monetizing Muse is something that's going to be playing out over the coming quarters. even the coming years. But right now, the fact that it saw such strong reception, such strong adoption, all this stuff is a very promising sign that they're going to be able to monetize this going forward. We've seen this sort of thing from Meta in the past with other kinds of products or acquisitions they've made like Instagram and WhatsApp, which were very popular, and then they were able to monetize them over time.

52:00And of course, it has just an absolutely massive user base and a ton of data to just be building things off of. Ryan Vostelica out there in Chicago. Thanks, Ryan. Check out Ryan's reporting on the Bloomberg Terminal and at Bloomberg.com. Shares of meta down about 3.6 % in today's trade. That is going to do it for this edition of Bloomberg Tech. Don't forget to check out our podcast. You can find it on the Terminal as well as online on Apple, Spotify, and iHeart. This is Bloomberg.

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53:12Loved by high-growth startups like Granola, Modal, and Etched, Adio runs the work behind every win. That's Adio, the agentic CRM, the intelligent system that never sleeps, picks up leads at 2 a.m., catches renewals before they slip, hands you the answer before you ask. Try Adio free at adio.com slash iHeart. That's adio.com slash iHeart.

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