Intel Approaches Apple About Investment

24:15And that's what's really going on here. This is a civil war within the Democratic Party, right? Where the extreme left is pulling the Democratic Party. and the moderates are afraid of the extreme left. It's the inverse of the Republican Party when they had the Tea Party and the Tea Party was pulling the Republican moderates too far to the right because they were afraid of them in a primary. That's what's happening here. It's a battle for the soul of the Democratic Party. And the Democratic Party is not anti-business. It's not anti-police. That's not who we are. We're not about redistributing income as a policy, right?

25:03You tax to provide a service. You don't tax to take money from the rich to give it to the poor, right? That's why Donald Trump calls him a communist. So this is not the Democratic Party that I believe I represent and traditionally has served this nation well. He has zero experience in the position, never managed anything, five employees, never had a real job. and when you're willing to consider chief executive of New York City, no management experience, ran five people, now he's going to run 300 ,000 employees, $115 billion budget. You wake up any morning, you could have a terrorist attack, you could have another COVID.

26:00It just demeans government and demeans public service in a way that I just find abhorrent and I'm going to do everything I can to stop it. Governor Cuomo, thank you very much. Appreciate it. Thank you. I'll send it back to you. Our thanks to Bloomberg's David Gura there. And a reminder that Michael Bloomberg, the founder and majority owner of Bloomberg News, parent Bloomberg LP, has endorsed Cuomo in the primary and contributed to his PAC. Ed.

26:31Caroline Hyde:Okay, we have some breaking news crossing the Bloomberg. Amazon has agreed to pay$2.5 billion in penalties and refunds and to change its process for how you cancel Prime subscriptions. This isn't the FTC case against it. So the split is that the company will pay$1 billion in civil penalties and refund$1.5 billion to customers. The accusation that the FTC had made was that Amazon was misleading millions of customers into signing up for Prime, but then making it intentionally difficult to cancel. They will now change that process overall. When the news broke, there was a brief spike into positive territory, but we're still down two-tenths of 1%.

27:10Caroline Hyde:The extraordinary thing, Caro, is remember that the trial in this case with jury selection was only three days ago. And they've reached a settlement,$2.5 billion in just three days. Let's get to another story out of the UK. AI data center developer Nscale has just raised$1.1 billion just one week after announcing its partnership with NVIDIA and OpenAI in the UK. Let's get more from Bloomberg's Mark Bergen. A lot of focus at the moment on the NeoCloud and N-Scale kind of fits into that. What are the details from this story? We know a lot more than what you said. This is$1.1 billion. They've described it as one of the largest.

27:47Actually, they said it's the largest Series B round in Europe. You know, it's really fascinating to see the scale, though. We have some in our story in Bloomberg today. But this might be just the amount of money they need to purchase just one of their data centers they have had planned to build in the UK. And I think they are claiming to go out and purchase, deploy 300 ,000 NVIDIA GPUs. So they're going to need a lot more money. We're not sure if this is just equity or equity in debt, but they're likely to be raising probably both of more and very soon. And your investigations before showing that Nscale, very briefly, Mark, has never built a data center before.

28:25Yeah, I mean, why do you need that experience? To be fair, they spun out of a crypto mining operation, And similar to what Core Reve did, they have hired senior executives that have a lot of experience, but the company itself hasn't. Bloomberg's Mark Bergen, short and sweet, and we so appreciate it. Thank you very much. Coming up, the wave of AI data center announcements keeps on going. We'll talk to Barclays next. With the highest number of young STEM graduates per capita in the EU, Ireland has the people and skills your company needs to succeed here. IDA Ireland, the national investment development agency, can help you find and nurture the people you need to internationalize and thrive.

29:04Our talent is just one of the extraordinary benefits Ireland has to offer. Learn more at IDAireland.com. Invest in extraordinary.

29:16Caroline Hyde:Support for the show comes from Public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions, buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined.

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30:39Learn more at brex.com slash AF.

30:47Welcome back to Bloomberg Tech. A quick check on some key names that move this market today. Look, we are just questioning some of the valuations within the S &P 500, within the NASDAQ. We're on pause ahead of those big inflation numbers tomorrow. But I dig into individual names that continue to push higher. Corweave turned around, it was trading lower, and then it goes into the grain by 1.5%. Why? They've got yet further commitments coming from OpenAI to continue to build out their data center needs. They're upping it by another$6.5 billion to more than$22 billion in commitments. That's important because we'd worried about perhaps to focus on Microsoft as a key client for CoreWeave.

31:20Now the NeoCloud really pushing in to other areas of growth. We're also looking at NVIDIA up 7 tenths of a percent. This is, we just digest, this phenomenal scale of investment coming from this company. Whether it's backing Intel last week to 5 billion, whether it's$100 billion in terms of equity going into open AI, no matter what, when they commit to increase their AI spend, the market rewards them, Ed. And interesting notes coming out on this company today as well.

31:45Caroline Hyde:Yeah, I think NVIDIA is worth lingering on. Barclays out with a new note, raising its price target from$200 to$240, maintaining an overweight status on the stock. Barclays research analyst Tom Amali joins us, the author of that note. You are in the camp of people that listened to Jensen Wang when he said, this is going to be a$1 trillion opportunity or industry. And then very recently said, actually, it's going to be a$3 or$4 trillion opportunity. And now you, like many, say it's a bit more believable to us. just explain your thesis. Perfect. And thanks for having me on the show. I think in a prior segment, you had Joanne on talking about how the pie keeps on growing.

32:25If you look at compute announcements since December of 2024 through date, we're looking at over$2 trillion of announced dollars of compute and over 40 gigawatts of power. If you look at what Jensen said historically, about 65 % to 70 % of that is related to compute. So if you look at what it could mean for NVIDIA, It's about$1.5 trillion really coming into the pipeline over a very recent period of time.

32:50Caroline Hyde:Tom, you saw the announcement between OpenAI and NVIDIA, right, from earlier this week? Yes. Okay. So on the Internet, the analogy or metaphor that people are using with that is it's like an extension cable. NVIDIA is the extension cable. They're unplugging from the wall and just plugging back into the cable. Do you see what I'm asking about NVIDIA puts$100 billion into OpenAI in order for OpenAI to take$100 billion worth of NVIDIA gear? Absolutely. How do we interpret that? I mean, there's two big concerns with the deployments of AI right now. It's one, power, and then two, the circular reference issue that you see brought up again and again.

33:33I would say you can flip this argument on its head. Obviously, it's early days here, and there is reason to be careful about circular issues in terms of investment. But I would ask, where should NVIDIA invest their money? I think buying back stock now would be one option. But Jensen's in founder mode here. He's looking to create an ecosystem where you're having more and more players actually drive AI further on. And I guess the other point would be this is not just Jensen. You're seeing investments from AMD and Broadcom. And this is going to be something that's driven forward by a group of companies.

34:04But clearly a concern that many investors bring to light. But I do think that NVIDIA is in a unique position where they're taking the capital that they've made and they're reinvesting it in their space. So I can look at that argument both ways. Look, they've just deployed in Europe with Nscale. They've been deployed in NeoClouds and CoreWeave, for example, Tom. What's so interesting is where the house of cards could fall. What would limit this up and to the right perspective about AI compute needs and that feeding in to NVIDIA? and indeed all of the semiconductors that currently have a stake in providing AI accelerators?

34:41As you mentioned earlier in the show, it's the return on investment first and foremost. And I think that what we do in the note that we had out today is try to show what the investment from a chip perspective is looking like versus what the ROI is. And we do that by looking at hyperscaler RPO. So you look at AWS, Azure, GPC, Oracle. And over the past several years, that's been growing at a 30 % CAGR, so essentially hyperscaler backlog. that's exploded to over 80%. And if you look right now, the backlog's at over$1.1 trillion. So what you're seeing first and foremost is that you're getting some ROI, you're getting some business that's stepping up.

35:16That's an area of the world that we can do a little more work on. The other side, which is less in the semiconductor ecosystem, is the power side, where if you look at what 40 gigawatts means, you're talking multi-major cities in terms of the deployment. So that's really where the investment needs to focus on from this point forward, because if you don't have a utility bill for someone living in a city and that's being sucked to another data center, that's a serious problem. Tom, it's interesting that I think Alibaba chimed in, the CEO saying$4 trillion is his number too by 2030. But I cast my mind back to March when there was a wobble in the market.

35:49When we did start to question some of the valuations, that was because the chairman of Alibaba had said there was a bubble in terms of AI infrastructure investment, particularly in the U.S. So how much of this, what alarm bell rings for you when we start to get into a valuation that screams bubble? Because you see NVIDIA could go up another 30 % or so. Yeah, I think there's two things to look at. The first sort of reset in valuations this year came around DeepSeek. And that was a change in where we saw the AI revenue coming from. We've transitioned to what was scaling laws in training. So all these guys making money on training.

36:24And now we're moving more to the era of inference, which is people actually using these models. seeing agents out there actually serving individuals. And so you've seen a shift in where compute spend has actually gone. So the ROI is helpful, and it makes me feel a bit better as we go along here. And we'll continue to look at OpenAI, Anthropic, and you'll see more fundamentals come out as time goes along. But the concern is always these are very large numbers. Where do these dollars come from? First step is look at hyperscalers. If you look at today, the CapEx as a percent of op income is still around 50%.

36:57I wouldn't start to get worried until you're above 100 % and getting to a position where you're obviously taking on debt to do this. And then secondly, I would look at the sovereigns, where globally you're starting to see countries invest in this. And that's additional dollars that is outside of that original pie. And that was always the proxy for when do we run out here? When do we get to the limit of hyperscaler CapEx?

37:17Caroline Hyde:Tom, you did not reference Intel in the note you published overnight, but you do cover Intel. I just wanted to ask for your reaction to the NVIDIA equity investment in Intel, but actually for me more the partnership on x86 and also in the PC domain. How do you interpret that, please? Yeah, I think just first and foremost from a very 30 ,000-foot view, it's good that Intel is getting dollars to bridge the gap here. There's obviously been some capital concerns. When it comes to how it moves the technology profile forward, we've seen a government investment. We've seen some other investors, Brookfield and Apollo, over the past several years.

37:57And you haven't seen a big change in the technology profile. What I would argue is that this is very favorable for NVIDIA. You potentially have Intel focusing an AI product for x86 CPUs in the data center that will help with the 36 and 72 systems that NVIDIA has out there today. On the PC side, gaming PCs already have a discrete GPU. NVIDIA is already there. Maybe you could see some collaboration that helps drive forward Intel's push on the AI PC side. But largely, this seems like a more favorable agreement for NVIDIA. And funny how times change with NVIDIA stepping in to rescue Intel here.

38:31Caroline Hyde:Okay, Tom, let's end here. So there's consensus that in AI and data center, at least this will be a$4 trillion industry over varying timeframes or addressable opportunity. Have you and your colleagues and peers calculated how much of that you expect NVIDIA to take? And have you factored in competition from AMD, Grok, and other custom ASIC solutions that are coming out? Yeah, so I don't think we've done a full analysis when we get to that$4 trillion. Boy, that would be great if we do. But I would say that right now, general purpose silicon still represents greater than 90 % of the market. And that's NVIDIA and AMD.

39:08Broadcom, with their announcement, and particularly with OpenAI, is starting to take more share. If you look at the longer-term horizon, I still think general-purpose silicon makes up a majority of the market, say 60-40. But you do see from where we are today, general-purpose silicon is a much larger piece of the pie. So again, as Joanne was saying before, it's smart to be invested across these names. If you look at Broadcom, they're just growing at a much faster rate than where they are today, which makes that story very interesting as well. So I guess in summary, just$4 to NVIDIA over the long term as I look at the market, but a faster growth rate from the custom silicon guys.

39:44Caroline Hyde:Tom Amali from Barclays, I think the first time on Bloomberg Tech, and we've really enjoyed it. Thank you very much. Carrie, what you got? It is time now for Talking Tech. And first up, Elon Musk's ex-AI in the U.S. government has signed a deal that allows federal agencies to use Grok AI chatbot. Now, the deal is part of a push to speed up adoption of new technologies like artificial intelligence. And at just 42 cents per agency, it's the cheapest contract yet under the government's new initiative. Plus, the Trump administration has launched investigations into imports of robotics, industrial machinery and medical devices.

40:15The probes set the stage for tariffs, which the president is allowed to place on goods deemed critical to national security. And Apple is calling on the EU to scrap the Digital Markets Act. Now, the U.S. tech giant argues that the consumer protection law worsens user experience, increases privacy risks, and threatens to undermine innovation, though the company says it is complying with the law while it's in place. Ed.

40:39Caroline Hyde:OK, coming up, Alexa von Tobel of Inspired Capital joins us. She'll explain why she says physical AI is reaching an inflection point and the impact of quantum on financial services, which today is a top story. This is Bloomberg Tech.

41:01Caroline Hyde:Support for the show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve the workflow and your agent handles the risk. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined.

41:40Caroline Hyde:An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokerage services by Open to the Public Investing, Inc., member FINRA, and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. If your best finance people are doing expense reports, chasing receipts, or spending time on month-end close, it's time to get Brex AF, a gentic finance that eliminates that work before it starts.

42:23Learn more at brex.com slash AF. Aging doesn't stop, and neither should you. With Vital Proteins Collagen and Protein Shakes. Because around the age of 30, your body needs more support for movement and recovery. On workout and rest days, reach for a 30-gram total protein shake. Or go with our classic collagen peptides. Help support healthy hair, skin, nails, bones, and joints. So you can stay vital, stay you. Visit VitalProteins.com to learn more and where to buy. These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.

43:03HSBC has achieved a breakthrough in deploying quantum computing in financial markets. Now, using IBM's Heron Quantum Processor, the bank was able to improve bond price predictions. Let's talk about the opportunity to invest in this next frontier of computing. And Alexa von Tovel, founder and managing partner of Inspired Capital, previously the founder of fintech startup LearnVest, which is sold to Northwestern Mutual back in 2015. And what interests me so much is within your podcast, you've just been speaking to a founder you've backed, logical, all about the future of quantum. You've been deep diving on this.

43:36So when you see these sorts of iterations and breakthroughs, what do you make of it? Where is the opportunity for you in the seed in the Series A? First of all, great question. And as you know, I'm a long-term, early-stage investor, and I like to look for companies that can be worth$10,$20,$30 billion. There's very few of those in the world, and I think that led me to quantum now almost a year and a half ago, thinking it's sort of the next wave of innovation after AI. And the potential is profound. Once and if we build these quantum computers, and mind you, it's a category where people have been toiling away for 30 years without much success.

44:13But the best experts in the world believe that in the next decade, we will begin to see real advancements towards building the first scaled quantum computer. And what comes out of that is huge advancements in financial services and pharmaceuticals and all these other categories that are going to change the world in a profound way. When you think about IBM's role here, and they've come on the show and said by 2029, our quantum computers are going to be in there in the wild and achieving real things. Then from the early stage founder, how are you seeking them out and where can they add to the quantum process?

44:44Sure. So I think the big goal right now is people are trying to get to 10 ,000 qubits. So many different hardware types, six or seven based on how you cut it. And I think your most important researchers and PhDs in the world are trying to get to 10 ,000, 100 ,000 skilled qubits. That is the march that everyone is working towards and we're rooting for them.

45:06Caroline Hyde:Alexa, I'm really interested in the business model, which I know is a bit of a dry way of looking at it. But when we think about compute for data centers in the AI context, people lease that capacity, right? I think about the work that Google is doing in quantum. It uses its quantum machines in-house for research. So with what HSBC did with IBM, and when you're looking to invest in the earlier stages of this field, How do quantum computing companies give their services to a financial institution like an HSBC? What's the model for that? That's a great question. So I think we're going to see a few things.

45:42First of all, right now, people will rent out their quantum computers. You're seeing prices from$10 ,000 to, in different cases,$50 ,000 per hour, etc. So people will rent them out. I actually think it could be a profound business model shift, which is whatever is created with that quantum computer, or whatever IP, whatever technology that comes out of using those advancements in compute, that you could take a revenue stream forever. So that is sort of an interesting shift. Somebody once said to me that whoever builds the first quantum computer almost overnight could become Pfizer because the compute of what's possible for pharmaceuticals could be that profound.

46:21So it gives you a sense of the shift, which is you could potentially take a stream of the IP that comes out of quantum computers as a new business model entirely.

46:31Caroline Hyde:Alexa, you are one of many, I would say, that is arguing that physical AI is having a chat GPT moment. Physical AI is now a pretty broad category. So which vertical within that would you say that is most true of? Great question. So what I get excited about is everyone was running at digital AI, as you've seen the dollars pour into the category. At Inspire, our early stage venture fund is very thesis-driven. So for us, what physical AI means is taking big foundational models that now exist credibly that can interact with things like sensors and robotics and create smart devices everywhere in our physical world.

47:14If you think about just our infrastructure, we all live because of our infrastructure, our water, our pipeline, our electricity, our roads. and we're getting to the point where we can no longer be reactive, which is what we are. It's almost like the Roman times. Something breaks, you go and fix it. To becoming predictive about our ecosystem around us, our world and infrastructure around us. And that is what we mean by physical AI it inspired. We're really looking for the intersection of observability and predictability in the environment around us. And looking at your portfolio companies, you've already made some key bets here.

47:47Yes, we have. Thinking about bright AI. TC Labs. What is it that these companies that we see on our screen now have offered you from the seed and series A area that you feel hasn't been adopted already by big industry, by big companies already listed? Sure. I'll start with Bright AI. Bright AI, Alex, the CEO, is an absolute technical genius, the godfather of IoT, and he invented a sticker. There's now 250 ,000 already deployed of these stickers, and they can go on anything from a utility pole to a water pipeline. And here's what it does. It then sends an observability layer back to whichever company has bought these stickers and can say now proactively, the utility pole is 25 degrees slanted.

48:30Let's go fix it before it falls on an electrical wire and takes power grids out. Literally, men and women walk up and down utility poles right now and observe them physically and then fix things versus being predictive in fixing it. And Bright.ai in the water world will literally find inside pipelines the leaks. And right now, today, we lose 6 billion gallons of treated water, which is 15 million homes of water. Think about that. Every single day because of leaks and bursts. And Bright.ai is the sensors that will get ahead of that. So that's Bright.ai, a company we're really rooting for. Another company, as we said, was TC Labs, which is an incredible team out of Google.

49:09They're trying to save one gigaton of carbon each year. And what they do is go take the energy we already have. So think about this. Because of AI, we need wild amounts of energy, right? There's not enough energy is the headline. And so they're going to the infrastructure we already have, oil refineries, and not only helping make them be more efficient using AI so that they can produce more energy, but also more carbon friendly. So that's TC Labs. And then finally, TreeSwift is the data set of sensors for our forests. The forests are the lungs of the planet, and they are measuring them so that we can get ahead of forest fires and major storms that then take power out.

49:50So as you see, we are very forward-thinking in physical AI.

49:56Caroline Hyde:Alexa von Tobel, co-founder, managing partner of Inspired Capital. Thank you very much. South Korea says investment projects in the U.S. will remain in limbo until visa issues are resolved. In the wake of the Trump administration's immigration raid at a Hyundai LG Energy battery plant in Georgia, South Korean Prime Minister Kim Min-suk sat down with Bloomberg's Sherry An in Seoul for an exclusive interview.

50:22Realistically, without a solution, it's difficult to invest in the United States and carry out the various joint projects currently planned between South Korea and the U.S. We absolutely must find a solution. Several projects are underway between South Korea and the U.S. Without resolving the visa issue, meaningful progress remains virtually impossible. Coming up, Disney readies for a legal battle with President Trump over Jimmy Kimmel's late night return. More on that next. This is Bloomberg Tech.

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51:36Caroline Hyde:Policies provided by Hartford Fire Insurance Company and its property and casualty affiliates, Hartford, Connecticut. Ask yourself, what are your best people spending their time on right now? Expense reports, receipt chasing, month-end close that takes weeks. You become what you spend on, and that's not what you're building toward. Brex is the intelligent finance platform that eliminates that work before it starts. AI agents that handle the manual stuff automatically, so your team can spend their time on what actually compounds. It's time to get Brex AF. Learn more at brex.com slash AF. Aging is real, and so are the benefits of adding vital proteins, collagen, peptides to your daily routine.

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