Microsoft, Nvidia Commit $15 Billion to OpenAI Rival

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

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1:11Bloomberg 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. Microsoft and NVIDIA commit to invest up to$15 billion combined in AI startup Anthropic. This is Saudi Arabia's crown. Prince is set to discuss tech investments and AI innovation with President Trump today. And gaming giant Roblox takes steps to expand age verification across its platform. We'll discuss with the CEO. But first, we check in on these markets once again under pressure. The Nasdaq off by 1.7%. We have raised$1.8 trillion from this benchmark since the end of October.

1:53In large part because some of the key AI players have been on the downside. Bitcoin, though, recovers ever so slightly up percentage point. We're in 92 ,846. Move on to individual movers because it's all around some of our top story today. Cloudflare, we want to check in and we're down 3%. That's after it's been fixed, but we were struggling to get on to NJ Transit. You were struggling to get on to OpenAI's ChatGPT. You were struggling to get on to many a website because of Cloudflare more broadly. And that's as we saw an outage that now they say has been fixed. We're still off by 3%. Let's talk about, though, the top story that we just mentioned.

2:27Microsoft and NVIDIA, both committing to invest up to a combined$15 billion in Anthropic, in a move that ties the AI developer closer to two of the biggest backers of its rival, OpenAI. Bloomberg's AI editor, Seth Vigman, joins us some more. It's a tough time to be announcing that you're going to be buying cloud from one company while they're going to be investing equity in another. Just more circular deals, it feels like. This one feels very clearly following the OpenAI playbook that we've been seeing in recent weeks here. Yes, I think Anthropic is taking money from Microsoft and NVIDIA. Anthropic then plans to commit spending to Microsoft's platform using NVIDIA chips.

3:05Kind of textbook here, and I think we'll add to some of the anxiety there, but it is on a bit of a smaller scale. Also, our understanding at this point is that this financing is part of a larger investment round to be announced at some indeterminate time. So TBD, how much Anthropic is actually planning to bring in here? I mean, they only just closed a round that valued them at more than$180 billion. This is the new normal. It's a bottomless need, and everyone is tapping everyone else. All the ships have to rise together or else they fail. But what's interesting is Amazon had to make clear that they're still the number one provider of cloud and of training compute to Anthropic.

3:38Everyone seems to be in Anthropic now, but how are we seeing that rival the likes of OpenAI? Yeah, I mean, again, this is not an either-or model. It's a yes-and. I think we've seen OpenAI turn to Anthropic's backers, namely Google and Amazon. So Anthropic is doing the same. Now, there's a lot of intrigue there about what that means about the Microsoft OpenAI relationship. But again, at this moment, everyone is tapping everyone else until the music stops. And the music has been sounding a little jerky of late. I mean, certainly in the public sector, people have been worrying about these circularity deals on the actual productivity gains that we might ever get with AI.

4:13That's right. I do think Anthropic, though, has messaged clearly in the last week or so that while they're kind of playing the OpenAI playbook here, we're investing heavily in infrastructure in chips, building out more. We're doing it on a smaller scale. Now, as I said the last time I was on, $15,$20,$50 billion, these are massive sums. But when you compare it to OpenAI's$1.4 trillion, a bit more measure. Well, we've also got other breaking news today from LLM innovations and improvements. This time coming from Alphabet, shares are under pressure, down 2.3%. But they rallied hard yesterday because we know Berkshire Hathaway is getting into Alphabet.

4:44But now we've got Gemini 3. And it seems to actually be really rather good. That's right. So at the same time that Google has been helping Anthropic and OpenAI compete, they're also still trying to be the best model on the market. And so I think with Gemini 3, they're really touting their gains in coding and in mimicking the process human reasoning. Obviously, those are key aspects for Anthropic and for OpenAI as well. Interestingly, the Gemini 3 model also offers a more premium tier. I think it's$250, something like that, a month that you get to do even more intense reasoning where you can test different hypotheses.

5:13And we'll see. But they're all competing with the same kind of benchmark claims here to try to be the dominant force. And while we have news of LLMs getting ever more sophisticated, we're able to code, we're able to Vibe code, and your team has been so busy because Vibe coding startup, Lovable, which is actually a European startup, seems to be expanding and maybe even getting a really high valuation too. Yeah, I think it's really probably the most promising or one of the two most promising coming out of Europe right now. A lot of the Vibe coding leaders are from the US, including Cursor, and you can argue Anthropic and others.

5:44I think Lovable has seen pretty strong organic demand and pretty promising growth in recurring revenue. But this is a crowded market. And if Google's model changes the game overnight for coding capabilities, that might have disruptions further and down the line. It's very much to be seen. $200 million annual recurring revenue. And according to sources, a$6 billion valuation. We can have the CEO in a little bit later. Seth, amazing wrap-up of all things AI. Seth Fiegeman, of course, who helps edit across that team. Let's turn to Washington now. Guess what we're talking about? AI. But with the Saudi Arabian crown prince, Mohammed bin Salman.

6:17He's at the White House today meeting President Trump. We know the talks about deepening U.S.-Saudi ties, but really there is such a focus on tech, on investment, on innovation. Let's do it all with Bloomberg's Tyler Kendall joining us from the White House. A lot of it's going to be about chip access. Right, exactly, Caroline. And good morning to you. No doubt access to critical chip technology is going to be at the top of the agenda today as Saudi Arabia has faced U.S. restrictions since 2023, in part over the kingdom's ties to Beijing. Now, I will point out that when President Trump visited Saudi Arabia back in May, the two countries announced a slew of investment commitments related to AI, related to data centers that are going to come to rely on access to these advanced semiconductors.

7:00But six months has gone by and we have yet to see the U.S. greenlight those export licenses. Now, people familiar tell us here at Bloomberg News that the two sides are still hashing out, one, the security conditions for these shipments, and two, the specific reciprocal investments that Riyadh is going to commit to making when it comes to making good on their pledge for$600 billion in U.S. investments over the next four years. Now, perhaps adding to the pressure here is that we know that recently the UAE saw some of its export licenses greenlit when it comes to projects run by U.S. companies there.

7:33But, Caroline, this really does dovetail into the other key part of the conversations today, which has to do with defense. We are watching closely whether or not the two countries enter into a defense-mutual cooperation pact and also those F-35s that President Trump indicated that he will allow the sale of. Of course, this comes back to the chip conversation because there are concerns here also about whether or not China could have access to this advanced technology in these fighter jets. Caroline, I'll end on this. It's absolutely packed here in Washington. We're expecting tech leaders from across the country to descend and world to descend here, all leading up to tomorrow's U.S.-Saudi-led investment summit at the Kennedy Center here in Washington.

8:12And we await that arrival of MBS to the White House. Tyler Kendall, thank you very much indeed. Let's get the wider investor perspective here. I'm pleased to say Margie Patel is with us, Allspring Global Investment Senior Portfolio Manager, Head of Capital Allocation. And look, we are thinking about how global narrative around AI continues to develop. Have you got any worries that we've been seeing, at least in the pressure in the stock market of late? No, I think this is a little garden variety correction because we've had a few wobbles, bad news in the private credit market. I think that we'll have maybe 5 % correction.

8:46I think the year will finish on a very, very strong note because really the trend for artificial intelligence is so strong for data centers. In fact, when you look at the companies that have commented, basically they don't have enough capacity for all the demand and they've been able to raise prices. So that doesn't sound to me like a peak of a market that's ready to collapse at all. I'm just going to go out to some sound that we heard a little bit earlier in a summit that Bloomberg's been having over in Africa. They have the JP Morgan vice chairman joining David Pinto. Just listen to what he said about a correction.

9:18It's possible there is probably a correction there. and that correction will also create a correction in the rest of the segments in the S &P and in the industry because you are probably, in order to justify these valuations, you are considering a level of productivity that it will happen, but it may not happen as fast as the market is pricing. Daniel Pinto there of JPMorgan, just speaking with our own editor over in Africa today, Margie, And I'm really interested as to, well, why you think this will just be, I think you call it a garden variety correction. What will be there to support it? Will it be NVIDIA's numbers that get us back on track?

10:04Well, I'm not sure anything NVIDIA could say will be enough to assuage market concerns. But really, when you look at the big market corrections, the economic corrections, they've all been driven by, frankly, Federal Reserve activity when they start to aggressively raise rates. So right here it looks, you could say, well, the Fed is somewhere between neutral to slightly easing. And again, that is not the precondition. I think we've been through so many of these cycles all driven by the Fed that we think it's natural that we should have a big downward correction. And I don't think we will. I think we'll just have a continued period of slow growth for most of the economy.

10:38The tech sector is very strong because artificial intelligence is really a qualitative leap in the kind of technology that we've had over the last several decades. So we think it's just a small correction. In fact, if you look at NVIDIA, the stock really for this quarter, the fourth quarter, is really just about flattish. And all they are except for Google is the only one that's up for the quarter. So that says to me there's a lot of nervousness waiting for NVIDIA. But I think after that clears the air, I think we'll have a strong finish because the fundamentals are still so strong as far as the eye can see, which I would say is at least for another year or so.

11:14Look, we're looking year-to-date NVIDIA up 35%, but it has eroded about half a trillion dollars of market cap since the end of October, Margie. So is that a buying opportunity? Well, I think it's a moderate opportunity, yes, because at least you have some of a discount. The PE is around 40 times, and that's higher than the average stock, which is around 27 times. But on the other hand, their leaders in their sector, they should have an above-average growth as far as the eye can see. So it's really not as high priced as it was relatively a few months ago. So I'd say, yes, it's a good time to add to NVIDIA because their fundamental position is really strong.

11:54I think it's just, as I said, market nervousness. Short-term traders have gotten badly whipsawed back and forth in the last couple of months. And I think that's what's really causing this downward wave in volatility. Giving us the longer-term perspective, we always so appreciate it. Margie Patel of Allspring Global Investments. Stay well. See you soon, we hope. Meanwhile, coming up, gaming giant Roblox takes steps to expand age verification across its platform. We'll discuss the details of Roblox CEO Dave Uzuki. That's next. This is Bloomberg Tech.

12:30Roblox has begun rolling out age verification technology for all users and is introducing age-based chat as the gaming platform expands safety features with further parental resources too. Moblock CEO Dave Buzuki joins us now. And Dave, this really builds on that big ambitious September announcement. How is this going to be rolling out? Hey, great to be here. And what an enormous responsibility with 150 million users every day coming to the platform. We're rolling out what we believe will be the gold standard for the future of internet safety. We're the first really major gaming platform to use AI to estimate the age of everyone on the platform who wants to use chat and communicate.

13:13We're going to start rolling this out in December, and then it should be all rolled out by January. Basically, on whatever device you're on, take a quick image. We'll analyze your age with AI, complement it with a bunch of other signals, and use that really to figure out who might you be chatting with to keep the platform more safe. We're not going to be allowing minors, for example, to communicate with people who are adults. And we're going to roll it out to everyone on the platform. I'm really interested as to how you're going to measure success here, Dave, because in many ways you're trying to prove a negative.

13:50But how are you going to be internally thinking this has worked, people are satisfied and they're safe? Well, I want to highlight things are already working in that we're a very unique platform in that we filter all of the text and communication on our platform. We don't allow the sharing of images. We have monitoring for critical harms. We work very closely with law enforcement. So I see this as an addition to everything we're doing and really to our vision of what we've been calling the gold standard. But we do estimate over the next few months, we'll know roughly the age of everyone on the platform.

14:32And we'll complement that with some of the other things we do, like trusted connections and things like that, to constantly build on our innovation. You know, we've shipped over 100 safety innovations in the last year. So it's really a continuation of that focus. You're using a third-party vendor, Persona, I believe. And how are you going to be ensuring that that's robust enough? The AI, the underlying technology is robust enough over in the UK. Well, some of them using Discord, for example, have managed to bypass previous facial recognition age verification tests. There's a bunch of other signals we have in addition to the facial age estimation.

15:10And we do have the ability to estimate several times if we need to. So in addition to using the camera to do an age check, we have other ways to validate. and putting all of these signals together, we believe is pretty robust, really. What's so interesting is clearly you're here with safety as a priority. You did mention back in the earnings, your CFO in particular, that maybe you'll see some friction. Maybe the numbers, the revenue, the growth might be impacted as people start to have to verify their age and maybe slower to come and adopt. Do you think that that will bear out? How will it look longer term?

15:46We shared this vision that we believe over 10 % of the global gaming market, which is somewhere between a$180 and$200 billion market is going to be running on Roblox. And in the earnings call we just had, we shared this amazing growth, both on bookings and DAUs in the 70 % year-on-year rate. Long-term, we believe this is just the right thing for the platform. We're unique in that we have all ages. We have people under 13, over 13. Our over 13 is growing rapidly. this is the right long-term vision and we're really optimistic about continuing our growth. Okay, so this is the right balance from your perspective.

16:28What do you think the data will bear out as to the name, well, ultimately the actual ages of people you have using it? Do you think you'll have more under 13s than you anticipated? Do you think you'll have more older users? We can't estimate that exactly. What I can say is that the facial age estimation tech we're going to use is pretty reasonable and pretty accurate. I've tried it. Some of my kids have tried it. We've tried it within our staff meeting. So I think we're going to find out we're reasonably close. But over time, we will get a better signal on everyone's age. And this must be something that marketeers, that those that eventually will be buying more ads with Roblox are going to be looking at.

17:09Is this going to help, well, inject some fuel to that offering because people will still feel safer about what age group are going to be consuming such adverts? We have shared a couple of things. We don't target under 18 already on the platform, but there's an enormous number of older users joining the platform. We shared in our earnings call, I believe in Q4, we're literally earning Q3 running at over 10 billion hours a month of engagement. That's an amazing amount of engagement. Our economy is primarily driven right now by our virtual economy powered by Robux. But advertising is a wonderful complement.

17:50And you're right, we're going to have a better, more accurate estimate of everyone's age, which for a lot of our advertisers that are starting to hop on with events supporting all kinds of things, beauty products, movies, things like that, they'll have a better idea of really the number of people over 18 on our platform. Roblox CEO Dave Buzuki on the latest safety updates. We really appreciate you joining the show today. Thank you. Now coming up, we're going to be speaking with the lovable CEO Anton Esica as the company is said to be nearing a$6 billion valuation. This is Bloomberg Tech.

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19:51AI coding startup Lovable is set to hit a$6 billion valuation. That's according to sources. The company is seeing rapid growth, reaching$200 million in annual recurring revenue and expanding with new offices in Boston and San Francisco. Joining us now to discuss, Anton Osika, CEO of Lovable. Anton, I go to the numbers that you've actually given to us, the$200 million, the annual revenue run rate. That's a lot. Who's purchasing? So we're seeing Lovable, since we launched just 12 months ago, have been powered by this consumer and prosumer movement of individuals that use the product and then they love it.

20:30So they put in their credit card. And that's just the movement that's been then translated to us being pulled into the enterprise where Fortune 500 companies like Klarna, HCA Healthcare, they're transforming how they work on top of a completely new way to build software products and even software companies on top of the products that are being built. $200 million in terms of what you're seeing annual revenue run rate. You're seeing, as you say, a breadth of enterprise adoption and individual entrepreneurialism. But when it comes to vibe coding and the use cases, where are you having to build out?

21:09You're building offices in America, it would seem. Yeah, that's correct. What we're seeing is that Lovable is providing a lot of value in large companies moving faster. And many of those companies are in the U.S. So we have great leadership that has built companies at the larger stage before. Ryan Meadows, Skjell Klaviyo, he's now joining, building out from where he's based in Boston. We have Marianne Coghe, who joined from Notion. She's moving with her family to Stockholm. I think that says a lot. Why do we keep the core headquarters here in Stockholm as we expand globally on the mission, which is simply to reimagine how software is built and who gets to build it.

21:53And we're witnessing a once-in-a-generation democratization of software creation. The pace is extraordinary. It was only four months ago. It was only back in July that you mentioned that you got$100 million annual revenue run rate. Now that's doubled. You are, we understand, looking for funding. You could have a$6 billion valuation. Can you comment on how much you are needing to have yet further capital to finance this expansion? Yeah, Caroline, I'm not here to talk about any fundraising that hasn't happened. But what I can say is that the momentum is absolutely astounding and it's increasing.

22:30There are 100 ,000 new projects built on Lovable every single day. And what's growing even faster is how much traffic the meaningful applications and businesses built on Lovable are gathering. We're seeing 5 million visits to Lovable websites per day. That doubled in just the last two months. And some part of that is us building out and just reimagining how does the entire lifecycle of building a software product look like. We launched Lovable's cloud, an AI offering, two months ago. And that has resulted in almost 30 % of all the applications built having AI included, even though they're built without a software engineer.

23:16They're built by the 99 % who don't code and then starting to collaborate with engineers if they're being built in large companies in the same platform. What are your costs? Where are you having to spend more? Is it talent? Is it compute? What is it that you are having to build within your business model? so we're we when someone asks lovable to build a new piece of software or just a presentation a demonstration of something that they think the business should be doing we are of course consuming compute to power the ai and that costs a significant amount but lovable has healthy unit economics and now what we're looking to do is to just do everything we can to drive as much value for all of our customers.

24:03And that's going to require us to invest in the new offices that we're opening and to take care and teach customers that are using Laval how to get the most value out of the product. Anton, when you hear the anxiety in the public markets that companies are over-investing, that we're not seeing the AI rewards yet in the time frame that we need to for the amount of money that's going on capital expenditure, what do you say to that? so when ai initiatives are being pushed into a company top down then i think there's often a risk that the expectation is wrong someone hasn't used the tools themselves what we're seeing with lovable is that it's all being adopted bottoms up so people come to the lovable website they They build an application, publish it online or privately to their own company, and then they see value, and then they start paying.