Nvidia Earnings This Week; Biggest Power Deal in History

24:48It has seen tremendous growth since it was founded over a decade ago, operating eight exchanges across options, equities and futures for disclosure purposes. As part of a collaboration with Bloomberg and MIAX, have launchpad futures and options. And Bloomberg has a dedicated studio on the exchange floor, where Bloomberg's Nora Melinda is joining us now. Hot off your interview with MIAX CEO Thomas Gallagher. Talk to us about what you've been discussing over there. Well, Caroline, I had the opportunity to chat with Tom Gallagher earlier this morning. Of course, we're here celebrating the launch of the Bloomberg 100 Equity Index Futures.

25:22Now, this is a product that the company is launching, hopefully geared at retail traders. We've been seeing an emphasis on a lot of companies, a lot of brokerages really being interested in bringing in the retail participation. This company offering the opportunity of commission free for retail traders as they are launching this product. The first of a series of products to also come. What was really interesting from my conversation earlier with Tom was the idea of Miami as the Wall Street South. We've been seeing so many big business leaders, Ken Griffin, a number of other names, talking about the tax environment being more favorable in states like Florida, southern states.

26:00And so you're certainly seeing MyEx really leveraging that, coming to Miami. Their headquarters, funnily enough, are actually in Princeton, New Jersey, but the trading floor just behind me. So a lot of activity here in some of these southern states and certainly MyEx looking toward further growth and development here. Fantastic. Nora, Melinda, thanks for bringing us and insights from your conversation. We appreciate it. Coming up, well, we've got plenty to be discussing with a recursive CEO, Richard Sosha. It's an AI company coming out of stealth. And already he's been running u.com as the CEO.

26:35He's already also got AIX, which is a venture fund. But now he's starting yet a new company all around the issues of AI and where we take large language model creation in the lab and the frontier lab area. We're looking, though, right now as AI not being the savior to these markets. NASDAQ 100 off by 0.7%. Look, it's the second straight day of losses. We've seen the semiconductor index as well off by 2.4%. That brings its losses in the last couple of days to more than 6%. We've, of course, got a lot of the eyes on NVIDIA for later this week. Wednesday after the bell, we get their numbers. We're off by percentage point for the world's most valuable company.

27:10This is Bloomberg Tech.

27:18Welcome back to Bloomberg Tech. Look, we've got a little bit of risk aversion creeping into the market, and it's largely geopolitically focused. We're worried once again about the conflict, US, Iran, and we're seeing oil prices on the rise. That is seeing yet a second day of pullback, particularly on the Nasdaq 100, or off by 8, 9 tenths of a percent, let's call it. We're seeing the chip stocks under pressure, in particular Micron and the like, really dragging in points perspective. But I'm also looking at what's happening in crypto. Look, risk assets in general taking a bit of a hammering. We're seeing down by 2.8%, but we're sub 77 ,000 now.

27:49It was 76 ,000 for Bitcoin. And there's been about 70 million in terms of the actual bearish bets coming back into the market. Bullish bets are being taken off. We've seen$700 million worth of those bullish bets being taken off in the last 24 hours alone, according to CoinGlass. So just keep an eye on risk sentiment. But look, if we look across to Asia, not all was bearish. I'm looking at Samsung shares in South Korea, up nearly, we'll call it 3%. Investors were actually encouraged by signs that the company's union is open to some negotiations, while a local court moved to limit the threat of potential strike.

28:21Bloomberg's global tech editor, Peter Elstrom, joins us. And just remind us of the context here. This is Samsung that has done phenomenally well in terms of share price, in terms of profitability. And now labor wants to see some upside from it. Yeah, these are very tense times in South Korea. Make no mistake about it. Samsung is squaring off against its union. The union has said it may go on strike as soon as Thursday for 18 days. That's a big deal for the company because, as you say, they're in the middle of this boom in memory chip prices, which has been great for their profits. They made a ton of money because of that.

28:54The whole AI industry needs more of the memory, both from Samsung and from SK Hynix at this point. But this labor disruption threatens to throw a wrench into that whole dynamic. And just to set the scene, it is quite unusual for Samsung to have this kind of conflict with their union. For decades, they never had any conflict at all. And then just a couple years ago, they had a small strike, but it wasn't that serious. So this is unusual for them to come this far. As you say, they've agreed to go back to the table after setting this possible strike date. They are talking again, but they haven't reached a resolution yet.

29:25The court took a little bit of the potential damage off the table by saying there are some limitations about what the union can do at this point. But there's still this possibility of a strike coming up later on this week, which would affect not just Samsung and the South Korean companies, but the AI industry more broadly. Yeah, everyone waiting with bated breath as we worry about memory prices yet further if there's less of supply. But Peter, I mean, it was just last week that we saw the South Korean market lose billions, hundreds of billions of dollars in just 90 minutes as people wondered how, politically speaking, we might see AI profits be shared with a nation writ large.

30:02We've already seen SK Hynix have to offer more of its profits to its workers. Just remind us of the tensions there and if they'll also spill out globally. Yeah, the Korean society right now is having this debate about what are you going to do with these enormous profits coming out of AI? And also the government is beginning to ask this very important question. How should governments prepare for this world that's coming at us with AI, with all these AI improvements, where perhaps you're not going to have the same kind of jobs that you had in the past? So as you're referring to, one of the policy advisors to the president posted something on his Facebook page where he talked about the possibility of a citizen dividend, where they would take some of the profits from these big companies and use those to establish a more stable foundation for the society.

30:47That could involve retraining, he said. It could involve support for people who want to start up companies. It could involve a number of different things. But his goal was really to kick off this conversation and try to ask the question, How do we as a government proactively start to think about these big issues? And if we're going to get this windfall of profits because these companies are making so much money, how do we use that cash to the best advantage for what's ahead of us? Pretty much, Peter Elstrom. Fascinating what's happening in Asia. We appreciate it. Let's look at what's happening with Google's leadership in AI right now.

31:17What's made computing power a really prized resource inside the company, with priority increasingly going to major projects like Gemini and paying customers. The bottleneck, well, it's frustrated some employees, prompting a number of AI researchers to leave for startups. For more, Bloomberg's Julia Love, who covers Alphabet, joins us now. And Julia, they're going and founding their own companies because they can't get what they want done internally at Google. How much of a change is that to be struggling to get access to compute? Yes. So I think it's just a fact of the AI industry that researchers would always like more compute.

31:54But the shortage has just become more acute in this day and age because large language models require such vast amounts of computing power. And so traditionally, AI research at Google, especially in Google Brain, one of the labs, was very egalitarian. Researchers got a certain amount of computing power and they could team up to try to do bigger projects. But now that pool still exists, but it contracts in times of high demand. and researchers just often can't get meaningful research done with their allocations. And so if their work isn't a priority at Google, that is the only avenue they can pursue, whereas in a startup, they have more doors to knock on.

32:41I mean, let's just talk about Andrew Dye, who you've focused on in this particular story. You've also focused on a female-founded company that's gone on to get VC backing. when they articulated to you what it used to be like, what it is now in terms of building businesses. But is it because Alphabet is too busy selling out its compute to its cloud customers? Or what is it that's making it so much more of a tussle? Yes, I think there's a few things happening at once. One is that generative AI has made, you know, Doodle's consumer products so popular and Doodle needs a lot of computing power to serve those.

33:17And then the cloud business is taking off. So Google wants to meet that demand. And then at the same time, AI research is more computing intensive than it once was. And so researchers need more compute to do a cutting edge experiment. And so there's a lot of mouths to feed. Everyone wants more. And if people run up against roadblocks at Google, that... Oh, what a tech issue on the tech show. Dan, we'll get back to Julia Love when we can, but we appreciate her insights there. Meanwhile, let's talk about where else computers being used and what we're seeing in the Frontier Labs. Because Recursive is a startup creating AI that conducts experiments on how to safely improve itself.

34:06And it just came out of stealth. The company is valued at$4.65 billion. The backers including Graycroft, NVIDIA, AMD Ventures and more. CEO Richard Socher joins us now for more. Many will recognize you because, Richard, you've joined on another company that you're also leading, U.com. You also happen to be busy in venture capital. So talk to us about recursive. What is it that you felt needed to be fixed? So we want to build recursive, self-improving superintelligence that automates knowledge discovery. You know, AI now is code and can code. And so you can have a closed loop where you replace human ingenuity and trying to come up with ideas, implement those ideas, and validate those ideas.

34:51And you can actually allow AI to do that on itself. The reason you're able to enter out of stealth with a$4 billion market capitalization is because you're a pretty well-known famed AI researcher, Richard. But there are many, well, shall we say, there are many very ambitious labs out there who also want to reach super intelligence. Why aren't they doing it right? What is it that you feel Recursive is going to gain an edge of rather than helping another lab already do what they're doing? Yeah, we have, we collected and combined an incredible team of co-founders, folks from Google, DeepMind, from OpenAI, from Salesforce Research, and many other incredible labs, Meta and so on.

35:34We are focused on open-endedness and really have the entire company try to allow AI to build the next better version of AI. And whenever in AI research we replace manual systems with learned systems, we see a massive improvement. And then on top of that, we can sit now on top of this whole new infrastructure where we built a company from the ground up by empowering AI to do its own experimentation. Whereas most of the other labs in the past basically started before that was possible. Okay, so you've got this focus from the very birth of the business, but you also need an awful lot of money, as we can see that you're raising, for compute to take on some of the juggernauts.

36:17How much is it a costly business? How are you thinking of reframing the demand for GPUs and the like? You're absolutely right. A big new scaling law we're trying to prove is that the more compute results in more inventions, more improvements. And so compute is one of the largest costs for us, and that's why we're really excited to have the folks like NVIDIA and AMD be part of this round. Just the open-ended nature of driving in endless innovation. You say you want to do that safely. What are the worries and limits of it not being done safely? You're absolutely right. Safety is a huge concern. That's why we have some of our co-founders who've done research in rainbow teaming, for instance, where AI improves the safety of large language models like Tim Rock-Teschel and his collaborators worked on.

37:07We take safety very seriously. And we believe, though, that this is the best and fastest way to superintelligence, which will then allow humanity to flourish much, much more by inventing, building ultimately a Eureka machine, one that allows us to invent everything else thereafter. after. How are you going to divide your time, Richard? You're CEO of U.com and you're also at AIX, the venture firm that's just lost its co-founder. So how do you divvy this all up? I work all the time and I have incredible teams around me that enable this. Of AI agents? Also AI agents, yeah, but also some really incredible humans.

37:51Okay. Incredible humans cost a lot of money. So are they incentivized by equity, by the sheer ambition of the task? Or how are you going to be hiring yet further talent? Because they're also getting to a significant expense line compared to GPUs. That's absolutely right, yeah. I think as a founder these days, you want to think more about the overall potential of the pie rather than your size and amount of pie that you have. As in, we do share equity with our employees. and everyone. And I think that encourages and excites everyone. I think in general, the more you have ownership of what you're creating in this AI world, the more you love AI because then you just care about the outputs.

38:34And so I think it's important to share that equity and ultimately grow something amazing together. Richard Sosha, great to have some time with you. CEO, co-founder of Recursive. We appreciate your time today. Coming up, we're going to go back to Las Vegas. It's Dell World. And we're speaking with Daniel Roberts from the AI cloud provider, Iren. That's next. This is Bluebird Tech.

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41:07Let's get back over to Las Vegas. Our own Ed Ludlow is standing by with Dell Technologies World Event upon you, Ed.

41:16Yeah, and we've got a really great case study. Iron is an AI cloud that is building infrastructure all over the world, not just the United States. In all these geographies, Dell is its key server partner, right? It wants the NVIDIA GPUs. Couldn't think of a better conversation to have. It's kind of kick off the day. Dan Roberts, co-founder, co-CEO. You've been a busy guy as well on the M &A side. You've acquired a marketing or creative agency. I mean, basically why? But there's also this conversation, Caroline and I have it all the time, about the public's perception of what's really happening with data center and how it impacts them.

41:54Yeah, look, brand awareness, we're going global, we're growing our customer base. It's really important to us, but that's a small point in the grand scheme of things. It's all about power and time to compute. And the issue is you can't implement a software update to bring on power. The tech industry is very brilliant at going really fast, but you can't code your way to an AI gigawatt of compute. And that's what we're focused on. In the United States, at least, there is some sort of public backlash, right? In zip codes where data centers are getting built, the public feels the pressure of higher energy prices.

42:28What's that like for Iron? And what are you confronting in that respect? Eight years ago, when we started this business, we had a differentiated strategy. We never went to metropolitan areas. we went to regional communities where there was an abundance of renewable energy that creates a cost, a structural advantage over time. And we've reinvigorated local communities across British Columbia, Canada, Texas. And it's an advantage for us because we are located where people want us to do business. Dan, I think I'm right in saying, just as with everyone else, you're in a position where demand for compute, your compute, is vastly outpacing your ability to supply it.

43:05what is the biggest barrier to you getting more capacity online, getting more stuff built? Absolutely. I mean, we're still in the dial-up era of AI. When you step back, the amount of friction you've got, waiting for prompts, you've got to craft your prompt really carefully. You know, complex prompts take 15 to 40 seconds to actually spit out an answer. As that speeds up, demand accelerates, which drives more compute and more use cases. And for us, it's been a focus on what is the end choke point and that's power it's steel it's concrete it's actually building the physical infrastructure that takes years and years if you wanted to start today and build a gigawatt ai factory you are looking 2030s before you get the first computer online let's get a bit deeper on that so if you wanted to say is in other words you choose a site you get permissions you're not going to get it online for six years four years it'll take you 18 to 24 months to get the attention of a utility to work out whether your block of dirt even has power or not.

44:04That's the starting point. Now we're getting to it. What are the utilities not doing that you need them to do? Well, utilities, they're doing the best they can. Like they're running complex networks with a lot of generation on one side, a lot of power demand on the other. And at the end of the day, when you connect to them, this is why grid connected capacity is so valuable. When you connect to them, they're underwriting 24-7 guaranteed power. So they're naturally risk adverse and they're naturally dealing with an inundation of requests at the moment. I'd love to go back to basics for a second.

44:33You build data centers, and those data centers have servers inside them, and those servers are for AI workloads. What's it like working with a Dell? What is it that you rely on Dell for? And how do you get hold of NVIDIA GPUs, right? There is this idea that you can just phone Jensen Wong and say, hey, I need some of those. But in practice, it probably doesn't really work like that. Yeah, look, we've got a great relationship with both Dell and NVIDIA. We announced a partnership with NVIDIA for 5 gigawatts of compute. Are you also being an investment? Yes, so they're exposed to upside in us as we grow and deploy their GPUs, and we're working on their reference architecture for a gigawatt factory in Sweetwater.

45:13But the opportunity with those partners is to work closely and build up the whole ecosystem, all the way from land, steel, concrete, down to the end users of this compute. Is there a geography somewhere in the world that is the best place to build a data center right now? Look, every geography is slightly different in terms of how they handle things, but the majority of our capacity is in Texas and they've been pretty good. If you could ask Mr. Wong and Mr. Dell one thing right now, or ask something of them, what would it be? Oh, look, I think the whole industry is moving from if silicon is no longer the choke point, How do we solve steel?

45:51How do we solve concrete? How do we solve the kilowatts? And this president and this administration, they have an answer for that? I think everyone's trying to work it out. It's been an interesting evolution for your company, right? Now public in the United States, Sydney, Australia is your home. What's that like trying to work across borders at the moment and trying to get projects done at the same time in different jurisdictions? Oh, look, the reality is we've got projects in North America. We've got projects in Europe. We've got projects in Australia. Yes, my family is in Sydney and I get back for the weekends.

46:25But, you know, when people ask where I live, my typical answer is on a plane. Dan Roberts, co-founder, co-CEO of IREN, really critical AI cloud. And like your previous guests, I think everyone's just working all the time right now, Caro. Largely on planes. Ed, thanks so much. Look, tune in later today as Ed sits down with the CEOs of Dell, of NVIDIA, for an exclusive interview live from Dell World. You don't want to miss it, 2.30 p.m. Eastern, 11.30 p.m. Pacific. Coming up, new 13F filings. They're revealing how hedge funds are repositioning around big tech and the AI trade. We'll break down the biggest moves next.

47:01This is Blueberg Tech.

47:15Fresh regulatory filings, known as 13F filings, are giving investors a close look at how hedge funds and major money managers are positioning around big tech and the AI trade. Joining us now to break it all down is Bloomberg's Hemmer Palmer. It's always so much happening each quarter at this time. Hemmer, pass through, for example, what's happened with Microsoft, because certainly the Bill Ackman news caught our attention. Where else has there been moves in that company? Absolutely. Bill Ackman taking a pretty sizable stake in Microsoft, more than$2 billion worth, making it his fourth biggest holding.

47:44And this is a stock that fell a great deal in the first quarter. So he may have been buying up these shares at attractive prices. But he believes that Microsoft is stronger and a lot more resilient than investors are out there believing. He thinks Microsoft's 365 suite with Word and Excel are two of the most valuable franchises in enterprise tech. So really bullish sentiment from Bill on Microsoft. But that's not what everyone's thinking. Yeah, is that at odds with some of the others, the Tiger Hubs? Absolutely. So it's really interesting when you see these divergences. So Tiger Global and Co2 slashed their stake in Microsoft by more than half.

48:21Wow. Lone Pine got out of it entirely. So you see really different moves from these firms that really do spend a lot of time investigating these companies. Now, the stock fell 23 % in the first quarter. It has rebounded some of that since. What about just in general, whether Microsoft is the old one out here in terms of everyone either taking one view or the other or the big moves in other companies? So we did see a decent amount of selling in the first quarter from across the Tiger Cubs. We look at them because they tend to focus on tech. They tend to be directional and intentional. Keep in mind the first quarter, incredibly volatile.

49:00March was a wild month. A lot of funds lost a lot of money. That could be why we saw some firms trying to sell. We don't know when in the quarter funds were selling just because of the nature of 13Fs. But we did see some other trends when we look at popular sells. Amazon, this is a stock that sunk about 10 % in the first quarter. Tiger Global trimmed its stake. Code 2 cut Amazon by about a fifth. And Lone Pine sold out of Amazon entirely. Berkshire Hathaway also exited that company too. So you do see some big moves in some of these localized companies, for sure. Fascinating, because some of them have since ridden up higher on the back of that move.

49:40Hemipalma, always breaking it down for us. We so appreciate all the moves from the regulatory filings. Meanwhile, that does it for this edition of Bloomberg Tech. Tune in later today. Again, do not miss this exclusive interview. We can't tell you about it enough. CEOs of Dell, of NVIDIA, they are live from Dell World. It's at 2.30 p.m. Eastern, 11.30 a.m. if you're over on the Pacific side. Don't forget to check out the podcast too. You can find it on the terminal as well as online on Apple, Spotify, and iHeart. From New York and from Las Vegas today, this is Bloomberg Tech.

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