Nvidia Nears $14B Hugging Face Deal

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1:27Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco. This is Bloomberg Tech coming up in videos in advance talks to acquire AI startup Hugging Face in a transaction totaling$14 billion. Plus, Dell shares jump after the company boosted its annual sales forecast by$25 billion due to surging demand for servers to run AI tasks. And Uber cuts 10 % of its staff globally to streamline its core engineering, science, and delivery groups. Okay, so let's get right to our top story. NVIDIA could be closing in on its biggest AI acquisition yet. According to sources, the chip makers in advanced talks to buy Hugging Face in a deal that could total$14 billion.

2:15For more, Bloomberg's Ian King is here with us, along with Rachel Metz, both of whom broke the story last night. We've known about, Ian, the number of$12.9 billion. That's the kind of acquisition, and we've known that it's close. This$14 billion figure, what does that include? What's the new bit here? Yeah, I mean, according to our reporting, that includes an extra sort of billion dollars of retention. Obviously, NVIDIA doesn't want the talent, the core of that company to just disappear overnight when it acquires it. That's about keeping the staff. Rachel, it seems a strange place to go next, but what is Hugging Face?

2:50Like, we've been talking about them so often of late because they were subject to a mistaken hack by open AI models as one example. But what is it that they actually do? Yeah, so Hugging Face does a couple different things. It offers a platform that a lot of companies use to showcase AI models that they're releasing. It's also a place where anybody could post AI models or similar kinds of work that they're working on that they want to share with other people. And the company also, for a long time, has really focused on doing its own research. It's very focused on open research, open models, and has been fostering that sort of ecosystem for a long time.

3:32Ian, why would NVIDIA want to buy Hugging Face, as Rachel's just described it? What she said was key there, which is open models, right? At the moment, the industry is very concentrated on the hyperscalers and what they produce and what open AI does. And what NVIDIA really wants is a broad adoption of AI across the economy. It basically wants more customers. And Hugging Face is an area where it's sort of a bazaar where things can be propagated, where people can come and get what they need. and in theory, according to probably NVIDIA, a better thing for the overall industry. Rachel, is it a surprise that this is happening?

4:14Like in Hugging Face's history of either raising money or what we know about their co-founders selling to NVIDIA, did we have that on the bingo card? I think it sounds a little bit surprising on its face, but then if you think about it, it actually could make a lot of sense. The company has been around for about 10 years. They have a lot of investors, including NVIDIA. My understanding from people that I've spoken to that are close to the company say that NVIDIA has long been a dedicated investor of the company. And as Ian mentioned, they're aligned, especially on the open model. So it could be a really great matchup for both sides.

4:56A bit of M &A history for NVIDIA, Ian. We say$14 billion would be their biggest acquisition in AI. Where has NVIDIA done actual acquisitions as opposed to these investments, which it makes many of? Yeah, I mean, it doesn't have a huge record of acquiring. It tends to like to do things in-house. You could probably, the most recent one of note was what it did in terms of getting hold of the assets of Grok. That's right. Grok with a Q. That's right. Grok with a Q, the AI chip investor. But really the question here is what happens to Hugging Face if NVIDIA owns it? NVIDIA is a very powerful force in AI.

5:35Arguably, Hugging Face's greatest value is that everybody uses it. Rachel, real quick, is this imminent? Do we know if this will happen, when it will happen? Yeah, according to our reporting, it sounds like it is pretty imminent. And we are expecting that it will happen this week. okay bloomberg's ian king and retro metz with the story one of the most read stories this wednesday morning thank you very much let's get to the earnings story shares of dell higher off session highs but the company boosting its annual sales outlook by a massive 25 billion dollars with ai server revenue now expected to triple to 74 billion dollars this fiscal year Dell also reported a$95 billion AI server backlog and earnings in the quarter well ahead of Wall Street's expectations.

6:26Joining us now is Porsche Capital Management President and Owner Michelle Canale. Dell continues with momentum. This is the fifth straight quarter where they basically raised their outlook. What do you see as the story behind that? Well, first, thanks for having me, Ed. It's just a powerhouse in the server area. And a few years back, Dell was considered dead or almost what I would call a dinosaur. But they've been great in terms on the server side. And it's not just the AI servers I'm going to point to. It's also their servers where the revenue was up over 110 % year over year. Because if you're going to have AI servers, the corporations also need their traditional server infrastructure upgraded.

7:16I'm looking at Dell shares on a sort of longer time horizon. So even year to date, actually, 252 % gain. But it took some time for them to get credit, or at least for the market to understand, you need to have a Dell to put the server design together. Do you expect this to be a name that continues to have momentum on the equity side? I do, because they're the leader in this space. And they are very good in terms of their competitive advantages. They have a great breadth of products. Their supply chain is phenomenal. Their client relationships are great. And they've also been in the process of going through an optimization program in terms of cleaning out the product lines that aren't going to work and maximizing their margins.

8:02And that's another thing I think they don't get enough credit for. This year, their operating margins were over 11 percent. Last year, they were six. I mean, that's a huge trend. I want to zoom out here for some perspective and look at today's big number, which is$32 trillion. Yes, trillion. And that's how much data center spending is expected to reach by the year 2050, according to a report by PwC. So, Michelle, I don't know how you feel about such reports from the likes of PwC. But on your point there on the margin expansion, right, the story on the technology side has been that NVIDIA dominates the content ownership of the server.

8:43You know, Dell doesn't really contribute that much to it. But if we get to that, that$32 trillion number, surely Dell is going to take a big slice of that market. It's definitely the case because they've got the entire company lined up to continue to take share. And they're by far away the number one player in the server and AI server space. So, yes, if that survey is correct, which is very interesting because the last survey I saw was through 2030 going to$8 trillion. But now we're looking at$32 trillion. As you said, that's a huge number. And Dell will definitely benefit. And I think a lot of analysts on the sell side are seeing that.

9:25And you're seeing a lot of the estimates today push up by quite an amount. More broadly, across all the layers of the AI stack, where are you most focused right now? What are you looking at most closely? I started my career as a semiconductor analyst. And so I still am attracted to what's going on there on the public side, as well as the private side. And you're going to see more and more focus on the fact that it's not just customization by Broadcom or others, but you had NVIDIA buying MediaTek. And there are other private semiconductor firms that we're going to start hearing more about because copper is not going to make do with these chips in terms of transmitting the data.

10:15We need optics. We need other materials involved. And as this happens, the semiconductor story is going to broaden out and there are going to be a lot more winners. And there's going to be some market share losses along the way. In the private markets, we've seen that manifest in particular in specialized inference platforms. I'm trying to think of one etched as a good example. When you say there will be market share changes, who loses out in that context? I don't have exact names on that, but things are moving so quickly. You have NVIDIA that is smart enough to make these partnerships and make these acquisitions, but if you do not have the war chest to do that, maybe something like a Broadcom may have more problems in front of it.

11:07That's why the earnings announcement today is going to be very interesting and see if they're going to be able to prove that their AI revenue can stay within the$120 billion to$150 billion. How high or low has the bar been set for Broadcom? I'm really interested in what you just said after the shocker of NVIDIA's earnings last week, where they gave us a rare fiscal year outlook for growth of 70%, which was modeled on supply. It wasn't a growth outlook based on demand, but supply. Can you extrapolate through to Broadcom? I think they will benefit in the short term from the same issue. Last night when I was listening to, I think it's SemiCon over in Taiwan, the main theme was supply.

11:59There is not enough supply. So in the short run, the main players will benefit from that. But that may change with time. And as the means of building these small chips as they get smaller and as the amount of data is being communicated increases, the shares are going to change in terms of who's winning and who's losing share. Michelle Conor of Porsche Capital Management for the first time on Bloomberg Tech. Thank you very much. A story that broke this morning, Alphabet. This is Shares, very muted move after a federal judge ruled that Google doesn't have to sell off its advertising exchange and instead needs to make its ad tech tools work with those operated by rivals.

12:44The decision allows Google to avoid a forced sale. You'll remember at April 2025 ruling that the company had illegally monopolized two advertising technology markets. I would say I think that this was a probable or one scenario outcome and the stock move very muted after those headlines this morning. Now, coming up in the show, Uber is planning on cutting 10 percent of its global stock. That's in a massive restructuring effort. We're going to have the details next. This is Bloomberg Tech.

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15:27Uber is looking to cut about 3 ,300 roles in its latest restructuring efforts to reduce its management layers. That's according to an email from Uber's CEO viewed by Bloomberg News. It's about 10 % of its global staff, Bloomberg's Natalie Lung, broke the story. Interesting. So there's a real emphasis here on cutting out management layers. Why is Uber so focused on that now? They have been brewing so much in the past five years. And there are actually a lot of teams apparently called micro teams that have one to two reports. And part of the effort here is to cut those micro teams in half. And as a result, there will be 20 % fewer managers.

16:04And in the CEO's note today, he talked about internal surveys of people complaining that they're doing a lot more coordination and alignment versus just building things. So this is really an effort to make the organization simpler and faster. Natalie, we say, as it's outlined in Dara Khoshwashoggi's memo obtained by Bloomberg News, that it's a restructuring. But there are areas that Uber's really focused on. It wants to grow in. What did Dara say about that in his correspondence? Yes. Obviously, the core ride hailing and delivery business are very important. They're investing more into drivers and merchants and trying to get ahead in global markets and expansion markets where DoorDash, its rival, is also competing in, especially in Europe.

16:50They also talked about, you know, building an autonomous future, which is very important because they committed, you know, more than$10 billion in investment in the next few years. And they're going to have to reallocate capital to be able to do that. I think most people are familiar with Uber, right? You know, as a ride-hailing platform, largely with human-driven cars, but summarize what the robo-taxi strategy is. For Uber, it's kind of multifaceted. Yes. So Uber doesn't want to make their own robo-taxis. They're not going to build their own Waymo car or Tesla, but they are partnering with a bunch of different providers such as Neuro, Lucid, Rivian and Averight to sort of be able to aggregate all these cars and in the future become the go to platform where people can hail multiple kinds of autonomous vehicles.

17:38Blueberg's Natalie Leung with the reporting breaking the story on Uber, cutting 10 percent of staff. Thank you very much. another big story. AI coding startup Cognition is set to close a new funding round of around$1 billion, according to sources. The latest round will place the startup at a$47 billion valuation. Bloomberg's Rebecca Torrance covers all things startup, venture capital, and broke the story. This is interesting because, very simply, it is a marked and very quick jump from Cognition's last valuation. That's right, Ed. Cognition just raised at a$26 billion valuation in May. This is a massive jump from that, obviously, and there has been a ton of investor interest in this round.

18:18We reported that the round is looking to be around a billion, but it could exceed that amount because it's received, the company has received nearly$10 billion in total investor interest. That's due in part to the growth of the company and in the investor interest more broadly in AI coding startups. I should say that in our reporting, and I teamed up with you on this one, we don't have a sense of all the details yet, right? We don't necessarily have who's participating in this round or leading it, but the sense is that it is well underway for Cognition to raise this money and that this valuation is getting settled.

18:53That's right. The deal is pretty set to close and certainly moving forward. It's also notable that Cognition's annualized revenue has passed$900 million at this point. That's up from$492 million in May. So that's one of the things that's really driving a lot of interest here. Russ, right, because I think Scott Wu, the CEO, had come on the show and shared that AR figure. Just very quickly, you and I had reported that SpaceX approached cognition with the idea of acquiring them. Cognition said no. We published the story. Scott Wu, the CEO of cognition, and Elon Musk weighed in. But just summarize that historic reporting for us, because I think it's relevant here, given the timing.

19:34Sure. So we had reported that SpaceX had approached cognition in recent months about a potential acquisition. Cognition had rebuffed them. Cognition has always been very vocal about wanting to remain an independent company. That's why they said they did this last fundraise. So it's unsurprising to see another fundraise well underway here. And SpaceX obviously just closed its$60 billion acquisition of Cursor in August. And we had also reported previously that that had driven investor interest into Cognition and certainly seems to continue to be doing that now. Okay, to recap, Cognition is set to raise a billion dollars at about a$47 billion valuation, according to Rebecca's reporting.

20:13Bloomberg's Rebecca Torrance, thank you very much.

20:22Lots going on around the world. Let's get out to New York, where Bloomberg's Yaira Hanand is standing by. Hey, Yaira. Hi, Ed. It's time now for Talking Tech. First up, Anthropic has released a cheaper version of its powerful Fable AI model. The company says Fable 5.1 is better at coding and science tasks. Enterprise users will pay the same price per token as Fable 5, but less when the model resurfaces previously processed information. Plus, Apple's new CEO, John Chernis, will get about$58 million in compensation next year. That's according to an SEC filing. That includes$3 million in base salary and a$55 million stock grant.

21:04Meanwhile, Tim Cook, who has moved into the executive chairman role, will be paid around$47 million. Not bad. And TSMC's need for chip-making tools has nearly doubled since the end of last year. That's according to a senior executive. The comment was made at Semicon Taiwan, where others in the industry also touted increased demand. Here's Berthold Schmidt, the CTO of German laser maker Trump, a key supplier to ASML. Right now on EUV level, we are trying to triple our output within the next two years. And in areas like the plasma generators, with the demand we are having, the order books that are filling up, we see solid growth and we probably also double, maybe even triple on the generator side within the next two years.

21:53Schmidt added that despite the demand, he did not say the industry was in a super cycle. Ed. Thank you, Hyra. NVIDIA CEO Jensen Wang is urging the world's largest economies to accelerate their adoption of AI as a way to enhance growth. Speaking at a G20 meeting in North Carolina, Wang said, quote, Every single country needs to build infrastructure to support their local economies and called AI the great equalizer. Bloomberg's Maggie Eastland was in the room and she's with us now. This is a sort of side meeting to the main ministerial G20. But the biggest names in technology are there and they are having a pretty clear message.

22:35Go through what Jensen Wong said and who else was in the room. Absolutely. So we've heard already this morning from Jensen Wong, as well as Tom Brown, the chief compute officer and co-founder of Anthropic. And they both emphasize this message to the foreign nations that have joined the U.S. here to say we need to build data centers not only in the U.S., but also abroad. And this is, of course, coming at a time when within the U.S. there's growing backlash in communities towards having data centers built there. So it's a very interesting dynamic. But the one message that's been consistent across all the CEOs and tech executives that we've heard from is that we need to build data centers.

23:19We had heard from Elon Musk yesterday who framed this as AI will equate to economic growth. Just give me the bigger picture why they've got all these tech CEOs into the room. Absolutely. So from the U.S. perspective, they're working on ironing out and getting all of the nations to agree to what White House official Michael Kratios is calling the Carolina principles. So that's essentially a framework for regulating or in this case sort of not regulating technology. So it outlines, you know, having a very tailored approach and considering the opportunity cost of not innovating fast enough. So they're trying to get other nations to agree to this.

23:59And in doing that, they're presenting all of these tech executives and having them weigh in on the importance of innovation and the importance of keeping regulation moderate so that all of these tech founders can continue doing what they're doing. OK, and elsewhere at the actual ministerial G20, AI has also been a topic. Here's Treasury Secretary Bezum. I think that the AI companies, whether it is the builders of the data centers, whether it is the labs themselves, have done a horrendous job, horrendous job of explaining themselves to the American people. And I think we need a big reset on this.

24:38They're going to have to take some of the blame and they are going to have to convince the American people that all the benefits will not accrue to a small group. Maggie, real quick, that's a slightly different AI perspective. Absolutely. And one thing it makes me think of that I heard from Tom Brown just this morning is, you know, he actually said that he loved President Trump's post about data centers. So Anthropic, that's a company that's historically been a louder voice in terms of needing to pay attention to the safety risks of AI, is now coming out at this public summit and saying, hey, we really need to build data centers.

25:15Boomberg's Maggie Eastland, terrific reporting on the ground. Thank you very much.

25:24Welcome back to Bloomberg Tech. You probably remember Napster as that company that upended the music industry, right? Yes, that Napster, 1999 Napster. Now it's trying to do something similar with AI. Napster's reinvented itself as an agentic AI company with Microsoft selling its platform through Azure. Joining us now is Napster CEO, John Acunto. Okay, that was sort of an abridged history. You joined Napster in March of 2025 when your other company had acquired it. But let's just start with the very basics here. What are we talking about, John? Well, we're going from streaming music to streaming intelligence, and we're just unbelievably excited at making that transformation.