SpaceX Files for Nasdaq IPO

22:25Ed Ludlow:Even A100s. If you're out there running workloads on A100s, give me a call. I want to know. Tony Wong with T. Rowe Price, back on BTEC. Thank you so much. Now, coming up, we're going to hear from Airbnb CEO Brian Chesky, actually on the company's use of AI models from China. That's next. This is Bloomberg Tech.

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25:51Ed Ludlow:The CEO of Airbnb has defended his company's use of open source AI models from China. Last month, the congressional committee asked Airbnb for more information about its use of these models as part of a broader investigation. The committee says it has concerns about the implication for Airbnb's American customers. Here's what Brian Chesky told me in response to that yesterday. We are not a customer of those companies. We're using a variety of different open source models. I just want to say a few things about this matter. Number one, data and privacy is most important to Airbnb. I think anyone who knows Airbnb knows we have an outstanding track record on data security and privacy.

26:29Number two, all of our data is vaulted. No company has access to our data. It is vaulted in Airbnb. Number three, the congressional committee has reached out to us. They said they have some questions. We said we want to cooperate. And so we're in direct contact and cooperation with them.

26:47Ed Ludlow:Airbnb CEO Brian Chesky in a conversation yesterday. How's everyone doing out there? Let's take a quick check on the markets. And it's taken a little bit of time to kind of find the story. NASDAQ 100 is now down half a percentage point. The Sox is basically flat. NVIDIA is now firmly lower, down 2%. But actually, funny enough, Walmart in its earnings is the biggest points drag, at least on the NASDAQ 100. We have a lot more to come in the program about NVIDIA, about the historic SpaceX S1, and a whole lot more. Stay with us because it's half time in the program. And this is Bloomberg Tech.

27:41The world is rebuilding computing for agentic AI and robotic physical AI. NVIDIA sits at the center of these transitions.

27:52Ed Ludlow:Welcome back to Bloomberg Tech. That was NVIDIA CEO Jensen Huang speaking on the earnings call from fiscal second quarter financial year 27 earnings. One of the big takeaways from NVIDIA's earnings was the rise in demand beyond the hyperscalers. Bloomberg Intelligence writing that it was a more important signal for the future than NVIDIA's signature beat and raise. The author of that research, Bloomberg Intelligence's, Kunjen Sabani, here with us. What is the world outside of the hyperscaler? What are we talking about? Some people would say, oh, this is about companies big and small building on-prem, right?

28:28Ed Ludlow:And NVIDIA is going to have this whole new customer list that is of that size. It's hard to see. Give me the full thesis. Yeah, you know, that second segment is very fragmented, but people keep missing because it's very diverse. So, first of all, it has Sovane, right, which is itself driving billions of dollars of revenue. All of the AI Neo clouds. So, when we look at the space in the AI Neo clouds, that keeps on growing higher and higher. And they are becoming now a significant spender of CapEx, which does not get captured in most of the CapEx discussions from the public clouds that we hear. You have all of your AI labs, up-and-coming enterprise and industries, deployment of on-prem AI, as well as these data center, you know, guys who run the data centers are now becoming much more high GPU-based AI data center cloud renters.

29:19So, this 50%, which is expected to grow faster than the top hyperscaler segment, by the way, is getting more and more significant, especially for NVIDIA because this is where you have the least competition. The ASICs and the TPUs and the Traniums don't compete in this segment. So it's purely monopolistic for NVIDIA. NVIDIA gets the highest stack attach rate, means they can sell a lot more of their networking and their other components here, and they get the best margins in this segment.

29:48Ed Ludlow:I think during the call, there was an attempt to clarify that kind of mysterious$1 trillion figure. So it runs calendar 25 to the end of 27. It is Blackwell and Rubin systems, but it excludes Vera CPU and some of the other networking components you were just talking about. I always come to you. You always have your feet on the ground, right? It doesn't really matter what the number is that hits on the second quarter, 91 billion plus or minus 2 percent. That number, the one trillion, give me your kind of like base level understanding of it. Yeah, all it includes is just the Blackwell and the Vera Rubin, the full stack that is going to start ramping in 3Q.

30:31That's all it includes. It does not include, like you mentioned, the 20 billion CPU standalone that they mentioned, right, for 26 and 27. It does not include the Grok-based LPX server. It does not include the new launch of their storage-based CPX servers and a few other networking components. So a lot of good, creamy revenues are not included in that. The$1 trillion number, by the way, based on our estimate, is rising. So we think now it will be an upside to$1 trillion, plus all these other lists of items that I outlisted could be an upside to that for revenues.

31:06Ed Ludlow:Khenjane Tabani from Bloomberg Intelligence, your research is always the go-to, man. Thanks so much. Let's dive deeper into the NVIDIA story, but also like the market reaction. With Anna Rathbun, founder and CEO of Grenadilla Advisory. you know what we get ourselves into these frenzies we're like the nvidia earnings they're gonna hit and they hit right and you get the red headline on the bloomberg and it's 91 billion dollars plus or minus two percent and then everyone goes but it doesn't even matter what the number is it's everything else you're in the markets why do we behave like that it's lonely at the top i mean when you're the largest company in the world i don't think there's anything you can do to surprise investors to the upside.

31:47So you become a company that needs to defend itself. NVIDIA hit it out of the park in many ways, in almost all the ways that we expected them to, not only in the top line and earnings, but also, you know, networking business growing as well as diversifying its customer base. Everything we've asked for, they've given us. But I think there are other things like, is the growth actually slowing? Is the growth what we've been expecting for the last two or three years. And that's the question that I don't think NVIDIA was able to answer. And the dividend increase to me was a big signal that what the investors had been worrying about might be coming true.

32:28Ed Ludlow:Okay. I actually, I apologize to my team in the control room. I'm going to do the opposite of what I just said. Okay. Let's linger then. Let's linger on the shareholder returns. What were you getting at there? Give me a little bit more. Yeah. So, So, you know, the buybacks, it's not that big because if you're a multi-trillion dollar company, 80 billion isn't that huge. I see. It was really the dividend side of it. When a company starts to return dividends, that's a multi-year commitment, right? So that means, well, maybe we're not going to be finding other areas to invest in. We're just going to be returning some cash to the investors.

33:04And that's a signal for growth companies that says, OK, maybe we're not going to be growing as fast as you had anticipated. So that was a small signal. We'll see what happens. I still think NVIDIA is going to continue to grow because of this massive ecosystem they're at the center of. But it was definitely a signal, maybe a small one, but a certain one.

33:26Ed Ludlow:We're showing this image on the screen, right? And we went into this earnings prior to them hitting saying two things. Everyone expects a beat and raise situation. But also, it doesn't really matter historically what NVIDIA says. That data, I appreciate there's a lot there, is how the S &P 500 trades in the days and months that follow an NVIDIA earnings, even when they beat big. And there's no guarantee that the market is going to sort of respond with euphoria. You know, does that matter anymore? this kind of story that at the index level, given NVIDIA's size and scale, that was kind of what we were all bracing for.

34:03Yeah, I mean, it matters because of its size, right? The largest company behaving this way is going to have an impact on the index. Now, this reminds me of how Apple used to behave about 10 plus years ago. There was nothing that Apple could do to satisfy investors. The market would actually punish them for it. So I think this is just what happens when you are at the top and you have high, investors have high expectations of you. And if you happen to have a high concentration in the index, you can take everyone down with you.

34:35Ed Ludlow:It's really, really tempting always to look at how a stock trades in the moment and try and find the story. But what I would also say is that, you know, if you think about last Friday, Monday, Tuesday, when the president of the United States returned from China, NVIDIA and the sector, the SOX, were close to correction territory. You know, we're down again now post earnings on video. What lesson would you learn from that? You know, there are two things. I think the reaction today really is about NVIDIA itself. It's not even about the AI industry. It's about NVIDIA. Friday was a huge disappointment.

35:12And since then, we've learned that China actually banned the gaming chips while Jensen Huang was there. So when we're looking at China and NVIDIA, it's not a reliable market as much as is the market that we would like to be in. So it is, I think, right for Jensen Huang to sort of pay attention to other areas in which they can expand. Think about sovereign AIs outside of China, really. And I think China would be sort of a bonus, an upside optionality if it happens, but that if is a very big if.

35:46Ed Ludlow:Anna Rathbun, founder and CEO of Grenadilla Advisory. Thank you very much. Now, coming up, we're going to be joined by Sarah Guo from Conviction to drill down on kind of the impact of NVIDIA on a much broader ecosystem of startups. These are companies of all sizes that use the compute or the library of data and models themselves. Can't wait. This is Bloomberg Tech.

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38:48Ed Ludlow:Let's get back to NVIDIA earnings. A part of Jensen Wong's latest message to investors, NVIDIA isn't just selling chips to big tech anymore. It's supplying the picks and shovels for an AI gold rush where startups are building everything from AI agents to humanoid robots, robo taxis, everything in between. But on NVIDIA Compute, joining us, one of the key backers of that ecosystem, Sarah Guo, founder of Conviction, an AI native venture firm. And I think that's true, right? I think the best place I think to start with you is think about all your portfolio companies. Many of them come on the show and we say, okay, what's the biggest constraint on you right now?

39:25Ed Ludlow:Where are you most focused? And oftentimes it is compute. And they're sometimes super proud that they are working on NVIDIA gear. But are they accessing that compute through the cloud provider or are they able to get the cluster themselves, direct control? It depends on what they're trying to do, right? We have companies that are building at the infrastructure layer, building at the model layer, building at the application layer. One of the first things we did when we started the fund was go buy Compute for our companies, just because we can take the timing risk as a venture fund. And we concluded exactly what you just described, which is they're all going to need it.

40:01What did that look like?

40:02Ed Ludlow:Sarah, sorry to interrupt you, but literally what it did it look like? We went and bought H100s at the time, a bunch of nodes, cloud. But the point was the market has gone through different shortages. and now people are predicting a lot of ongoing constrained supply and we were worried about access for startups in that period of time, which is why we did it. But our companies, to your actual question, if almost all of them want to do experimentation and they all start with frontier performance, which is NVIDIA chips today, right? Because that allows you to do new things. And then as these companies mature, they tend to post-train smaller models, think about cost, think about how to be able to, even just being able to use more tokens on the same task allows you to change the user experience.

40:54But everybody wants to start with current generation chips.

40:58Ed Ludlow:The state of play that Jensen describes is demand vastly outpacing NVIDIA, but also in aggregate, the industry's ability to supply. On the other side of the table, would you say that that state of play is true for the founders that you're trying to help grow? It's probably been a two quarters of increasing stress in the ecosystem about access to supply at different scales. Wow. And so I, you know, have spent a good amount of time with the leaders of companies that, you know, serve NVIDIA chips in cloud asking to buy a hundred million dollars at a time compute. And I've never been in that scenario before where you're trying very hard to pay somebody a lot of money with a multi-year commitment.

41:45And it just speaks to the shortage dynamics. I think it's very hard to get on-demand, small-scale compute right now, which is what many startups are starting with, as you were describing. And so I think the shortage dynamic is real. And And what is more interesting to me is, you know, NVIDIA have this amazing outperformance on the earning side. And Jensen will repeatedly tell people demand is parabolic. Humans struggle to consume that. And, you know, it's hard to feel bad for Jensen Huang, Jensen's winner in all of this. Thank you for being honest. Yeah, yeah. But, like, and he's an amazing leader.

42:27but he's like, I'm telling you, honestly, the reality of what I project repeatedly and you just keep not believing me, right? And I'd say like, I believe him from the demand side because what I expect will happen is this massive exponential growth that shows up in things like Claude code revenue is really because you have long horizon agents that people are using in this one use case already but the world is not just code, right? And so if there's zero, not zero, but small scale, a few billion to 40 billion of revenue in a very small number of months because we figured out how to use the models more productively on long horizon agent tasks, we're going to do that for lots of different functions in the knowledge economy.

43:12Ed Ludlow:While you're here, if you don't mind, like SpaceX S1. Wow. Yes. Wow. It's inspiring. You have a big event today, right, where I believe like some of the cursor guys will be there. And so we learn a little bit about that. But there's this number, total addressable market for AI,$26.5 trillion, super focused on enterprise. You know, they literally label it as such in the deck. Go ahead. I mean. Yeah, I think it's a funny number and then like a funny diagram when you visualize the tan because it's like Starlink and then enterprise AI. Yeah, yeah, yeah. And, you know, much of what we invest in is enterprise AI.

43:52My friend Andre Karpathy described this well, which is the simplest way to think about the use of AI is automation. Right. It's automation of tasks we already do.

44:02Ed Ludlow:Right. And if we give these models the tools and the harness such that they can do these tasks, they can take over things for us. And so I do think that the opportunity is as big as Elon says. But does Elon believe the opportunity or is this him trying to justify why SpaceX took XAI? I think it's interesting that what you put in the S1 is a choice, right? And he could have easily just said something broader or focus on other parts of the SpaceX TAM overall. But he is making the commitment that we are going to go make our offerings relevant in enterprise AI. And so I think he's very committed to this.

44:45Ed Ludlow:Yes or no? You think he will pull it off? so there's a question about whether the value is infrastructure models or applications and see this in the you know anthropic deal and the cursor deal as well they have the infrastructure the infrastructure and the capability to build more is extraordinarily valuable and i think the question will be like i think he's going to make money on that no matter what the question is do they also need to own the model and the application layer to sarah's point yes one said that anthropic would pay SpaceX$1.25 billion per month through 29 for compute. Sarah Guarov conviction across every part of it.

45:21Ed Ludlow:Thank you very much. All right. A lot more to come still in the madness of the program. We'll be breaking down two Blockbuster IPOs on the docket. Two, SpaceX and OpenAI? Maybe. This is Bloomberg Tech.

45:43Ed Ludlow:Let's get back to SpaceX. In addition to the company's blockbuster IPO filing, investors are also closely watching tonight's highly anticipated Starship launch. The mission marks SpaceX's 12th major Starship test flight, a critical milestone as the company pushes to advance its next-gen rocket program while preparing for what could become the biggest IPO in history. Bloomberg's Sanna Pashanka joins us now. You're probably sick of me, right, Sanna? Because how many times did I post in the blog, Starship is central to all of this. It said it in the S1, could not be more clear. Let's start with tonight's test.

46:19Ed Ludlow:What are we expecting? What does it look like? How long does it run for? Right. So today, you know, Starship is slated to take off from the launch pad at Starbase, Texas at around 6.30 p.m. ET, 5.30 p.m. Texas time. time it's going to take off ignite its raptor engines and lift off into space it is debuting an upgraded version of the vehicle it's called version three that has upgraded engines it's supposed to have improved power and capability it's going to yeah lift off into space lap around the globe and then eventually splash down into the Indian Ocean and you know as you were mentioning Ed, this is a really crucial test for this vehicle that is just, you know, so important for all of Elon Musk's ambitions for SpaceX and, you know, the valuation of the company for the coming IPO.

47:09Ed Ludlow:So let's talk a little bit about those ambitions, right? The idea is that Starship is capable of carrying a much greater payload to orbit. So think Starlink, think space-based data center and humans getting to Mars. Explain it to us. Yeah, yeah, totally. So, you know, Starship has kind of the payload capacity that will enable something. Let's start with orbital data centers. It will enable an orbital data center of, you know, as many as one million spacecraft orbiting the Earth, which is what, you know, SpaceX has said they want to do. You can't do that to scale as well with the Falcon rockets.

47:46They're current rockets. You really need a much larger vehicle that can carry 60 satellites to space. And so, you know, they will need Starship to effectively build these orbital data centers at a timeline and a pace that really makes sense and could actually lead to a profit one day. To get humans to the moon and Mars, you will also need, you know, that type of capability, that type of thrust. Starship is advertised as the most powerful rocket ever built. And, you know, Starship is so important to SpaceX's ambitions, but it's also key to America's space ambitions. because SpaceX has a contract with NASA for Starship to land humans on the moon.

48:31Ed Ludlow:Bloomberg Santa Passion Card, thank you very much. Fresh off a courtroom win over Elon Musk, the race for the trillion-dollar AI mega IPO is on. Did you have this on your bingo card? Sources say OpenAI may make a confidential filing as soon as this Friday. Joining us now with the details, Bloomberg's Shereen Ghafari. yesterday afternoon. It's the last thing anyone needed was to see that headline hit. But the timing is interesting. What do we know about an open AI path to an IPO? That's right. So an open AI filing, it would be a confidential filing, could come as soon as Friday or in the coming weeks.

49:08That would obviously put it in close competition with Anthropic, which is also expected to potentially file this fall, as well as SpaceX, which is already out there with the S1 listing.

49:19Ed Ludlow:Yeah, I'm going to let us put SpaceX to one side for a second. So let's say it's a race between OpenAI and Anthropic for September or October. What do we know about that timeline, but also the numbers involved, right? Do we have a sense of valuation or what either company wants to raise? That's right. So the valuations are already, you know, nearing a trillion, right? OpenAI was last valued at over$850 billion just earlier this spring. Anthropic similarly also in talks to raise at up to 900 valuation as we've reported. So when we're thinking about an IPO months out, you can only, you know, you would hope that for these companies, at least they're thinking they want to go further north of that, getting us closer to potentially that trillion mark.

50:05Ed Ludlow:There's an idea that when Elon Musk was told by the jury in charge he's not allowed to proceed with his suit, it removed an overhang to OpenAI, let them kind of proceed with their ambitions. But why does OpenAI want to go public? I know it seems silly, but do they need money? Is it the public perception thing? Has it always been in the plans? It's a good question because on the one hand, these companies like OpenAI and Anthropic can command these massive private financing rounds that we've never seen before on precedented levels of cash. However, access to public markets allows them to do that with much more ease, frequency.

50:37It also allows everyday people to get in on the AI boom or bust, which is a risk, right, if it does change. But that also, you know, then potentially is allowing a larger group of sort of retail investors to have a stake in the company. But really large pools of capital being more easy to access without all the funding round song and dance, I think helps them.

50:58Ed Ludlow:Bloomberg Shringafari all over the OpenAI and the Anthropic story and will be for the rest of this year. That does it for this edition of Bloomberg Tech. This is what markets look like. Not too much going on at the index level. Basically flat. NVIDIA is down. One and a half percent. But in the background, there's still this idea that the big one is coming, SpaceX's IPO. This is Bloomberg Tech.

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