Wall Street CEOs Summoned to Discuss Anthropic AI Risks

25:10That being said, from the few people who have publicly experimented with it and talked about it, They are taking it seriously. And as Bloomberg reported this morning, the government is as well hosting a meeting among some government leaders to talk about the potential vulnerabilities to the financial sector that technologies like this could raise if released. Shireen, what has all this meant for OpenAI? Because it's been an extraordinary week for them as well in terms of public relations, but also what's been happening in terms of them saying to their own investors, according to your reporting, that, look, we're ahead of the game because we've got more compute.

25:44But yet they're not going ahead with certain compute projects in the UK, for example. Yes, again, you know, everyone is parsing different signals here and trying to understand which way things are headed or rather why certain decisions are made. But what we do know is that there is still this compute crunch and that all the major AI labs say they need much more compute in order to be able to serve their customers. And that tracks with what we're seeing in terms of restrictions on free usage with some of the major vendors. And, you know, they're charging more for the most premium products. So with OpenAI, what we know is that they still very much have these ambitious plans for Stargate to roll out lots and lots of gigawatts of energy that people have never seen before in terms of the size numbers for powering AI.

26:33At the same time, we are seeing a pullback on that UK site, a pause, citing energy concerns, citing regulatory concerns. So price does matter here. They can't pay an unlimited amount for it. Shereen Ghafari, you're across all of these things. It's so busy. We didn't even mention what's been the Muse Spark announcement from Meta and what's happened with video in Alibaba in China. We so appreciate you joining today. Thank you. Coming up, we're going to talk about that compute crunch. Speaking with Michael Gontraita, Corwee's CEO. This is Bloomberg Tech.

27:09Welcome back to Bloomberg Tech. Let's check in on these markets because we're saying at all show, it's a tale of two halves. And as that 100 is showing with that hardware outperformance in particular at the moment, we're up 0.4%. In fact, we're up more than 4 % on the week. Now, even as we see consumer prices jump, that core level of inflation actually relatively tames. So we've got some support for risk assets. We've got planned peace talks throughout the weekend. That is the macro perspective. But then we're also thinking about the software sell-off. We're up by 2.6 % on the ETF that tracks software names.

27:38Once again, tumult really ensuing from what the likes of Anthropics latest models, other developments really mean for this area. Look at Palo Alto Networks. Here's a company that's actually helping with the Mythos trial. When you think about Glass Project, in particular Glass Wing Project, where they're testing with some 40 partners to be able to get ahead of any cyber risks, Palo Alto Networks is one of those. But it's still up by 7%, worst day in two years, as we worry about how software names are reconfigured in the age of AI. CallWeave, though, benefits on the hardware side. We're up 12 % because there is an absolute need for compute and infrastructure.

28:15And today they announced that they're doing that for Anthropic. Let's get to the CEO of CoreWeave now. Michael Intrater joins us. You've just had a$21 billion deal announced with Meta yesterday. You have Anthropic today, Michael. What does this mean for your investors in terms of the clarity of revenue growth going forward? Yeah, first of all, good afternoon. Thank you for having me. But it has been a unique couple of weeks for us here because not only have we really made tremendous progress with the likes of Meta and Anthropic, but we've also had tremendous overwhelming success in the capital markets as we continue to build the funding mechanisms to be able to ensure that we are able to execute on our roadmap for growth.

29:03Let's talk about those funding mechanisms, because you're looking at unique ways to be able to get access to credit lines by using basically the power of your customer. The fact that Meta is the one that's coming to you for the compute and the strength there. You're also tapping, though, well, convertible notes was what was issued yesterday, as well as bonds. We're seeking billions of that. How much more debt are you going to have to take on to fuel the growth? So, you know, we've been very creative about how we kind of look at the capital markets, making sure that we can execute on our plan in the most cost-effective way.

29:38And so, you know, we issued$8.5 billion worth of bonds at A-minus paper because of the quality of our counterparties. And, you know, that was a tremendous reduction in our weighted average cost of capital. And then we came back yesterday. We did the largest dual offering ever. And that was both the convertible note that we issued as well as a tranche of high yield, you know, really positioning us well for the capital requirements. And it's just the oversubscription to these tools that we're bringing into market, to the paper that we're bringing to market, really provides tremendous transparency to us, to our investors, to our clients about how much access we are going to be given to capital as we continue to execute on this strategy.

30:38And, you know, people are really confident the cost of capital keeps coming down in our ability to kind of drive the compute that is so dear to all of these model creators and product, people who are producing product for artificial intelligence. You know, it's just been an extraordinary week, both on the capital raise side as well as the client contract side. As the cost of capital comes down, you get to have more. How much more money do you need to get from the debt markets, Michael? Yeah, so look, you know, our strategy continues to be success-driven, right? And so we go out and we execute a contract like the one we just did with Meta.

31:21And now with that contract in hand, we will go into the capital markets and we will raise debt that will be at a very low cost of capital to be able to build the infrastructure to deliver on that contract. Each of our contracts are profitable and drive wonderful return. And at the ParentCo, we're just looking to continue to scale into this unique opportunity to kind of build an enormous company that is instrumental in delivering infrastructure to the world. How much does Anthropic need? So we're not at liberty to speak to the size of that contract. It is a multibillion dollar contract. But really much more importantly than that, from our perspective, this is the first contract that we've executed with them.

32:10It's the first time that they've used somebody out of one of their core investors. And they came to us because of the quality of the infrastructure and the software solutions that we provide. And so, you know, we just think it's an incredible vote of confidence from one of the most important lands in the world. and we think that it's going to be a launch pad for additional business between us and them. Just as every other client that we've brought on, really all the major clients, they come on, they do a contract with us and it's a land and expand strategy for both parties. We really build from that into a very broad based relationship where we become an integral part of their infrastructure strategy.

32:53Let's talk about Mythos. does the slow unveil of the model to unique partners, does that signal an issue with compute? So, look, you know, the strategy that Anthropic is using to, you know, as they kind of bring their products to market is really, you know, it's their strategy. You know, our job in this ecosystem is to provide as much infrastructure at the highest quality that we can, right? And they came to us, they engaged us because they have demand for compute because of the wonderful products that they are bringing to market. And that's, you know, being echoed across the different labs, you know, universally.

33:38And, you know, our role in this is really to go ahead and to deliver the infrastructure that these companies are going to need and currently need to be able to successfully deliver their product to market. That's what our role is we do. Michael, I'm fascinated by the global perspective you have here, because the geopolitical environment that we live in at the moment means that energy prices are driving up, particularly over in Europe and the UK. OpenAI, we have reporting that they're pulling back on their Stargate project in the UK because energy is getting too expensive. And yet they're going out to their investors and saying, look, we're ahead of the game, we're ahead of Anthropic because of our compute that we have.

34:15What are you seeing in terms of people trying to rearrange where their computer is accessed from? Yeah, look, you know, the way I kind of view it, and my background really is within the commodity space, is that people are going to be very thoughtful about managing the cost of delivering infrastructure. And some of that is going to come from the energy side. It's going to be, hey, where can we get electrons that are effectively priced so that we can continue to drive our company? But it's also going to come from places like CoreWeave, where our software and the yield on the compute that we build is just higher than other alternatives because of the quality of the software environment that we built.

34:58And so you're seeing both sides of that coin really being driven. And you're seeing the success of our infrastructure and the adoption of our infrastructure because of the part that we can impact. And so we look at the different energy markets. We place our infrastructure in lots of different places in order to mitigate localized risks such as what's happening in Europe at the moment. But we really do think that the part that we can directly control is the quality of the infrastructure we deliver. Would you pull back from the UK, Michael? No, no, we have no intention of pulling back from the UK.

35:33We are well positioned there. We have, you know, a great relationship with the energy companies, with the data centers and, you know, with the broader economy over there. And we absolutely will continue to build and expand our footprint in those jurisdictions. Michael and Trotter, I always wish we had more time with you. Thank you. It's been a busy week. You need some rest. We appreciate it. Call you CEO. Coming up, it's been a busy week for four NASA astronauts. They flew around the moon. Returning home may be the most dangerous part. We'll discuss the expectations for Artemis 2 Splashdown. That's next.

36:08This is Bloomberg Tech.

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37:35We're all over the world. Listen to the latest from Bloomberg News Now on Apple, Spotify, or anywhere you listen. After its historic trip around the moon, the crew of Artemis II is preparing to splash down in the Pacific Ocean this evening. Now the three Americans, one Canadian, have broken record for distance travelled by humans in space. They were the first to witness parts of the lunar surface as they travelled closer to the moon than people have been in 50 years. Now they're preparing for a pretty fiery plunge back into Earth's atmosphere in a major test of the Orion capsule's heat shield.

38:08Let's discuss that and what to expect with Bloomberg Space Reporter, Sana Prashanka. And Sana, why is this such a test for Orion in the capsule? Yeah, so during the first Artemis I mission, we saw that there were some issues with Orion's heat shield upon reentry. They had noticed some chunks of it had basically, you know, fallen off when the Orion capsule splashed down. And so that was kind of a test of what is to come. And, you know, they're trying out a different type of reentry this time in which the Orion capsule will be exposed to those fiery temperatures for less amount of time. So, you know, NASA says they feel very confident in the performance of the heat shield this time around.

38:55But, you know, time will tell. Just with Lockheed Martin built Orion crew capsule in particular, how has the company been navigating through this as well? And how have all entities worked together to ensure that this is the safest possible splashdown? Yeah, so Lockheed Martin has said that they have done a very comprehensive investigation following Artemis I of their heat shield and, you know, what exactly went wrong and have done more testing with the heat shield of, you know, the current capsule to ensure that they wouldn't face the same issues again with this different type of reentry. so they definitely feel confident and they have also engineered a new type of heat shield for the following Artemis missions starting with Artemis 3.

39:43So you know they've said that they have really investigated the issues, worked through them, fixed them and that will be implemented on the subsequent missions following this one. Sana, it's been a busy week. Thanks for joining us. Sana Prashanka there, our space reporter. Let's get even more with Lori Leshin. She's professor of Space Future at Arizona State University, former head of NASA's Jet Propulsion Laboratory, first one ever to do that. And just the scale of the anxiety as we wait for them for this splashdown at 5 p.m. Pacific time, 8 p.m. here in New York. Yeah, I mean, it's definitely one of those pins and needles moments.

40:21We tend to, you know, it's a little bit like waiting in line for a roller coaster. You're both nervous and excited. We're so thrilled to have the astronauts coming back down. But it is going to be a pins and needles moment for sure until they are safely back on the ship after they land in the ocean. Talk about some of the numbers here. Ten metric ton Orion capsule, about twice the mass of the Apollo capsule, as you put it, Laurie. And what speeds are they hitting and how hard is this to scientifically ensure that the heat protection is there? Yeah, so it is. It's a 10 metric ton capsule, about twice the mass of Apollo when it reentered the atmosphere.

41:04So it's bigger, which is great for the astronauts. We've seen the cramped quarters. Can you imagine how small that Apollo capsule was? And yes, they hit the top of the atmosphere going 25 ,000 miles an hour. And over the course of 13 minutes, slow down to about 20 miles an hour. That should be their hit velocity, you know, under parachutes going nice and slow, coming down into the Pacific. And another number I love is the heat shield gets to be about the temperature of the surface of the sun, about 5000 degrees Fahrenheit. That's really hot. And so this is one of the biggest challenges of spaceflight is our atmosphere is great to help us slow down, but it heats the heck out of everything.

41:44So we've got to make sure those heat shields work. And I think the work between Lockheed Martin and NASA and probably subject matter experts, even beyond those two organizations, have really contributed to the confidence that we have going in to today's reentry. But we'll still all be on pins and needles. I mean, and the confidence that's been built over the last nine days or so, this mission, And we don't want to touch all the wood here at the moment, but has been remarkably successful. It has. And look, we will celebrate like crazy once the astronauts are back on Earth. And then we can really breathe and take that moment to celebrate.

42:27What an extraordinary accomplishment here in the year of the 250th birthday of our country to once again inspire the nation and really the world with great science. You know, their flyby of the moon was, as a scientist, it made my heart go pitter patter. And also all of the data and information that we've gained about Orion and how it works and whether there are things we'll need to tweak before future missions. A lot of that data is resident on the capsule itself and in the brains of the astronauts. All of that will get downloaded once they're back on Earth. And then push us forward to Artemis 3 then.

43:04Right. So, and it's going to go fast now. This is what I love. You know, I was involved in this program back at the very beginning, back in 2011, when the very first Orion capsule came off, you know, was being built and the SLS was born, essentially. And now it's taken us a long time to be flying humans back into deep space with these two fabulous, with the rocket and the spacecraft. But now it's going to go faster. So Artemis 3, we hope to launch in next year. So I expect you're going to hear very soon an announcement of crew, more specifics about the mission, which we've changed the mission profile from what was expected previously, in order in part to accelerate this and hopefully accelerate getting boots on the moon, which we hope will happen in 2028 on Artemis 4.

43:49You're back in academia. What does these moments, I mean, I just think about my kids coming home from school every day at the moment with various art projects and things they've been doing around Artemis 2. What has it done in terms of inspiring those that are studying under you, those that are now going to study under you? I think it's a great moment that, you know, Apollo inspired a generation around the world to pursue innovation, to pursue technology, to ask hard questions and do things that we thought were impossible. I really hope we're going to have the same impact on this generation, the Artemis generation.

44:23And we're really seeing massive amounts of excitement. And not only from space geeks like us, but from everybody that we talk to. And so it's a great moment of opportunity for us in this country to continue to drive STEM learning and innovation. And Jared Eisenman, of course, the administrator, how important has NASA's focus been on this to be bold? But also, what about the money and what more is needed right now from the government? Right. I do think Jared has been a real breath of fresh air coming in and trying to drive the agency to move faster, but do so smartly. I also know that he understands, based on personal experience, the risks involved in human spaceflight.

45:03And so we're going to fly when we're ready, but we need to start moving things out of the way. When I was director of JPL, I had this group I called the Snowplow Team, which is, can we get stuff out of the way for the technical folks who are trying to get us further, faster and get things done? We've got to be the people that clear out that clutter. And I know that he's really committed to that. And it's great because NASA needs that. It's become a bit bureaucratic, and it's great to have that breath of fresh air in Jared. Marge, you're telling me you're launching several new NASA missions. Laurie Leshin, it's always so great to have you on.

45:38Thank you so much. Former director of NASA Jet Propulsion Lab, currently the professor of Space Futures at Arizona State University. Now coming up, Apple. It's permanently closing its first unionized store in the United States. We're on the next. This is Bloomberg Tech.

45:57Time now for Talking Tech. And first up, shares of China's Sharetronic data. They plummeted 20%. It's following U.S. charges against Supermicro co-founder for allegedly smuggling NVIDIA chips. The company denies a relationship with Supermicro, but records show ShareTronic procured$92 million worth of NVIDIA H100 and H200 processors, which have been banned from sale to and within China. Meanwhile, NVIDIA-backed Lumentum said demand from the biggest U.S. tech companies for its optical components is accelerating and would be sold out through all of 2028, later this year. The company is investing at least$100 million to expand its specialized factories in Japan, and the stock is up 1 ,500 % over last year, as investors bet on Photonics as the essential plumbing for the next generation of AI data centers.

46:42Meanwhile, Apple is shutting its first unionized retail store in the United States in June, citing declining conditions at the mall. The company said in a statement that the employee can apply for open roles at Apple in accordance with the collective bargaining agreement, The union representing Towson employees called the move union busting, saying Apple's claim about the agreement is, quote, simply false. Let's dig into that. Primo, Josh Idelson is here with more on their story. So is it that the mall isn't performing well or is it that this was the one rare case of unionization? Well, this tees up what is likely to be a years long legal battle potentially over that question, whether this was a legal retaliation or simply a business decision.

47:25It's not inherently illegal for a company to shut down a unionized location, but it is illegal for a company to retaliate against workers for organizing by shutting down. And across various industries, it is often one of the biggest fears workers have about unionizing is that it could lead the company to retaliate by shutting down their business. How would evidence be weighed here? I mean, several retailers, we know Crate & Barrel, Banana Republic, have pulled back from that particular mall, but they're not on electronics sellers as well. And so what is it that you've tended to see come forward in these years-long battles?

48:02The U.S. Labor Board, when it conducts an investigation, talks to various witnesses, looks at documents. Sometimes there are internal communications that come up that influence the decision whether to issue a complaint. Then the case proceeds through many steps after that that can end up in federal appeals court. The union will point out, as they have, that Apple, they say, is not letting the union members that are losing their jobs get the same right to transfer to other jobs that workers at the other two stores being closed down are getting. And the union argues that shows the animus against the union here.

48:41In the meantime, though, this upends one of the few footholds that organized labor had at Apple. And it could have a chilling effect on organizing elsewhere, regardless of what happens with a potential legal case. The International Association of Mechanists and Aerospace Workers, how do they think Apple will unionize ever again or not, briefly? Well, they're arguing that they will put pressure on the company, including looking to elected officials. We've seen sometimes these fights become as much about a company's brand and reputation as about the day-to-day profit of the company. And unions look for whatever leverage they can to push back in these situations.

49:23Josh, it's great to have you here live to talk through the story. Bloomberg's Josh Idelson there. Now that does it for this edition of Bloomberg Tech. Do not forget to check out the podcast. Find it on the terminal as well as online on Apple, Spotify and iHeart. From New York, happy weekend. This is Bloomberg Tech.

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