# Nvidia Nears $14B Hugging Face Deal

An episode of [Bloomberg Tech](https://invisiblenetwork.ai/podcast/1611767434), 2 Sep 2026, 43 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/41764a4f-fc64-4e11-89ba-ae7c0030ab5e/c2363730-6460-4707-80f7-b4b9011b98df/audio.mp3?utm_source=Podcast&in_playlist=9caafc41-289c-4115-995d-ae7c0030ab75

Bloomberg’s Ed Ludlow breaks down Nvidia's advanced talks to acquire AI startup Hugging Face in a $14 billion deal. 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. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios.
[0:04] Speaker 2: Podcasts.
[0:05] Speaker 1: Radio.
[0:06] Speaker 2: News.
[0:13] Speaker 3: Bloomberg Tech is live from the heart of Silicon Valley
[0:17] Speaker 3: with Ed Ludlow in San Francisco. This is Bloomberg Tech
[0:24] Speaker 3: coming up in videos in advanced talks to acquire AI
[0:26] Speaker 3: startup Hugging Face in a transaction totaling $ 14 billion. Plus,
[0:32] Speaker 3: Dell shares jump after the company boosted its annual sales
[0:34] Speaker 3: forecast by $ 25 billion due to surging demand for servers
[0:39] Speaker 3: to run AI tasks. And Uber cuts 10% of its
[0:42] Speaker 3: staff globally to streamline its core engineering, science, and delivery groups. Okay,
[0:48] Speaker 3: so let's get right to our top story. Nvidia could
[0:50] Speaker 3: be closing in on its biggest AI acquisition yet. According
[0:53] Speaker 3: to sources, the chip makers in advance talks to buy
[0:57] Speaker 3: Hugging Face in a deal that could total $ 14 billion.
[1:00] Speaker 3: For more, Bloomberg's Ian King is here with us, along
[1:03] Speaker 3: with Rachel Metz, both of whom broke the story last night.
[1:06] Speaker 3: We've known about, Ian, the number of $ 12. 9 billion. That's
[1:10] Speaker 3: the kind of acquisition, and we've known that it's close.
[1:13] Speaker 3: This $ 14 billion figure, what does that include? What's the
[1:16] Speaker 3: new bit here?
[1:17] Speaker 4: Yeah, I mean, according to our reporting, that includes an
[1:20] Speaker 4: extra sort of billion dollars of retention. Obviously, NVIDIA doesn't
[1:24] Speaker 4: want the talent, the core of that company to just
[1:28] Speaker 4: disappear overnight when it acquires it.
[1:30] Speaker 3: That's about keeping the staff. Rachel, it seems a strange
[1:34] Speaker 3: place to go next, but what is Hugging Face? Like,
[1:36] Speaker 3: we've been talking about them so often of late because
[1:38] Speaker 3: they were subject to a mistaken hack by OpenAI models
[1:42] Speaker 3: as one example. But what is it that they actually do?
[1:46] Speaker 5: Yeah, so Hugging Face does a couple different things. It
[1:49] Speaker 5: offers a platform that a lot of companies use to
[1:53] Speaker 5: showcase AI models that they're releasing. It's also a place
[1:57] Speaker 5: where anybody could post AI models or similar kinds of
[2:02] Speaker 5: work that they're working on that they want to share
[2:03] Speaker 5: with other people. And the company also, for a long time,
[2:07] Speaker 5: has really focused on doing its own research. It's very
[2:09] Speaker 5: focused on open research, open models, and has been fostering
[2:14] Speaker 5: that sort of ecosystem for a long time.
[2:16] Speaker 3: Ian, why would NVIDIA want to buy Hugging Face as
[2:20] Speaker 3: Rachel's just described it?
[2:23] Speaker 4: What she said was key there, which is open models, right?
[2:27] Speaker 4: At the moment, the industry is very concentrated on the
[2:30] Speaker 4: hyperscalers and what they produce and what open AI does.
[2:34] Speaker 4: What NVIDIA really wants is a broad adoption of AI
[2:38] Speaker 4: across the economy. It basically wants more customers. And hugging
[2:42] Speaker 4: face is an area where it's sort of a bazaar
[2:46] Speaker 4: where things can be propagated, where people can come and
[2:48] Speaker 4: get what they need. And in theory, according to probably NVIDIA,
[2:53] Speaker 4: a better thing for the overall industry.
[2:55] Speaker 3: Rachel, is it a surprise that this is happening? Like
[3:00] Speaker 3: in Hugging Face's history of either raising money or what
[3:03] Speaker 3: we know about their co-founders selling to NVIDIA, did we
[3:06] Speaker 3: have that on the bingo card?
[3:10] Speaker 5: I think it sounds a little bit surprising on its face,
[3:13] Speaker 5: but then if you think about it, it actually could make.
[3:15] Speaker 1: A lot of sense.
[3:17] Speaker 5: The company has, it's been around for about 10 years.
[3:20] Speaker 5: They have a lot of investors, including Nvidia. My understanding
[3:24] Speaker 5: from people that I've spoken to that are close to
[3:27] Speaker 5: the company say that Nvidia has been long been a
[3:29] Speaker 5: dedicated investor of the company. And as Ian mentioned, they're aligned,
[3:34] Speaker 5: especially on the open models. So I, It could be
[3:38] Speaker 5: a really great matchup for both sides.
[3:42] Speaker 3: A bit of M & A history for NVIDIA. And,
[3:45] Speaker 3: you know, we say $ 14 billion would be like their
[3:47] Speaker 3: biggest acquisition in AI. Where has NVIDIA done actual acquisitions
[3:52] Speaker 3: as opposed to like these investments, which it makes many of?
[3:56] Speaker 4: Yeah, I mean, it doesn't have a huge record of acquiring.
[3:59] Speaker 4: It tends to like to do things in-house. You could probably,
[4:03] Speaker 4: the most recent one of note was what it did
[4:05] Speaker 4: in terms of getting hold of the.
[4:06] Speaker 1: Assets of Grok. That's right.
[4:09] Speaker 3: Grok with a Q.
[4:09] Speaker 6: That's right.
[4:10] Speaker 4: Grok with a Q, the AI chip investor. But really,
[4:13] Speaker 4: the question here is, what happens to Hugging Face if
[4:16] Speaker 4: NVIDIA owns it?
[4:18] Speaker 3: NVIDIA is a.
[4:19] Speaker 4: Very powerful force in AI. Arguably, Hugging Face's greatest value
[4:23] Speaker 4: is that everybody uses it.
[4:25] Speaker 7: Right.
[4:26] Speaker 3: Rachel, real quick, is this imminent? Do we know if
[4:29] Speaker 3: this will happen, when it will happen?
[4:32] Speaker 5: Yeah, according to our reporting, it sounds like it is
[4:36] Speaker 5: pretty imminent and we are expecting that.
[4:39] Speaker 1: It will happen this week.
[4:41] Speaker 3: Okay, Bloomberg's Ian King and RetroMets with the story. One
[4:43] Speaker 3: of the most read stories this Wednesday morning. Thank you
[4:46] Speaker 3: very much. Let's get to the earnings story. Shares of
[4:49] Speaker 3: Dell higher off-session highs for the company, boosting its annual
[4:52] Speaker 3: sales outlook by a massive $ 25 billion, with AI server
[4:57] Speaker 3: revenue now expected to triple to $ 74 billion this fiscal year.
[5:03] Speaker 3: Dell also reported a $ 95 billion AI server backlog and
[5:07] Speaker 3: earnings in the quarter well ahead. of Wall Street's expectations.
[5:11] Speaker 3: Joining us now is Porsche Capital Management President and owner,
[5:14] Speaker 3: Michelle Connell. Dell continues with momentum. This is the fifth
[5:19] Speaker 3: straight quarter where they basically raised their outlook. What do
[5:23] Speaker 3: you see as the story behind that?
[5:26] Speaker 8: Well, first, thanks for having me, Ed. It's just a
[5:29] Speaker 8: powerhouse in the server area. And a few years back,
[5:34] Speaker 8: Dell was considered dead or almost what I would call
[5:37] Speaker 8: a dinosaur. But they're just, you know, they've been great
[5:40] Speaker 8: in terms on the server side. And it's not just
[5:43] Speaker 8: the AI servers.
[5:45] Speaker 9: I'm going to point to.
[5:45] Speaker 8: It's also their servers where the revenue was up over 110%
[5:50] Speaker 8: year over year. Because if you're going to have AI servers,
[5:55] Speaker 8: the corporations also need their traditional server infrastructure upgraded.
[6:01] Speaker 3: I'm looking at Dell shares on a sort of longer
[6:03] Speaker 3: time horizon. So even year to date, actually 252% gain.
[6:09] Speaker 3: But it took some time for them to get credit
[6:11] Speaker 3: or at least for like the market to understand you
[6:14] Speaker 3: need to have a Dell to put the server design together.
[6:17] Speaker 3: Do you expect this to be a name that continues
[6:19] Speaker 3: to have momentum on the equity side?
[6:21] Speaker 8: I do because they're the leader in this space. And
[6:27] Speaker 8: they are very good in terms of their competitive advantages.
[6:30] Speaker 8: They have a great breadth of products. Their supply chain
[6:33] Speaker 8: is phenomenal. Their client relationships are great. And they've also
[6:38] Speaker 8: been in the process of going through an optimization program
[6:41] Speaker 8: in terms of cleaning out the product lines that aren't
[6:44] Speaker 8: going to work. and maximizing their margins. And that's another
[6:48] Speaker 8: thing I think they don't get enough credit for. This year,
[6:52] Speaker 8: their operating margins were over 11%. Last year, they were six.
[6:56] Speaker 8: I mean, that's a huge win.
[6:59] Speaker 3: I want to zoom out here for some perspective and
[7:02] Speaker 3: look at today's big number, which is $ 32 trillion. Yes, trillion.
[7:08] Speaker 3: And that's how much data center spending is expected to
[7:12] Speaker 3: reach by the year 2050, according to a report by PwC. So, Michelle,
[7:16] Speaker 3: I don't know how you feel about such reports from
[7:19] Speaker 3: the likes of PwC, but on your point there on
[7:21] Speaker 3: the margin expansion, right? The story on the technology side
[7:25] Speaker 3: has been that NVIDIA dominates the content ownership of the server.
[7:29] Speaker 3: You know, Dell doesn't really contribute that much to it.
[7:32] Speaker 3: But if we get to that $ 32 trillion number, surely
[7:35] Speaker 3: Dell is going to take a big slice of that market.
[7:39] Speaker 8: Definitely the case because they've got the entire company lined
[7:45] Speaker 8: up to continue to take share. And they're by far
[7:48] Speaker 8: away the number one player in the server and AI
[7:51] Speaker 8: server space. So Yes, if that survey is correct, which
[7:54] Speaker 8: is very interesting because the last survey I saw was
[7:58] Speaker 8: through 20, 30 going to 8 trillion, but now we're
[8:01] Speaker 8: looking at 32 trillion. As you said, that's a huge
[8:04] Speaker 8: number and Dell will definitely benefit. And I think a
[8:08] Speaker 8: lot of analysts on the sell side are seeing that
[8:10] Speaker 8: and you're seeing a lot of the estimates today push
[8:13] Speaker 8: up by quite an amount.
[8:16] Speaker 3: More broadly, across all the layers of the AI stack,
[8:19] Speaker 3: where are you most focused right now? What are you
[8:21] Speaker 3: looking at most closely?
[8:23] Speaker 8: I started my career as a semiconductor analyst, and so
[8:28] Speaker 8: I still am attracted to what's going on there on
[8:32] Speaker 8: the public side. as well as the private side. And
[8:36] Speaker 8: you're going to see more and more focus on the
[8:40] Speaker 8: fact that it's not just customization by Broadcom or others,
[8:44] Speaker 8: but you had NVIDIA buying MediaTek. And there are other
[8:49] Speaker 8: private semiconductor firms that we're going to start hearing more
[8:53] Speaker 8: about because copper is not going to make do with
[8:57] Speaker 8: these chips in terms of transmitting the data We need optics.
[9:01] Speaker 8: We need other materials involved. And as this happens, the
[9:07] Speaker 8: semiconductor story is going to broaden out and there are
[9:10] Speaker 8: going to be a lot more winners. And there's going
[9:12] Speaker 8: to be some market share losses along the way.
[9:16] Speaker 3: In the private markets, we've seen that. manifest in particular
[9:20] Speaker 3: in specialized inference platforms. I'm trying to think of one.
[9:24] Speaker 3: Etched is a good example. When you say there will
[9:28] Speaker 3: be market share changes, who loses out in that context?
[9:33] Speaker 8: I don't have exact names on that, but things are
[9:36] Speaker 8: moving so quickly. You have NVIDIA that is smart enough
[9:42] Speaker 8: to make these partnerships and make these acquisitions, but if
[9:45] Speaker 8: you do not have the war chest to do that,
[9:48] Speaker 8: maybe something like a Broadcom may have more problems in
[9:52] Speaker 8: front of it. That's why the earnings announcement today is
[9:55] Speaker 8: going to be very interesting and see if they're going
[9:57] Speaker 8: to be able to prove that they're A, revenue can
[10:01] Speaker 8: stay within the $ 120 billion to $ 150 billion.
[10:07] Speaker 3: How high or low has the bar been set for Broadcom?
[10:12] Speaker 3: Really interested in what you just said. After the shocker
[10:16] Speaker 3: of NVIDIA's earnings last week, where they gave us a
[10:20] Speaker 3: rare fiscal year outlook for growth of 70%, which was
[10:23] Speaker 3: modeled on supply. It wasn't a growth outlook based on demand,
[10:27] Speaker 3: but supply. Can you extrapolate through to Broadcom?
[10:31] Speaker 8: I think they will benefit in the short term from
[10:35] Speaker 8: the same issue. Last night when I was listening to,
[10:39] Speaker 8: I think it's Semicon over in Taiwan, the main theme
[10:43] Speaker 8: was supply. There is not enough supply. So in the
[10:47] Speaker 8: short run, the main players will benefit from that. But
[10:50] Speaker 8: that may change with time and as the means of
[10:54] Speaker 8: building these small chips as they get smaller. And as
[10:58] Speaker 8: the amount of data is being communicated increases, the chairs
[11:03] Speaker 8: are going to change in terms of who's winning and
[11:05] Speaker 8: who's losing share.
[11:09] Speaker 3: Michelle Conover, Porsche Capital Management, for the first time on
[11:11] Speaker 3: Bloomberg Tech. Thank you very much. A story that broke
[11:15] Speaker 3: this morning, Alphabet. These are shares, very muted move, after
[11:20] Speaker 3: a federal judge ruled that Google doesn't have to sell
[11:23] Speaker 3: off its advertising exchange and instead... needs to make its
[11:27] Speaker 3: ad tech tools work with those operated by rivals. The
[11:30] Speaker 3: decision allows Google to avoid a forced sale. You'll remember
[11:34] Speaker 3: April 2025 ruling that the company had illegally monopolized two
[11:38] Speaker 3: advertising technology markets. I would say I think that this
[11:41] Speaker 3: was a probable or one scenario outcome and the stock
[11:45] Speaker 3: move very muted after those headlines this morning. Now, coming
[11:48] Speaker 3: up in the show, Uber is planning on cutting 10%
[11:52] Speaker 3: of its global stock. That's in a massive restructuring effort.
[11:55] Speaker 3: We're going to have the details next. This is Bloomberg Tech.
[12:08] Speaker 3: Uber is looking to cut about 3,300 roles in its
[12:12] Speaker 3: latest restructuring efforts to reduce its management layers. That's according
[12:15] Speaker 3: to an email from Uber's CEO viewed by Bloomberg News.
[12:18] Speaker 3: It's about 10% of its global staff. Bloomberg's Natalie Lung
[12:23] Speaker 3: broke the story. Interesting. So there's a real emphasis here
[12:27] Speaker 3: on cutting out management layers. Why is Uber so focused
[12:30] Speaker 3: on that now?
[12:31] Speaker 2: They have been growing so much in the past five years,
[12:34] Speaker 2: and there are actually a lot of teams, apparently called
[12:36] Speaker 2: micro teams, that have one to two reports. And part
[12:39] Speaker 2: of the effort here is to cut those micro teams
[12:42] Speaker 2: in half, and as a result, there will be 20%
[12:45] Speaker 2: fewer managers. And the CEO's note today, he talked about
[12:50] Speaker 2: internal surveys of people complaining that they're doing a lot
[12:54] Speaker 2: more coordination and alignment versus just building things. So this
[12:58] Speaker 2: is really an effort to make the organization simpler and faster.
[13:03] Speaker 3: Natalie, we say, you know, as it's outlined in Dara
[13:06] Speaker 3: Khosrowshahi's memo obtained by Bloomberg News, that it's a restructuring.
[13:09] Speaker 3: But there are areas that Uber's really focused on. It
[13:12] Speaker 3: wants to grow in. What did Dara say about that
[13:16] Speaker 3: in his correspondence?
[13:17] Speaker 2: Yes. Obviously, the core ride hailing and delivery business are
[13:21] Speaker 2: very important. They're investing more into drivers and merchants and
[13:24] Speaker 2: trying to get ahead in global markets and expansion markets.
[13:28] Speaker 2: where DoorDash, its rival, is also competing in, especially in Europe.
[13:32] Speaker 2: They also talked about building an autonomous future, which is
[13:35] Speaker 2: very important because they committed more than $ 10 billion in
[13:39] Speaker 2: investment in the next few years, and they're going to
[13:41] Speaker 2: have to reallocate capital to be.
[13:43] Speaker 3: Able to do that. I think most people are familiar
[13:46] Speaker 3: with Uber, right? You know, as a ride-hailing platform, largely
[13:49] Speaker 3: with human-driven cars. But summarize what the robo-taxi strategy is.
[13:53] Speaker 3: For Uber, it's kind of multifaceted.
[13:55] Speaker 2: Yes. So Uber doesn't want to make their own robo-taxis.
[13:58] Speaker 2: They're not going to build their own Waymo car or Tesla.
[14:02] Speaker 2: But they are partnering with a bunch of different providers,
[14:05] Speaker 2: such as Nuro, Lucid, Rivian, and Avride, to sort of
[14:11] Speaker 2: be able to aggregate all these cars and in the
[14:14] Speaker 2: future become the go-to platform where people can hail multiple
[14:17] Speaker 2: kinds of autonomous vehicles.
[14:20] Speaker 3: Bloomberg's Natalie Lung with the reporting, breaking the story on Uber,
[14:23] Speaker 3: cutting 10% of staff. Thank you very much. Another big story,
[14:26] Speaker 3: AI coding startup Cognition is set to close a new
[14:29] Speaker 3: funding round of around $ 1 billion, according to sources. The
[14:33] Speaker 3: latest round will place the startup at a $ 47 billion valuation.
[14:37] Speaker 3: Bloomberg's Rebecca Torrance covers all things startup, venture capital, and
[14:40] Speaker 3: broke the story. This is interesting because, very simply, it
[14:44] Speaker 3: is a market and very quick jump from Cognition's last valuation.
[14:49] Speaker 1: That's right, Ed.
[14:50] Speaker 10: Cognition just raised at a $ 26 billion valuation in May.
[14:54] Speaker 10: This is a massive jump from that, obviously, and there
[14:57] Speaker 10: has been a ton.
[14:58] Speaker 3: Of investor interest in this round.
[14:59] Speaker 10: We reported that the round is looking to be around
[15:02] Speaker 10: a billion, but it could exceed that amount because the
[15:05] Speaker 10: company has received nearly $ 10 billion in total investor interest.
[15:09] Speaker 10: That's due in part to the growth of the company
[15:11] Speaker 10: and in the investor interest more broadly in AI coding startups.
[15:16] Speaker 3: I should say that in our reporting, and I teamed
[15:18] Speaker 3: up with you on this one, we don't have a
[15:20] Speaker 3: sense of all the details yet, right? We don't necessarily
[15:23] Speaker 3: have who's participating in this round or leading it, but
[15:27] Speaker 3: the sense is that it is well underway for Cognition
[15:30] Speaker 3: to raise this money and that this valuation is getting settled, right?
[15:35] Speaker 3: That's right.
[15:35] Speaker 10: The deal is pretty set to close and certainly moving forward.
[15:40] Speaker 10: It's also notable that Cognition's annualized revenue has passed $ 900
[15:45] Speaker 10: million at this point. That's up from $ 492 million in May.
[15:49] Speaker 10: So that's one of the things that's really.
[15:51] Speaker 1: Driving a lot of interest here.
[15:52] Speaker 3: I think Scott Wu, the CEO, had come on the
[15:54] Speaker 3: show and shared that AR figure. Just very quickly, you
[15:58] Speaker 3: and I had reported that SpaceX approached Cognition with the
[16:02] Speaker 3: idea of acquiring them. Cognition said no. We published the story.
[16:08] Speaker 3: Scott Wu, the CEO of Cognition, and Elon Musk weighed in.
[16:10] Speaker 3: But just summarize that historic reporting for us, because I
[16:13] Speaker 3: think it's relevant here, given the timing.
[16:15] Speaker 2: Sure.
[16:16] Speaker 10: So we had reported that SpaceX had approached Cognition in
[16:18] Speaker 10: recent months about a potential acquisition.
[16:21] Speaker 3: Cognition had rebuffed them.
[16:22] Speaker 10: Cognition has always been very vocal about wanting to remain
[16:24] Speaker 10: an independent company. That's why they said they did this
[16:27] Speaker 10: last fundraise. So it's unsurprising to see another fundraise well
[16:30] Speaker 10: underway here. And SpaceX obviously just closed its $ 60 billion
[16:34] Speaker 10: acquisition of Cursor. in august and we had also reported
[16:38] Speaker 10: previously that that had driven investor interest into cognition and
[16:43] Speaker 10: you know certainly seems to continue to.
[16:45] Speaker 3: Be doing that now okay to recap cognition set to
[16:49] Speaker 3: raise a billion dollars at about a 47 billion dollar
[16:52] Speaker 3: valuation according to rebecca's reporting with bloomers rebecca torrens thank
[16:55] Speaker 3: you very much Lots going on around the world. Let's
[17:05] Speaker 3: get out to New York where Bloomberg's Yahira Hanan is
[17:07] Speaker 3: standing by.
[17:08] Speaker 9: Hey, Yahira.
[17:09] Speaker 3: Hi, Ed.
[17:10] Speaker 11: It's time now for Talking Tech. First up, Anthropic has
[17:13] Speaker 11: released a cheaper version of its powerful Fable AI model.
[17:16] Speaker 11: The company says Fable 5.1 is better at coding and
[17:20] Speaker 11: science tasks. Enterprise users will pay the same price per
[17:24] Speaker 11: token as Fable 5, but less when the model resurfaces
[17:29] Speaker 11: previously processed information. Plus, Apple's new CEO, John Churnis, will
[17:34] Speaker 11: get about $ 58 million in compensation next year. That's according
[17:38] Speaker 11: to an SEC filing. That includes $ 3 million in base
[17:42] Speaker 11: salary and a $ 55 million stock grant. Meanwhile, Tim Cook,
[17:47] Speaker 11: who has moved into the executive chairman role, will be
[17:50] Speaker 11: paid around $ 47 million.
[17:52] Speaker 3: Not bad.
[17:53] Speaker 11: And TSMC's need for chip-making tools has nearly doubled since
[17:57] Speaker 11: the end of last year. That's according to a senior executive.
[18:01] Speaker 11: The comment was made at Semicon Taiwan, where others in
[18:04] Speaker 11: the industry also touted increased demand. Here's Bertolt Schmidt, the
[18:09] Speaker 11: CTO of German laser maker Trump, a key supplier to ASML.
[18:15] Speaker 9: Right now on EUV level, we are trying to triple
[18:19] Speaker 9: our output within the next two years. And in areas
[18:23] Speaker 9: like the plasma generators, with the demand we are having,
[18:26] Speaker 9: the order books that are filling up, we see solid
[18:29] Speaker 9: growth and we probably also double, maybe even triple on
[18:33] Speaker 9: the generator side within the next two years.
[18:35] Speaker 11: Schmitz added that despite the demand, he did not say
[18:38] Speaker 11: the industry was in a super cycle.
[18:39] Speaker 2: Ed?
[18:43] Speaker 3: Thank you, Juhaira. NVIDIA CEO Jensen Wang is urging the
[18:46] Speaker 3: world's largest economies to accelerate their adoption of AI as
[18:49] Speaker 3: a way to enhance growth. Speaking at a G20 meeting
[18:53] Speaker 3: in North Carolina, Wang said, quote, every single country needs
[18:56] Speaker 3: to build infrastructure to support their local economies and called
[19:00] Speaker 3: AI the great equalizer. Bloomberg's Maggie Eastland was in the
[19:04] Speaker 3: room and she's with us now. This is a sort
[19:07] Speaker 3: of side meeting to the main ministerial G20. But the
[19:12] Speaker 3: biggest names in technology are there and they are having
[19:16] Speaker 3: a pretty clear message. Go through what what Jensen Wong
[19:19] Speaker 3: said and who else was in the room. Absolutely.
[19:22] Speaker 12: So we've heard already this morning from Jensen Wong, as
[19:25] Speaker 12: well as Tom Brown, the chief compute officer and co-founder
[19:29] Speaker 12: of Anthropic. And they both emphasize this message to the U.S. foreign,
[19:35] Speaker 12: the foreign nations that have joined the U.S. here to
[19:38] Speaker 12: say we need to build data centers, not only in
[19:40] Speaker 12: the U.S., but also abroad. And this is, of course,
[19:43] Speaker 12: coming at a time when within the US, there's growing
[19:46] Speaker 12: backlash in communities towards having data centers built there.
[19:50] Speaker 8: So it's a very interesting dynamic.
[19:52] Speaker 12: But the one message that's been consistent across all the
[19:55] Speaker 12: CEOs and tech executives that we've heard from is that
[19:59] Speaker 12: we need to build data centers.
[20:01] Speaker 3: We had heard from Elon Musk yesterday who framed this
[20:05] Speaker 3: as AI will equate to economic growth. Just give me
[20:08] Speaker 3: the bigger picture why they've got all these tech CEOs
[20:11] Speaker 3: into the room. Absolutely.
[20:13] Speaker 1: So from the U.S.
[20:14] Speaker 12: Perspective, they're working on ironing out and getting all of
[20:18] Speaker 12: the nations to agree to What White House official Michael
[20:21] Speaker 12: Kratzios is calling the Carolina principles. So that's essentially a
[20:25] Speaker 12: framework for regulating or, in this case, sort of not
[20:29] Speaker 12: regulating technology. So it outlines, you know, having a very
[20:32] Speaker 12: tailored approach and understanding. considering the opportunity cost of not
[20:37] Speaker 12: innovating fast enough. So they're trying to get other nations
[20:39] Speaker 12: to agree to this. And in doing that, they're presenting
[20:42] Speaker 12: all of these tech executives and having them weigh in
[20:45] Speaker 12: on the importance of innovation and the importance of, you know,
[20:49] Speaker 12: keeping regulation moderate so that all of these tech founders
[20:54] Speaker 12: can continue doing what they're doing.
[20:56] Speaker 13: Okay.
[20:56] Speaker 3: And elsewhere at the actual ministerial G20, AI has also
[21:00] Speaker 3: been a topic. Here's Treasury Secretary Besant.
[21:04] Speaker 13: I think that the AI companies, whether it is the
[21:07] Speaker 13: builders of the data centers, whether it is the labs themselves,
[21:12] Speaker 13: have done a horrendous job, horrendous job of explaining themselves
[21:16] Speaker 13: to the American people. And I think we need a
[21:18] Speaker 13: big reset on this. They're going to have to take
[21:21] Speaker 13: some of the blame and they are going to have
[21:23] Speaker 13: to convince the American people that all the benefits will
[21:28] Speaker 13: not accrue to a small group.
[21:30] Speaker 3: Maggie, real quick, that's a slightly different AI perspective. Absolutely.
[21:33] Speaker 12: And one thing it makes me think of that I
[21:35] Speaker 12: heard from Tom Brown just this morning is he actually
[21:40] Speaker 12: said that he loved President Trump's post about data centers.
[21:42] Speaker 12: So Anthropic, that's a company that's historically been a louder
[21:46] Speaker 12: voice in terms of needing to pay attention to the
[21:48] Speaker 12: safety risks of AI, is now coming out at this
[21:51] Speaker 12: public summit and saying, hey, we really need to build
[21:54] Speaker 12: data centers.
[21:56] Speaker 3: Bloomberg's Maggie Eastland, terrific reporting on the ground. Thank you
[21:59] Speaker 3: very much for joining Welcome back to Bloomberg Tech. You
[22:08] Speaker 3: probably remember Napster as that company that upended the music industry, right? Yes,
[22:13] Speaker 3: that Napster, 1999 Napster. Now it's trying to do something
[22:17] Speaker 3: similar with AI. Napster's reinvented itself as an agentic AI
[22:21] Speaker 3: company with Microsoft selling its platform through Azure. Joining us
[22:26] Speaker 3: now is Napster CEO, John Acunto. Okay, that was sort
[22:30] Speaker 3: of an abridged history. You joined Napster in March of
[22:35] Speaker 3: 2025 when your other company had acquired it. But let's
[22:38] Speaker 3: just start with the very basics here. What are we
[22:40] Speaker 3: talking about, John?
[22:42] Speaker 14: Well, we're going from streaming music to streaming intelligence, and
[22:46] Speaker 14: we're just unbelievably excited at making that transformation. We know
[22:50] Speaker 14: that Napster really changed the world of music, and we're
[22:54] Speaker 14: really looking to change the world of agentic AI, specifically
[22:58] Speaker 14: streaming intelligence.
[23:01] Speaker 3: The Microsoft part of this, why is it that Napster
[23:04] Speaker 3: needs to go through Microsoft and Azure to do this?
[23:06] Speaker 3: Explain the deal, essentially.
[23:10] Speaker 14: Well, I mean, in essence, there are many companies that
[23:13] Speaker 14: are partners, obviously, with Microsoft. And we saw an opportunity
[23:18] Speaker 14: to sort of continue to sit and work with all
[23:22] Speaker 14: the large language.
[23:22] Speaker 1: Models with our agent.
[23:25] Speaker 14: And quite frankly, Microsoft was the best partner for us
[23:29] Speaker 14: at this point to really make sure that our customers
[23:33] Speaker 14: own the data, Own their own customers, own their experience,
[23:39] Speaker 14: and really own their models.
[23:40] Speaker 1: And I think that's the path that we saw Microsoft on.
[23:44] Speaker 3: Okay, so yes, dear Bloomberg Tech audience, there'll be loads
[23:47] Speaker 3: of you watching. Napster, the music streaming service, now offers
[23:51] Speaker 3: an AI agent, essentially. What is the agent called? What
[23:55] Speaker 3: does it do? Why is it better than other AI agents?
[23:59] Speaker 14: Well, first off, the agent's on the edge, and so
[24:02] Speaker 14: the cost difference is the first thing you feel, right?
[24:07] Speaker 14: Our costs are about a penny a minute versus others
[24:10] Speaker 14: that can be 25 cents to a dollar a minute.
[24:12] Speaker 14: So that's the first experience that you have is the
[24:15] Speaker 14: cost savings. But most importantly is having a one-on-one conversation,
[24:20] Speaker 14: whether it's online or in-store with an agent, really we
[24:26] Speaker 14: think is the very next step of AI.
[24:30] Speaker 3: John, we have seen shoe companies pivot to AI. We
[24:34] Speaker 3: have seen crypto companies pivot to AI. There will, with respect,
[24:39] Speaker 3: be loads of people watching this interview thinking, okay, he's
[24:42] Speaker 3: going through the full lexicon and glossary of AI words.
[24:45] Speaker 3: What are we actually talking about? How real is this?
[24:50] Speaker 1: Well, I mean, it's obviously real enough to be native
[24:51] Speaker 1: in Microsoft.
[24:52] Speaker 14: And listen, our hat's off to everybody that wants to
[24:57] Speaker 14: try to reinvent a brand. We feel like we're really
[25:00] Speaker 14: just transitioning disruption. We feel Napster did its part and
[25:04] Speaker 14: its job in the history of disrupting music, and we're
[25:07] Speaker 14: going to do our part in disrupting AI. And this
[25:10] Speaker 14: is really just the first step. And in terms of
[25:13] Speaker 14: Allbirds and some of these others, We truly wish him luck.
[25:16] Speaker 14: I think the first step is finding a great product,
[25:18] Speaker 14: which we already have. That's kind of demonstrated here with
[25:21] Speaker 14: this relationship.
[25:23] Speaker 3: I think what was interesting about what you said there
[25:25] Speaker 3: is that you are basically leveraging your existing expertise and
[25:29] Speaker 3: core competencies, right? Like Allbirds was a sneaker company, and
[25:33] Speaker 3: it pivoted to compute. What is it that Napster, its people,
[25:38] Speaker 3: is good at that makes you a prime candidate to
[25:41] Speaker 3: be an AI company?
[25:43] Speaker 14: Well, I mean, ultimately, we're a collection of actually a
[25:46] Speaker 14: lot of companies that we've acquired over the years to
[25:50] Speaker 14: really make it so that our customers can have a
[25:54] Speaker 14: one-on-one conversation online with their customer. And when you think
[25:59] Speaker 14: about it, how many websites have you went today where
[26:03] Speaker 14: you had a one-on-one conversation with your customer? So we
[26:06] Speaker 14: really spent the past five, six years building and developing
[26:09] Speaker 14: those expertise through acquisition and through working with customers globally.
[26:17] Speaker 3: John, going back to some of that history, so Infinite
[26:19] Speaker 3: Reality acquired Napster, the overall entity is a private company.
[26:24] Speaker 3: Just from sort of a financing perspective and Napster's place
[26:29] Speaker 3: in the world, how are you thinking about its future
[26:31] Speaker 3: as a private company, looking at public markets? And I
[26:35] Speaker 3: guess in that context, what your capital needs are. You
[26:37] Speaker 3: talked about how your economics are pretty good.
[26:39] Speaker 2: Yeah.
[26:41] Speaker 1: The economics are great.
[26:42] Speaker 14: You know, we really see the fourth quarter of this
[26:46] Speaker 14: year and most of 27 being a true launching pad.
[26:50] Speaker 1: We're in the adoption phase of AI where our customers.
[26:54] Speaker 14: Are really looking to adopt the product and being able
[26:57] Speaker 14: to access it directly in Microsoft and have that build
[27:03] Speaker 14: in that relationship we see as a big lift for
[27:06] Speaker 14: us in late 26 into 27.
[27:09] Speaker 3: I went back through the archives. Actually, it wasn't that
[27:11] Speaker 3: long ago. So like January of this year, the music
[27:14] Speaker 3: streaming part of Napster is gone. It's shut down.
[27:17] Speaker 2: Yeah.
[27:18] Speaker 3: Is that it?
[27:19] Speaker 13: Yes.
[27:19] Speaker 3: That's the end of that story?
[27:20] Speaker 1: Yeah. No, not yet. I mean, you know, we really
[27:23] Speaker 1: want to have fun with the brand.
[27:25] Speaker 14: We really want to bring back sort of music through
[27:30] Speaker 14: the eyes of AI and the ability for creators to
[27:34] Speaker 14: still create but use AI tools to.
[27:36] Speaker 1: Do that creative presentation.
[27:38] Speaker 14: It's a very delicate thing right now, obviously, in the
[27:40] Speaker 14: creative space, AI. So we're going to kind of see
[27:44] Speaker 14: how that settles out, see how the major labels want
[27:46] Speaker 14: to approach that in a way which doesn't disenfranchise creators.
[27:51] Speaker 3: Just really quick, I want to go to your infrastructure
[27:54] Speaker 3: or lack of infrastructure, right? So it seems like the
[27:57] Speaker 3: pitch on your economics is in part that Azure allows
[28:01] Speaker 3: you to do it with a sort of asset-light model, right,
[28:03] Speaker 3: through a significant cloud computing partner. So you don't have
[28:06] Speaker 3: any serious outlay on your own compute capacity, essentially.
[28:11] Speaker 1: Well, exactly. Our agents....
[28:15] Speaker 14: Sit on top of all models. So we're really, quite frankly,
[28:22] Speaker 14: the interface, what our customers would use to have an
[28:27] Speaker 14: interface with a customer. And so it's super important that
[28:32] Speaker 14: we keep our focus on how our customers can have
[28:36] Speaker 14: the best interaction with their customers and really pivot the
[28:41] Speaker 14: discussion away from cutting costs and how AI displaces folks
[28:46] Speaker 14: and really sort of pivoting the conversation to how we
[28:48] Speaker 14: can learn through these online interactions, for example, why 90%
[28:54] Speaker 14: of people aren't buying from your website and start to
[28:57] Speaker 14: figure out how AI can be a tool to the
[28:59] Speaker 14: blue sky side of the equation.
[29:02] Speaker 3: Launched as a music streaming platform in 1999, Napster. Today,
[29:07] Speaker 3: AI agent through Microsoft Azure, Napster. Jonathan Turve, Napster, thank
[29:11] Speaker 3: you very much for joining us on Bloomberg Tech.
[29:13] Speaker 1: Thank you so much.
[29:15] Speaker 3: Coming up on the program, Zanitsa Todorova, who's the head
[29:18] Speaker 3: of thematic thick research at Barclays, is going to join
[29:21] Speaker 3: us to talk about the next phase for the humanoid
[29:24] Speaker 3: robotics industry. That is her expertise and deep research area.
[29:29] Speaker 3: And it's been a big topic on the show for
[29:30] Speaker 3: quite some time now. Humanoids. This is Bloomberg Tech.
[29:39] Speaker 2: Bloomberg.
[29:44] Speaker 3: Humanoid robots are moving out of the lab and into
[29:46] Speaker 3: the real world, with deployments expected to surge in the
[29:49] Speaker 3: years ahead. Our next guest thinks the industry is entering
[29:52] Speaker 3: a major scale-up phase, but says a shortage of real-world
[29:56] Speaker 3: training data remains a key hurdle. Zanitsa Todorova is the
[29:59] Speaker 3: head of thematic fic research at Barclays. Back on the show.
[30:02] Speaker 3: I think let's start by, Zanitsa, you reminding us what
[30:05] Speaker 3: your kind of... longer-term forecast is for the addressable market
[30:11] Speaker 3: or size of this humanoid robotics market globally?
[30:14] Speaker 7: Hi, it's great to be on the show again. Right,
[30:18] Speaker 7: so humanoid robotics is scaling really fast. We estimate that
[30:23] Speaker 7: by 2035, it could become a $ 200 billion market, and
[30:26] Speaker 7: it could be part of a much bigger physical AI
[30:29] Speaker 7: market worth a trillion dollars. Now, if we want to
[30:32] Speaker 7: put some numbers in terms of deployment units behind this forecast,
[30:36] Speaker 7: our forecasts look like this. So in 2026, we expect
[30:39] Speaker 7: that we're going to see about 60,000 new humanoid robots
[30:42] Speaker 7: deployed worldwide. That's a massive scale up compared to what
[30:46] Speaker 7: we saw last year. when we just have 15,000 robots
[30:50] Speaker 7: but I think more importantly we're just touching the surface
[30:52] Speaker 7: of what's possible and we're just we're going to see
[30:55] Speaker 7: much more and according to our latest research by 2035
[30:59] Speaker 7: we could see about 13 million new humanoids deployed each
[31:03] Speaker 7: year across two major markets, the US and China. And
[31:07] Speaker 7: I think that if we continue to see the same
[31:10] Speaker 7: technological progress as we have seen so far in 2026,
[31:14] Speaker 7: and if investor appetite for the theme continues to hold strong,
[31:18] Speaker 7: I think we could easily see about 30 million humanoids
[31:23] Speaker 7: in operation by 2035, which is quite a sizable fleet
[31:26] Speaker 7: if you think about it.
[31:28] Speaker 3: Okay, right now we're looking at video of Tesla's Optimus.
[31:31] Speaker 3: And what I find so interesting about this is the
[31:34] Speaker 3: number that you shared of 60,000 units of humanoid robotics
[31:37] Speaker 3: globally in this year. Don't most of those come out
[31:40] Speaker 3: of China?
[31:43] Speaker 7: Well, about 85 to 90 percent of us will likely
[31:46] Speaker 7: come out of China.
[31:47] Speaker 1: That's for sure.
[31:48] Speaker 7: China seems to.
[31:49] Speaker 1: Have the edge right now.
[31:50] Speaker 7: But I think there are small ecosystems popping up worldwide.
[31:54] Speaker 1: And I think the U.S.
[31:55] Speaker 7: Is very quickly narrowing the gap in terms of maybe
[32:00] Speaker 7: not so much in terms of the number of units
[32:01] Speaker 7: that are deployed out there, but certainly in terms of
[32:03] Speaker 7: the expertise of the robots and what they can do
[32:06] Speaker 7: in the real world.
[32:09] Speaker 3: The limiting factor that I'm being told on a near
[32:12] Speaker 3: daily basis by industry is real world data. So what
[32:16] Speaker 3: we mean by that is the ability of the humanoid
[32:20] Speaker 3: robot to interact with its immediate physical environment, be that
[32:23] Speaker 3: a factory, other industrial setting, whatever it is. One solution
[32:28] Speaker 3: seems to be synthetic data. Could you just quantify the
[32:31] Speaker 3: challenge and how you see the market trying to address it?
[32:35] Speaker 13: Right.
[32:36] Speaker 1: I absolutely agree.
[32:37] Speaker 7: I think that the number one challenge right now is
[32:39] Speaker 7: not really demand for humanoids. I think that there is
[32:41] Speaker 7: strong demand for humanoids in all kinds of applications. The
[32:45] Speaker 7: biggest challenge is the lack of physical AI data. And
[32:47] Speaker 7: I think that this is something that people find very
[32:50] Speaker 7: surprising because the reality is we have tons of digital data,
[32:53] Speaker 7: but it's just not useful.
[32:54] Speaker 9: For training humanoid robots.
[32:56] Speaker 7: And I do think that the data necessary to train
[33:00] Speaker 7: and to scale, more importantly, a truly general purpose humanoid
[33:03] Speaker 7: robot does not exist on the Internet. It needs to
[33:06] Speaker 7: be retrieved in the real world, in the physical world.
[33:10] Speaker 7: And that could mean something like recording humans doing everyday
[33:13] Speaker 7: tasks from doing the laundry to household work and even deliveries.
[33:18] Speaker 7: And this way, generating data that is required to train
[33:21] Speaker 7: these very complicated general purpose models. Now, you mentioned simulation,
[33:25] Speaker 7: and I think this is definitely one solution, one bet
[33:28] Speaker 7: to this challenge. However, I do feel that as humans,
[33:32] Speaker 7: we live in a very fuzzy, very unstructured world. And
[33:37] Speaker 7: simulation has its advantages. It's definitely a cost-effective option. But
[33:40] Speaker 7: I think ultimately simulation will hit a wall in terms
[33:43] Speaker 7: of how much of that fuzziness, how much of that
[33:46] Speaker 7: messiness it can capture. So ultimately, I think we'll have
[33:50] Speaker 7: to lean on the real world and the physical data
[33:54] Speaker 7: that's out there. And we definitely see more and more
[33:56] Speaker 7: companies popping up, which reflects a general industry-wide push towards
[34:02] Speaker 7: assembling this data that is going to feed models for
[34:05] Speaker 7: the next five to 10 years.
[34:06] Speaker 3: You know, the most bullish on the humanoid industry put
[34:10] Speaker 3: a lot of faith in the digital twin, the idea
[34:13] Speaker 3: that a digital twin can ground the humanoid in the
[34:15] Speaker 3: real world physics around it. That's on the software side.
[34:19] Speaker 3: On the hardware side, is there even a supply chain
[34:21] Speaker 3: for the humanoid robot anywhere in this planet, on this planet?
[34:27] Speaker 7: It's beginning to be put together. It does not exist
[34:32] Speaker 7: at the scale that we would think when it comes
[34:35] Speaker 7: to other technological products such as EVs, for example, other
[34:37] Speaker 7: types of industrial robots. I think that the reason is
[34:40] Speaker 7: that this is going to come over time. We just
[34:43] Speaker 7: need to find the skill application for humanoid robots. They
[34:46] Speaker 7: are most efficient functional form. And I think I'm confident
[34:49] Speaker 7: that the supply chain is going to emerge around it.
[34:51] Speaker 7: I think that if you think about it at a
[34:53] Speaker 7: high level, we don't need to reinvent everything from scratch.
[34:56] Speaker 7: I think that there are lots of complementarities between, I
[35:00] Speaker 7: would say, electric vehicles and humanoids, especially when it comes
[35:04] Speaker 7: to actuators.
[35:06] Speaker 3: And motion systems.
[35:08] Speaker 7: So I think we can borrow a lot from that.
[35:11] Speaker 7: It's definitely not going to be plug and play, but
[35:13] Speaker 7: I think that the basics of that exist. And I
[35:17] Speaker 7: think as As the technology improves, the supply chain is
[35:20] Speaker 7: definitely going to scale accordingly.
[35:25] Speaker 3: Zanitsa Tororova, who is the head of thematic FIC research
[35:28] Speaker 3: at Barclays, but is just all in on the research
[35:31] Speaker 3: behind humanoid robotics. Thank you very much indeed.
[35:33] Speaker 1: Thank you.
[35:40] Speaker 3: Many tech earnings coming after the bell today, and we
[35:43] Speaker 3: start with Snowflake. The company revenue expected to rise 30%,
[35:47] Speaker 3: which would mark a third straight quarter of growth at
[35:50] Speaker 3: or above 30%. Bloomberg's Brodie Ford joins us now. What's
[35:54] Speaker 3: the Snowflake story right now?
[35:56] Speaker 15: The data layer is one that's been spared from the
[35:58] Speaker 15: kind of scourges of the SaaSpocalypse. Things have been going
[36:01] Speaker 15: pretty well for Snowflake. I mean, they're down a bit today,
[36:04] Speaker 15: but overall their stock has been at its highest point
[36:07] Speaker 15: in years because, you know, you have all your data
[36:10] Speaker 15: already in this platform and Snowflake's been able to say, well,
[36:13] Speaker 15: now you need to process it with AI and we're
[36:16] Speaker 15: going to sell you.
[36:16] Speaker 3: Additional products to do so.
[36:18] Speaker 15: So their revenue growth has been pretty healthy and Wall
[36:21] Speaker 15: Street's been pretty happy. So they just want to they
[36:23] Speaker 15: want to see that adoption continuing.
[36:25] Speaker 3: That was the most eloquent, poetic earnings preview that this
[36:28] Speaker 3: show has ever seen or heard. Snowflake is successful, right?
[36:34] Speaker 3: Like they have top line growth that seems strong profit.
[36:39] Speaker 3: Why is it that they're not sort of like the
[36:41] Speaker 3: high flying name in the world of A.I.
[36:43] Speaker 15: Well, the question, you know, I mean, they're not making
[36:46] Speaker 15: any of the real core interesting AI products everyone's excited about.
[36:50] Speaker 15: But what they are doing is a platform where you
[36:53] Speaker 15: can use all of them on your data. And they've
[36:55] Speaker 15: been successful at doing so. I mean, one of the
[36:58] Speaker 15: debates is whether they're new AI products. cannibalizes their kind
[37:02] Speaker 15: of core computing revenue. This doesn't appear to have played
[37:06] Speaker 15: out yet, but it's certainly something we'll be watching.
[37:08] Speaker 3: It can be a watch. Exactly. Bloomberg's Brady Ford on Southlake.
[37:11] Speaker 3: Thank you very much. Next up, HPE set to report
[37:14] Speaker 3: earnings after experiencing its best year in the stock market,
[37:18] Speaker 3: driven by AI fever. The stock up roughly about 112%
[37:21] Speaker 3: in 2026. Bloomberg intelligence analyst Wu Jinhou joins us. What
[37:26] Speaker 3: is the BI preview on HPE? And what do you
[37:29] Speaker 3: think is on deck for earnings?
[37:31] Speaker 6: Yeah, so Ed, quite straightforward. Look, AI is going to matter.
[37:36] Speaker 6: We do expect a little bit of upside on AI,
[37:38] Speaker 6: primarily from memory inflation. However, the biggest story is traditional
[37:43] Speaker 6: servers and the uptake by customers on traditional servers. And
[37:47] Speaker 6: there was outperformance on Dell last night. And I expect
[37:51] Speaker 6: similar outperformance on AI servers as well as networking for
[37:56] Speaker 6: HPE tonight.
[37:57] Speaker 3: So that's the read through that I'm looking for. Dell
[38:00] Speaker 3: basically is seeing momentum in AI servers. Is it therefore
[38:03] Speaker 3: just expected HPE sees the same and just the basics
[38:06] Speaker 3: of like the role of those two companies?
[38:09] Speaker 6: Yeah, look, from a scale standpoint, HPE doesn't even match
[38:15] Speaker 6: Dell's scale, right? But at the end of the day,
[38:18] Speaker 6: there is a fair amount of demand that HPE is
[38:21] Speaker 6: eventually going to benefit. But from the enterprise server side,
[38:24] Speaker 6: corporate server, corporate IT, that's where a fair amount of
[38:29] Speaker 6: meaningful upside that Dell saw, HPE is going to see
[38:32] Speaker 6: the same.
[38:34] Speaker 3: Well, Jim, big picture, what's your takeaway been from this
[38:37] Speaker 3: earnings season in the parts of the infrastructure that you cover? Like,
[38:41] Speaker 3: what is the big story that's happening in that market?
[38:45] Speaker 6: Yeah, look, at the end of the day, everyone is spending.
[38:48] Speaker 6: Despite memory inflation, you know, customers are willing to absorb it,
[38:52] Speaker 6: whether it's going to be the cloud or for enterprise IT.
[38:56] Speaker 6: The only people that's not willing to spend it are
[38:58] Speaker 6: the PC customers.
[39:00] Speaker 3: Bloomberg Intelligence is Woojin Ho, HPE on deck after the
[39:04] Speaker 3: market closed today. Last but certainly not least, Broadcom also
[39:08] Speaker 3: reporting earnings after the closing fell. Investors hoping for a
[39:12] Speaker 3: reprise after a difficult summer in the stock market where
[39:15] Speaker 3: shares went on a $ 520 billion tailspin since they hit
[39:19] Speaker 3: a high, which was back in early June. Bloomberg Intelligence
[39:22] Speaker 3: analyst Kunjan Savani is here for more. Actually, the way
[39:25] Speaker 3: I look at it is how high is the bar
[39:27] Speaker 3: or low is the bar for Broadcom after the shock
[39:30] Speaker 3: that NVIDIA gave us on that outlook for growth last week?
[39:35] Speaker 16: The bar is very high, specifically for their fiscal 2027 outlook. Remember,
[39:41] Speaker 16: last quarter, they sort of missed on the 3Q guide
[39:44] Speaker 16: and they reiterated the $ 100 billion plus revenue for fiscal 2027,
[39:48] Speaker 16: which investors did not like. Since then, a lot of
[39:51] Speaker 16: tailwinds have gotten in their favor. The new OpenAI chip
[39:54] Speaker 16: is running ahead of schedule. Programs at Meta and Anthropic
[39:57] Speaker 16: have even gotten stronger. So there's a lot of expectation
[40:01] Speaker 16: as well. You said with the big guy that NVIDIA provided,
[40:05] Speaker 16: there's a lot of expectation to give a much higher number,
[40:08] Speaker 16: almost 20 to 30 percent higher number to that billion
[40:12] Speaker 16: dollar number.
[40:14] Speaker 3: This week, custom silicon has been a big talking point.
[40:16] Speaker 3: I had an interview with Jensen Wong where he basically said,
[40:18] Speaker 3: I'm not worried about custom silicon, but I'm going to
[40:21] Speaker 3: make it easy for custom chips to work with our tech.
[40:25] Speaker 3: You put research out this morning, Broadcom cements number two
[40:28] Speaker 3: AI chip position as XPU scales. Explain that to us.
[40:34] Speaker 16: Yeah, look, so when you look at the other world,
[40:36] Speaker 16: which is the custom chips, right? Broadcom has almost close
[40:39] Speaker 16: to over 80% share when it comes to revenue, right?
[40:42] Speaker 16: Broadcom has almost now seven to eight hyperscale wins. So
[40:46] Speaker 16: when you think of ASIC or custom silicon volume increasing,
[40:49] Speaker 16: the number one beneficiary remains Broadcom. And the step that
[40:53] Speaker 16: NVIDIA is doing, like we talked about, is hedging its risk.
[40:55] Speaker 16: So even if you go with a TPU or with
[40:58] Speaker 16: a Tranium-based data center, NVIDIA can still play a role
[41:02] Speaker 16: in there with its N-Milling portfolio. But Broadcom definitely benefits
[41:06] Speaker 16: across the board here as ASIC volume rises.
[41:10] Speaker 3: Kunzhen, you're a chip guy. You're a semiconductor analyst and
[41:13] Speaker 3: Broadcom is kind of like an interesting business that has
[41:17] Speaker 3: a software component. Do you pay attention to that software component?
[41:21] Speaker 1: We definitely do.
[41:22] Speaker 16: I mean, almost depending on what they report tomorrow, but
[41:25] Speaker 16: now close to like 40 percent or so, the revenue
[41:27] Speaker 16: is from software. So and one thing people always forget,
[41:30] Speaker 16: you know, this is this software business is what really
[41:32] Speaker 16: helps them generate significant free cash flow, which then they
[41:36] Speaker 16: go and in turn deploy in the semiconductor business to
[41:39] Speaker 16: drive the growth which we are seeing in the AI.
[41:41] Speaker 16: That business is very important. We again expect some healthy
[41:44] Speaker 16: numbers from that business tonight. Yes, it's something that, again,
[41:48] Speaker 16: doesn't surface on the top, but it's really the core
[41:51] Speaker 16: driver in terms of free cash flow generation.
[41:54] Speaker 3: It's very interesting. The other part of the BI thesis
[41:58] Speaker 3: is that whatever they might say, tempers, cyclality, we just
[42:02] Speaker 3: have 20 seconds. But what is it that they're trying
[42:04] Speaker 3: to put to rest with that?
[42:07] Speaker 1: There's not a lot of cyclality.
[42:08] Speaker 16: It's just like, again, we're expecting a big beat to
[42:11] Speaker 16: the fiscal 27 number in a lack of that would
[42:15] Speaker 16: be a difficult time for sentiment.
[42:17] Speaker 3: Bloomberg Intelligence's Kunjan Sabani Broadcom after the market close. That
[42:22] Speaker 3: does it for this edition of Bloomberg Tech. There's been
[42:24] Speaker 3: a lot of news, so just a real quick check
[42:26] Speaker 3: on what markets are doing generally in the technology space.
[42:29] Speaker 3: NASDAQ 100 is flat. The MAG7, some outperformance chips, outperformance.
[42:34] Speaker 3: NVIDIA continues to have momentum, and it has all week.
[42:37] Speaker 3: In part, that MediaTek deal, which I encourage you to
[42:39] Speaker 3: go and check out. Also, check out the podcast. And also,
[42:42] Speaker 3: find me on Twitter or X. Find me on Instagram.
[42:45] Speaker 3: Let's talk. We love your feedback. This is Bloomberg Tech.

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