OpenAI’s $70B Run Rate Meets AI’s Infrastructure Challenge

>> "BLOOMBERG TECH" IS LIVE FROM THE HEART OF SILICON VALLEY WITH ED LUDLOW IN SAN FRANCISCO. ED: THIS IS "BLOOMBERG TECH." OPEN EXPECTS TO REACH OR EXCEED $70 BILLION IN ANNUALIZED REVENUE BY THE END OF THE YEAR. ORACLE KEEPS SEVERAL DATA CENTERS ON TRACK BY RELYING ON TRUCK DELIVERIES OF NATURAL GAS. AND WE SIT DOWN WITH KLEINER PERKINS PARTNER ILYA FUSHMAN ON HIS TAKE ON THE MEGA IPO PIPELINE, AND A CONVERSATION COMING UP. YOU MADE IT, HAPPY FRIDAY. IN A WEEK THAT'S ON WITH THE NASDAQ 100 BUILDING ON POSTING CONSECUTIVE HIGHS, THEN WE HAD A BIT OF A WOBBLE IN THE MARKETS. NET-NET, THE NASDAQ 100 IS FLAT ON THE BEAT. THE PAIN WAS FILLED IN SEMICONDUCTORS. THE DECLINE IN CHIP STOCKS, PUT THIS INDEX ON TRACK FOR A PRETTY STEEP WEEKLY DROP, ITS FIRST WEEKLY DECLINE GOING BACK TO AUGUST 28. WE WILL GET TO THAT. IT IS ALL BECAUSE OF SOME CONFUSION AROUND THE TOP STORY. TODAY'S BIG NUMBER 8, 70 BILLION DOLLARS. THAT IS OPENAI'S ANNUALIZED PRODUCTION REVENUE BY THE END OF THE YEAR. THE COMPANY SURE THAT NUMBER WITH INVESTORS AS PART OF DISCUSSION FOR ITS LATEST FUNDRAISING EFFORTS. A LOT OF CLARITY ON WHAT HAS BEEN A CONFUSING FEW DAYS. EXPLAIN THE BASICS OF WHAT WE ARE REPORTING HERE. >> IT HAS REALLY RATTLED THE MARKETS. AS YOU MENTION. THIS PARTICULAR STORY SHARES THAT OPENAI'S ANNUALIZED PRODUCTION REVENUE IS SET TO HIT 70 BILLION BY THE END OF THIS YEAR. WE REPORTED EARLIER YESTERDAY THAT RIGHT NOW IT'S AT 50 BILLION. WHEN THAT NUMBER WAS REPORTED BY A BUNCH OF OUTLETS, THERE WAS A BIT OF CONFUSION BECAUSE THERE WAS A $70 BILLION NUMBER OUT THERE PREVIOUSLY AND THE UNDERSTANDING HAD BEEN AT THAT WAS WHERE OPENAI'S ANNUALIZED REVENUE IS NOW, SO IT THROUGH THE MARKET FOR A LOOP TO SAY THAT THIS NUMBER IS NOW $20 BILLION LESS THAN EXPECTED. THAT IS COMING FROM A DIFFERENCE IN HOW OPENAI AND ANTHROPIC CALCULATE THEIR REVENUE, WHICH WE CAN TALK ABOUT. ED: WHAT IS ANNUALIZED REVENUE? A LOT OF PEOPLE MISS THE BASICS. THEY ARE NOT POSTING IN 2026 $70 BILLION. OPENAI EXPECTS TO IN THE YEAR, IF THEY KEEP GOING AT THAT PACE OVER THE NEXT 12 MONTHS, THEY WOULD MAKE $70 BILLION OF REVENUE. THAT IS HOW WE UNDERSTAND IT. WHAT THEY CATEGORIZE AND REVENUE ACCOUNTS FOR SOME OF THE CONFUSION. EXPLAIN THAT. REBECCA: ANTHROPIC, WHEN IT IS CALCULATING ITS ANNUALIZED REVENUE, AND MOST RECENT YEAR THAT IS PUBLIC, 65 BILLION DOLLARS, THAT INCLUDES GROSS SALES FROM ITS CLOUD PARTNERS. OPENAI STRIPS THAT OUT. THE FIGURE THAT IS BEING SHARED HERE, THE 50 BILLION, IS THAT ANNUALIZED REVENUE FROM ITS SHARE OF THE CLOUD REVENUE. ED: AS OPPOSED TO GROSS. REBECCA: BECAUSE IT IS NOT AN APPLES TO APPLES COMPARISON WITH ANTHROPIC, IT IS HARD TO COMPARE THESE TWO BUSINESSES, DIRECT COMPETITORS AGAINST EACH OTHER. ED: THERE ARE LOTS OF PEOPLE THAT HAVE LIMITED UNDERSTANDING OF THE PRIVATE MARKETS AND COMPANIES, THINKING WHY DO WE HAVE ALL OF THESE FINANCIAL METRICS? THESE COMPANIES ARE NOT PUBLIC YET. WE BROKE THE STORY ON THIS PRIVATE FUNDING ROUND. AS PART OF THAT MECHANISM, AS I UNDERSTAND IT, OPENAI IS EXPLAIN TO INVESTORS WHAT IS GOING ON AS PART OF AN EFFORT TO RAISE FUNDS. REBECCA: THAT'S CORRECT. THIS IS HAPPENING IN AI A LOT BECAUSE THESE COMPANIES ARE GROWING SO QUICKLY. THE REVENUE DOESN'T FEEL LIKE QUITE ENOUGH, SO OPENAI COME IN CONVERSATION WITH INVESTORS, IS IN TALKS TO RAISE $30 BILLION. THEY FIND IT MORE APT TO USE THIS NUMBER TO EXPLAIN LOOK HOW MUCH WE ARE GROWING IN ANNUALIZED REVENUE BY THE END OF THE YEAR. WE HAVE MUCH MORE ON THE WAY. ED: PEOPLE ON THE SOCIALS SAYING, COULD YOU IMAGINE IF THESE COMPANIES WERE PUBLIC? REBECCA TORRENCE, THANK YOU FOR BEING WITH US. YESTERDAY, A DEBATE OVER ONE AI COMPANY'S REVENUE RUN RATE HELPS TO KNOCK THE NASDAQ DOWN 1.4%, CHIPS DOWN 3.4 PERCENT. YOU JUST HEARD THE REPORTING THAT OPENAI'S REVENUE PICTURE LOOKS STRONGER, AT LEAST SOME CLARITY. THAT TELLS YOU HOW SENSITIVE THE MARKET HAS BECOME TO THE QUESTION, DOES THE REVENUE ULTIMATELY JUSTIFY ALL OF THIS AI SPENDING? FOR MORE, MICHELLE WEAVER, MORGAN STANLEY EXECUTIVE DIRECTOR IS WITH US NOW. I READ YOUR BODY OF WORK. YOU THINK WE ARE IN THIS NEXT PHASE OF AI ANYWAY. IT'S AMAZING TO SEE FINANCIAL MARKETS AROUND THE WORLD SO FOCUSED ARR NUMBERS. WHAT DOES THAT TELL YOU? MICHELLE: I THINK IT SUPER IMPORTANT TO SPLIT THE UNIVERSE. THIS THEME IS THE MOST DOMINANT IN THE MARKET. YOU HAVE COMPANIES THAT ARE AI ENABLERS, YOU HAVE COMPANIES THAT ARE AI ADOPTERS. THE WAY WE MAKE SENSE OF THAT IS, WE TAG ALL 36 STOCKS THAT WE COVER ON THEIR EXPOSURE TO AI. WE ARE FINDING INCREMENTALLY POSITIVE DATA POINTS AROUND AI ADOPTION. THAT IS WHAT REALLY MATTERS FOR THE BUILD UP. YOU NEED THE DIFFUSION PART OF THE STORY TO PLAY OUT. WHILE IT IS STILL EARLY, WE SEE POSITIVE DATA POINTS. WE SEE 460 BASIS POINTS OF MARGIN EXPANSION FOR STOCKS THAT ARE ANALYST TAGGED AS HIGH MATERIALLY ADOPTERS. THAT IS JUST AHEAD OF THE S&P 500, HEAD OF THE MSCI WORLD INDEX. WE ALSO SEE UPSIDE IN EARNINGS GOING INTO THAT I T A DR. BUCKET, AS WELL. ED: I REFLECTED ON THE WEEK THAT WAS. ONE SESSION OF A MARKET DOES NOT MAKE. WE STARTED WITH THE NASDAQ 100 POSTING CONSECUTIVE RECORD HIGHS. EVERYONE ALREADY HANDS AN EYE TO YOUR EARNINGS, WHEN YOU ARE TALKING ABOUT. IT IS STILL PICKS AND SHOVELS, THE AI BUILDUP. NOTHING HAS REALLY CHANGED AS FAR AS I CAN TELL. MICHELLE: WE THINK WE'RE ARE IN A TRANSITION PERIOD RIGHT NOW. WHAT WE ARE CALLING FOR IS A BARBELL. TYPICALLY IN THE TECH CYCLE, IT GOES SEMICONDUCTORS, INFRASTRUCTURE, SOFTWARE AND SERVICES, APPLICATIONS BUILT ON TOP OF THAT TECH CYCLE. I THINK THE CYCLE IS DIFFERENT. THE MAJORITY OF THE RETURNS HAVE BEEN ACCRUING ON THE ENABLER SIDE, BUT WE HAVE SOME SERIOUS BOTTLENECKS TO DEAL WITH RIGHT NOW, POWER AND POLITICS. THAT IS LEADING US TO BE SELECTIVE ON SOME NAMES BUT STILL BROUGHT IT OUT INTO THE EARLY CYCLE ADOPTERS. ED: AHEAD OF THE MIDTERMS, I WANT TO PUT THE POLLING DATA TO ONE SIDE. YOU HAVE YOUR OWN SURVEY DATA. YOU ARE LOOKING AT DATA CENTERS THROUGH THAT LENS OF THE CONSUMER. WHAT ARE YOUR FINDINGS? MICHELLE: WHEN WE RUN OUR SURVEYS, THIS IS A BROAD SAMPLE OF 2000 U.S. CONSUMERS DIVERSIFIED BY GENDER, REGION, RACE. NET SENTIMENT IS OVERALL POSITIVE OR AI. 14% NET POSITIVE, MORE PEOPLE SUPPORTING AI THEN DISFAVORING IT. WHEN WE MAKE THE ISSUE LOCAL, WOULD YOU SUPPORT A DATA CENTER WITHIN 10 MILES OF YOUR HOME? THE ISSUE BECOME SHARPLY NEGATIVE, -20% SENTIMENT. WHEN YOU MAKE IT LOCAL, THAT IS WHERE YOU SEE IT REALLY TURN. ED: I APPRECIATE THAT YOU HAVE A LONGER TIME HORIZON IN YOUR RESEARCH. IN THE MIDTERMS, THERE ARE SPECIFIC RACES WHERE CANDIDATES TALK MORE ABOUT THE DATA CENTER AS AN ISSUE. WHAT ARE THE SHORT-TERM EFFECTS OF THE OUTCOMES OF THOSE RACES? MICHELLE: WHAT IS MOST IMPORTANT TO WATCH AS WE HEAD INTO THE MIDTERMS IS THE OUTCOME AT THE GOVERNOR LEVEL. YOU HAVE SEEN A LOT OF THE MORATORIUMS, RESTRICTIONS PUT ON SO FAR BEING DONE VIA EXECUTIVE ORDER BY GOVERNORS. THAT IS WHERE I WOULD EXPECT THE MOST CHANGE COMING OUT OF THE MIDTERMS, SOMETHING THAT HAS BEEN AN ISSUE IN THE CONGRESSIONAL RACES, MORE OF THE CHANGE WILL HAPPEN AT THE STATE LEVEL. ED: THE NEXT QUESTION. DO WE LATER GET FEDERAL REGULATION ON DATA CENTER MORATORIUMS, OR IS IT SOMETHING THAT PAUSES OR HALTS THE ACTIVITY? MICHELLE: THE FEDERAL GOVERNMENT STILL LOOKS VERY SUPPORTIVE OF THE BROAD DATA CENTER BUILDOUT. THE ONE ISSUE YOU ARE SEEING MORE MOMENTUM BEHIND AT THE FEDERAL LEVEL IS ON PROTECTING RATEPAYERS AND PROTECTING CONSUMER POWER BILLS. IF ANYTHING IS TO CHANGE, I WOULD EXPECTED TO BE MORE CENTERED AROUND THAT VERSUS A BROADER SLOW DOWN OR HALT ON THE DATA CENTER BUILDOUT. ED: HOW MUCH OF A HEADWIND IS POWER AS A BOTTLENECK RIGHT NOW IN YOUR RESEARCH? MICHELLE: IT IS STILL THE NUMBER ONE BOTTLENECK. THE WAY THAT WE THINK ABOUT THE POWER SHORTFALL, WE TAKE OUR SEMICONDUCTOR TEAM'S CHIP SALES ESTIMATES, HOW MUCH POWER IS NEEDED FOR THAT, AND THEN WE LOOK AT AVAILABLE GRID CAPACITY. WE FIND A 57 GIGAWATT SHORTFALL IN THE POWER NEEDED THROUGH 2028. FOR CONTEXT, NEW YORK CITY IS SIX TO 10 GIGAWATTS OF POWER. WHEN WE LAYER ON SOLUTIONS LIKE BITCOIN MINERS, NATURAL GAS TURBINES, FUEL CELLS, ALL OF THOSE THINGS, WE STILL END UP WITH A 30, 40% SHORTFALL IN POWER NEEDED. ED: AN INTERESTING STORY ABOUT THIS IN THE PROGRAM COMING UP NEXT. MICHELLE WEAVER, THANK YOU FOR COMING ON THE PROGRAM. HAPPY FRIDAY. NVIDIA-BACKED DATA CENTER FIRMUS IS EXPLORING A FUNDING ROUND FOR AS $3 BILLION AFTER PULLING ITS PLANNED IPO IN AUSTRALIA. THE COMPANY WAS TARGETING $5 BILLION FROM THE LISTING BUT INVESTOR CONCERNS OVER HIGH BORROWING COSTS, THE CAPITAL NEEDED TO BUILD OUT ITS DATA CENTER PIPELINE WEIGHT ON THE DEAL. FIRMUS SAYS THEY WILL CONSIDER OTHER FUNDING OPTIONS INCLUDING A MIX OF DEBT AND EQUITY. ORACLE IS TAKING A NEW APPROACH TO AVOID DELAYS IN DATA CENTER BUILDS. THIS IS INTERESTING FROM BRODY FORD. WE HAVE THAT NEXT. THIS IS "BLOOMBERG TECH." ED: THE AI BUILDOUT IS RESHAPING CORPORATE CREDIT. HYPERSCALERS ARE ON TRACK TO RAISE $300 BILLION IN INVESTMENT GRADE BOND MARKETS THIS YEAR ALONE. INVESTORS ARE STILL BUYING, BUT AS A NUMBER OF ROWS, SO TO CONCERNS ABOUT HOW MUCH DEBT THE MARKET CAN ABSORB. WALL STREET WEEK TAKES A CLOSER LOOK AT THE RISKS BEHIND AI'S GROWING DEBT BOOM. >> BY NOW, WE ALL KNOW THAT AI HAS AN INSATIABLE APPETITE FOR COMPUTE, AND THAT MEANS MORE DATA CENTERS, CHIPS, AND OTHER EXPENSIVE INFRASTRUCTURE. EQUITY INVESTORS HAVE ALREADY BENEFITED FROM SEEN SHARES OF THE SIX HYPERSCALERS RISE BY AN AVERAGE OF 15% YEAR TO DATE. NOW, IT IS THE DEBT INVESTOR'S TURN. >> THE NUMBERS KEEP GROWING, AND THAT IS THE CHALLENGING PIECE OF IT. >> THAT INVESTORS LIKE LAUREN MORAN AT WELLINGTON MANAGEMENT. >> WHEN WE LOOK BACK TO 2025, THIS BORROWING FROM HYPERSCALERS HAD ONLY REALLY BEGUN. THROUGH THE COURSE OF 2026, WE ARE PROBABLY LOOKING AT $300 BILLION IN THE INVESTMENT GRADE MARKET BORROWINGS FROM HYPERSCALERS THEMSELVES. >> THE TECH SECTOR ACCOUNTED FOR JUST 5% OF INVESTMENT GRADE CORPORATE BOND ISSUANCE IN 2024. THAT NUMBER IS NOW CLOSER TO 20%. >> WHEN WE THINK ABOUT THIS YEAR, LIKELY, WE WILL SEE TWO POINT 75 ACTUALLY DOLLARS IN ISSUANCE IN THE U.S. MARKET. IT'S A PRETTY SUBSTANTIAL PORTION OF THE DEBT WE ARE SEEING IN THE MARKET. IMPORTANTLY, WHEN WE THINK ABOUT THE ACTUAL GROWTH IN OUR DEBT MARKETS, IT IS LARGELY COMING FROM HYPERSCALERS AT THIS POINT. WE LOOK AT YEAR-OVER-YEAR INVESTMENT GRADE ISSUANCE BEING UP ABOUT 35%. >> SCOTT IS THE GLOBAL COHEAD OF INVESTMENT GRADE SYNDICATE AT BARCLAYS. >> WHERE YOU ARE SEEING MORE DIFFERENTIATION IS IN SOME OF THE OFF BALANCE STRUCTURES, CHIP FINANCINGS, ACTUAL DATA CENTERS THEMSELVES. YOU HAVE SEEN IN RECENT DAYS, FORCE MAJEURE APPLIED IN SOME INSTANCES. YOU HAVE TO START THINKING ABOUT THE AI ECOSYSTEM HOLISTICALLY, TANGENTIALLY, WHAT IT MEANS, CAN I GET THE POWER, CAN I GET THE TRANSMISSION, CAN I GET THE HEATING AND COOLING? CAN I GET THE THING BUILT IN TWO YEARS? IF NOT, WHAT ARE THE OUTS THAT THE HYPERSCALER MAY HAVE IN TERMS OF THE CONTRACTUAL DEAL ON THE DATA CENTER. ED: YOU CAN GET THE FULL STORY ON WALL STREET WEEK TONIGHT AT 6:00 WITH DAVID WESTIN. ORACLE IS USING A NEW POWER STRATEGY TO KEEP MANY OF ITS DATA CENTERS ON TRACK, TRUCKING AND NATURAL GAS DIRECTLY TO THE SERVER FARMS. THE COMPANY IS CONSIDERING USING THIS APPROACH IS BUILT UP -- SPEED UP THE BUILT IN THE MEXICO BY ONE OF ITS DATA CENTERS HAS BEEN DELAYED. SHARES OF ORACLE ARE UP 5% NOW. AFTER THE STORY BROKE, THEY DROPPED A LOT. THERE WERE OTHER FACTORS INCLUDING THE OPENAI STORY. HERE TO EXPLAIN HIS BRODY FORD. WE WILL GET TO THE REACTION LATER. THE BASICS, THEY ARE TRUCKING IN NATURAL GAS. THAT SEEMS REASONABLE. BRODY: IN AN IDEAL WORLD, YOU WOULD BE ANYWHERE NEAR THIS. YOU HAVE A DATA CENTER THAT YOU PLUG INTO THE ELECTRICAL GRID. FAILING THAT, YOU HAVE AN ON-SITE POWER PLANT, A PIPELINE TO. ED: THE DELAY ON THIS PIPELINE BEING A PROBLEM. BRODY: IF A PIPELINE IS DELAYED SIX MONTHS OUT, YOU START SAYING, WE BORROWED A LOT OF MONEY TO BUILD THESE DATA CENTERS, OUR ENTIRE BUSINESS IS BASED ON GETTING THEM ONLINE QUICKLY. WE DEFINED A STOPGAP. TRUCKING OUT LARGE AMOUNTS OF GAS IS SUBMITTED YOU WOULD DO FOR MINING IN THE OUTBACK OR INDUSTRIAL, TEMPORARY ACTIONS IN REMOTE PLACES. NOW YOU HAVE 30 TRUCKS A DAY GOING TO DATA CENTERS OUTSIDE SALT LAKE CITY. WE ARE QUITE FAR FROM THE IDEAL POWER SCENARIO, BUT ORACLE IS FINDING A WAY TO KEEP THESE THINGS MOVING. ED: ORACLE DID NOT REQUEST TO OUR STORY, BUT I SAW SOMETHING RELATED TO THIS. THE STOCK REACTION IN THE MOMENT, A LOT GOING ON. BRODY: ORACLE DIDN'T RESPOND TO A REQUEST FOR COMMENT BUT THEY TWEETED, WE LOVE OUR PARTNER THAT IS HELPING US DO THIS THING. ED: GETTING THE GAS ONTO THE SITE. THE STOCK IS UP 5% AGAIN TODAY BUT IT WAS UNDER PRESSURE IN PART BECAUSE OF THE CONFUSION AROUND OPENAI'S ARR. WHEN THE STORY BROKE, THERE WAS A CONTINUED SLIDE. BRODY: OUR UNDERSTANDING IS THE MARKET IS LIGHT, THE DELAYS ARE MORE SIGNIFICANT THAN WE EXPECTED. THIS IS THE SITUATION WHERE, YOU ONLY DO THIS IF YOU ARE REALLY UNDER THE GUN. OUR REPORTING SHOWS THAT ORACLE IS FINDING A WAY TO WORK, BUT THEIR BACKS ARE UP AGAINST THE WALL. ED: TERRIFIC REPORTING. THANK YOU VERY MUCH. THE ERICKSON IMMIGRATION GROUP WILL JOIN US TO DISCUSS THE SUSPENSION OF SOME COMPANY'S AND UNIVERSITIES FROM A WORKER VISA PROGRAM. WHAT IMPACT WILL THAT HAVE ON TECH AND THE WIDER ECONOMY? THAT IS NEXT. THIS IS "BLOOMBERG TECH." ♪ ED: MICROSOFT, ADOBE, ALONG WITH HALF A DOZEN OTHER COMPANIES AND NINE UNIVERSITIES HAVE BEEN ACCUSED OF ABUSING A U.S. WORKER VISA PROGRAM. THE TRUMP ADMINISTRATION HAS SUSPENDED THEM FROM THE PERMANENT LABOR CERTIFICATION PROGRAM, PERM. THE PROGRAM ALLOWS COMPANIES TO SPONSOR FOREIGN WORKERS WITH PERMANENT RESIDENCY GREEN CARDS. IT'S A SMALL PART OF THE U.S. IMMIGRATION ECOSYSTEM, AND THE PART OF THE DEBATE. LET'S TALK ABOUT THE IMPACT IT COULD HAVE ON TECH AND THE ECONOMY WITH HIBA ANVER OF THE ERICKSON IMMIGRATION GROUP. WE HEARD FROM THE VICE PRESIDENT JD VANCE. START OFF WITH YOUR REACTION TO THE ACTION TAKEN BY THIS ADMINISTRATION. HIBA: IT SEEMS THE ADMINISTRATION'S CONCERN IS THAT COMPANIES LAID OFF AMERICANS WHILE SPONSORING FOREIGN WORKERS, WHICH IS A REASONABLE QUESTION TO ASK. BUT I THINK IT HELPS YOU UNDERSTAND HOW THE IMMIGRATION PROCESS ACTUALLY WORKS HERE. THE PROGRAM THAT IS BEING SUSPENDED IS FOR EXISTING EMPLOYEES THAT COMPANIES HAVE ALREADY DEEMED TO BE A VALUE ADD TO THE COMPANY. THERE ARE NO NEW EMPLOYEES BEING HIRED THROUGH THE PROGRAM THAT HAS BEEN SUSPENDED. IT IS THE SAME PERSON THAT'S BEEN WORKING FOR THE COMPANY FOR COME IN SOME INSTANCES, MANY YEARS. THE OTHER THING THAT IS REALLY IMPORTANT FOR US TO UNDERSTAND IS THAT THE RULES INVOLVED IN THIS PROGRAM ACTUALLY ALREADY ACCOUNT FOR CERTAIN LAYOFF PROTECTIONS. IF A COMPANY HAS HAD LAYOFFS IN THAT SAME POSITION IN THE PAST SIX MONTHS, THERE IS A VERY HIGH LIKELIHOOD THAT THE APPLICATION THAT IS PART AND PARCEL TO THE PERM PROGRAM WOULD NOT BE PERMITTED TO BE FILED. SO I THINK THERE ARE A LOT OF UNANSWERED QUESTIONS AS TO WHAT THE ADMINISTRATION'S MOTIVATION IS, BECAUSE I TO QUESTION WHETHER OR NOT SUSPENDING A PROGRAM FOR PEOPLE WHO ARE ALREADY HERE IN THE U.S. GETS US TO WHERE THEY WANT TO GO IN TERMS OF FOCUSING ON WHETHER U.S. CITIZENS ARE BEING REPLACED. ED: MICROSOFT IS NOT THE ONLY COMPANY OR CASE STUDY HERE, BUT IT WAS THE NAME SINGLED OUT BY THE VICE PRESIDENT. I THINK WE HAVE SOME SOUND OF WHAT JD VANCE SAID. >> THERE HAS BEEN NO COMPANY IN THE UNITED STATES THAT HAS ABUSE THIS MORE THAN MICROSOFT. WE HAVE DECIDED TO TO SPEND THE PERM PROGRAM FOR MICROSOFT, WHICH MEANS THEY CAN NO LONGER APPLY, NO LONGER BE ABLE TO TAKE THOSE H-1BS THAT APPLY FOR PERMANENT RESIDENT STATUS WITHIN THE UNITED STATES OF AMERICA. ED: IN MICROSOFT'S RESPONSE, THE CONTEXT IS -- NOT THE RESPONSE FROM THE ADMINISTRATION, BUT MICROSOFT'S ALLEGED ACTIVITY RELATES TO H-1BS. MICROSOFT SAID THAT IF THOSE 6000 APPLICATIONS LAST YEAR, THE MAJORITY WERE FROM EXISTING EMPLOYEES, ALREADY IN THE UNITED STATES. WHY WAS THAT AN IMPORTANT DETAIL IN THE RESPONSE? HIBA: THE MORE IMPORTANT THING TO FOCUS ON HERE AGAIN IS THE NUANCE. A LAYOFF FOLLOWED BY THE IMMIGRATION FILING DOESN'T AUTOMATICALLY MEAN THERE WAS AN AMERICAN WORKER THAT WAS REPLACED. I WOULD IMAGINE A COMPANY THE SIZE OF MICROSOFT CAN CUT JOBS IN ONE PART OF THE BUSINESS AND STILL NEED DIFFERENT SKILLS IN ANOTHER. FOR EXAMPLE, IF SOMEONE WAS LAID OFF IN SALES OR GAMING, THAT IS NOT AUTOMATICALLY INTERCHANGEABLE WITH ABLE AT LEAST TO BE FILLED WITH A INFRASTRUCTURE OR ENGINEERING OR SOMETHING LIKE THAT. WHAT WE ARE SEEING OUR COMPANYWIDE TOTALS BUT ALSO A INFORMATION ABOUT THE DETAILS FOR WHY THE ADMINISTRATION IS MAKING THESE ALLEGATIONS IN TERMS OF THIS USE THE PROGRAM. ED: THE BIG PICTURE CONCERN IS THIS IMPACTS TIME PIPELINES AND THERE WILL BE A NEGATIVE IMPACT TO THOSE TECHNOLOGY COMPANIES. ALSO SCHOLARS IN THE NINE UNIVERSITIES. IS THAT THE CONCERN THAT YOU HEAR FROM CLIENTS THAT ARE RELEVANT HERE? HIBA: IT IS. IT'S ALL ABOUT THE TALENT PIPELINE. THE TALENT PIPELINE COME FROM A COMBINATION OF U.S. WORKERS, FOREIGN WORKERS, AND ALSO RECENT FOREIGN GRADUATE STUDENTS. THERE IS PLENTY OF DATA TO SUPPORT THAT A VERY SIGNIFICANT NUMBER OF STUDENTS THAT PARTICIPATE IN HIGHER EDUCATION PROGRAMS, STEM, ENGINEERING, COMPUTER SCIENCE, ARE ACTUALLY THEMSELVES FOREIGN STUDENTS. IT'S IMPORTANT TO REMEMBER THAT WITH RESPECT TO THE TALENT PIPELINE, WE ARE NOT GOING TO BE ABLE TO INCREASE A TALENT PIPELINE, OR DEVELOP IT OVERNIGHT, AND WE HAVE COME INTO A CERTAIN DEGREE, RELIANCE ON FOREIGN WORKERS AND STUDENTS. THE PERSPECTIVE PROBABLY NEEDS TO BE MORE NUANCED. WE ARE USING THIS FOREIGN TALENT, THE BEST AND THE BRIGHTEST, TO ADD TO THE EXISTING TALENT THAT U.S. WORKERS POSSESS. ADDING TALENT IS NOT THE SAME THING AS TAKING AWAY FROM U.S. WORKERS. AN ADDITIONAL SKILLED -- PLAYER CAN ELEVATE THE ENTIRE TEAM. ED: QUICKLY, THE NEXT STEP IS A RETALIATION OR RESPONSE IN THE COURTS FROM THE COMPANIES? HIBA: I THINK YOU HAVE TO SEE HOW IT PLAYS OUT. THERE IS A LOT MORE DETAIL AND INFORMATION THAT IS MISSING ON THE PART OF THE ADMINISTRATION. WE DO HAVE A STATEMENT IN RESPONSE FROM MICROSOFT THEMSELVES. WHETHER OR NOT THIS WILL BE LITIGATED REMAINS TO BE SEEN. ED: HIBA ANVER, THANK YOU VERY MUCH. COMING UP ON THE PROGRAM, ILYA FUSHMAN JOINS US. WE WILL TALK ABOUT AI REVENUES, THE IPO PIPELINE, BUT ALSO THE NEXT BIG OPPORTUNITIES OR VENTURE INVESTORS. WHAT IS AROUND THE CORNER THAT WE ARE NOT TALKING ABOUT RIGHT NOW? LOOKING FORWARD TO IT. HALFTIME HERE IN THE CITY OF SAN FRANCISCO. THIS IS "BLOOMBERG TECH." ED: WELCOME BACK TO "BLOOMBERG TECH." WE MADE IT TO FRIDAY. IN A WEEK WHERE TECHNOLOGY STOCKS START PUSHING FRESH RECORDS AND THE REAL STORY IN THE MIDDLE OF THE WEEK WAS CONFUSION ABOUT ANNUALIZED REVENUES FROM FRONTIER LABS AND WHAT THAT MEANS FOR THE JUSTIFICATION OF SPENDING AND THE NASDAQ 100 IS MODESTLY HIGHER. THE SOX IS DOWN AND ON TRACK FOR ITS FIRST WEEKLY DECLINE SINCE THE WEEK ENDING 28. IT IS SO INTERESTING TO SEE PRIVATE COMPANIES WITH DATA IN THEIR REPORTING FROM NEWSROOMS DRIVING MARKETS EVERYWHERE. I WANT TO TAKE A STEP BACK AND LOOK AT WHERE TECHNOLOGY AND THE MONEY BACKING IT GOES NEXT. KLEINER PERKINS HAS BEEN MAKING THOSE BETS FOR MORE THAN 50 YEARS. AMAZON AND GOOGLE, TO MORE RECENTLY ANTHROPIC AND WAYMO. EARLIER THIS YEAR HAD RAISED ANOTHER $3.5 BILLION TO INVEST IN THE AI BOOM. ILYA FUSHMAN JOINS US NOW. ARR, YOU KNOW, YOU ARE AN INVESTOR IN ANTHROPIC AND I APPRECIATE BOTH COMPANIES HAVE FILED CONFIDENTIALLY THAT THERE IS A LIMIT TO WHAT WE CAN DISCUSS, BUT THIS ARR CONFUSING -- CONFUSION, WHY IS THAT A METRIC THAT MATTERS IF YOU ARE A VENTURE CAPITALISTS? ILYA: TAKING A STEP BACK, IF YOU LOOK AT THESE COMPANIES, WHETHER IT IS ANTHROPIC OR AI, WAYMO, SOMETHING INCREDIBLE IS HAPPENING TODAY. HE SCALED REVENUE AND THE RATE AT WHICH THESE COMPANIES ARE COMPOUNDING AT SCALE. CERTAINLY THINGS LIKE ARR MATTER IN TERMS OF THE PREDICTABILITY OF THAT REVENUE AND HOW THAT REVENUE MANIFESTS ITSELF OVER TIME, BUT I THINK THE MORE IMPORTANT PICTURE IS, HAVE NEVER SEEN COMPANIES GROW THIS BIG THIS FAST IN THE HISTORY OF TECHNOLOGY. THAT POINTS TO SOMETHING TRULY FOUNDATIONAL. ED: PART OF THE CONFUSION WAS AN ACCOUNTING DISCREPANCY BETWEEN HOW OPENAI DOES ARR AND ANTHROPIC DOES ARR. THAT WAS INTERESTING. THEY ARE SIMILAR AND DIFFERENT. WE HAVE PLENTY OF PEOPLE IN THE SHOW, WHEN YOU GUYS DECIDED WE WILL MAKE AN INVESTMENT INTO ANTHROPIC, WHAT WAS THE THESIS? WHAT WAS THE GUIDING PRINCIPLE OF THAT? ILYA: WHAT WE SEE IS ACROSS-THE-BOARD, WHETHER IT IS AT THE APPLICATION LAYER, THE INDIVIDUAL LAYER, THIS IMPACT OF AI IS STILL INCREDIBLY EARLY, AND INCREDIBLY PALPABLE, RIGHT? IT IS LIKE NOTHING IN TERMS OF TECHNOLOGY -- LIKE NOTHING WE HAVE SEEN IN PRIOR CYCLES. FOR US IT IS LESS ABOUT THOSE DETAILS YOU ARE TALKING ABOUT. IT IS MORE, WHAT DOES THE FUTURE HOLD HERE? FUTURE IS, FROM OUR PERSPECTIVE, EXCITING. WE ARE HERE IN SAN FRANCISCO. THE MORE AI-CENTRIC COMPANIES LOOK AND FEEL VERY DIFFERENTLY INSIDE THAN EVEN THE MOST FORWARD THINKING, TRADITIONAL ENTERPRISES. JUST AT THE ENTERPRISE LAYER, GETTING THIS TECHNOLOGY INTO THE MARKET, WHETHER IT IS DIRECTLY THROUGH ANTHROPIC APIS OR COMPANIES LIKE HARVEY, OPEN EVIDENCE. ED: WE HAVE BEEN SHOWING SOME OF THE PORTFOLIO AND LATER ON IN OUR CONVERSATION I THINK WE SHOULD TALK A LITTLE BIT ABOUT DEFENSE TECHNOLOGY AND HARDWARE. BUT BRING BACK UP SOME OF THE -- WE CAN CYCLE THROUGH THE PORTFOLIOS. WHAT YOU WERE TALKING ABOUT, THE APPLICATION LAYER IN ENTERPRISE SPECIFICALLY, HOW CLOSELY TIED TO THE FORTUNES OF THOSE COMPANIES TO THE SUCCESS THAT OPENAI AND ANTHROPIC ARE HAVING, OR HOPE TO HAVE? ILYA: THEY ARE INTERCONNECTED. IT IS THE -- THE ABILITY TO ACCESS INTELLIGENCE. SOME OF THAT IS THROUGH APPLICATIONS LIKE HARVEY FOR LEGAL AND PROFESSIONAL SERVICES, AND SOME OF THAT IS GOING TO BE ACCESSED THROUGH DEVELOPERS AND PRODUCTS LIKE COGNITION, OR DIRECTLY THROUGH CODEX AND CLAUDE. BUT ULTIMATELY IT IS REALLY ABOUT, WHAT IS THE COST OF INTELLIGENCE THAT YOU CAN ACCESS TODAY? THAT COST, AND IN TERMS OF THE DOLLARS PER REALLY HIGH QUALITY THINKING, IS ACTUALLY BEEN KIND OF GOING DOWN ON AVERAGE, BECAUSE YOU ARE ABLE TO DO CREATIVE THINGS LIKE BALANCE TO OLDER ITERATIONS OF MODELS WITH NEWER ONES. THERE IS OBVIOUSLY A BIG MOVEMENT IN OPEN SOURCE, OPEN-WEIGHT MODELS. OVERALL THIS IS REALLY, FOR US COME ABOUT, WHAT IS THE OPPORTUNITY OF GETTING THIS INTELLIGENCE INTO THE WHOLE ECONOMY? WITH PRODUCTS LIKE INSTINCT, WHICH WE ARE INVESTED IN, AND MUSE AND THINGS LIKE THAT, NOW IT IS FINALLY GETTING INTO CONSUMER, AND THAT IS THE EXCITING PART. ED: I HAVE BEEN USING DOTS A LOT, AND I HAVE BEEN USING MUSE A LOT, AND INSTINCT LESS. BUT WHAT IS SO INTERESTING IS THAT THERE IS A MARKET THERE OF REAL PRODUCTS, AND PEOPLE HAVE CHOICES. HOW DO YOU KNOW YOU HAVE PICKED THE RIGHT ONE OR BACK TO THE RIGHT ONE? >> I THINK THEY ARE GOING TO BE TAILORED TO DIFFERENT NEEDS, BUT IT IS MORE IMPORTANT IS, I THINK THIS IS THE FIRST -- BEYOND THE CHATGPT MOMENT, THIS IS THE FIRST TIME WHERE CONSUMERS ARE DEEPLY ABLE TO EXPERIENCE THE MAGIC OF AI, THIS AGENT THAT DOES STUFF FOR YOU. THAT HASN'T HAPPENED BEFORE AND THAT IS A FOUNDATIONAL MOMENT. WHICH IS WHY YOU ARE SEEING SO MUCH ACTIVITY IN THIS SPACE. ED: DO YOU DAY TODAY USE THESE AGENTS FOR ANYTHING USEFUL? ILYA: YEAH, I DO. MY WIFE USES THEM MORE THAN I DO. EVERYTHING FROM SCHEDULING DINNERS, KIDS ACTIVITIES -- I BUY PIZZA FOR MY KIDS. I JUST TELL IT TO GET IT AND IT TEXT ME WHEN THE PIZZA IS DONE. IT IS LIKE HAVING, YOU KNOW, A COPY OF YOU THAT DOES STUFF FOR YOU. ED: WITH ALL OF THE FOCUS ON THE FRONTIER LABS, BUT THESE REAL AGENTS, THERE ARE AGENTS IN THE SENSE THAT THEY CAN TAKE AN ACTION. I FIND THE MOST INTERESTING CASE STUDY TO BE WAYMO AND THE PATIENTS THAT WAS REQUIRED FOR EVERYONE THAT WENT ALONG WITH WAYMO. NOW HERE WE ARE IN CITIES ACROSS AMERICA AND THEN GENERATING -- REVENUE-GENERATING FARES ON RIDES. WHAT WAS THAT LIKE, BEING ON THE CAP TABLE? ILYA: WE GOT ON A LITTLE MORE RECENTLY, BUT WE HAVE BEEN TRACKING THE COMPANY FOR A LONG TIME AND IT IS MAGIC. IT IS LIKE TELEPORTATION. ED: THIS IS THE BIG ROUND THEY DID AT THE START OF THE YEAR? ILYA: IT REALLY FEELS LIKE YOU ARE IN A TELEPORTATION CHAIN WHEN YOU'RE IN A WAYMO. WAYMO IS STILL EARLY. IT IS IN SELECT CITIES. IT IS EXPANDING. ED: THAT IS THE PARALLEL I'M TRYING TO DRAW. IN TERMS OF EVERYDAY PERSON'S ACCESS TO THE TECHNOLOGY -- ILYA: WHICH IS WHY YOU ARE SEEING SO MUCH EXCITEMENT AND EXUBERANCE. YOU HAVE AUTONOMY ON THE WATER. THESE FOUNDATIONAL TECHNOLOGIES ON AUTONOMY, AI ARE FINALLY STARTING TO MAKE THEIR WAYS INTO -- LET'S CALL IT THE REAL WORLD, THE PHYSICAL WORLD. THAT IS A BIG PLACE WHERE WE WILL SPEND MORE TIME. ED: IT HAS BEEN AN IMPORTANT YEAR FOR THE FIRM. NO, I TRIED TO TRACK WHERE THE VENTURE DOLLARS ARE FLOWING, AND IT IS STILL VERY HIGHLY CONCENTRATED. I THINK 20 ONE BIG DEALS ACCOUNT FOR THE MAJORITY OF IT YEAR TO DATE. HOW DOES YOU RACING THOSE FUNDS REFLECT THAT? THAT YOU NEED TO BE IN A GAME. ILYA: ONE BILLION OF THAT IS EARLY-STAGE. THERE HAS BEEN JUST OVER 400 BILLION DOLLARS INVESTED THROUGH THE END OF JUNE THIS YEAR IN VENTURE, AND 80% OF THAT HAS GONE TO LATE STAGE DEALS. AS TO GIVE YOU A SENSE OF WHERE THE DOLLAR IS GOING. HONESTLY, IT IS A REFLECTION OF THE FACT THAT YOU SEE THESE COMPANIES, WHETHER IT IS ANTHROPIC, WHETHER IT IS WAYMO, WHETHER IT IS DATA BRICKS, HARVEY, COGNITION, THESE COMPANIES ARE HITTING REVENUES AND COMPOUNDING AT A SCALE TRULY WE HAVE NEVER SEEN BEFORE. AND SO, IF YOU HAVE THE ABILITY TO ACCESS THOSE AND DEPLOY CAPITAL, GOING BACK TO WAYMO IS STILL EARLY, IT IS HUGELY TRANSFORMATIONAL. IT IS AN OBVIOUS OPPORTUNITY SET. ED: I MISSPOKE. YOU GOT INTO WAYMO IN THIS JANUARY ROUND, WHICH WAS NOTABLE AT THE TIME. WITH SEQUOIA, WHO CO-LEAD THAT ROUND. THIS IS A 50-YOUR FIRM. HOW DO YOU GO GENERATION TO GENERATION AT A FIRM LIKE KPN, AND SAY, THIS YEAR IS SOMETHING WE ARE DOING DIFFERENTLY. OR IT IS STILL IN LINE WITH EVERYTHING WE HAVE DONE HISTORICALLY? ILYA: OUR GOAL AT KLEINER PERKINS IS TO INVEST IN HISTORY-MAKING COMPANIES. COMPANIES THAT MAKE HISTORY. IT IS ON OUR WEBSITE. OUR MAIN FOCUS IS UNDERSTANDING WHEN THE TIME IS RIGHT AND WHEN THE MARKET IS RIGHT FOR A COMPANY TO BREAKOUT AND REALLY CREATE AND DEFINE A CATEGORY. SO, A LOT OF WHAT WE SPEND TIME ON IS THAT. UNDERSTANDING TECHNOLOGY TRENDS, BUT THEN BEING INFORMED BY THE ENTREPRENEURS THAT TELL US WHAT IS HAPPENING IN THE WORLD. IT IS VERY MUCH AN INFORMED DECISION, BUT ULTIMATELY IT COMES DOWN TO THOSE FOUNDERS. ED: WE HAVE A LOT MORE TO DISCUSS. ILYA FUSHMAN IS STAYING WITH US. WE WILL TALK A LITTLE MORE ABOUT WHAT PEOPLE CALL THE TRILLION DOLLAR OPPORTUNITY IN AI, BUT I WANT TO GET TO WHAT PEOPLE ARE NOT TALKING ABOUT RIGHT NOW. NEXT THING BEYOND THE MODELS, PHYSICAL AI. THIS IS "BLOOMBERG TECH." WE ARE CONTINUING OUR EXTENDED CONVERSATION WITH ILYA FUSHMAN. WE TALKED ABOUT THE ENORMOUS SUMS FLOWING INTO FRONTIER AI. WE WANT TO TALK ABOUT WHAT COMES NEXT. HIS VIEW IS COMPANIES WILL BE BUILT IN THE PHYSICAL WORLD. WHAT DRIVES THE CONVICTION ON THAT IDEA? ILYA: THE TECHNOLOGY, IT IS THE FACT YOU HAVE COMPANIES LIKE WAYMO THAT HAVE DEVELOPED A ROBUST ECONOMY. THEY HAVE DEVELOPED MODELS TO MAP OUT THE PHYSICAL WORLD AND THOSE ARE FINDING THEIR WAY INTO ROBOTICS. THERE ARE MASSIVE INDUSTRIES WHERE YOU THINK ABOUT TRANSPORTATION, SUPPLY CHAIN, FACTORY AUTOMATION, BUILDING THE PHYSICAL THINGS. I WAS JUST IN TEXAS LAST WEEK. THESE ARE MASSIVE, INCREDIBLE OPPORTUNITIES, AND THEY ARE BECOMING MUCH MORE VIABLE IN TERMS OF TECHNOLOGY PERMEATION INTO THE WORLD BECAUSE OF ALL THE WORK THAT HAS BEEN DONE AT FRONTIER. ED: IT IS TANGIBLE. YOU CAN SAID THEY WANT TO BUILD ADVANCED CHIP YARDS DOMESTICALLY IN THE UNITED STATES. THEY CAN DO THAT MORE QUICKLY BECAUSE OF AI. THEY CAN PRODUCE PRODUCTS THAT ARE MUCH MORE INTERESTING AND COMPETITIVE BECAUSE OF AI AND TECHNOLOGY. ILYA: IF YOU JUST LOOK AT SUPPLY CHAIN MORE BROADLY. WE HAVE COMPANIES LIKE MOTIVE, RESTORED THAT HAVE TAKEN A LOOK AT HOW GOODS AND MOVE AROUND. HOW DO YOU INJECT COMPUTER VISION ROBOTICS INTO SAFETY, PERFORMANCE, AUTOMATING WAREHOUSES SO THE COST TO ACCESS FOR CONSUMERS GOES DOWN, AND THAT IS BECOMING TANGIBLE. YOU HAVE THE TRANSPORTATION SECTOR WITH COMPANIES LIKE WAYMO. ALL OF THESE MASSIVE INDUSTRIES THAT HAVE BEEN AROUND FOR AGES THAT ARE TRULY TRILLION DOLLAR MARKETS ARE COMING UP FOR GRABS. IN ANOTHER BIG SECTOR, WE HAVE MIND ROBOTICS. REALLY GOING AFTER INJECTING TECHNOLOGY INTO THE AUTOMOTIVE INDUSTRY, DOMESTICALLY AND GLOBALLY. ALL OF THIS IS POSSIBLE BECAUSE OF ADVANCES IN THE LARGE LANGUAGE MODELS AND HARDWARE. ED: THOSE THINGS ARE HAPPENING NOW. VENTURE IS SUPPOSED TO BE ABOUT SEEING AROUND CORNERS. WHAT IS THE NEXT THING THAT PEOPLE ARE NOT TALKING ABOUT RIGHT NOW THAT YOU ARE JUST CONVINCED IS THE NEXT WAVE, THE NEXT ACT, WHATEVER YOU CALL IT. ILYA: INVESTMENTS ARE BEING MADE NOW INTO WHAT WILL BECOME IMPACTFUL IN THE COMING YEARS. THE MOMENT FOR ROBOTICS IS NOW BECAUSE OF HARDWARE COSTS COMING DOWN AND HARDWARETHERE IS A DOMAIN AROUND SCIENCE AND THE FRONTIER THAT IS BECOMING INTERESTING. CAN YOU AUTOMATE LABS? HELPING FIND ANTI-BODIES AND DRUGS WHERE INVESTORS -- GOING AFTER OVERALL CELLULAR REJUVENATIONS TO HELP US BECOME YOUNGER IN A SENSE. THESE THINGS ARE ONLY POSSIBLE NOW AND DEVELOPMENT POSSIBLE THE PAST COUPLE YEARS. THAT IS WHAT I THINK YOU WILL SEE MORE OF INDIA ECONOMY. YOU MIGHT HAVE ROBOTICS IN THE HOME. YOU MIGHT HAVE ROBOTICS PERVASIVELY THROUGH OUR LIVES AND CERTAINLY IN THE MANUFACTURING SECTOR IN A REALLY MASSIVE WAY. AND THEN THERE IS CHIPS, THE FOUNDATION OF AI AND AI MAKING AI. ED: YOU ARE STILL ACCOUNTABLE TO LP'S IN YOUR JOB IS TO MAKE RETURNS. WE SHOULD TALK ABOUT THE IPO WINDOW, OR WHAT YOU SEE ANTHROPIC AS THE LOW HANGING FRUIT FOR THAT. YOU HAVE ALSO HAD SOME M&A SUCCESS RECENTLY, WHICH I FIND INTERESTING. ILYA: THE IPO MARKET, SPACEX, THE GREAT OUTCOME. YOU HAVE A FEW INTERESTING COMPANIES. THE WINDOW IS IN SOME WAYS OPEN. IN SOME WAYS YOU HAVE TO BE THOUGHTFUL ABOUT HOW YOU APPROACH THE WINDOW. I WOULD SAY FEELING MUCH MORE OPTIMISTIC TODAY THAN IN THE HISTORICAL WINDOW. THE M&A MARKET IS QUITE INTERESTING. WE HAD SALESFORCE -- INCREDIBLE STORY. WE HAD SERVICE NOW. ALSO A GREAT ACQUISITION. WHAT YOU ARE STARTING TO SEE IS COMPANIES THAT HAVE HISTORICALLY BEEN GROUNDED IN TRADITIONAL SOFTWARE REALLY REINVENT THEMSELVES THROUGH ACQUISITION. THAT IS A REALLY IMPORTANT POINT FOR ALL THESE COMPANIES TO THINK ABOUT. THE TALENT REQUIRED TO BECOME AN AI ORGANIZATION IS PROBABLY SITTING OUT THERE IN A STARTUP SOMEWHERE. IT IS REALLY IMPERATIVE FOR COMPANIES TO BRING BALANCE. ED: I WANTED TO ASK YOU, WHAT IS THE COMPANY YOU DESPERATELY WANT TO SEE SOMEBODY BUILD? THAT IS NOT BEING DONE YET. ILYA: BY THE WAY, EVERYTHING IS GETTING BUILT, WHICH IS EXCITING. . I GO BACK TO OUR CONVERSATION -- THE MOMENT YOU HAVE FOR SOMETHING LIKE INSTANT REVIEWS. THAT IS PRETTY OBVIOUS. ED: A TOOL THAT BECOMES UBIQUITOUS. ILYA: IF YOU COULD CLONE YOURSELF, AND YOU COULD HAVE SOMEBODY DO YOUR WORK FOR YOU AND SAID HE THAT TIME SO YOU COULD SPEND IT WITH FAMILY -- OR JUST DO MORE -- THAT WOULD BE INCREDIBLE FOR YOU AND FOR SOCIETY. THAT IS AN OBVIOUS SET OF THINGS THAT WILL HAPPEN. FROM THAT, THE WORLD IS YOUR OYSTER. ED: ILYA FUSHMAN, IT IS GREAT TO HAVE YOU BACK ON "BLOOMBERG TECH ." THERE IS A LOT GOING ON IN THE WORLD. LET'S GO TO NEW YORK. >> IT IS TIME FOR TALKING TECH. NVIDIA SAID ITS OPTICAL COMPONENTS ARE COMPLETELY SOLD OUT THROUGH EARLY 2029, WITH CUSTOMERS ALREADY LOCKING IN ORDERS FOR 2030. THE COMPANY MAKES TECHNOLOGY THAT HELPS MOVE DATA FASTER INSIDE AI DATA CENTERS AND SAID IT IS RACING TO ADD CAPACITY. A NUCLEAR STANDOUT HAS RAISED ABOUT $400 MILLION AT A ROUGHLY $1.9 BILLION VALUATION. IT IS DEVELOPING NUCLEAR TECHNOLOGY THAT COULD OFFER A CHEAPER SOURCE OF RELIABLE POWER. GENERAL CATALYST IS LEADING THE SERIES. RESOLUTE IS SETTING A SITE ON WALL STREET. THE CEO SAID THE FINTECH WANTS TO TAKE ON JP MORGAN AND AMERICAN EXPRESS AS AN EXPANSE IN THE U.S.. IF REVOLUT GOES PUBLIC THE U.S. WOULD BE ITS PRIMARY LISTING. >> U.K., U.S., BUT PRIMARILY IN THE U.S.? >> YES. ED: HAPPY FRIDAY TO YOU. YOU CAN CATCH MORE OF THAT INTERVIEW AND THE FULL EPISODE OF "BLOOMBERG TECH: EUROPE." COMPANIES ARE NO LONGER ENCOURAGING WORKERS TO MAXIMIZE THEIR TOKEN USE BUT THAT IS NOT ME CONCERNS ABOUT THE COST OF AI IS GONE FOR CFOS. WE HAVE MORE ON THAT DEBATE, NEXT FEARED THIS IS "BLOOMBERG TECH." ED: WORKERS RUNNING UP THERE AI USE OR TOKEN MAXXING HAS GIVEN WAY TO VALUE MAXXING OR OUTCOME MAXXING, WHATEVER YOU WANT TO CALL IT. THE AI SPEND IS KEEPING UP CFOS AT NIGHT. NO PRESSURE, BUT LIKE SO MANY CFOS ARE WATCHING RIGHT NOW. I KNOW MANY OF THEM ARE UP AT NIGHT. HOW MUCH OF A CONCERN IS IT, TOKEN COSTS, BROADLY? >> THANK YOU FOR HAVING ME. IT IS THE ONE THING KEEPING CFOS UP AT NIGHT. IT COMES UP IN EVERY INTERVIEW I DO AND I SPEAK TO CFOS PRETTY MUCH EVERY DAY. IT TELLS US SOMETHING. ALTHOUGH COMPANIES ARE EMBRACING TECHNOLOGY, WE SEE MORE IMPLEMENTATION ACROSS DEPARTMENTS, ACROSS USE CASES. THE MAIN QUESTION AROUND COSTS AND HOW DOES IT COMPARE TO PRODUCTIVITY AND SAVINGS YOU GENERATE AS A BUSINESS. THAT IS STILL AN OPEN QUESTION FOR CFOS. ED: THE JENSEN HUANG VIEW ON THIS, THE CEO OF NVIDIA, HE MUST TO SEE ENGINEER SPENDING TOKENS WITH NO LIMITS AS FAST AS THEY POSSIBLY CAN. BUT WHAT ARE THE STRATEGIES THAT CFOS ARE USING TO BUDGET, TO MANAGE IT? >> HAVING AN ENVELOPE. THAT IS THE FIGURE THEY WANT TO START THE YEAR WITH. AND THEN THEY ARE SAYING THEY ARE FLEXIBLE IN TERMS OF HOW THEY ARE ALLOCATING THAT AMOUNT ACROSS TEAMS. ENGINEERS USUALLY GET THE MOST AMOUNT. YOU CAN ASK FOR MORE TOKENS IF YOU NEED TO. SOME COMPANIES WANT TO SEE HOW YOU USE YOUR EXISTING BUDGET OF TOKENS AND IF THAT IS EFFECTIVE. SOME COMPANIES ARE RESORTING TO INCREASING THE BUDGET AS WE GO ALONG. ONE STARTED WITH FIVE MILLION DOLLARS AND THEY DOUBLED IT BECAUSE THEY REALIZED WHAT WE THOUGHT INITIALLY WAS NOT SUFFICIENT. MODEL ORCHESTRATION IS A BIG FOCUS FOR COMPANIES. WHAT ARE THE MODELS AND WHAT IS THE RIGHT TASK TO USE THIS MODEL FOR? COMPANIES ARE TRYING TO FIGURE OUT HOW THIS WORKS BEST AND DEPENDING ON HOW EXPOSED TO AI THEY ARE. ED: WE ARE IN IT RIGHT NOW. COMPANIES BUDGET LATE SUMMER TO FALL. THEY MUST ALL BE THE RIGHT NOW, 2027, TOKEN MAXXING. THANK YOU SO MUCH. CHECK OUT THE NEWSLETTER THIS SUNDAY AFTERNOON, LUNCHTIME, EARLY EVENING. I WILL PUT IT OUT THERE ON THE SOCIALS. WHAT A WEEK. THAT DOES IT FOR THIS EDITION OF "BLOOMBERG TECH." A LOT OF YOU ARE POSTING AT ME ON THE SOCIALS. THANK YOU FOR THAT RECAP. THE CONVERSATION WITH REBECCA ON THE PODCAST. YOU CAN FIND IT ON THE TERMINAL AND ONLINE AT APPLE, SPOTIFY AND IHEART. THANK YOU FOR BEING WITH US ALL WEEK LONG ON "BLOOMBERG TECH." FROM THE CITY OF SAN FRANCISCO, THIS IS "BLOOMBERG TECH."