AI Spending Ripples Across Tech Stack; Nvidia Acquires Hugging Face

0:00Join us for Bloomberg Power Players on September 10th in New York. Set against the backdrop of the US Open Tennis Championships, Bloomberg convenes the leader shaping the future of sports business from athletes and team owners to commissioners and investors. Here are the market-moving conversations driving the multi-trillion dollar sports economy. Register now at BloombergLive.com slash PowerPlayer's Radio. That's BloombergLive.com slash PowerPlayer's Radio. Bloomberg Tech is live from the heart of Silicon Valley, with Ed Ludlow in San Francisco. This is Bloomberg Tech coming up from chips to servers to software. AI spending is rippling across the tech stack. What earnings from Brawcom, Snowflake and HPE? Tell us about the strength of the AI boom we'll discuss with the CEOs of Snowflake and HPE later this hour.

1:00Plus, Nvidia has agreed to a quiet hugging face in a transaction valued about $13 billion. We speak with HPE co-founder Thomas Wolf about the deal. And self-driving tech startup Wave reaches a deal with Uber to offer Robo Taxis in London with a human in the driver's seat. Wave CEO later this hour. This is what technology stocks are doing. High on the Nasdaq 100 modestly 6.1%. It is earnings from software to chips to other parts of the infrastructure stack that we're focused on. In Snowflake's case, this is a blowout. The stock is on track for its best days since May and trading at a 2021 high. AI is translating into faster growth. The revenue outlook up to $6 billion for the year. HPE, strong AI server demand, but not as strong as Dell. And there wasn't the read through from that name. We're going to speak to the CEOs of Snowflake and HPE later in the hour. Then there's Broadcom, huge AI chip growth ahead. Doubling in fiscal 27. Doubling again in fiscal 28.

2:02But not huge enough for this market. And that's where I want to start today's show. Let's get more with Bloomberg's Deena Bass. Broadcom is a custom silicon story, right? And they posted some big numbers in terms of what's going to come. But it just wasn't enough for this market. It was a high bar. Sure, first of all, their forecast for the current quarter of their fiscal fourth was pretty lackluster in terms of both regular sales and AI chip sales. And so that came out initially right after the bell and the stock headed downward. Then we got into the call and CEO Hock Tan gave the forecast that you just repeated about AI chip growth for fiscal 27 and 28. Doubling each year, which again seemed to at the time, please investors more of the stock started coming back. But this morning, it's back down again. And there are some concerns, one, in light of Nvidia's blah, quarter last week, that neither the Q4 numbers, nor perhaps the forecaster, maybe go to enough compared to that. Two, some of this was priced into the stock already.

3:03There's also concern being raised about where that AI chip growth is coming from. Tan basically said that most of it is coming from anthropic and open AI, who are sets to become the company's number one and number two. Customers in 27 and 28 respectively. So there's some concern about those two as the customers. The stock's down 6% right now. Pretty much on track for its biggest drop since the first week of June. $150 billion in fiscal 27 on AI chips, $230 billion in fiscal 28. Those are big numbers, but like Nvidia is doing now $100 billion of revenue overall in a quarter. Is there any sense that this custom chip game is chipping away at Nvidia's leading that market, that they're gaining market share on Broadcom side? It does seem to be chipping away at pieces of it. We've had a lot of discussion from OpenAI over the last couple of weeks about the ways in which they are going to use the custom chip that they're building with Broadcom.

4:04But also at the same time, OpenAI will talk about how much Nvidia they're using. So there is that the other issue for Broadcom is that even in the custom chip market, they're facing greater competition. Google, TPU, had been their largest customer, and still is, but it's had to be replaced by Anthropic. And Google just signed a deal with Broadcom's competitor, Marvel, also more competition for Broadcom from MediaTag. Both of those companies are backed by Nvidia. Bloomberg's deenabased. Thank you very much indeed. Stay with Bloomberg. We're going to break down the other earnings. I want to speak with the Snowflake CEO, Shreedar Ramaswami, and the HPE CEO, Antonio Neri, later this hour. By the way, when we came to air, there were some headlines on the Bloomberg terminal about chatbot outages. Curiously, the headlines all hit at the same time. Down detector is saying that users are reporting issues with OpenAI platforms. SpaceX AI is saying that GROC is experiencing issues and is investigating the outage.

5:04And Anthropic is saying, all within the same time span, it's investigating clawed areas and working on a fix. Those all hit the Bloomberg terminal literally at the same time before the show started. We're trying to work out what's going on with all of the chatbots around the world. Let's get back to the AI story. Our next guest, as we're seeing, strong evidence of AI adoption and broadening from hardware to select software at the infrastructure layer. That's clear evidence of it as AI becoming increasingly integrated into business models. Alliance plans teams for Manic Innovation Equities, Chief Investment Officer Leichu is back with us on Bloomberg Tech. The common theme across all of those earnings we outlined lays that AI demand seems very strong. Is that what you see? Yes, in fact, we continue to see AI solidly moving into the adoption phase. And at this moment, when you look across the board, the general trend actually is on demand is outstripping supply. So when you see companies actually from the commentary versus the numbers, the common theme we're seeing is that demand is so strong that supply simply cannot keep up.

6:12And that's not just for this year, but it's for multiple years to come, whether it's at the chip level or other parts of the infrastructure as well. Leichu, I want to go back to Nvidia last week just as an illustrative example, because they said that they would have top line growth of 70% in the next fiscal year. But that was a forecast modeled on supply, their ability to supply, not growth modeled on demand. I found that math very interesting. How did you interpret it? Yes, and then so this is actually where at a very interesting moment, and then the moment where you're seeing some volatility in the market as well. The market by and large, we often generally speaking, we reward beat and raises. And then we want to see estimate revision, particularly in technology sector and fast growing sectors. But when currently where you were in this really interesting dynamic where the demand is so strong, but we simply do not have enough supply to support that. So we're in this interesting transition phase where for the near term, you don't see as much estimate revision, even though the demand outlook is extremely strong.

7:19But that just means we just have to look at everything in the context of valuation as well, and then in the context of horizon. When we think about long-term durability of growth and profitability, and combine that with a reasonable valuation, and that's when you find the best performing stocks, and that's what we are really focused on. We started the conversation with your writing about how this is broadening out, right? Basically from chips to other layers of the stack. How do changes in portfolios reflect that right now? I think we are in the adoption phase. So when you in the adoption phase, and then you look back, we started simply at the physical infrastructure layer. But as we moved to adoption phase and you've already seen it, we went from the broadening out, even at the infrastructure layer, we have gone from simply GPU to TPU to CPU to the networking layer. But now we're in the phase where you're also seeing as enterprise and consumer starting to use more AI, you will see opportunities at the infrastructure layer, at the software layer, at the cybersecurity layer, and many other areas as well.

8:27And actually, I also think we're starting to see evidence of AI being adopted in some of the industries. So if you look so far, what we have seen is some industries such as InfoTag, Financials, or Healthcare. These are historically some of the fastest adopter of new technology. And then we do believe that AI is once in a lifetime transformative technology, whoever uses it to their advantage will be able to increase their profit pool, accelerate their growth. And we're actually seeing early evidence of that. So you see the portfolio naturally transition following along this type of transformation and along the curve of adoption. Alliance Bernstein's Phamatic Innovation Equity, CIO, Lachoo, back on the show. Thank you very much indeed. Coming up, Nvidia is going to require hugging phase and a transaction valued at about $13 billion. We're going to speak with hugging phase as co-founder Thomas Wolf about the deal, the Bloomberg Tech. Video has agreed to acquire hugging phase in a transaction valued at about $13 billion confirming earlier Bloomberg reports.

9:39Here to discuss, is hugging phase co-founder Thomas Wolf back on Bloomberg Tech? There's a piece of this that's really interesting that hugging phase continues to be hugging phase, right Thomas? Owned by Nvidia, but is an open platform. Can we start with the mechanics of that? How hugging phase is going to run under the proposal that you and Clen and the others agreed? Do you and Clen stay with hugging phase? And the specifics of how you're going to structure this? Of course, the first thing to say is we are staying indeed. All the three co-founders are staying. We are doubling down with six years, at least, retention at hugging phase and the idea is all the team is going to join. The goal is really as Jensen said in his tweet and interview this morning, and as you can read it on the blog post as well, is to keep an open, independent, compute, agnostic platform and infrastructure for hugging phase.

10:41So, practically, for our user, this is going to change really very little. The main differences will have the back key, this power of hugging phase of Nvidia to be able to double down and to accelerate our work. What is it that hugging phase is going to be able to do now, Thomas? Like either scaling or in the speed of movement, you just wouldn't have otherwise been able to do independently? I think we've been extremely efficient along our journey. We've been able to raise a very minimal amount if you compare to any AI company nowadays with raise less than half a billion dollars. I think we've been able to achieve amazing results with that. We scaled to 3 million models on the hub, like 18 million users. We have 200,000 companies using us. I think the idea is that now what we realized this year was that on the one hand, open source was having a huge moment, like open source was really on the rise.

11:50And also, when we were attacked, you remember earlier this summer, we realized that open source was actually critical for safety and critical from any aspect. Happy to dive into that from safety to company being able to do research, to basically company being able to own their data. We thought, okay, we have a future here, Azer, we raise more money and we double down, or we find someone who share our value, share our mission very deeply, and we partner with them. We were very lucky that Gentson was active, receptive to this discussion. So it sounds like hugging phase looked at the strategy for the future and approached him video, or Gentson in an approach hugging phase. Yeah, we approached him very open discussion, I think everything was on the table. We often have this offer to invest, to basically raise more money. And the discussion was, okay, where should we go? And at some point, we saw a line, there is so many things we can do, share that, let's go all the way.

12:59What was interesting, as outlined by Gentson in his various communications, like for example, a blog post on LinkedIn, is that the hugging phase community will still have the same choices, including the cloud platform backing, the inference platform. In other words, there is no mandatory requirements to use and video compute. Was that something that you guys on your side insisted on, or what's the back story to that? Yeah, I mean, we'll talk about that, but the idea really here is, Gentson believed like us in the power of community, the power of collaboration. We wrote this great letter about open source model, he thinks really widely. We had this same wise scope of thinking, we think there is a huge collaboration that we think actually open source model have to be built through collaboration that transcends. And that transcends normal competition. So she also there is a very, there is a really big line, and how we think about these problems.

14:06Now the exact specifics will be defined, you know, will very soon. This is a slight tangent or an aside, but you know, last week you're on the show with me, and we were talking about your robotics business. How does the robotics business transfer within video? Because you had massive demand for micro dot quite quickly. In videos got massive scale. They are a hardware company as well, you know, explain the opportunity there. Yeah, I think you also the same, you know, you've seen Gentson stage with some ducks, you know, there was this Disney in a tree decks, but what they were called GDX robot last year, GD, we know Gentson also a lot of robotics, we know robotics as well. We see here also it's very, you know, it's something that we can keep developing very similarly to how we've been building it at a taking phase. I think the surprising news for us was that this robotic release almost eclipse or even, you know, was even more successful than some remorse about the joint acquisition.

15:14And so it's I think a good indication of, you know, how we'll be able to manage these different things going on throughout the future. Thomas, this is a deal, right? $13 billion, $1 billion of which is tied to employee retention through stock. How did this discussion go around regulation antitrust? You know, how do you think that your competitors and videos competitors will view this deal and what level of confidence or concern is there on this passing through the regulatory process with ease? Yeah, all of that is a bit early to tell you answer right for now. It's just today, Ed. I think it's a process we'll see. We're quite confident. We think we think, you know, there is a really nice path where basically hugging phase, continuing to operate as this in the finance open platform that's been in the past. We think this is a very good direction. Make a lot of sense. Now, you know, I'm not yet to be answering really deep regulation quite right now.

16:26Okay, Thomas, I appreciate that very quickly. What do hugging phase staff feel about this? What's the response internally then? I mean, ecstasy, you know, you maybe so the picture we shared on Twitter, you know, Jensen joined our hands for a lot of the team members, because kind of once in the lifetime opportunity, basically to equip Jensen and having, I think the whole team is really very excited about this new direction. Everyone is, you know, ready to go 10 years again, like building to the next step of open source models. We think this is a great chance for the whole open source model ecosystem to be honest. We think it's kind of incredible. Thomas Wolf of hugging phase back on the show a week later after confirmation that Nvidia has acquired hugging phase for about $13 million. Thank you so much. Coming up, we're going to go to London, London riders are about to get Robotaxy access through the UK capital.

17:27We're going to talk to the CEO of Wave about a deal with Uber that's making that possible. This is Bloomberg Tech. Bloomberg Green returns to New York during climate week, September 22nd and 23rd bringing together industry leaders, policy makers and climate innovators to explore solutions for a more resilient future ready world. Powered by Bloomberg's trusted journalism and data driven insights, discover how climate is reshaping business, technology policy and the economy, presenting sponsor Satachi Energy, official airline Alaska and Hawaiian airlines learn more at Bloomberg Live dot com slash green and Y radio. Self driving technology startup Wave has reached a deal with Uber to offer Robotaxy rides in London with a safety driver. It's the latest move in the global race to commercialize autonomous ride hailing wave CEO Alex Kendall is back with us on Bloomberg Tech. Alex, I'm covering this industry. I know that this is a source of frustration, but the first question is always, what's the path for the safety driver coming out of the vehicle?

18:35Take that and explain the London case study to us. Hey, well firstly, as you know, London is an incredibly difficult place to drive. It's a 2000 year old city. It's full of narrow roads, frequent pedestrians and cyclists. And so I'm delighted that we've been able to bring our technology here. We've been learning to drive here for a decade. And it's I think one of the hardest places in the world to learn to drive. But we're starting with a supervised service this week with safety operators in the path to get to launch a driver's service is really three things. The first one is to move to a scalable vehicle platform. You know, our business model works with automakers so that they build the robot taxes, no retrofits or built in mass production hardware. And of course, validating the safety metrics we need for driverless operation. And third, we've got a permit today for supervised operations and we're working with regulators towards a driverless permit. So those three things, which we're working on very quickly over here in London.

19:35At the same time, you know, you have multiple projects in parallel, right? There is the driverless platform of Nissan, for example, where there's a future in London. But other cities come into play in the R&D of that explain that relationship. Yeah, that's right. We've looked to build a business where we want to provide intelligence across anyone who wants to build intelligent machines. And uniquely, we've got an AI that can scale from consumer vehicles to robot tax. So we are deploying our AI and consumer vehicles are the number of leading automakers like Nissan and Stellantis. And of course, as of today, starting robot taxi services today in London and by the end of the year, we'll be scaling this to Tokyo and we've agreed with Uber to take it to 10 cities beyond that as well. It's amazing. Alex has been almost 10 years since I left London and moved to SF. What's your relationship like with that city, with the mayor, but also, you know, under a new government with Andy Burnham, is there a pathway for sort of comprehensive framework regulation for your industry in the UK?

20:37In other UK cities? One thing people might not realize is that earlier this year, the UN published a technical regulation that allows for a global framework for higher levels of autonomy and consumer vehicles and robot axes. And many countries around the world, UK, Europe, Japan, all sign up to these regulations and they also provide a basis for in the US as well. So this is fantastic. And then the UK itself has been adopting these. There was an act past in 2024 and we've been working with Transport for London and government here to bring this into fruition. So we're pretty happy with how this is growing. London is one of Uber's five largest markets by really, so it's a really important market to bring autonomy into. I think Londoners are going to love this service and what we've got is a, you know, it's a safe and responsible plan to bring this technology and introduce it to Londoners and people through the UK with regulators here. You know, the Uber relationships keyed underscore rates through the Uber app. You said a moment ago that there's a plan for 10 cities with Uber going forward. Are any of those cities in the United States, Alex?

21:46We will be bringing it globally, including to the US. We haven't announced any other specific cities yet, but stay tuned. I'll give you a call when we do. Real quick. How are you guys doing on the funding side? There was reports that some wave staff sold off stock on the Pisces Exchange, for example. Like, is that an employee liquidity thing? Are you out there doing secondaries? What's going on? Yeah, we're well funded. We've got, we've raised almost three billion of cash. We just up to our second employee liquidity round. We've got a great global team. And actually, you know, one of the things I think we're well set up to do is, you know, to really continue with our frontier and body day science. We've been the first team to build vision language action models and world models for robotics and now bring this new contrarian approach to the technology to market as well. Of course, continuing to grow and bring it to the world. And production applications, like in consumer vehicles all around the world and for robot taxi services. So it's full steam ahead. It's in a phenomenal year for our team so far. And this is a pretty proud moment for us.

22:50Alex, just very quickly, what you just said world models remind the audience what waves core competences. What we've built is an end-to-end AI driver. So it's a single neural network that's capable of reasoning and making decisions in real time. It can generalize across any vehicle we work with small large vehicles all around the world. We're the first company to have driven this technology in over 500 cities zero shot. So no high definite maps. It's an AI that's capable of driving any vehicle all the way around the world. Alex Kendall, wave CEO back on the show. It's great to have you now deployed modestly in London coming up snowflake earnings, feeding analyst estimates. A big move in the stock. We're going to speak to the CEO, treat our ramas. That's next half time here in the city of San Francisco. And this what markets look like. This is Bloomberg tech. Welcome back to Bloomberg tech. And that's that 100 really tech heavy index pushing up to session highs again of more than 1% now. A lot of what's happening in the market is fed speaking and what the Fed will or won't do in terms of the outlook for rates.

23:54But earnings is also like a very big part of this story elsewhere. What is happening in the release of different generations of AI model also massively important matters up 4%. Okay, this one was a big news item this morning. It's launched its latest and most powerful AI model to date with the company's chief AI officer hailing it as quote competitive with an tropics model and quote better than open a eyes GPT 5.6. So, particularly when it comes to coding. Bloomberg's really griffins with us. Yeah, I you know, I did a double take it to screen right on the stock move because I was like, is there a direct causal relationship here. But very simply, meta is out with a powerful model. They're talking it up and the market seems to believe them. What do we need to know? Yeah, chief AI officer Alexander Wang and I spoke yesterday. And he's saying this is the biggest performance jump to date. It's putting it on par with competitors like open AI and anthropic performance improvement for coding and agentic capabilities. Notably, this is not the highly anticipated model from meta called water melon. Yes, you got that right. It is water melon. It's still coming. Alex wouldn't speak to when. But that's going to be the big model release. Some have said towards the end of the year. This is not that, but it's a big improvement.

25:12Okay, so like the business model for meta is so interesting with open AI you have chat GPT with anthropic you have Claude and the coding tool. How does meta charge or get people every day people businesses to use these these powerful AI models. Yeah, so they are charging. This is a closed model. That means developers can't just download those building blocks and build upon it. It's going to cost as much as the prior version use FARC 1.2. Developers can access it via its API platform. That's essentially a way to use meta services via meta. This is not the open source kind of technology that Mark Zuckerberg has preached in his most recent manifesto that 6,500 word document that he put out in which he promoted open source. So that's kind of notable here. They need to show a return on investment for the billions upon billions that they're spending to try to catch up.

26:12Blimbos Riley Griffin on meta, which is up 4% more than 4% in the session. Thank you so much. Snowflake reported its second quarter earnings yesterday after the closing bell beating analyst estimates and raising its full year forecast for product revenue shares right now up almost 20% on track for their best day since late May and trading at their highest level since December of 2021. What's going on? Let's speak to Snowflake CEO, Shreeta Ramaswami. You've had three straight quarters of accelerating product revenue growth and it seems a strange question Shreeta. Good morning to you. Welcome to the show. How much of that is AI? Hi, good morning. Yeah, indeed. This quarter was pretty amazing for us. $1.49 billion in product revenue up 37% year on year. We are doing this while also expanding operating margin by 400 basis points to 15%. About half of the beat the overperformance came from AI. And what's nice about this moment is that AI is actually driving a nice feedback loop because more customers are bringing data onto Snowflake using our AI products, cocoa and co-work to get things done, which in turn is driving consumption on the platform.

27:26It sets up this very nice flywheel of people wanting to do more with Snowflake. And it's an effect that's pretty profound. It also gives us confidence about where we are headed. That's why we raised the full year guidance by 5% to 36% for the year. What is cocoa? Coco is a coding agent for data. It comes as part of Snowflake. I've used it to write software as well. But what it specializes in is any job that you want to do with Snowflake goes 5 to 10 times faster using cocoa. Yeah, I've tried to I know the answer. I was reading so much because the surprise that jumps out of the page right is the momentum 2000 accounts added in that quarter. The overall usage is really high in a market that is competitive. There are many coding agents out there. Why do you think the cocoa is standing out, Shreder? Because it's the easiest cell for Snowflake as a company. I literally go to our customers and say, if your data team uses cocoa, you can make things go 5 to 10 times faster.

28:30And we publish benchmarks on this. We are good at what we do compared to off the shelf models. And even harnesses from the foundation labs. Coco is just a lot more effective on Snowflake jobs because it understands so much about Snowflake. And that's really the magic. Plus, we don't have things like per user subscriptions and a lot of the other products do. Coco is included for free with Snowflake. It's a consumption model. And it just makes this a very, very compelling product for every data team on the planet. That business model is interesting. So if you added 2000 accounts in one quarter, where does that show up will translate into revenue growth? In first of all, it shows up in AI revenue because people that are using cocoa consume tokens. That's the first starter effect. But the bigger effect is that they are doing all kinds of things on Snowflake. They are bringing more data into Snowflake. They are optimizing and debugging their pipelines. They are setting up things like interactive tables that can power dashboards. They're creating agents that going to co work and can get deployed to business users.

29:41It's the second and third-order effect of Coco. That's most interesting for Snowflake. Remaining performance obligations. RPO came in below at least Wall Street's consensus estimates and expectations. How would you ask the market to interpret that figure? And what kind of emphasis would you put on it? I wouldn't put a lot of emphasis on it. We are seeing this trend where the bigger renewals are getting pushed out by a quarter to the latter part of this year. We are pretty confident that RPO will increase, especially in Q4 by a lot. Revenue is the leading indicator that drives everything and that's very, very healthy. We talked about Coco and the context of the other coding platforms that are out there. Generally speaking, a lot of the analysts ask about Databricks. And Databricks is talking about it's 80% growth. It's crossing $7 billion in ARR. Where are they doing well against you? Where do you feel you're doing well against them?

30:47It's a big market, first of all. Our strength has always been in the context of a cohesive, easy-to-use, trusted data platform. Their heritage is more of catering to developers, wide open code bases, sprawl of data, and not as much attention paid to things like governance and disaster recovery. Snowflake is the place where enterprises have put their most valuable data, the one that they used to run their business, which is what sets us up super well to move upstream. Yes, technology is important, but I have so many meaningful conversations with our customers about how we can transform how their sales teams operate or how we can help them optimize their supply chains. I would say that we are leveraging AI to do the kinds of things that we honestly would not have imagined possible three years ago. I'm very happy with where we are headed. Snowflake is becoming a lot more than a tech provider that's largely invisible.

31:50If you're able to drive real outcomes for our customers. I like that. AI is clearly driving more usage of Snowflake. What can a customer do today with their data within Snowflake that they weren't able to do even a year ago? If you look at customers like United Rentals or Indeed, which is among the world's biggest job sites, Indeed has rolled out Coco and Co-Work to their employees in over 60 countries and 28 languages. Ready access to data, ready access to reasoning, ready access to being able to do anything else that the data team wants to do on top of Snowflake that simply would not have been possible a year or two ago, but represent the frontier of what is possible with AI and data today. Snowflake CEO, Shida Ramaswamy, the stock up 20% on track for its best day since May, highest level since December 2021. Thank you so much.

32:51A piece of news that we broke this morning. 137 Ventures early bets on SpaceX are proving worthy with the 2014 vintage fund of SpaceX. Now, worth more than eight times the money that investors originally put into it. That's net of fees and other charges. The investors received back or were distributed $2.5 billion worth of the space company shares last quarter by 137. And a source says the venture firms total assets under management is now over $20 billion, which includes investments in and real and cognition. You remember 137 was one of the big winners of the SpaceX IPO that we covered on the show at the time. A quick update on what's going on with various AI model outages that we started the show with. Open AI is now saying it's applied mitigation and its monitoring recovery of its platforms. And Frappic has just said several of its models have recovered after experiencing errors, but the companies continue to work to address disruptions, particularly with its Opus 4.8 and Opus 5 offerings.

33:54GROC, the chatbot from Elon Musk's SpaceX AI, is also confronting outages that's according to the company's status page. Coming up, HBH, HPE shares are falling despite booming AI demand and a raised outlook. We're going to speak with HPEC, our Antonio Neri. This is Bloomberg Tech. The The The Game Insight on the innovators, disruptors and tech driven trends shaping today's complex economy. I'm Carol Masser. And I'm Tim Steneveck. Wrap up your work day with the Bloomberg Business Week Daily Podcast. We bring you deeper dives into the story shaping your world from the evolution of AI to the shifting priorities of global business. Plus Silicon Valley power players and the latest tech trends. Catch up on the conversations you missed during the day. Subscribe to the Bloomberg Business Week Daily Podcast on Apple, Spotify or anywhere you listen.

35:12And what were the reasons behind that? What's changed? Well, good morning, Ed. Thanks for having me. First of all, we are incredible proud of the results we posted. And that result, the results are a reflection of the exceptional demand we see and the excellent execution by our teams. Which, you know, we think about the underlying drivers of that, they stront the money and twerking, stront the money and traditional servers, and expanded profitability. But what we are doing is raising the demand on the confidence on that durability, which give us the confidence not only to raise once again, you know, our guy for 26, but also the guy for 2027 on a bigger base. So for us, it's to continue to stay focused on that. And the stock reaction is day one, but look, it takes some time for investors to digest it. But we are not what about that generally tends to recover very, very quickly. Yeah, right now the stock's down 6%, which would be its biggest drop since late June, but it had been down 12%, which would have been the biggest drop since April of 2025.

36:19You talked about a specific contract with an unnamed hyperscaler. This is a market where people like want the detail. So I ask you, who is that hyperscaler? But what is significant about that arrangement that the market should be excited about it? Well, there were two news yesterday that I think the market should be very excited about it. One is the strategic expansion with Oracle, which will allow us to actually build a gigawatts scale infrastructure as Oracle continues to grow their AI footprint. And that will include all our HP Juniper products, meaning scale out QFX switches and scale across, which are PTX routers. That demonstrates the level of innovation and time to market with the latest technology. So you're very proud about that. And that's a driver into the future. And even in the business, we have not even considered yet the yet to be released, the Helios stack, which will include a scale up switches.

37:25On the cloud and AI, you reference to that multi-billion dollar deal with a hyperscaler. We cannot share the contract. Yeah, it is a traditional server contract. But interestingly enough, it's going to be used internally. So think about the hyperscaler as an enterprise customer who is going to use our servers to do their own AI inferencing for their own needs. And that's again another proof point that we have the technology to support any customer in any use case. So we are excited about both. And that's why we're posting the durability of the demand because the other trend that we have seen is huge growth in enterprise or not option of AI. Antonio, I don't know if it makes it any easier for you, but I did ask Jensen Wong about circular financing earlier this week on the show. In the Oracle arrangement, Oracle gets warrants. And so inevitably the questions are raised. Is this or is this not circular financing?

38:25The warrants we are providing actually scale with a amount of infrastructure we're going to build. So as more infrastructure gets deployed, the warrants come with it, which means strengthen the partnership between the two companies to grow together. And so we both will benefit. Is now the circular financing you're referring to, but is about incentism, both sides to grow together. Let's get away from the numbers and just ask what's the story here with what's happening in AI build out, right? When in video had it earnings last week, they gave a growth forecast that was modeled with supply, their ability to supply the market. And the status of demand running ahead of supply is quite well known. What is the situation for HPE? Is it such that you can say, okay, here is what we can comfortably supply or confidently supply to the world, but it would be greater worth supply chains improved?

39:26That is the same story actually. It is exactly the same framework. So if you think about Q3 results on revenue in the demand, obviously demand significantly outpace revenues. And that revenue growth was 34% in the quarter. And underneath that, if you think about networking, we grew 10%, but order demand grew 36%. So 3.5 times faster. But if you take a forward now, look, I have done 35 quarters as a CEO. Normally we put guides that we want to not only achieve, but beat. And that is the confidence that we factor in our supply chain ability to deliver on that number. So related to Q4, we're going to grow revenue almost $2 billion quarter over quarter. And then on the bigger base, we're going to grow 14 to 17% because we have negotiated multi-year agreements with our suppliers that actually brings the capacity that we need to deliver against that number.

40:28But the reality is that demand will continue to outpace supply. And that's a good thing because what we're doing, we're working with them, interlocking when the supply becomes available at the time into deliver that revenue and obviously the technology for them. HP, CEO, and Tony and Ernie, thank you so much for your time this morning on the earnings beat. Now coming up, Blue Origin turns to another Jeff Bezos venture for its talent. Really interesting story next. This is Bloomberg Tech. A framework for light touch regulation of AI has been agreed to by the members of the G20 out of a tech in innovation summit held in North Carolina. The so-called Carolina Principles, call for nations to apply sector-specific approaches to rulemaking, avoid creating new regulatory bodies for AI governments and urge closer collaboration between governments and private industry. Here's a comment secretary how Latinic on the need to embrace the AI build out.

41:29Basically, if your community embraces data centers, you're going to have great economics, you'll have more power will be built in the price of power in your community will go down, and you'll have the economic power of their paying taxes, and they're making your community better. So if your community doesn't embrace a data center, some other community will. A quick look at Tesla shares, up more than 7%. Now put some on track for their best day since late June, trading at their highest level since mid-July. Not really clear why. We know there's a big cybercab event in Texas, 540 PM Eastern time according to some Tesla staff that posted about it on X. We know that we're going to get a closer look at cybercab. They have a really limited robot taxi footprint right now in the city of Austin. Maybe we'll learn more. But for one reason or another the stock is really soaring this Thursday. This is a big one. Jeff Bezos' Blue Origin is turning to another one of his companies for talent.

42:32Over the last year dozens of veterans of the Amazon Leo satellite venture have moved to Blue Origin, according to their LinkedIn profiles. Bloomberg's Spencer Soap adjoins us with the story. I mean in some ways it's only natural isn't it? That's some alumni, some veterans of one Bezos space focus enterprise. Would jump to the other one or is it a surprise? Yeah, I don't think it would be a big surprise. I think what it highlights is if you look at the differences between Amazon founder Jeff Bezos and Amazon's current CEO Andy Jassy. Bezos definitely has a reputation for having a long term vision, an insatiable curiosity and a commitment to projects, to funding projects through their entirety. Whereas Jassy has a reputation as being more of a financial steward. He's going to watch the outflow, watch the investments.

43:37And he's going to be very mindful, like when are we getting a return on this and if it's not showing a return he's going to cut it. So I think that if you're a space engineer, you're just going to see Bezos as a more stable company. You know, Bezos is Blue Origin is a more stable place to be. Whereas Amazon you're going to feel like a piece of a disposable appendage. The other sort of leadership factor here is Dave Limp, right? So he was the devices chief Amazon is now the CEO of Blue Origin. How wide does this sort of Amazon alumni network reach a blue? Yeah, I mean there's an Amazon Kesselhorn shadow and there's a lot of people. And Seattle's still fairly small town, especially when you get into the field of rocket science. You know, you're talking tens of thousands of people in this profession nationally. So it is fairly small and there's connections. But I really think that Bezos versus Jassy is going to be a much bigger factor in people calculating their career choices than any kind of support and it's further down the balance between chain.

44:50Bloomberg spends the sofa. Thank you very much indeed. That does it for this edition of Bloomberg Tech. A few late minute editions, a lot going on and later today we're going to speak with open AICO Sam Altman 330 PM Eastern 1230 PM Pacific time. Do not miss it. Recap the show on the podcast. You can find it on the terminal as well as online on Apple Spotify and I heart. This is Bloomberg Tech. Hi, I'm Carol Masser with a helpful tip to keep you plugged in throughout the market day. Subscribe to the stock movers report from Bloomberg. These are short audio episodes, five minutes or less delivered right to your podcast feed. Stock movers fills you in on the day's winners and losers on Wall Street and tells you about the news and data that's driving those gains and losses. Why spend all day watching ticker scroll across your screen? Subscribe to stock movers today on Apple Spotify or anywhere else you listen.