Broadcom Expects AI Chips Sales to Top $100 Billion in 2027

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AI chips to top $100 billion next year to stock, pushing higher on the earnings.

Plus, Anthropic has resumed discussions with the Pentagon about the use of its AI models

by the US military amid a feud over safety details this hour.

An industrial software startup nominal is now valued at a billion dollars,

thanks to Series B funding, led by Founders Fund, we speak to the company CEO

and trace the events of Founders Fund.

First, we check in on these publicly traded markets.

Then once again, anxiety rips through, we're in a sick,

severe conflict with Iran and all prices are still suggesting concern,

Brent crude up 3.3%. So, supply chains being choked, we're going to get into that story later on,

Ed. But it means that we're seeing inflationary pressures,

worrying people about the Federal Reserve's ability to cut rates going forward.

We've got jobs data tomorrow, then that's at 100, down my 10th of a percent,

two tenths of a cent, let's call it Bitcoin of by more than 2%.

What are you looking at?

Yes, the difficult tension in public markets, the Iran War, but also earnings is there.

So, Brawl comes up 5%, it's a big game, but nothing sort of remark for

games recent history. The key data point is 100 billion dollars just in AI chip sales

in 2027, which is remarkable because in the current quarter,

they'll do about 10 billion dollars. In the quarter gone,

chip sales grew doubled basically 100% from a year ago.

There's a lot of momentum there, but it was a high bar, there's also anxiety about the

executing. We need to dig into it.

Let's dig into it. We believe we're going to actually support a run of

Lestellaker who goes to all the analysts, reports, the reactions to the numbers.

Are they buying this 100 billion dollar figure?

So far, it does seem like people are. People are pretty optimistic about the company's

position with AI. And a lot of the AI forecasts at Brawl come game, we're seen as much

better than expected. So there's certainly a lot of optimism. But like you said,

we're not seeing the stock really go on a tear here at the way we've seen in

past quarters when they're really surprised to the upside.

Part of this in the data is that there was an existing data point, a backlog of 73 billion

dollars relating to AI. And they seem to be getting a lot of credit by coming out and saying,

we have line of site quotes to this 100 billion dollars through 2027 or out on an annual

basis, 2027. Like, is that just what the street is seizing on? Did they make an assessment of

margins? Did they make an assessment of the other parts of Brawl Combs business, which is also

software? Yeah, I believe the software business disappointed, at least mildly, this past quarter.

But I think the focus really is on the AI side of things. I've spoken to people who say that

Broadcom just doesn't get the credit for its position in AI, especially relative to companies

like Nvidia. So this is obviously a very positive data point for them. Now, I think there are a lot

of just sort of growing concerns out there about, you know, capital spending on AI infrastructure.

Are we getting to a point where we're getting near peak earnings? There might be some of

that data sort of tempering some of the enthusiasm for Broadcoms results, but I think overall,

anyone who is just looking at the numbers should be pretty happy.

We're most right for the Lestelica who all morning in Chicago has been across dozens of

sales side notes and gave us the summary there. I want to talk more about Brawl Combs. Drampiney

advises Capital Partner and Portfolio Manager about $30 billion dollars that you manage for clients

and Brawl Combs at top three, right, in terms of holdings. It's really interesting the direction

of ASICs and Custom Silicon. How do you go from $10 billion dollars of sales in the current quarter

to telling your investors, oh, by the way, next year, in excess of $100 billion dollars just in chips?

That's believable to you. Yeah, it's an incredible ramp. I had a lot of no question about it,

but when you look at the history of Broadcom, we've owned this stock for clients since I arrived at

the firm in 2015. It's been a core holding, it's been a leading holding for many of our strategies

on the equity side because of several things. One, they've always managed to maintain a deep

moat in their products relative to the competition, whether it was for iPhone ships or storage or

elsewhere, and their acquisitions have generally led to better cost savings than folks have predicted.

And now with the diversification into software, and that continuing to do well through VMware,

you know, they have recurring revenue streams through the software side which helps maintain margins,

and they've shown their ability to execute. The fact that they've locked up capacity through

2028 tells us how good their visibility is. So I want to seize on that part. A lot of people

ask me like, what is it that Broadcom actually does? So if you take Google's TPU, for example,

they co-design the architecture, make it a manufacturable chip, but Broadcom is fabulous, right?

And so that bit you just said, as far as I can tell, the value is not just in the design of the TPU,

which they've been discussing about in recent years, it's the ability to scale and get it to

market scale. Is that how you look at it? Yeah, that's definitely part of it, Ed.

You know, their ability to work well with TSMC. I mean, it's not just up to TSMC to get these

designs to work. It's very much a coordinated process of design with the manufacturing capabilities.

So they have shown that they're very effective in helping TSMC get to high yields, and that's

behind the scaling capability. But it isn't just the TPU or the XPU. It's also the fact that

they're selling the networking technology along with these chips. And in fact, with networking

expected to grow faster, they're selling networking devices beyond their six customers to the broader

ecosystem of AI-based data centers. They're becoming even more like Nvidia in terms of just a full

stack offering. And in many ways, going for the key competition that is designing the chips for

the meta for the open AI, did you get enough certainty that that relationship with meta

is really strong, that they are going to be able to ramp in the way that they expect for open AI

and these companies that want to build their own and not just wholly rely on Nvidia?

You know, I think one thing we know about Broadcom is that they work very closely with their

customers. And that is what has given them visibility in the past, and it's that visibility

they're pointing to now. They work on multi-year road maps. And so, yes, when they say that meta is

continuing to work with them, you know, that seems like a reliable piece of information. There

was a lot of information on last night's call. But, you know, beyond what Nvidia does,

the networking capability that Broadcom brings to the table allows their customers not just to build

right around the chip, but also to the connectivity to other parts of the server in the data center.

And that's, you know, that's a different line of products. And then you look beyond just the AI

business and you've got software that is separate and storage and other, you know, iPhone and

other technologies gives them a more diversified positioning relative to Nvidia. We like Nvidia.

We've owned it for a long time for clients as well. And we think it's going to continue to grow.

We think the pie is expanding so much at this room for both of them. But the visibility that Broadcom

articulated I think is really compelling. And I think that's why you're going to see the analyst

community get more on board and raise those estimates. Can you talk a little bit more how

complimentary it is to have the hardware and the software offering? Why VMware matters?

Yeah, so, you know, the, you know, the role of the enterprise software is to not just be able to,

you know, run AI for your company and use other AI models. But it's to integrate those,

you know, capabilities of AI to deliver insights into how you run your businesses, right? And so

that's, it's not enough just to have the information, right? You've got to then pass that information

through to your enterprise software to enable you to change the way you're doing things within

the business, change the way you're serving customers. So that's the integration that, you know,

that they articulate and I think is a pretty compelling story.

You know, Hock Tan historically has been Mr. M&A, right? And I look at how Nvidia has kept itself

in the lead, not necessarily outright acquisition, but investments, you know, licensing agreements.

Do you see Broadcom doing more of that, Joanne?

I'm not sure which direction you're going in with that one, Ed. Do you see Broadcom continuing to

look for M&A opportunities? I mean, right now it seems like they're flat out in terms of, you know,

co-developing these XPUs. I don't know if they currently have the bandwidth to do any major M&A.

They're, you know, using up their capacity allocation at TSMC for what is clearly a high growth,

high margin opportunity. But one thing they have done in the past regularly is when any one area of

their business got too large, relative to the rest, they'd go find some other area in which to

invest, in which to bring in into the company. So, you know, maybe over the next couple of years,

I would see that as a possibility. I don't see it as imminent.

At the moment, they're investing in their shares and buying them back to Anthony of advice

as capital. This was great to check in with you. Thank you. Now, let's turn to private credit now,

because BlackRock, it's marked down its loan to infinite commerce holdings to zero, from 100 to zero,

just three months. In fact, if that company's dead at a hundred cents on the dollar, look,

the roughly 25 million dollar loan to the so-called Amazon aggregator is now considered worthless,

marking the second sudden wipeout to hit BlackRock's private credit division in recent months. What's

interesting about Infinite Commerce, Ed, is it's also VC backed. And look, they're saying, BlackRock

saying a lot of this business was written in 2021. Well, we just think about what the venture

community has got in terms of liabilities to 2021 equity and where that currently trades for them.

This is Caroline Hyde's stomping ground. So, I'm being a bit careful in going to the key risk

in private credit, but the thing is that when you have a loan to a private company, it doesn't

like trade every single day. The valuation kind of lags. And so, before you know it, if something's

gone wrong, then you get the piece of news that you just read out. That's kind of how I understand

the market at least. But what's interesting is another credit offering, or another partner that

had been lending to Infinite Commerce, they marked that loan down in December. So, maybe BlackRock's

will explode to it. Most red story on the Bloomberg, and no surprise. I'm coming up in the

program talks resume between Andrew Toppick and the Pentagon over the military's AI use. We have

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So there's a lot of noise about AI, but times too tight for more promises. So let's talk about

results. At IBM, we work with our employees to integrate technology right into the systems they

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IBM. Anthropic. Well, it's resume talks with

Pentagon over how its AI models are used by the US military. Now, that's according to a source.

It follows a feud between the two sides that had seen President Trump threaten to actually

blacklist the company. Let's get more Bloomberg tech editor, Seth Figerman. And Dario Amadeh had

taken this dispute into the public realm. Now, we understand perhaps the retorks going on in private

again. Yeah, it feels like some of the public rhetoric, which on both sides has sounded pretty

fierce. May not be reflecting what's going on behind the scenes right now. Now, we're going to know

how much closer they are to an agreement here after the standoff last week. But it does suggest

that on Anthropic side, there's a cloud of uncertainty now over its business. And for the Pentagon,

we've known throughout that they've leaned pretty heavily on this model and there's been calls

both within the defense industry and into looking value trying to de-escalate the situation.

So I guess we don't know what a resolution would look like yet, right? Because you just go back

and explain what the point of difference was originally between Anthropic and Anthropic's

red lines were. And why the Pentagon, I guess, labeled them as supply chain risk.

Yeah, I mean throughout Anthropic has been pushing for two key red lines first on protections

against mass surveillance of American citizens and the other on deployment of autonomous weapons.

It seems like throughout the negotiation, they've gotten close. There have been stipulations

on the contract that get close to it, but there have been certain wording differences that might

be nuanced to us, but which Anthropic seems to feel are key to ensuring their appropriate safeguards.

Bloomberg's AI editor, Seth Figman, thank you very much. Let's stick with AI,

because data centers have proven to be a target in the Middle East conflict, the war in Iran. A

modern version of the wartime strategy of attacking an opponent's critical infrastructure.

Bloomberg's Lonnie Prince Lou is one of the reporters who's been looking into this and joins

us now. Really, we're showing kind of the map right now of the infrastructure impacted,

but there are key sites in the United Arab Emirates and in Bahrain. Bring us the latest reporting

on what we know. So basically, after the Israeli and US strikes, Iran retaliated and they hit

three Amazon sites in the UAE and Bahrain. The other way around, there was also two sites hit

in Iran, or what we know of, according to our reporting. And what this tells us is that data

centers are becoming as critical and as strategic as oil and ports when it comes to war and the

functioning of the state during war times. So why, yeah, yeah, yeah, and why were Amazon specifically

hit? They are, of course, wholly owned by the US software company and there's been some reports

that they may have hosted some military data. This is a frightening story and at the moment,

we're seeing breaking news around the UAE telling to buy residents to seek shelter immediately

due to missile threats. We go back to, therefore, what operators of strategic infrastructure should do.

How can these operators protect data centers right now and the people within them?

So obviously, you have to evacuate some of these or operate on minimal staff.

Going forward, I think you have to treat it as a military priority. So hard in your infrastructure,

which is very costly, maybe build underground in bunkers and caves. But it's going to be,

have to have some sort of rethink as we go forward and think about data centers and how critical

they are becoming also during times of war, what that means. Rainbow's, Lonnie,

Prinsler, thank you so much for joining us on this important story. Meanwhile, coming up,

we're going to talk more about logistics and the logistics firm, CH Robinson, joining us to

talk about integrating artificial intelligence into systems and dealing with an AI scare trade,

not to mention what's happening with logistics in the Middle East. This is Rainbow Tech.

War in Iran has put pressure on global supply chains. In recent weeks, global logistics stocks have

also been hit like other sectors by the AI scare trade. But one name that's been given some credit

in the markets for its AI integration is CH Robinson. How is the company managing both of those

disruptive events, Dave Bozeman, the company CEO joins us now here in San Francisco and you are

in town with a big focus on AI, in terms of who you're meeting with. But when I talk about

CH Robinson, your job is to move goods from point A to point B. So let's start with the conflict

in the Middle East. What are you seeing? How is it impacting you day to day so far?

Well, first of all, thanks for having me here. One thing that's happening right now is disruption

in our industry is a reality. Global disruption is a reality. And this is just one more thing that

we're seeing and that we are navigating with our customers. We're obviously seeing, you know,

the airports within the Middle East are shut down. It was an estimate of about 10 to 13 percent

of that capacity being affected. Which we're going to have freight in that context? Correct.

Air freight out of the airports out of the Middle East, the straight of Hamus has obviously been

affected. And that's caused some rerouting of ships around the Horn of Africa and just slowing

down overall shipments within that disruption. But again, it's something that we deal with.

We've dealt with it before and we'll help our customers navigate through that.

This is a technology show, but throughout the week we've been looking very closely at energy.

You know, is there anything specific in distilled that you can tell us about in diesel,

in other markets that impact your operations really? No, obviously it's more of a weak issue.

We look at oil prices really down the line. Obviously we have carriers that can be affected

by potential prices down the line, but that's something that we just keep an eye on. Not

something that is affected us right now. So let's talk about how with the 100,000 of goods that

you're delivering every single day, Dave, how AI and in particular lean AI as you see it supply

chains, helping you in this situation. Yeah, Caroline, we are essentially and we are in town for

a tech conference and when industrial being invited to a tech conference and we feel really good

about that. And we essentially operate like an industrial or tech built company in an industrial

space. We ship 37 million shipments annually and we have 75,000 customers that we deal with

at Robinson and relationships with hundreds of thousands of carriers. And AI has allowed us to

really disrupt the industry and disrupt ourselves by, by the way. And we feel good about that.

It's going to the bottom line because we have real customers, real shipments and real data.

And that's allowed us to have a productivity increases of 40% since the end of 2022.

And it's just going to the bottom line. We're at the end of the day, we're the end user

beneficiary of AI. There's a lot of talk right now, but a company like Robinson benefits from that

in the industrial space. I mean, that talk just taken me back to February the 12th when you saw

your stock plummet about 12% because there was talk that some karaoke company that's pivoted into

the world of AI logistics was suddenly going to eat everyone's lunch, Dave. How do you ground

shareholders in the reality? What is it you show that the innovation keeps on coming and that

you're disrupting yourself and not allowing others to come and take that share?

Well, Caroline, I look at that as perception and reality. And we're the reality in that space.

It's Robinson and not perception. You have to have real tangible things. And for us,

our tangible things are our data. It's our engineers that we are a builder, not a buyer.

And we have things that are going to the bottom line. I was really, really pleased that our

investors, the analysts, the banks, really came out and said it's Robinson that is actually

the disruptor. And this Robinson said that should be up on this news. And we agree quite frankly.

I'm trying to get a sense of what happens next for you a little bit.

We accept AI lowers costs. So you have to make a decision. If they're lowering your costs,

do you keep that for yourself or do you do something with customers? And then you look at

your capex specifically for tech. Where's that going? You've got to keep spending through it.

Yeah, this is amazing when you think about it. First of all, AI is driving that

efficiency and it just gives us that more competitive mode that we have. It's a deeper and wider

competitive mode. If you look at the numbers, being an end user, AI play, a fun fact for you,

our usage is up 85x. 85x. 80, 85x. We're up on our usage, but our costs are only up one and a half

ax. And so we get that benefit of that end user. We don't spend a lot. Our token cost is a

little less than a million dollars. And so it's really about token costs for us, the agents that

we build essentially have a marginal cost of zero because we are internal builder. And so all of

this continues to drive a competitive, deep mode for us that is super hard to replicate.

That chart we're showing is what the credit I was talking about that you're getting for being early,

early movies and AI. Okay, so two events we have a conflict in the Middle East and we have AI

with disruption, but I know that our colleagues in research in particular like want to understand

where we're at in the freight cycle. And whether those two micro events or maybe macro events

have changed the trajectory of what your industry was seeing. Yeah, well, first of all, with 75,000

customers, we see a broad impact of what's going on in the world. And right now what we're seeing is

with the disruption, again, this has not been the only disruption, there is some caution

from customers that they have on doing that. And for us, we watch two things. You have to watch

capacity, which we've seen some tightening in the cost of carriers. But then there's the demand

side. And specifically, we look at housing, retail, manufacturing and automotive. All of those have

been somewhat muted. And we're really looking for those to be up and to the right. No major green

shoots on that certainly disruptions can affect that. But we're watching that and at Robinson,

it doesn't matter. We have a system that wins at the low and we have a system that certainly

will win at the high and we're excited about it. And you've got more AI agents as well with Quinn.

Come back and talk to us about those in the future. Dave Bosman, CEO of CH Robinson, enjoy your

time on the West Coast. Thank you. Now coming up, China. It bolsters its AI ambitions. More on that

next. This is Blue Meg Tech. Welcome back to Blue Meg Tech. Another day of macro that affects

the tech markets. Look, we're in a six day of conflict with the Middle East. We've also had some

resilient jobs data here in the United States with jobless claims. We've got non-farm payrolls

as soon as tomorrow. The market trying to digest what the reality is of the Fed being able to cut

into this perhaps more inflationary environment. We're down six tenths of a percent. Big tech erodes,

but there are some single names I want you to shine a light on because if we are on the upside,

we look at Broadcom. We're up almost five percent for this name. Look, there are numbers shining

a light doing better in terms of earnings. But really, it's the $100 billion commitment that we're

getting from the CEO, Hawksown. $100 billion in AI sales by 2027 up from just 20 billion in 2025.

The market likes that. Also, the share by-back. I'm looking at booking.com, up 7 percent. In fact,

the zoo hosting this could be a waterloo moment. If there are reports out that chat GPT is not

going to have a pay for in chat GPT, but actually go to chat GPT apps to end up buying your booking.com

or other e-commerce plays, that could mean much better news in terms of disruption for companies

like this in terms of generative AI. I'm looking at JD.com by 1.8 percent. First loss in four years

for this giant in e-commerce ed and we're talking China a little bit more now.

Yeah, because overnight shares of Chinese AI chip stocks were on the rise. In its latest five-year

plan draft, the Chinese government announced a pledge to speed up AI chip development and some of

those names are familiar to you, right? We've been talking about them at least in the recent quarters.

Bloomberg senior tech editor Mike Shepherd joins us now. The idea of the Chinese government having

policy support for the chip sector domestically is not new, but I guess we now put some flesh on

the bones of that plan in this draft document. What's the kind of need to know on what China plans to do?

Well, we did see a little bit more flesh on the bones ed and of course this also is part

of an effort really underway since 2015 to shift from low-end manufacturing to higher-end

manufacturing and especially when it comes to advanced technology. And chip making really is at

the center of that. They really want to wean their dependence on US designers and providers like

Nvidia and like advanced micro devices for those chips that would be powering artificial intelligence,

which is an area that China has also, like the US, stake the claim in. And this is giving wing

to companies like Canbercan, like Moores and others that have really tried to make leaps and strides

in this area of AI chips. We can look for further subsidies and further scientific support area

in areas to help these chip makers. And it's not just chips, though. This is an effort that also

focuses on robotics. It also focuses on batteries as well and rare earths and those are three areas

where China already has a bit of a global edge and it's even showing that it may use its

advantage in those areas as potential choke points in negotiations with trading partners like the US.

Talking in the US, now what China has also got leaps and bounds more of than the US is energy

many would say. And the ability, therefore, to not have to pass on costs of energy to consumers

when they ramp up their data centers. That's something that's front and center here in the US.

Just want to go back to what President Trump said just yesterday having met with some of the leaders

tech CEOs in Washington about those energy costs. Take a listen, Mike.

Under this new agreement, big tech companies are committing to fully cover the cost of increased

electricity production required for AI data centers and that would be prices for American

communities will not go up but in many cases will actually come down and very substantially.

What was committed to yesterday, Mike? Well, it's a great question, Carol, because the commitment

is really something on paper that sounds really big sounding that they will buy or build any

additional power that they need for all of those AI data centers that they are pushing as part

of the artificial intelligence boom. They will also work with states and localities on rate

increases that might be affected by whatever they are trying to build in the way of all that

data center infrastructure. And they have also committed to fund any additional grid or other

infrastructure that would be needed to support all that additional power supply. There is a catch

though and that is that none of this is really binding. What the company signed doesn't really

have teeth in it from the federal government to actually force them to follow through on any

of those pledges. It will really be up to states and the utilities to actually enforce

any of that compliance on the ground either through regulation at the state level and we have

seen that in New Jersey with the freeze on rate hikes or in the negotiations over rate increases

by utilities. Now one of the other big questions is on the states side and that is permitting.

And a lot of these companies that were present yesterday that included meta,

Microsoft and OpenAI. They all are interested in building their own power sources near those data

centers. But what they need is support on the states side to try to speed the permitting. And

that was another question that was left open during yesterday's conversation.

But it was also a central tenet of the AI Action Plan published last July which

Shep, you and I went through in some detail right, we'll get to it later in in the week.

Bloomberg's Mike Shepard, thank you very much, Carrie. Plenty of other news headlines today.

There it is, and it's time now for talking Tehrgett. First up,

NIC owner, NYSE owner, into the continental exchange. The acquiring stake in a cryptocurrency

exchange operator, OKX. In a deal that values the digital asset platform at $2.5 billion. Now

according to the statement seen by Bloomberg, ICE will get AC on OKX's board. Financial

terms are not disclosed. Now, shares of StubHub are plunging today. After the ticket reseller

posted fourth quarter results and 2026 outlook, the fell short of estimates. Now, and I say,

comparisons are particularly tough this year. Noting the absence of one Taylor Swift tour that

boosted sales in the prior period, at least two firms have downgraded the stock.

And Aura Health is acquiring gesture recognition startup, double point technologies.

CEO Tom Hales says the deal will help shape the future versions of Aura's smart rings,

potentially adding controls powered by voice and hand gestures. Terms, they weren't disclosed

dead. OK, coming up nominal CEO, Cameron McCord, and found his fund partner, Trace Stevens,

joined us to talk about the startups' latest fundings. But also the effort to modernize

US manufacturing through software. This is Bloomberg Tech.

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So there's a lot of noise about AI, but times too tight for more promises. So let's talk about results.

At IBM, we work with our employees to integrate technology right into the systems they need.

Now, a global workforce of 300,000 can use AI to fill their HR questions,

resolving 94% of common questions. Not noise. Proof of how we can help companies get smarter by

putting AI where it actually pays off. Deep in the work that moves the business.

Let's create smart to business. IBM.

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Industrial software startup Nominal has raised an $80 million series be extension led by Founders

Fund. That brings the company's valuation to $1 billion at a time when the US is increasingly

focused on modernizing and rebuilding its manufacturing capabilities. Cameron McCord, CEO of Nominal

and Trace Stevens partner of Founders Fund are with us here in San Francisco. A lot of people say to

me, I think you and I have discussed this in the past as well, that the industrial sector kind of

missed cloud and the cloud revolution, and if I was to try and summarize what it is you want to do,

you want to build the platform that would account for that. An easier place to start would be like,

why did you need to raise more funds to do that, to move more quickly?

Yeah, well, thank you for having me. We've been busy since the last 10 months when I was in the

studio for our last financing. So we're building a platform for hardware testing and operations,

a fully integrated solution for the modern era. Frankly, we hadn't touched the 75 million of

capital that we raised earlier last year, but when Founders Fund approaches you, they approached us

late last year with an offer to lead a premium to financing. I think you take it very seriously.

They have a really unique position and vantage point in the industry, particularly for companies

building hardware, and I think particularly an interesting insight into the work that we've been

doing with Andrew, particularly which we announced a few weeks ago. So this is the join up.

It was Trey that phoned you, presumably. This is the intersection of what you're working on every day,

right, with Anderill as executive chair, but also the types of companies you invest in through Founders

Fund. I always note you separate those two when it comes to Anderill and Founders Funds backing

of them. But what was the thesis for you with nominal? Why did you think that this was an important

name to to back? Well, you know, there's been an explosion in enterprise SaaS. There's an

literal, infinite number of companies that you could bring on to help with enterprise software

kind of problems inside of an organization. But any reasonable, efficient organization is going

to take an approach of trying to cut as much of that out as possible to minimize the spin for

for the org. So there are no nice to have. Nice to have enterprise software is not good.

At Anderill, you know, we have an incredibly intense process coming from my co-founder,

Matt Graham, and our chief information officer, Tom Bosco, who are constantly trying to weed out

all of the excess spend. But in that same process, you come across software that's critical,

things that you really, really need that are worth the money, it's worth the time and effort.

Nominal is one of those products that we use inside the enterprise. We were already investors

at Founders Fund, but it certainly increased the conviction when you know that an organization

that I obviously worked day to day very closely with was adamant that we needed to have our hands

on this. Cameron, your background is fascinating. And also, what's notable is how you talk about

this mission critical necessity for the software that you're building at the moment. I mean,

front and center is the geopolitical issue that currently confronts us. How are you seeing

engineers leaning on the software at the moment? How much are you thinking about this being ever

more integral? No, thank you, Caroline. Yeah, I think we think of Nominal as building very

serious software and building on Trace Point in an era where the last two decades saw a lot of very

unserious software optimized for.com, you know, era, signups, clicks, etc. But the engineers that

use Nominal and trust it every single day, they're instrumenting hardware, they're automating very

complex tasks, they're watching their hardware systems deployed in the field in operations,

and so it has to work. It is the definition of mission critical, especially at a time when

that's, you know, increasing and the world is moving faster and faster. Automating complex tasks,

Tray, that is at the heart of a disagreement that's currently upon us with Anthropic and the

Pentagon, and we know that conversations have started again in private between those two entities.

But how do you think about some of the ethical confrontation that consumer-focused AI,

enterprise-focused AI is currently being confronted with with its use in the military? This is

something you've had to think about first and foremost ages ago with Andrew.

Yeah, you're absolutely right. You know, being able to give our warfighters the capabilities that

they need to be successful, not only in deterring conflict, but in winning conflict if we would,

you know, get to the point where we need to do that, is incredibly important. And I think there's

nothing more ethical than engaging in good faith with our institutions, our democratic institutions,

to make sure that American companies, leading American companies, leading American technology

companies are sitting alongside in partnership with those democratic institutions. So, you know,

super proud to do that at Andrew, and I know Cameron is super proud to do that in nominal as well.

I'm trying to think how we can talk about what's happening in the war in Iran, in the context of

what normal actually does, right? The defense sector is a part of your customer base. And what I've

been trying to understand when nominal is, is it the software that's, that is helping to manage the

asset that is the factory or the output of the factory? Like that's quite an interesting distinction

because throughout the week we've been talking about the rundown of short-range, long-range

munitions, the different technologies of the play in Iran. How would nominal help make that process

better? Yeah, really Ed, we were trying to own the end-to-end process, so really everything from

the end of a manufacturing production line through to the experimentation R&D sort of lab

testing of those systems and then the end deployment. And a lot of the thesis behind nominal is

those have become very siloed operations, and you gain huge efficiency, speed, scale, reliability,

if you actually can link sort of with a common data platform that entire process. I always say,

I said this last time I was on the show, the biggest I think tester and validator of advanced hardware

systems is the US Department of War, and we're very proud to support that mission. For us it's

we are an engineering tool, you know, full stop, and so we try to give those who needed the best

most modern tools to support their mission. Try you, you are the executive chair of of

Anderil. Can I ask simply if any Anderil technology has been deployed or used in Iran,

and what the footprint is there, and also where nominal kind of fits in in managing that process?

Yeah, I mean we have all sorts of primarily counter-air systems that are present in conflict zones,

so we are actively working day to day with the department in ongoing operations.

Obviously can't give a whole lot of details beyond that, but you know this is kind of one of the

challenges of building a defense technology company is that you don't build for the wars of

yesterday or the wars of today. It takes time to integrate these things into concepts of

operations, so the work that we're doing in the region is work that we've actually been doing

for a long time. It's not that we just showed up, you know, in the moment of the conflict,

and I think that a lot of this goes to the test and evaluation operations is, you know,

getting to preparedness so that you're not just building a technology demonstrator, but you're

building something that is resilient, and that is going to work in times of conflict that requires

a lot of reps, and it's much harder to do than it is with just doing like a sim for software.

These things have lives and, like, they have human lives involved in them, and you can't afford to

make mistakes, so, you know, we're super proud to partner with nominal to make sure that we're

ready. We're ready for a game time when that shows up, like it has an Iran.

Drake, can I also ask you, Bloomberg reported this week that Andrew is looking to raise about

$4 billion with Andreessen and Frive co-leading the round. A comment on that, but also what is it

that Andrew needs funding for right now? You're building in Ohio, you're expanding in California?

Yeah, I mean, you know, the challenge is going from being a defense technology company where you're

building thousands of things, to being a defense manufacturing juggernaut where you're building

tens of thousands of things. I can't think of a whole lot of companies in the last 20 years, new

companies that have set up mass scale manufacturing. Maybe Tesla is the only real example. Andrew

is on the path to, you know, trying to be number two in that space, and that's going to require

a lot of capital, and it's going to require partnership from the department to get that off the

ground, which is the Department of War, which is where we are right now, and it will require

partnership with companies like nominal as well, to make sure that we are fielding capable systems,

and we're scaling in a way where we're delivering a functioning capability rather than just a technology

administrator or a prototype. Cameron, I reference that you had a fascinating background. You worked

at Andrew and yourself. You've been an investor yourself at Lux, you've also been heading up

sailed drone as well, the defense, you were head of defense for sail drone on autonomous maritime

companies. So you've been thinking about all of these questions that currently investors,

builders, and the community writ large are thinking about, how, what was the signal you think

has been sent by the Pentagon with its feud with Anthropic, and how does it make you feel building

alongside the government at the moment? Yeah, I think, you know, we, at nominal, we think a lot

about where AI will intersect with our technology area, and I think the, the unfortunate reality is

in the industrial sector and the hardware world, much of the software and technology is so antiquated

that it is just now, I think, becoming AI ready and AI adjacent, and we are working to help a lot of

our customers, you know, operationalize that technology. I think in terms of partnerships with

the Department of War, the messages that we get loud and clear are, you know, speed and scale

or paramount. And nominal plays a huge part in helping all types of, you know, companies

feel those systems to meet that resilient need. Camera record, CEO, nominal, and indeed,

Trace Stevens, partner at Founders Fund, fascinated to have you both join, we really appreciate it.

Now coming up, Elon Musk is putting millions into the Kentucky GOP primary. How is it bang off?

That's next, this blue bag tech.

Elon Musk told a jury that his 2022 post about putting plans to buy Twitter on hold was not one of

his wisest. Musk was testifying in a trial, alleging he purposely drove down Twitter's share price

during his negotiations to buy the company. No, it's not the first time that Elon Musk has his

social media posts sort of raked over the calls like this. No, this is a long running thing.

And in fact, often in these cases, his best defense is that he tweets a lot and, you know, his tweets

are not always taken seriously. And, you know, there is something to that. That, of course,

came up during the funding secured dispute of 2017 or 2018 when he threatened to buy out Tesla and

then was accused of not having the money. So I think it's going to be the same story we've

seen over and over again, which is just that he has a tendency to speak his mind. Let's put it

mildly on Twitter in ways that sort of don't follow traditional securities norms or sometimes rules.

Max, last August, you and I tried to dissect what the net result was from Elon Musk going into

the White House. Your latest for business week is, again, like his financial backing of certain

races this time in Kentucky. Like, what's the learning here? What are you writing it? Well, so top

on it, I think that the Musk Trump alliance is very much back. Now, maybe things are uneasy. A

little not as kind of friendly as they were when he was, you know, constant access to the Oval Office

and his child was kind of clowning around with the President of the United States. But he is certainly

in the, you know, in the circle of friends. Now, this race is interesting because the candidate

that Elon Musk is backing, Nate Morris, is very close to JD Vance. My sense is that Elon and

Nate Morris do not have any, you know, pre-existing connection. This is really a JD Vance thing.

He is kind of backing the person who is close to JD Vance. And when you look at this race,

it is kind of like a miniature version of the JD Vance thing. You have a candidate in Kentucky

who is very well connected with tech donors. Nate Morris also connected to Peter Teal. He started

a tech company called Rubicon, which was the Uber of Trash. But not necessarily hitting an off

with voters. The polls, I'll just say, have been a little bit spotty, including after this huge

infusion of money from Elon Musk, $10 million has gone into Kentucky advertising.

So do we think it's going to be effective? Have we dissected whether it's effective in the past?

So far, it hasn't paid off. But I'll say number one, there are a lot of undecided voters.

When you look at the polling between 20% and 40% of the voters in Kentucky are still undecided.

So maybe they've seen a few ads, but they haven't made up their mind. That is one potential factor.

And the other potential factor, and this is huge, cannot be underestimated, is Donald Trump.

A lot of these races are essentially running for Donald Trump's endorsement. That was JD Vance's

plan. And I think that's Nate Morris's plan here. And the truth is that part of what Trump is

looking at is can you raise money? And so that is something you can do with the world's richest man.

You can, Max Chaffkin, across this for Business Week and for our show, we appreciate it. That does

it for the decision of Bloomberg Tech, Ed. Yeah, check out the pod. You know where to find it.

From New York City and San Francisco, this is Bloomberg Tech.

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