Bloomberg Audio Studios, podcasts, radio news from the heart of where innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.

Bloomberg Audio Studios, podcasts, radio news from the heart of where innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.

Live from San Francisco. This is Bloomberg Technology coming up. US President Trump accuses China of violating an agreement with the US to east tariffs, escalating tensions between the two countries.

Live from San Francisco. This is Bloomberg Technology coming up. US President Trump accuses China of violating an agreement with the US to east tariffs, escalating tensions between the two countries.

Plus sales of Apple's.

Plus sales of Apple's.

iPhone are set to take a big hit from Trump's new tariff policy. We get into the numbers and we speak with the CEO of AWS as the leading Hyperscala runs faster on a What a week it has been in the world of technology.

iPhone are set to take a big hit from Trump's new tariff policy. We get into the numbers and we speak with the CEO of AWS as the leading Hyperscala runs faster on a What a week it has been in the world of technology.

I'm looking at the Nazak one hundred.

I'm looking at the Nazak one hundred.

It is a megacap and technology heavy index, and over the course of the week we're up a percentage point. We're actually lower in Friday session, but this is a rebound from last week where earnings and that tariff story have been the driver of the markets and the headlines. There are two names in particular that we have been so focused on. Those names are in video. Of course, we had earnings twenty four hours ago, thirty eight hours ago, forty eight hours ago, and then we spoke to Gensen one. It's giving some of the gains that it had seen back, but there is a big question still about China and cross border trade of the lead edge technology. And then Apple again softer four tens and one percent just twenty four hours ago, and Video was the world's most valuable company. Apple had regained some status as a three trillion dollar club.

It is a megacap and technology heavy index, and over the course of the week we're up a percentage point. We're actually lower in Friday session, but this is a rebound from last week where earnings and that tariff story have been the driver of the markets and the headlines. There are two names in particular that we have been so focused on. Those names are in video. Of course, we had earnings twenty four hours ago, thirty eight hours ago, forty eight hours ago, and then we spoke to Gensen one. It's giving some of the gains that it had seen back, but there is a big question still about China and cross border trade of the lead edge technology. And then Apple again softer four tens and one percent just twenty four hours ago, and Video was the world's most valuable company. Apple had regained some status as a three trillion dollar club.

We're under pressure. Now. Here's the top story.

We're under pressure. Now. Here's the top story.

China's planning to allocate seventy billion dollars of capital in a new effort to fast track new infrastructure projects and up its own economy from ongoing US tariffs.

China's planning to allocate seventy billion dollars of capital in a new effort to fast track new infrastructure projects and up its own economy from ongoing US tariffs.

That's according to sources.

That's according to sources.

Meanwhile, President Trump reigniting those tariff war concerns, posting on True Social that China has quote totally violated its agreement with US or US, offering no details of what agreements China could have violated. Let's get more from Bloomberg's Mike Shephard. Do we know what the president is talking about here?

Meanwhile, President Trump reigniting those tariff war concerns, posting on True Social that China has quote totally violated its agreement with US or US, offering no details of what agreements China could have violated. Let's get more from Bloomberg's Mike Shephard. Do we know what the president is talking about here?

Well, we haven't gotten a clear signal from him directly about what had set him off this morning, but we have seen ed over the past few weeks since that sit down in Geneva, between Treasury Secretary Scott Besson and his Chinese counterparts signed that that little agreement that that daytime that they had forged there in Switzerland was starting to come apart. The Chinese government had objected to some export controls that the US has increasingly been applying to China, keeping advanced technology from getting in there, And of course this has been a sore spot for Beijing for years, with limits on exports of semikins, but they have been escalating, and in more recent weeks we even saw the US go after makers of chip design software, telling them essentially, you can't sell to China without violating our export restrictions. So that is something that already Beijing was seeing as a violation of the spirit of those conversations. We had heard that a week ago, but now today we hear from the top US trade negotiator Jamison Greer talking about rare earths and critical minerals. And during that discussion in Geneva, the two sides had agreed that Beijing might lift some of the barriers that it had placed in retaliation for US export curbs on exports to the US of critical minerals.

Well, we haven't gotten a clear signal from him directly about what had set him off this morning, but we have seen ed over the past few weeks since that sit down in Geneva, between Treasury Secretary Scott Besson and his Chinese counterparts signed that that little agreement that that daytime that they had forged there in Switzerland was starting to come apart. The Chinese government had objected to some export controls that the US has increasingly been applying to China, keeping advanced technology from getting in there, And of course this has been a sore spot for Beijing for years, with limits on exports of semikins, but they have been escalating, and in more recent weeks we even saw the US go after makers of chip design software, telling them essentially, you can't sell to China without violating our export restrictions. So that is something that already Beijing was seeing as a violation of the spirit of those conversations. We had heard that a week ago, but now today we hear from the top US trade negotiator Jamison Greer talking about rare earths and critical minerals. And during that discussion in Geneva, the two sides had agreed that Beijing might lift some of the barriers that it had placed in retaliation for US export curbs on exports to the US of critical minerals.

So there is a bit of.

So there is a bit of.

Tit for tat that we are seeing here, and it may be bubbling over in the form of Donald Trump's truth social feed here today.

Tit for tat that we are seeing here, and it may be bubbling over in the form of Donald Trump's truth social feed here today.

Yet Yeah, I'm reading the news on the Bloomberg terminal, and I go back to what Michael Kratsios, who runs the White House Office of Science and Technology, right told us. The policy from this administration is promote and protect. Protect is the tariffs bit right. Promote is on shoring and stimulus for the tech industry. China is doing the same thing, right, It's trying to drum up some money seventy billion dollars we're reporting for its own industries in China.

Yet Yeah, I'm reading the news on the Bloomberg terminal, and I go back to what Michael Kratsios, who runs the White House Office of Science and Technology, right told us. The policy from this administration is promote and protect. Protect is the tariffs bit right. Promote is on shoring and stimulus for the tech industry. China is doing the same thing, right, It's trying to drum up some money seventy billion dollars we're reporting for its own industries in China.

What do we know about that?

What do we know about that?

Well, And that's a good question, and I'm glad you brought that up, because it's unclear whether the administration here is responding to that report of additional Chinese stimulus toward artificial intelligence and other high tech projects that they have planned as a way to spark their economy and make sure that they have some domestic demand to satisfy the industry that is trying to cultivate. But nonetheless it would not sit well with the US administration here because they are trying to bring some of that manufacturing to American shores to try to build up the American tech manufacturing base. We've seen so much of it, especially in semiconductors over decades, move to Asia, and Donald Trump there's been applying pressure to none other than Tim Cook, the Apple CEO, to try to get the iPhone production moved here. Of course, in our conversations with Mark German and so many others, we know that that is a bit of a pipe dream, but nonetheless it is a priority for the administration, and so you do see, as you said from your interview with Michael Kratzios, this desire to promote American tech here at home, but also protect it against the challenge it sees coming.

Well, And that's a good question, and I'm glad you brought that up, because it's unclear whether the administration here is responding to that report of additional Chinese stimulus toward artificial intelligence and other high tech projects that they have planned as a way to spark their economy and make sure that they have some domestic demand to satisfy the industry that is trying to cultivate. But nonetheless it would not sit well with the US administration here because they are trying to bring some of that manufacturing to American shores to try to build up the American tech manufacturing base. We've seen so much of it, especially in semiconductors over decades, move to Asia, and Donald Trump there's been applying pressure to none other than Tim Cook, the Apple CEO, to try to get the iPhone production moved here. Of course, in our conversations with Mark German and so many others, we know that that is a bit of a pipe dream, but nonetheless it is a priority for the administration, and so you do see, as you said from your interview with Michael Kratzios, this desire to promote American tech here at home, but also protect it against the challenge it sees coming.

From China, Bluembos, Mike Shephard, do not go far, how a sense, more news is coming on those topics. Meanwhile, sales of Apple's iPhone and those of its rivals are set to take a significant blow from President Trump's tariffs. IDC research showing smartphone growth of just zero point six percent post tariffs. For more, Nabila popeu IDC senior research director, joins us, I always track your data, not just the backward looking data, but extrapolating out and looking forward, you've kind of now got the post tariffscenario. Just explain what you published overnight and how this impacts in particular Apple.

From China, Bluembos, Mike Shephard, do not go far, how a sense, more news is coming on those topics. Meanwhile, sales of Apple's iPhone and those of its rivals are set to take a significant blow from President Trump's tariffs. IDC research showing smartphone growth of just zero point six percent post tariffs. For more, Nabila popeu IDC senior research director, joins us, I always track your data, not just the backward looking data, but extrapolating out and looking forward, you've kind of now got the post tariffscenario. Just explain what you published overnight and how this impacts in particular Apple.

Hi, thank you and nice to be here as always. Yeah, so exactly, And whenever we publish our forecast, we always have to show what was the scenario before, right, So in our latest forecast, which we just published, we're showing a flat growth and it's really important to see how that's changed, right, because twenty four was.

Hi, thank you and nice to be here as always. Yeah, so exactly, And whenever we publish our forecast, we always have to show what was the scenario before, right, So in our latest forecast, which we just published, we're showing a flat growth and it's really important to see how that's changed, right, because twenty four was.

You know, the year of we had like twenty three.

You know, the year of we had like twenty three.

We basically we've been in a few years of decline. In the twenty four exactly, thank you for showing that up was a big year of growth. And then twenty five was supposed to continue this growth. But we were supposed to have about two percent two point three percent, you know, continued recovery. But since February, when was our last forecast was published, we've been going through such tumulus times. Right, there's been a world ruin of uncertainty. You've seen that we're thrown around many times. We've had to pull down the forecast because of our we see high uncertainty, so much terrrift supply chain turmoil, and there's a lot of you know, just soft demand across the board in large global markets.

We basically we've been in a few years of decline. In the twenty four exactly, thank you for showing that up was a big year of growth. And then twenty five was supposed to continue this growth. But we were supposed to have about two percent two point three percent, you know, continued recovery. But since February, when was our last forecast was published, we've been going through such tumulus times. Right, there's been a world ruin of uncertainty. You've seen that we're thrown around many times. We've had to pull down the forecast because of our we see high uncertainty, so much terrrift supply chain turmoil, and there's a lot of you know, just soft demand across the board in large global markets.

I'm trying to understand policy and how you factor policy into that model. Right, So, the situation was that smartphones were given a tariff exemption.

I'm trying to understand policy and how you factor policy into that model. Right, So, the situation was that smartphones were given a tariff exemption.

That was mid April.

That was mid April.

Then President Donald Trump just this month May said that for smartphones made outside of America there should be a well, let's be honest, not just smartphones, the iPhone made outside of America, there should be a levy of twenty five percent.

Then President Donald Trump just this month May said that for smartphones made outside of America there should be a well, let's be honest, not just smartphones, the iPhone made outside of America, there should be a levy of twenty five percent.

How have you factored that in?

How have you factored that in?

So you know, that came out right actually after we had finalized our forecast. So we you know, what we had taken into consideration, right, because we knew that even when the exemptions were announced or whatever wherever the tariff stood, that it was all temporary. That things could always change. So we had to draw a line under stand at some point.

So you know, that came out right actually after we had finalized our forecast. So we you know, what we had taken into consideration, right, because we knew that even when the exemptions were announced or whatever wherever the tariff stood, that it was all temporary. That things could always change. So we had to draw a line under stand at some point.

But there was you know.

But there was you know.

We had we did bacon that there is I think things could always change. So there the what we're you know, saying to our clients or anyone that you know essentially asked us this question is that that there is a huge downside risk to the US forecast and the tariffs that twenty five percent essentially brings, you know, would impose the US market, right, It would impact increased prices, It would change the demand right to.

We had we did bacon that there is I think things could always change. So there the what we're you know, saying to our clients or anyone that you know essentially asked us this question is that that there is a huge downside risk to the US forecast and the tariffs that twenty five percent essentially brings, you know, would impose the US market, right, It would impact increased prices, It would change the demand right to.

The US market.

The US market.

Right now, we're expecting the US market to grow about one point nine percent, and what which is actually US and China are what are holding up that even that flat zero point six percent growth that we're seeing globally, but it was pulled down Both those large markets were previously expected to grow higher. And if this twenty five percent were to grow go into effect, you know, US market would potentially even go into a decline.

Right now, we're expecting the US market to grow about one point nine percent, and what which is actually US and China are what are holding up that even that flat zero point six percent growth that we're seeing globally, but it was pulled down Both those large markets were previously expected to grow higher. And if this twenty five percent were to grow go into effect, you know, US market would potentially even go into a decline.

We should say that that this data from you and the newsflow, it doesn't just apply to the iPhone, right, it also applies to other smartphone makers like on Android os as well. But this has been our focus, which is Apple and the pressure that Tim Cook has been under from this administration. The supply chain is a question mark. But right now, do you envisage any impact to pricing of iPhone or any giant shift to where that company manufactures that handset.

We should say that that this data from you and the newsflow, it doesn't just apply to the iPhone, right, it also applies to other smartphone makers like on Android os as well. But this has been our focus, which is Apple and the pressure that Tim Cook has been under from this administration. The supply chain is a question mark. But right now, do you envisage any impact to pricing of iPhone or any giant shift to where that company manufactures that handset.

So I'll address the second part first, right even you know, when when you know President Trump announced this potential twenty five percent for anywhere he even said that it's not just Apple, it would be to any brand that as long as phones coming into the US were not made in the US, it would they would face potentially twenty five percent or anything wherever they lack, Right, We do think that despite wherever, whatever, if you wherever the tears happen to land eventually if they do, regardless of that, we think smartphone OEMs will continue to diversify outside of China and Vietnam and India. We said this in our press release, will continue to be the two primary, you know, global hubs for smartphone manufacturing for reasons that everyone on your show that has come on to say, right, for because of the supply chain ecosystem that has already been established there prior to all this tariffs madness that began earlier this year. Right, it's really hard. I think anyone that says smartphone manufacturing, I mean, you understand that, I understand the ideal ideology behind bringing manufacturing to the US, And the question has also been asked, it's a dream, but I you know, I don't see any reality where that is possible. So it's just yeah, So that's the reason why we do feel that it's continued, those two regions are going to continue to be the focus of oh m's diversification plans.

So I'll address the second part first, right even you know, when when you know President Trump announced this potential twenty five percent for anywhere he even said that it's not just Apple, it would be to any brand that as long as phones coming into the US were not made in the US, it would they would face potentially twenty five percent or anything wherever they lack, Right, We do think that despite wherever, whatever, if you wherever the tears happen to land eventually if they do, regardless of that, we think smartphone OEMs will continue to diversify outside of China and Vietnam and India. We said this in our press release, will continue to be the two primary, you know, global hubs for smartphone manufacturing for reasons that everyone on your show that has come on to say, right, for because of the supply chain ecosystem that has already been established there prior to all this tariffs madness that began earlier this year. Right, it's really hard. I think anyone that says smartphone manufacturing, I mean, you understand that, I understand the ideal ideology behind bringing manufacturing to the US, And the question has also been asked, it's a dream, but I you know, I don't see any reality where that is possible. So it's just yeah, So that's the reason why we do feel that it's continued, those two regions are going to continue to be the focus of oh m's diversification plans.

IDC Senior Research Director Nabila Popad's great to have you on the show.

IDC Senior Research Director Nabila Popad's great to have you on the show.

Thank you so much.

Thank you so much.

Now coming up, UiPath raised its outlook, but competition in agentic WORKFOW solutions it's intensifying. We'll talk to CEO Daniel Dines about what that means for his company.

Now coming up, UiPath raised its outlook, but competition in agentic WORKFOW solutions it's intensifying. We'll talk to CEO Daniel Dines about what that means for his company.

That's next. This is Bloomberg Technology.

That's next. This is Bloomberg Technology.

Automation software company UiPath raised its full years sales outlook yesterday when it released its earnings. The company also stressed that it's public sector clients renewed contracts. Let's get more on this with UIPAR CEO Daniel Dines. Daniel, it's great to have you back here on Bloomberg Technology. You know, a point of discussion for most of the year so far has been the impact on of joje on companies just like yours that have government federal level contracts. I'm trying to read between the lines and the transfer to the earnest call. Was there any impact to you, positive or negative from that doge activity.

Automation software company UiPath raised its full years sales outlook yesterday when it released its earnings. The company also stressed that it's public sector clients renewed contracts. Let's get more on this with UIPAR CEO Daniel Dines. Daniel, it's great to have you back here on Bloomberg Technology. You know, a point of discussion for most of the year so far has been the impact on of joje on companies just like yours that have government federal level contracts. I'm trying to read between the lines and the transfer to the earnest call. Was there any impact to you, positive or negative from that doge activity.

Thank you for having me. Look, we had a great event in dc A month ago and we talked to it a lot of agency. There is a renewed interest in agentic automation as a space, and we basically renewed our contract. We have a great deal with the Air Force. They are coming with a great initiative called Airmen which is aiming at a very transformative of their business processes.

Thank you for having me. Look, we had a great event in dc A month ago and we talked to it a lot of agency. There is a renewed interest in agentic automation as a space, and we basically renewed our contract. We have a great deal with the Air Force. They are coming with a great initiative called Airmen which is aiming at a very transformative of their business processes.

So on.

So on.

In one, I think it's a more positive environment in DC, but still there is a lot of moving pieces in transition there. From our perspective and our guidance, it's not a big difference.

In one, I think it's a more positive environment in DC, but still there is a lot of moving pieces in transition there. From our perspective and our guidance, it's not a big difference.

Many points to new ar R R additions and then being low.

Many points to new ar R R additions and then being low.

What then accounts for that.

What then accounts for that.

Well, we continue to execute. Well, we just finish a big transition. We had an entire year of changes in the company. We accommodate everything to go really big in agentic automation.

Well, we continue to execute. Well, we just finish a big transition. We had an entire year of changes in the company. We accommodate everything to go really big in agentic automation.

Basically, what is the growth picture?

Basically, what is the growth picture?

Our analyst right that growth indicators a mix for UiPath. Would you agree with that analysis of it being mixed? And if you do see growth, where's it coming from?

Our analyst right that growth indicators a mix for UiPath. Would you agree with that analysis of it being mixed? And if you do see growth, where's it coming from?

Well, I think that agentic automation is a tremendous opportunity and it's I think everybody agrees that this is gonna be very trans formative on the business landscape.

Well, I think that agentic automation is a tremendous opportunity and it's I think everybody agrees that this is gonna be very trans formative on the business landscape.

We believe this is.

We believe this is.

Going to be a bigger opportunity than RPA, and we are really well positioned to capture a significant share of it. So all in once, I think this is really our biggest opportunity for growth.

Going to be a bigger opportunity than RPA, and we are really well positioned to capture a significant share of it. So all in once, I think this is really our biggest opportunity for growth.

I'm looking at the cost of inference right now, you know, particularly in the context of companies just like yours trickling down. A lot of companies are talking about the momentum that agent KI is giving them. What's your point of difference. What is it that you're able to offer that others are not.

I'm looking at the cost of inference right now, you know, particularly in the context of companies just like yours trickling down. A lot of companies are talking about the momentum that agent KI is giving them. What's your point of difference. What is it that you're able to offer that others are not.

I think a lot of agents that we are seeing today are conversational agents, but customers would like agents that are deployed in the context of their existing business processes. And how can you trust the agents? It's the main point of the conversations. And we offer a technology to ork straight between RPA bots and agents and humans that really enhance the reliability of agents and the trust of customers.

I think a lot of agents that we are seeing today are conversational agents, but customers would like agents that are deployed in the context of their existing business processes. And how can you trust the agents? It's the main point of the conversations. And we offer a technology to ork straight between RPA bots and agents and humans that really enhance the reliability of agents and the trust of customers.

Right now, what is the biggest cost consideration for you? I talked about inference costs coming down. Even so, investors in particular love to see a commitment to access to compute and also just some like long term commitment that the investment's worthwhile.

Right now, what is the biggest cost consideration for you? I talked about inference costs coming down. Even so, investors in particular love to see a commitment to access to compute and also just some like long term commitment that the investment's worthwhile.

Yeah, I would not say that. In our business, the infant cost is significant. The real cost comes with the implementing of the agents. Still, the capability is required to create really good agents that mimic the capability of humans are kind of rare, and we are working a lot to build technology that helped to democratize the ability to build agents. To me, this is gonna be the real cost of deploying a gentic automation.

Yeah, I would not say that. In our business, the infant cost is significant. The real cost comes with the implementing of the agents. Still, the capability is required to create really good agents that mimic the capability of humans are kind of rare, and we are working a lot to build technology that helped to democratize the ability to build agents. To me, this is gonna be the real cost of deploying a gentic automation.

That's key.

That's key.

Daniel dines UiPath CEO, thank you so much for joining us here on Bloomberg Technology. Now coming up, Microsoft's push to get corporate customers on board with co Pilot seems to be taking off. We've got the details on its AI sales coming up next.

Daniel dines UiPath CEO, thank you so much for joining us here on Bloomberg Technology. Now coming up, Microsoft's push to get corporate customers on board with co Pilot seems to be taking off. We've got the details on its AI sales coming up next.

This is Bloomberg Technology.

This is Bloomberg Technology.

A growing push for sovereign AI has led to a wave of data center announcements, including one this week from Bell Canada. It plans to invest hundreds of millions of dollars to build AI data centers across the country, and it is named chip startup Grock as the project's exclusive inference partner. Grock CEO Jonathan Ross spoke with Caroline Hyde about sovereign AI, but also US chip curbs on China.

A growing push for sovereign AI has led to a wave of data center announcements, including one this week from Bell Canada. It plans to invest hundreds of millions of dollars to build AI data centers across the country, and it is named chip startup Grock as the project's exclusive inference partner. Grock CEO Jonathan Ross spoke with Caroline Hyde about sovereign AI, but also US chip curbs on China.

From grox's beginning, we have done no business in China, and this is not a geopolitical thing. This is just a shrewd business thing. We saw all of these very large tech companies go into China and lose over and over and again, and there's just a thumb on the scale for any Western company. I hope that someday China allows real competition because real competition makes people stronger, and I want to compete against those Chinese companies. But until they allow real competition, we can't do that. So we've blocked all Chinese companies from having access to our API. We will not sell chips in China because they're just going to reverse engineer them and try and build them themselves, and they're not going to compete fairly. As a result, when we do these deals, we're not allowing Chinese companies to run on them, and we do build operate transfer. In these sovereign cases, we're doing build operate, so we're the ones operating that, and that actually gives commerce and others a lot of comfort that Chinese companies aren't going to be getting.

From grox's beginning, we have done no business in China, and this is not a geopolitical thing. This is just a shrewd business thing. We saw all of these very large tech companies go into China and lose over and over and again, and there's just a thumb on the scale for any Western company. I hope that someday China allows real competition because real competition makes people stronger, and I want to compete against those Chinese companies. But until they allow real competition, we can't do that. So we've blocked all Chinese companies from having access to our API. We will not sell chips in China because they're just going to reverse engineer them and try and build them themselves, and they're not going to compete fairly. As a result, when we do these deals, we're not allowing Chinese companies to run on them, and we do build operate transfer. In these sovereign cases, we're doing build operate, so we're the ones operating that, and that actually gives commerce and others a lot of comfort that Chinese companies aren't going to be getting.

Access, But does the strictions on say in video selling H twenties, as Jensen would say, mean that China just gets better at.

Access, But does the strictions on say in video selling H twenties, as Jensen would say, mean that China just gets better at.

Doing it themselves.

Doing it themselves.

In a Huawei will be able to compete with growth in.

In a Huawei will be able to compete with growth in.

The future potentially. However, the reality is if you enable people now, then they're going to be able to use that advantage to keep growing quicker. We're going to be using AI to design our chips, We're going to be using AI to design our software, So why would you give that advantage? I think it's different going back to information age technology, it's about replicating and distributing. Compute is about doing something specific. If you don't have the compute, you can't do it, whereas information knowledge sort of diffuses and you'll catch up. With generative age technology you can pull ahead.

The future potentially. However, the reality is if you enable people now, then they're going to be able to use that advantage to keep growing quicker. We're going to be using AI to design our chips, We're going to be using AI to design our software, So why would you give that advantage? I think it's different going back to information age technology, it's about replicating and distributing. Compute is about doing something specific. If you don't have the compute, you can't do it, whereas information knowledge sort of diffuses and you'll catch up. With generative age technology you can pull ahead.

You talk about wand in competition and to be competitive in China, for example, what about the competition within VideA. How do you stand compared to AMD and the other offerings Here in the United States.

You talk about wand in competition and to be competitive in China, for example, what about the competition within VideA. How do you stand compared to AMD and the other offerings Here in the United States.

We actually think we're one of the best things that's ever happened to in Vidia shareholders. So in Vidia sells a product that is a premium product. It's a luxury good, it's for training the models. When you train a model, you're willing to spend more money because you get to amortize that across an enormous number of users. If in Vidia continues focusing on inference, which they have to do right now because there isn't enough inference capacity, they're going to have to bring their margins down. They're going to have to sell their chips for a lot less. Remember, our cost is much less than in Vidia's cost. On top of that, higher volume, lower margin. And so the more inference compute we deploy, the more demand there is for training compute. The more demand for training compute, the more GPUs and VideA sells. And the one thing that's really important here in Video wants to do between three and five million GPUs for AI this year. But that's based on what's called HPM high bandwidth memory. It's this very scarce component. They can make as many GPU chips as they want, they can't make as much of the memories they want. Those chips are going to be built and sold, and the only question is what are they going to be sold to do when we come in and we sell inference chips than what we're doing is we're allowing those GPUs to be sold into training, which is a higher margin business. The video is going to make more profit thanks to us.

We actually think we're one of the best things that's ever happened to in Vidia shareholders. So in Vidia sells a product that is a premium product. It's a luxury good, it's for training the models. When you train a model, you're willing to spend more money because you get to amortize that across an enormous number of users. If in Vidia continues focusing on inference, which they have to do right now because there isn't enough inference capacity, they're going to have to bring their margins down. They're going to have to sell their chips for a lot less. Remember, our cost is much less than in Vidia's cost. On top of that, higher volume, lower margin. And so the more inference compute we deploy, the more demand there is for training compute. The more demand for training compute, the more GPUs and VideA sells. And the one thing that's really important here in Video wants to do between three and five million GPUs for AI this year. But that's based on what's called HPM high bandwidth memory. It's this very scarce component. They can make as many GPU chips as they want, they can't make as much of the memories they want. Those chips are going to be built and sold, and the only question is what are they going to be sold to do when we come in and we sell inference chips than what we're doing is we're allowing those GPUs to be sold into training, which is a higher margin business. The video is going to make more profit thanks to us.

All Right, we have some breaking news crossing the Bloomberg terminal. Utel Sat satellite based internet providers in talks to Rays one point five billion euros. This is interesting because in Europe, the continent's hoping that you tel Sat will be able to displace and compete against the likes of Elon, Musk Starlink in Europe.

All Right, we have some breaking news crossing the Bloomberg terminal. Utel Sat satellite based internet providers in talks to Rays one point five billion euros. This is interesting because in Europe, the continent's hoping that you tel Sat will be able to displace and compete against the likes of Elon, Musk Starlink in Europe.

That's the red headline.

That's the red headline.

You tail Satin talks to Rays one point five billion euros with a doubling of the steak from French entities.

You tail Satin talks to Rays one point five billion euros with a doubling of the steak from French entities.

We get more on that story as we get more on it.

We get more on that story as we get more on it.

All right, let's get back to what's happening in the world of AI, and Microsoft is focused in driving adoption of its AI tool co Pilot, and at a town hall this week, it touted its progress.

All right, let's get back to what's happening in the world of AI, and Microsoft is focused in driving adoption of its AI tool co Pilot, and at a town hall this week, it touted its progress.

Who broke the story, Bloomberg's Brody Ford.

Who broke the story, Bloomberg's Brody Ford.

I think this is really interesting, right because it's quick on the heels of this deep dive we did in Business Week about co Pilot, how it happened, how it launched, What Microsoft shypes are for it, what you reported are names across various industries, big corporate names that are doing deals.

I think this is really interesting, right because it's quick on the heels of this deep dive we did in Business Week about co Pilot, how it happened, how it launched, What Microsoft shypes are for it, what you reported are names across various industries, big corporate names that are doing deals.

Right.

Right.

Yeah, The background here is that Microsoft salesforce companies like them they have these AI tools, right. I mean, in the consumer space, Chat, GPT and tools like it have ramped incredibly. In the enterprise, it hasn't been quite as easy of an adoption path, and so with tools like Copilot, Microsoft's AI assistance, we don't have great intel over how many folks are really using it, how many folks are really paying for it. What we learned from the meeting yesterday, which sources we're telling us about, is that you know, there are dozens of customers who are having over one hundred thousand paid users. That's a pretty significant amount. I mean, of course, you know there's some discounting in that, but this is a sign that adoption is ramping, maybe more than investors had been appreciating.

Yeah, The background here is that Microsoft salesforce companies like them they have these AI tools, right. I mean, in the consumer space, Chat, GPT and tools like it have ramped incredibly. In the enterprise, it hasn't been quite as easy of an adoption path, and so with tools like Copilot, Microsoft's AI assistance, we don't have great intel over how many folks are really using it, how many folks are really paying for it. What we learned from the meeting yesterday, which sources we're telling us about, is that you know, there are dozens of customers who are having over one hundred thousand paid users. That's a pretty significant amount. I mean, of course, you know there's some discounting in that, but this is a sign that adoption is ramping, maybe more than investors had been appreciating.

Your reporting.

Your reporting.

We note that Microsoft CEO Sati Endella is very closely tracking all kinds of data, including who is using co pilot and how they're using it.

We note that Microsoft CEO Sati Endella is very closely tracking all kinds of data, including who is using co pilot and how they're using it.

Why is that important, right?

Why is that important, right?

I Mean, what's really important is that you don't have shelfware, but you don't buy one hundred thousand licenses, but you know, fifty people use it in finance, right. I mean, this is the classic problem with software where maybe you can sell a lot of things, but you have to really make sure they're using it.

I Mean, what's really important is that you don't have shelfware, but you don't buy one hundred thousand licenses, but you know, fifty people use it in finance, right. I mean, this is the classic problem with software where maybe you can sell a lot of things, but you have to really make sure they're using it.

Bloomberg's Brodie Ford another excellent piece of reporting.

Bloomberg's Brodie Ford another excellent piece of reporting.

Thank you very much.

Thank you very much.

Okay, coming up, Patrick McGoldrick from JP Morgan Private Capital joins us to talk about its approach to AI investment opportunities. Their conversation's next, This is Bloomberg Technology. Welcomes back to Bloomberg Technology, Amed Ludlow in San Francisco. It's kind of like the last day of technology earning and we're seeing movers in the market on some numbers that got posted last night, those of Dell and Marvel. In Dell's case, it was all about the profit outlook in topped estimates. There is clearly a backlog for AI serve demand, but shares are a little bit softer. Marvel a slightly different story. They kind of have like strong sales targets, they've won some business and they were pretty clear with the market, but investors still tip it on that chip name stock down five percent. That's having an impact at the index level as well. Let's go from public markets now to private markets. JP Morgan private Capital's Growth Equity Partners. It's a one billion dollar fund focusing on Series B right through the pre IPO startups. Managing partner Patrick McGoldrick joins us the focus right now the AI opportunity. I find this so interesting and it's part of today's VC spotlight. In my world, when I break a story about an AI startup or a new round, it's so interesting to look at the cat table traditional venture capital, traditional but also people like you coming in more in the private growth equity space. Would you just talk a bit about that business model and what you try to do.

Okay, coming up, Patrick McGoldrick from JP Morgan Private Capital joins us to talk about its approach to AI investment opportunities. Their conversation's next, This is Bloomberg Technology. Welcomes back to Bloomberg Technology, Amed Ludlow in San Francisco. It's kind of like the last day of technology earning and we're seeing movers in the market on some numbers that got posted last night, those of Dell and Marvel. In Dell's case, it was all about the profit outlook in topped estimates. There is clearly a backlog for AI serve demand, but shares are a little bit softer. Marvel a slightly different story. They kind of have like strong sales targets, they've won some business and they were pretty clear with the market, but investors still tip it on that chip name stock down five percent. That's having an impact at the index level as well. Let's go from public markets now to private markets. JP Morgan private Capital's Growth Equity Partners. It's a one billion dollar fund focusing on Series B right through the pre IPO startups. Managing partner Patrick McGoldrick joins us the focus right now the AI opportunity. I find this so interesting and it's part of today's VC spotlight. In my world, when I break a story about an AI startup or a new round, it's so interesting to look at the cat table traditional venture capital, traditional but also people like you coming in more in the private growth equity space. Would you just talk a bit about that business model and what you try to do.

Sure, and thanks for having me on today. I appreciate the opportunity. So the way we position our strategy is to operate like a traditional venture and growth equity investor. So we started investing at the earlier stages of a company's formation, Series B through pre IPO on the technology and consumer side, all the way through that last inflection.

Sure, and thanks for having me on today. I appreciate the opportunity. So the way we position our strategy is to operate like a traditional venture and growth equity investor. So we started investing at the earlier stages of a company's formation, Series B through pre IPO on the technology and consumer side, all the way through that last inflection.

Point before going public.

Point before going public.

I think for us, we seek to leverage the whole firm to deliver value to companies, and in a world where capital is just that, but value add in changing the inflection curve, of a company's growth de risking. We think JP Morgan is well suited to be that partner of choice.

I think for us, we seek to leverage the whole firm to deliver value to companies, and in a world where capital is just that, but value add in changing the inflection curve, of a company's growth de risking. We think JP Morgan is well suited to be that partner of choice.

So interesting you're talking about leveraging the full scale of JP Morgan.

So interesting you're talking about leveraging the full scale of JP Morgan.

Right as you're pitched.

Right as you're pitched.

The traditional VC would say, don't just take our check, take our operators. Many of us are entrepreneurs or startup founders. Your pitches, we're JP Morgan.

The traditional VC would say, don't just take our check, take our operators. Many of us are entrepreneurs or startup founders. Your pitches, we're JP Morgan.

Yes, I think in the simplest of essence, of course, I think we're privileged to be part of an organization that spends eighteen billion dollars a year in technology spend.

Yes, I think in the simplest of essence, of course, I think we're privileged to be part of an organization that spends eighteen billion dollars a year in technology spend.

We have sixty three thousand technologists.

We have sixty three thousand technologists.

And I think what is really important to recognize is we will work with companies across our firm as early as the seed stage, so we're on the hunt for exceptional technologies. Now as investors, of course, first and foremost we assess product market fit, the strength of the management team. But then where can we pair in those relationships covering ninety percent of the Fortune five hundred or forty five thousand private companies, So we have the privilege of those operators that other VC firms have. But I think the global footprint of a firm like JP.

And I think what is really important to recognize is we will work with companies across our firm as early as the seed stage, so we're on the hunt for exceptional technologies. Now as investors, of course, first and foremost we assess product market fit, the strength of the management team. But then where can we pair in those relationships covering ninety percent of the Fortune five hundred or forty five thousand private companies, So we have the privilege of those operators that other VC firms have. But I think the global footprint of a firm like JP.

Morgan, what are you saying in private markets right now?

Morgan, what are you saying in private markets right now?

Yeah, it's a complicated question. It depends on the topic. But let's start with where we see the investment opportunity set. I think for us, we're spending a lot of time in areas like artificial intelligence and cybersecurity, both incredibly resilient.

Yeah, it's a complicated question. It depends on the topic. But let's start with where we see the investment opportunity set. I think for us, we're spending a lot of time in areas like artificial intelligence and cybersecurity, both incredibly resilient.

From a tech spend perspective.

From a tech spend perspective.

There is a recent review of chief information officers and chief technology officers budgeting priorities, and I think for different reasons, you're seeing increased commitments to those areas. In AI, I think it's a world of now having gone from experimentation to actual deployment. Over sixty five percent of companies are now deploying AI in.

There is a recent review of chief information officers and chief technology officers budgeting priorities, and I think for different reasons, you're seeing increased commitments to those areas. In AI, I think it's a world of now having gone from experimentation to actual deployment. Over sixty five percent of companies are now deploying AI in.

Their full production suite.

Their full production suite.

Those companies are now automating tasks, they're creating efficiency and making a more delightful consumer and enterprise experience. In cyber unfortunately, you could have a version of me that's virtually produced my cadence inflection, a little bit of my positioning, and you'd have to be able to protect against that. So that defensive posture is critical. It's why even in tougher macro environments, the defensiveness of the spend there is very clear and so you'll see that reflected in some of our portfolio companies.

Those companies are now automating tasks, they're creating efficiency and making a more delightful consumer and enterprise experience. In cyber unfortunately, you could have a version of me that's virtually produced my cadence inflection, a little bit of my positioning, and you'd have to be able to protect against that. So that defensive posture is critical. It's why even in tougher macro environments, the defensiveness of the spend there is very clear and so you'll see that reflected in some of our portfolio companies.

Some of your portfolio companies we just showed Alpha Sense. Of course, the maker of Cursor such a hot property right now, tell me what's going on with that. But also data breaks like data Breaks recently has been relying on tenders like employee liquidity rather than a primary raise. How have you navigated those two mechanisms in these two hot names in the world of AI.

Some of your portfolio companies we just showed Alpha Sense. Of course, the maker of Cursor such a hot property right now, tell me what's going on with that. But also data breaks like data Breaks recently has been relying on tenders like employee liquidity rather than a primary raise. How have you navigated those two mechanisms in these two hot names in the world of AI.

Well, let's start with Alpha Sense, because I think that company think of it really as a market research and intelligence platform that in two thousand and eight had the idea of bringing publicly available data in the world of markets, also accessing the research reports that are put up by Wall Street firms, digesting that and giving research analysts, corporate development arms as well as portfolio managers the right solutions at their fingertips to make informed decisions.

Well, let's start with Alpha Sense, because I think that company think of it really as a market research and intelligence platform that in two thousand and eight had the idea of bringing publicly available data in the world of markets, also accessing the research reports that are put up by Wall Street firms, digesting that and giving research analysts, corporate development arms as well as portfolio managers the right solutions at their fingertips to make informed decisions.

With the auDA end of AI.

With the auDA end of AI.

That's gotten even more acute and clear as how they deliver value. And they recently acquired a company called Tigis, which provides private market perspective, so customer interviews that could transcribe that marriage of data is critical to making better decisions on data Bricks.

That's gotten even more acute and clear as how they deliver value. And they recently acquired a company called Tigis, which provides private market perspective, so customer interviews that could transcribe that marriage of data is critical to making better decisions on data Bricks.

You bring up an interesting point.

You bring up an interesting point.

I think the evolution of the private markets are such that companies are staying private longer in order to provide liquidity. They look to access this tender solutions and letting employees.

I think the evolution of the private markets are such that companies are staying private longer in order to provide liquidity. They look to access this tender solutions and letting employees.

Seek some liquidity.

Seek some liquidity.

For us, we want to be active in names like Data Bricks, where it's critical in the world of infrastructure for AI growing well in excess of the public markets with an exceptional management team, and so we're thrilled to be involved in both of those and think they're critical in this new advent of AI.

For us, we want to be active in names like Data Bricks, where it's critical in the world of infrastructure for AI growing well in excess of the public markets with an exceptional management team, and so we're thrilled to be involved in both of those and think they're critical in this new advent of AI.

Patrick, we just have thirty seconds. But you see some kind of exit coming in either of those names.

Patrick, we just have thirty seconds. But you see some kind of exit coming in either of those names.

Well, I wouldn't want to speculate on that too much. I think the management teams are better suits to do that. What I would say about the exit environment more broadly is we've gone from a faucet that's completely shut off to a trickle where you have companies like in health service Titan of course Core Weave that have used the public markets, which is important.

Well, I wouldn't want to speculate on that too much. I think the management teams are better suits to do that. What I would say about the exit environment more broadly is we've gone from a faucet that's completely shut off to a trickle where you have companies like in health service Titan of course Core Weave that have used the public markets, which is important.

Hopefully the back half of the year produces.

Hopefully the back half of the year produces.

More of that, but they are companies that could effectively go public by virtue of their performance.

More of that, but they are companies that could effectively go public by virtue of their performance.

Again, the management team and the market.

Again, the management team and the market.

Size, Patrick, open up that tap next time. Come back on and tell us when you have an ex Patrichan McGoldrick, Managing Partner, JP Morgan Private Capital, Thank you very much.

Size, Patrick, open up that tap next time. Come back on and tell us when you have an ex Patrichan McGoldrick, Managing Partner, JP Morgan Private Capital, Thank you very much.

Coming up, we.

Coming up, we.

Speak with AWS CEO Matt Garman in an exclusive conversation. One year in the role, so much has happened, from the sort of hyperscale perspective right through to the models that AWS is hosting large through Bedrock.

Speak with AWS CEO Matt Garman in an exclusive conversation. One year in the role, so much has happened, from the sort of hyperscale perspective right through to the models that AWS is hosting large through Bedrock.

We also got some breaking news. Let's take a look at DJT hitting session higher, raising his decline.

We also got some breaking news. Let's take a look at DJT hitting session higher, raising his decline.

Just confirmation the company's closed about two point four billion dollars in a bitcoin treasury deal, something.

Just confirmation the company's closed about two point four billion dollars in a bitcoin treasury deal, something.

We brought you a little bit of earlier this week. We'll be right back. Don't go far. This is Bloomberg Technology.

We brought you a little bit of earlier this week. We'll be right back. Don't go far. This is Bloomberg Technology.

Welcome to our Bloomberg radio and television audiences worldwide. We go right now to a conversation with Matt Garman, AWS CEO.

Welcome to our Bloomberg radio and television audiences worldwide. We go right now to a conversation with Matt Garman, AWS CEO.

Matt, it's good to catch up.

Matt, it's good to catch up.

It has been basically one year that you've been in the role as AWS CEO.

It has been basically one year that you've been in the role as AWS CEO.

Is a place to.

Is a place to.

Start what has been the biggest achievement in that time for AWS.

Start what has been the biggest achievement in that time for AWS.

Yeah, thanks for having me on. It's nice to be here again. Yeah, It's been a fantastic year of innovation. It's really been incredible, and as I look out there, one of the things that I've been most excited about is how fast our customers are innovating and ten adopting many of the new technologies that we have. And as you think about customers that are on this cloud migration journey, many of them have been doing that for over the last several years, but this year in particular, that we've really seen an explosion of AI technologies, of agentic technologies, and increasingly we're seeing more and more customers move their entire estates into the cloud and AWS.

Yeah, thanks for having me on. It's nice to be here again. Yeah, It's been a fantastic year of innovation. It's really been incredible, and as I look out there, one of the things that I've been most excited about is how fast our customers are innovating and ten adopting many of the new technologies that we have. And as you think about customers that are on this cloud migration journey, many of them have been doing that for over the last several years, but this year in particular, that we've really seen an explosion of AI technologies, of agentic technologies, and increasingly we're seeing more and more customers move their entire estates into the cloud and AWS.

So it's been really fun to see.

So it's been really fun to see.

It's been an incredible pace of technology and it's been a really fun first year.

It's been an incredible pace of technology and it's been a really fun first year.

The moment that investors kind of sat up and paid attention was when Amazon said that it's AI business was at a multi billion dollar run rate in terms of sales. What we don't understand as well is what proportion of that is AWS infrastructure.

The moment that investors kind of sat up and paid attention was when Amazon said that it's AI business was at a multi billion dollar run rate in terms of sales. What we don't understand as well is what proportion of that is AWS infrastructure.

Yeah, that is AWS, right, and so the key is that's a mix of customers running their own models. Some of that is on Amazon Bedrock, which is our own hosted models where we have first party models like Amazon Nova, as well as many of the third party models like anthropics models, and some of those are applications things like Amazon Q which helps people do automated software developments, as well as a host of other capabilities, and so there's a mix of that. And I think part of the most interesting thing about being at a multi billion dollar run rate is we're at the very earliest stages of how AI is going to completely transform every single customer out there. And we talk to customers and we look at where the technology landscape is, and we firmly believe that every single business, every single industry, and really every single job is going to be fundamentally transformed by AI. And I think we're starting to see the early start the stages of that. But again, we're just at the very earliest stages that I think what's going to be possible, and so that multi billion dollar business that we have today is really just the start.

Yeah, that is AWS, right, and so the key is that's a mix of customers running their own models. Some of that is on Amazon Bedrock, which is our own hosted models where we have first party models like Amazon Nova, as well as many of the third party models like anthropics models, and some of those are applications things like Amazon Q which helps people do automated software developments, as well as a host of other capabilities, and so there's a mix of that. And I think part of the most interesting thing about being at a multi billion dollar run rate is we're at the very earliest stages of how AI is going to completely transform every single customer out there. And we talk to customers and we look at where the technology landscape is, and we firmly believe that every single business, every single industry, and really every single job is going to be fundamentally transformed by AI. And I think we're starting to see the early start the stages of that. But again, we're just at the very earliest stages that I think what's going to be possible, and so that multi billion dollar business that we have today is really just the start.

Can you give me a generative AI revenue number.

Can you give me a generative AI revenue number.

For the world or for awls?

For the world or for awls?

Are you guys for AWS? Maybe Amazon as a whole.

Are you guys for AWS? Maybe Amazon as a whole.

Yeah, Like I said, we are in multiple billions of dollars, and that's for customers using AWS. We also use lots of generative AI inside of Amazon for a wide range of things. We use it to optimize our fulfillment centers. We use it when you go to the retail site to summarize reviews, or to help customer find products in a faster and more interesting way. We use AI in Alexa in our new Alexa Plus offering, where we conversationally talk to customers through the Alexa interface and help them accomplish things through voice that they were never able to do before. So every single aspect of what Amazon does leverages AI, and our customers are exactly the same. Customers are looking to AWS to completely change, whether it's their contact centers through something like Amazon Connect where it shows AI capabilities so that you don't have to go program it all the way down to our custom chips or Nvidia processors, or anything where customers at the metal are building their own models. We have the whole range of people that are building AI on top of AWS, as well as Amazon themselves.

Yeah, Like I said, we are in multiple billions of dollars, and that's for customers using AWS. We also use lots of generative AI inside of Amazon for a wide range of things. We use it to optimize our fulfillment centers. We use it when you go to the retail site to summarize reviews, or to help customer find products in a faster and more interesting way. We use AI in Alexa in our new Alexa Plus offering, where we conversationally talk to customers through the Alexa interface and help them accomplish things through voice that they were never able to do before. So every single aspect of what Amazon does leverages AI, and our customers are exactly the same. Customers are looking to AWS to completely change, whether it's their contact centers through something like Amazon Connect where it shows AI capabilities so that you don't have to go program it all the way down to our custom chips or Nvidia processors, or anything where customers at the metal are building their own models. We have the whole range of people that are building AI on top of AWS, as well as Amazon themselves.

We always credit AWS as being number one HYPERSCALA. But just what you said there about what the client's using in the silicon level through the capacity, it would really help if you could proportionately tell me what percentage of workloads are being run for training and which proportion of workloads being run for inference.

We always credit AWS as being number one HYPERSCALA. But just what you said there about what the client's using in the silicon level through the capacity, it would really help if you could proportionately tell me what percentage of workloads are being run for training and which proportion of workloads being run for inference.

Sure, yeah, and that changes over time. I think.

Sure, yeah, and that changes over time. I think.

Look as we progress over time, more and more of the AI workloads are being inference. I'd say in the early stages of AI and generate of AI, a lot of that usage was dominated by training as people were building these very large models with small amounts of usage.

Look as we progress over time, more and more of the AI workloads are being inference. I'd say in the early stages of AI and generate of AI, a lot of that usage was dominated by training as people were building these very large models with small amounts of usage.

Now the models are.

Now the models are.

Getting bigger and bigger, but the usage is exploding at a rapid rate, and so I expect that over the fullness of time, eighty percent, ninety percent, the vast majority of usage is going to be in inference out there, and really, and just for all those out there, inference it really is how AI is embedded in the applications that everybody uses. And so as we think about our customers building, you know, there's a small number of people who are going to be building these models, but everyone out there is going to use inference as a core building block in every they do, and every application is going to have inference, and already is starting to see inference built in to every application, and we think about it as just the new building block. It's just like compute, it's just like storage, it's just like a database. Inference is a core building block, and so as you talk to people who are building new applications, they don't think about it as AI is over here and my application is over here. They really think about AI is embedded in the experience. And so it's increasingly I think it's going to be difficult for people to say what part of your revenue is going to be driven by AI. It's just part of the application that you're building, and it's going to be a core part of that experience, and it's going to deliver lots of benefits from efficiency, from capabilities, and from user experience for all sorts of applications and industries.

Getting bigger and bigger, but the usage is exploding at a rapid rate, and so I expect that over the fullness of time, eighty percent, ninety percent, the vast majority of usage is going to be in inference out there, and really, and just for all those out there, inference it really is how AI is embedded in the applications that everybody uses. And so as we think about our customers building, you know, there's a small number of people who are going to be building these models, but everyone out there is going to use inference as a core building block in every they do, and every application is going to have inference, and already is starting to see inference built in to every application, and we think about it as just the new building block. It's just like compute, it's just like storage, it's just like a database. Inference is a core building block, and so as you talk to people who are building new applications, they don't think about it as AI is over here and my application is over here. They really think about AI is embedded in the experience. And so it's increasingly I think it's going to be difficult for people to say what part of your revenue is going to be driven by AI. It's just part of the application that you're building, and it's going to be a core part of that experience, and it's going to deliver lots of benefits from efficiency, from capabilities, and from user experience for all sorts of applications and industries.

The present day, it's fair to say majority is still training.

The present day, it's fair to say majority is still training.

No, I think that at this point more definitely more usage as inference than training.

No, I think that at this point more definitely more usage as inference than training.

We want to welcome our radio and television audiences around the world. We're speaking to AWSCO Matt Garman, who officially next week celebrates one year in that role leading AWS.

We want to welcome our radio and television audiences around the world. We're speaking to AWSCO Matt Garman, who officially next week celebrates one year in that role leading AWS.

A new metric that.

A new metric that.

Has been discussed particularly this earning season. We discussed it with Nvidia CEO Jensen One this week is token growth and tokenization. Has AWS got a metric to share on that front.

Has been discussed particularly this earning season. We discussed it with Nvidia CEO Jensen One this week is token growth and tokenization. Has AWS got a metric to share on that front.

I don't have any metrics to share on that front, but I think it's one of the measures that we can look at as the numbers of tokens that are being served out there, but it's not the only one, and I increasingly think that people are going to be thinking about these things differently. Tokens are a particularly interesting thing to look at when you're thinking about text generation, but not all things are created equal. I think, particularly as you think about AI reasoning models, the input and output tokens don't necessarily talk about the work that's being done. And increasingly you're seeing models that can do work for a really long period of time before they output tokens. And so you're having these models that can sometimes think for hours at a time. Right, they might you ask these things a go and actually do research on your behalf. They can go out to the internet, they can pull information back, they can synthesize, they can redo things. If you think about coding and que developer, we're seeing lots of coding where it goes and actually reasons and does iterations and iterations and improves on itself. Looks at what it's done and then eventually outputs the end result, and so at some point kind of the final output token is not really the best measure of how much work is being done. If you think about images, if you think about videos, there's a lot of content that's being created and a lot of thought that's being done, and so tokens are one aspect of it, and it's an interesting measure, but I don't think it's the only measure to look at. Although they are rapidly increasing.

I don't have any metrics to share on that front, but I think it's one of the measures that we can look at as the numbers of tokens that are being served out there, but it's not the only one, and I increasingly think that people are going to be thinking about these things differently. Tokens are a particularly interesting thing to look at when you're thinking about text generation, but not all things are created equal. I think, particularly as you think about AI reasoning models, the input and output tokens don't necessarily talk about the work that's being done. And increasingly you're seeing models that can do work for a really long period of time before they output tokens. And so you're having these models that can sometimes think for hours at a time. Right, they might you ask these things a go and actually do research on your behalf. They can go out to the internet, they can pull information back, they can synthesize, they can redo things. If you think about coding and que developer, we're seeing lots of coding where it goes and actually reasons and does iterations and iterations and improves on itself. Looks at what it's done and then eventually outputs the end result, and so at some point kind of the final output token is not really the best measure of how much work is being done. If you think about images, if you think about videos, there's a lot of content that's being created and a lot of thought that's being done, and so tokens are one aspect of it, and it's an interesting measure, but I don't think it's the only measure to look at. Although they are rapidly increasing.

Project Rainier, massive Custom server design project. What is the operational status and latest on Project Ray now?

Project Rainier, massive Custom server design project. What is the operational status and latest on Project Ray now?

Yeah, so we're incredibly excited about so project right here is a collaboration that we have with our partners at Entthropic to build the largest compute cluster that they'll use to train their next generation of their claud models. And Anthropic has the very best models out there today. Claude four just launched, I think it was last week, and it's been getting incredible adoption out there from our customer base. Nthropic is going to be training their next version of their model on top of Trainium two, which is Amazon's custom built accelerator processors purpose built for AI workloads and we're building one of the largest clusters ever released. It's an enormous cluster, more than five times the size of the cluster compared to the last one that they trained on, which again is the world's leading model.

Yeah, so we're incredibly excited about so project right here is a collaboration that we have with our partners at Entthropic to build the largest compute cluster that they'll use to train their next generation of their claud models. And Anthropic has the very best models out there today. Claude four just launched, I think it was last week, and it's been getting incredible adoption out there from our customer base. Nthropic is going to be training their next version of their model on top of Trainium two, which is Amazon's custom built accelerator processors purpose built for AI workloads and we're building one of the largest clusters ever released. It's an enormous cluster, more than five times the size of the cluster compared to the last one that they trained on, which again is the world's leading model.

So we're super excited about that.

So we're super excited about that.

We're landing TRAININGUM to servers now and they're already in operation, and Entthropic is already is already using parts of that cluster, and so super excited about that. And the performance that we're seeing out of TRAININGUM two continues to be very impressive and really pushes the envelope I think on what's possible both from an absolute performance basis as well as a cost, performance and scale basis.

We're landing TRAININGUM to servers now and they're already in operation, and Entthropic is already is already using parts of that cluster, and so super excited about that. And the performance that we're seeing out of TRAININGUM two continues to be very impressive and really pushes the envelope I think on what's possible both from an absolute performance basis as well as a cost, performance and scale basis.

I think some of those.

I think some of those.

Are equally going to be really important as we move forward in this world, because today much of the feedback you get is that AI is still too expensive. But costs are coming down pretty aggressively, and it's still too expensive, and so we think there's a number of things that need to happen there. Innovation on the silicon level is one of those things that needs to help bring the cost down, as well as innovation on the software side and algorithmic side, so that you have to use less compute per unit of inference or training. So all of those are important to bring that cost down, to make it more and more possible for ADI to be used in all of the places that we think that it will be over time.

Are equally going to be really important as we move forward in this world, because today much of the feedback you get is that AI is still too expensive. But costs are coming down pretty aggressively, and it's still too expensive, and so we think there's a number of things that need to happen there. Innovation on the silicon level is one of those things that needs to help bring the cost down, as well as innovation on the software side and algorithmic side, so that you have to use less compute per unit of inference or training. So all of those are important to bring that cost down, to make it more and more possible for ADI to be used in all of the places that we think that it will be over time.

Matt and Wednesday, Nvidia CEO Jensen Wang summarized inference demand for me. I just wanted to play you that SoundBite.

Matt and Wednesday, Nvidia CEO Jensen Wang summarized inference demand for me. I just wanted to play you that SoundBite.

Sure, well, we got a whole bunch of engines firing right now. The biggest one, of course, is the reasoning AI inference.

Sure, well, we got a whole bunch of engines firing right now. The biggest one, of course, is the reasoning AI inference.

The demand is just off the charts.

The demand is just off the charts.

You see the popularity of all these AI services.

You see the popularity of all these AI services.

Now your pitch for trainium too, And as you know, I've kind of taken a part the serve of design and looked at it is the efficiency and cost efficiency relative to Nvidia Tech. Are you seeing that same demand Jensen outlined for TRAININGUM two outside of the relationship with Mthropic.

Now your pitch for trainium too, And as you know, I've kind of taken a part the serve of design and looked at it is the efficiency and cost efficiency relative to Nvidia Tech. Are you seeing that same demand Jensen outlined for TRAININGUM two outside of the relationship with Mthropic.

Yeah, Look, we're seeing it across a number of different places, but it's not really TRAININGUM two versus in Nvidia, and I think that's not really the right way to think about it. I think there's plenty of room. The opportunity in this space is massive. It's not one versus the other. We think that there's plenty of room for both these and Jensen and I speak about this all the time that in Vidia is an incredibly fantastic platform. They've built a really strong platform that's useful and is the leading platform for many many applications out there, and so we are incredible design partners with them. We make sure that we have the latest in Vidia technology for everyone, and we continue to push the envelope on what's possible with all of the latest in Vidia capabilities. And we think there's room for Trainium and other technologies as well, and we're really excited about that, and so we have many of the leading AI labs are incredibly excited about using Trainium too and really leaning into the benefits that you get there. But for the law for a long time, these things are going to be living in concert together, and I think there's plenty of room. And customers want choice at the end of the day. Customers don't want to be forced into using.