Potential Nissan-Honda Merger, Databricks' $62B Valuation
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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 New York, this is Bloomberg Technology. Coming up, Nissan in talks to merge with Honda. Why tech giant Foxconn catalyzed the auto deal discussions. Plus, Databricks valuation rises to $62 billion. We'll sit down with the CEO to discuss the company's AI strategy and its expansion.

and all eyes on micron earnings after the closing bell. Can AI demand deliver? First, let's get to this key story of the day, the merger discussions. Nissan in talks with Honda, and it would be a deal that could create the world's third largest automaker with a better chance to compete with the likes of Toyota and even Tesla in the EV space, for example. Now, according to reports, the discussion between the two, they accelerated after Foxconn, the Taiwan-based producer of iPhones, actually approached Nissan about taking a stake.

Bloomberg's Craig Trudell joins us some more. So interestingly, once again, it's Japanese companies trying to fend off international investors. Yeah, I think, you know, this is a case of...

a company in Nissan that has been challenged for years now. And really, since the moment that Carlos Ghosn was unceremoniously taken out and arrested, actually, by folks in Japan, there was really concern within the government there about the long-term viability of this company and I think a desire to kind of drive them into the arms of Honda.

I think Honda was reluctant and perhaps Foxconn with its interest in entering the auto industry, its interest in particular in electric vehicles, knocking on Nissan's doors, I think it is sort of

indicative of the sort of prospect that would only further alarm the Japanese government. I remember back in the day talking to Carlos Ghosn about the Nissan LEAF. He was really upbeat about the scale of the market they had in electric vehicles, but now it pales in comparison to a Tesla, for example. How would the combined units be beneficial?

I think importantly, it would help Nissan in a real sort of blank space, which is hybrids. And, you know, a few years ago, we would have, you know, sort of been talking about, you know, would hybrids have a future? Are Teslas the way of the industry going forward?

I think we've seen this real renaissance, particularly in the U.S. market, but also in other parts of the world where it's clear that consumers are still not ready yet to pull the trigger on a Nissan Leaf or a Tesla. And it's been the case that Nissan has had a lot of issues, but one of them has been the complete lack of hybrids in the U.S. market. Honda really has some strength in that regard.

and would help Nissan to better compete if these two were to combine. Although I'm not sure hybrids will help in California in the future, just talk us through what's coming from the Biden administration in terms of California regulations compelling people to have EV, zero emission cars in the future.

Yeah, California announced intentions quite a while ago to phase out combustion cars from 2035. In order to actually sort of enshrine that and really protect that, the state needs to go to the federal government and get a waiver. And there's a precedent for this going back decades where California, because of the unique issues it's had with air quality going back many years ago,

There's precedent for it for the state to be able to set its own standards separate from from the federal government. And there are many states that that follow and adopt California standards. So this is a case of of the Biden administration kind of making more difficult on its on its way out the door. Any effort that the Trump administration, I think, is inevitably going to try and

and take a stab at the various waivers that California has had to try and set tougher policies for the auto industry. Yeah, we'll see how it survives the next administration. Craig Trudell, just a brilliant roundup of all things autos and EVs.

Let's get back though to the semiconductor space right now because that's really where we're looking at what's happening underneath the benchmarks. Micron, of course, reporting after the bell as well today. Analysts really looking for growth in the company's high bandwidth memory, as I mentioned. The product's there. It's all about AI infrastructure. Surprise, surprise. Denny Fish is a man who knows exactly about all these things. Portfolio manager on the global tech and innovation team. Over at Janus Henderson Investors, you own all the big names when it comes to semiconductors.

And kudos to you because you've had exposure to the biggest rallies of the year, Denny. What do you make of high bandwidth memory, the focus on US chip makers to get into that space? Yeah, I mean, we've witnessed probably the largest deployment of advanced semiconductor content ever in our history. And the reason that's happened is because we've advanced AI over the last couple of years.

Those advancements continue. I mean, we've really laid the tracks the last couple of years with retraining of all these models from OpenAI, from Google with Gemini, Anthropic and others. And what's really interesting now is we're actually making the transition from

from what we've seen with these models to reasoning. And that's a really big deal because now we're going to start seeing the handoff in a pretty material way from pre-training and training to actually inference and time-based inference. And so that should continue to be quite good for accelerated computing. It's just the mix might get a little different over time, but as it relates to just GPUs,

custom ASICs from the hyperscalers, high bandwidth memory, optics, you know, it should continue to be quite strong. Jonathan Henderson has some exposure to Micron, but I'm not seeing it, for example, in your global technology fund, for example. I'm interested, therefore, more about what you think about the shift that we've seen going on from all in on picks and shovels, all in on the infrastructure build-out when it comes to semiconductors, but now people moving across the software, now people thinking that it's the application layer that people are more interested in.

Yeah, that's absolutely right. And, you know, I actually think...

2025 is going to be a really interesting year because you can't put the investment into data centers that we put in over the last couple of years unless you start to monetize it. And we're actually starting to see the breadcrumbs, particularly over the last couple of quarters from a lot of companies. And, you know, you hit it on the head, you know, the application software ecosystem, whether that's publicly traded vendors that are starting to actually talk about specific contributions to their revenue models or...

There are a ton of startups, obviously, that are racing to disrupt the existing vendors and take advantage of this multi-trillion dollar opportunity. And what's really interesting is the software industry over the last 20 years grew to $600, $700 billion in aggregate.

as it expanded the software TAM, but as you really start thinking about what AI can do, this jump to reasoning and where we're going from here, and it brings not only the software TAM into play, but this larger services TAM that can be attacked by AI, and that should be really good for the software ecosystem. How are we going to start to see the wheat from the chaff here, though, Denny?

Throughout 2024, in many ways, all boats have risen until the second half. And then we started to pit winners against losers. Are we going to see that continue? Look, we take a case study of Adobe just not managing to deliver when it comes to how much generative AI is going to get to their bottom line compared to Palantir that has just exploded ever higher because of the AI opportunity.

Yeah, well, that's where we're at. And I mean, we've actually seen a narrowing in the semiconductor ecosystem in terms of the winners as we look at picks and shovels. And that's to be expected. Every time there's a big theme like this, you get a rising tide lifts all boats and then you get a narrowing of it. And, you know, and I think that's what we're going to see across, you know, the rest of the tech ecosystem, including software and 25. As you said, we'll separate the wheat from the chaff.

The companies that are actually having meaningful contribution from AI, they're gonna get higher multiples, their growth is going to accelerate and it's gonna be goodness. And then there are gonna be companies that are clearly struggling to get to the right side of time. As you mentioned, in Adobe's, it's an interesting case study because it's been a heavily debated stock in the investment community for the last couple of years.

as investors have gone from Adobe being on the right side of time as it relates to AI to potentially being on the wrong side of time.

Talking of wrong side of time, many trying to pass what the right or wrong side of the next administration is going to be. This is going to affect, for example, some internet names. I know that you focus in on Denny. And at the moment, we've got the breaking news that the US Supreme Court is going to hear arguments over a TikTok divestment. We're going to dig into that in a moment. But we do see regulatory implications for a lot of companies coming. How do you navigate that?

Yeah, well, not too differently than how we've navigated it for the last handful of years. And what I mean by that, we've had a very hostile backdrop for the last four years. So is it going to get worse? It's probably hard to get worse. Is it going to get better? Might get a little bit better in certain areas, but I expect it to continue to be a difficult environment for large cap tech.

that diminishes the opportunity for them to do M&A. And then it also, we will continue to see aggressive postures from the DOJ like we've seen with the Google case.

Danny Fish, portfolio manager at Janus Henderson Investors, really taking us across the whole breadth of the tech ecosystem. We thank you. And look, let's just dig into that breaking news now on TikTok. The Supreme Court has announced that it will hear TikTok's challenge to its U.S. ban on January the 10th, just days, of course, before its potential ban or divest argument coming January the 19th. We're seeing the implications for Snap, for example. Snap shares currently falling. Meta shares have been pairing their gain on the news.

Now coming up, cracking down on China made chips, the latest action being taken by the Biden administration to combat national security and competition concerns. That's next. This is Blue Air Technology. 89% of business leaders say AI is a top priority, according to research by Boston Consulting Group. But with AI tools popping up everywhere, how do you separate the helpful from the hype? The right choice is crucial, which is why teams at Fortune 500 companies use Grammarly.

With over 15 years of experience building responsible, secure AI, Grammarly isn't just another AI communication assistant. It's how companies like yours increase productivity while keeping data protected and private.

Designed to fit the needs of business, Grammarly is backed by a user-first privacy policy and industry-leading security credentials. This means you won't have to worry about the safety of your company information. Grammarly also emphasizes responsible AI so your company can avoid harmful bias. See why 70,000 teams and 30 million people trust Grammarly at grammarly.com slash enterprise. That's Grammarly at grammarly.com slash enterprise.

Grammarly. Enterprise-ready AI. Not everybody likes talking about money. Some people find it awkward.

Sometimes I even find it a little embarrassing. I do not. I like talking about money. Whether it's the boardroom, the newsroom, the trading floor, I've spent the last 30 years talking about money, writing about money, and talking about it and writing about it a little bit more. I'm Erin Summers at work, and every week, senior reporter John Stepak and I answer your questions about personal finance, and we discuss the best strategies for making the most of your money. Listen in for the kind of insights and explanations everyone can use to help them make better saving and investment choices for themselves and their families.

My question is whether you think maxing out my company pension match is enough for when it comes to saving for my pension. Should I attempt to pay my child's university fees and living costs? My partner and I have excess savings, so should we overpay on our mortgage or should we put the money into stocks? From Bloomberg Podcasts, tune in to Merrin Talks Money. Follow Merrin Talks Money on Apple Podcasts, Spotify or wherever you listen. Merrin Talks Money

Get back to the breaking TikTok news. Crossing the Bloomberg terminal is the news that the Supreme Court will indeed hear TikTok's arguments on January 10th before a potential ban, which is likely to come into place on January the 19th. Bloomberg's Kayleigh Lyons joins us for more. Of course, this is all regarding it's either to divest or be banned on January the 19th, but they've managed to get the Supreme Court to hear the argument.

Yeah, of course, TikTok, since this law was first passed in a bipartisan manner by Congress and then signed into law by President Biden earlier this year, has contended that it violates the right to free speech embedded in the Bill of Rights in the U.S. Constitution. So that is the grounds with which TikTok is pursuing this appeal at the Supreme Court after having lost an appeal in the D.C. Circuit Federal Court of Appeals, which voted three to zero against the company's argument, saying that Congress is well within its rights within the

concerns over national security to put into place this ban. So we'll see how this goes on January 10th. As you say, Caroline, it's just nine days before this ban is set to go into effect. But keep in mind, this Supreme Court does have a conservative majority, three justices of which were appointed by then president and now president-elect Donald Trump, who earlier this week at a press conference in Mar-a-Lago when asked about the TikTok ban said that he has a warm place in his heart.

for TikTok, talking about how he does think it's one of the reasons why he was able to pick up more of the youth vote. And at Mar-a-Lago on that very same day this week, he met with TikTok CEO, Sho Chu. So it'll be interesting to see if we hear from the president-elect

on the Supreme Court's decision to hear TikTok's arguments on January 10th. It's having market implications. We see Snap, for example, losing some market value on the back of this as people try to price in whether or not TikTok will be remaining as a competitor. Meta also pairing some of its earlier gains. Kayleigh, all of this comes in the context of U.S. versus China. We've had the breaking news today that Biden is going to be announcing a Chinese semiconductor probe here in the coming days, another area of tit-for-tat.

Absolutely. And this one is interesting, Caroline, because this probe will specifically be looking at foundational chips, the older generation ones that, of course, are the backbone to everything from cars to smartphones. Knowing this administration already for the last several years has been putting into place export controls around advanced semiconductor technology. So the things that go into, say, artificial intelligence, trying to restrain China's ability to control that technology. But the concern that this White House still has in its waning days is that China, because it's still producing these older chips,

is going to be able to flood the market with them and therefore make say American companies less competitive. Already this administration had announced that they would like to raise the tariffs on older chips from 25% to 50% by 2025. But according to people familiar with the matter, the feeling of the administration is that is not enough to actually adequately protect competition. Hence the launching of this investigation. The rub, Caroline, is while this investigation will be launching,

The inauguration, where Joe Biden will leave the office and Donald Trump will take it, is just over 30 days away. So ultimately, the conclusion of the probe, the findings, will be left up to the discretion of Donald Trump as to how to handle them, whether that will be tariffs or other restrictions around trade. We do know, though, that the president-elect is not shy when it comes to tariffs in China, Caroline.

He loves the word. But Kayleigh, just set the context there because also we know that he did invite President Xi, we understand, to the inauguration. So could a lot of this end up not being implemented because deals are done?

Well, that's entirely possible. And it's a live conversation here in Washington as to whether or not the tariffs that Donald Trump has threatened, not just technology, but all goods coming from China, are just a negotiating tactic, a way to start the conversation to extract more from China that he would see basically a way to use leverage. That remains to be seen, but it will be up to his discretion if he does want to act, if these findings do conclude that there are unfair trade practices.

China is involved in when it comes to this very critical technology that the US has already heavily invested in developing here in the States. I would note as well, Caroline, that while a lot of this is the discretion of the President, Congress is consistently acting hawkishly toward China as well. It is Congress where the TikTok ban

originated where we've seen a lot of restrictions passed through law and in the continuing funding resolution that was just released last night. It also includes language related to outbound investment into China restrictions. So this is something we're seeing really across the board.

Kayleigh Lyons, thank you very much indeed. All things US-China. Now it's time for Talking Tech. And first up, the risk of blackouts. They're going to increase for most of North America over the coming decade, according to a report by a grid reliability regulator. And the report underscores utility challenges as demand is forecast to rise the most in decades, of course driven by AI and the electrification of the economy.

Plus, a new court order issued Monday says TikTok must turn over its source code and financial data. This after claims from the Chinese tech company Beijing Meishi Network accused the social media platform of copyright infringement and misappropriation of trade secrets.

Ameta's Instagram is expected to account for half of the company's ad revenue in the United States, according to estimates from research firm eMarketer. Instagram is now expected to top $32 billion in US advertising revenue in 2025, up more than 24% from the current year. Coming up, Sandbox AQ announces a major new funding round. CEO Jack Hidari is with us. For next, we're going to be discussing the company's plans to use AI and innovate everything from medical devices to cybersecurity,

AQ, AI and quantum. This is Bloomberg Technology.

AI solutions company Sandbox AQ has closed its latest round of funding, raising $300 million, valuing the company now of $5.6 billion. The company says the investment will be used to further its development in areas like drug discovery, cybersecurity, navigation and medical devices, all using its own AI techniques. Sandbox AQ CEO Jack Henry is here with us. Let's talk large companies.

quantitative models. How is what you're building different from the large language models we've all had to wrap our head around? Caroline, good to see you, first of all. Great to be here live on set. In the world of Zoom, it's great to be in person for once.

This is a fundamental new area of AI. So I think we're all familiar with ChatGPT, we're all familiar with large language models, wonderful set of applications, millions of people using it around the world, as it should be. Now comes large quantitative models. And when we look at the majority of the business sectors, the economy, we look at biopharma, chemicals, energy, financial services, these are all quantitatively driven, not language driven.

And so the majority of our economy is actually depending on quantitative relationships. An example would be in biopharma. Let's say we want to create a new drug for a certain cancer or Alzheimer's or Parkinson's. We probably don't want to take the drug of the language model trained on Reddit and cat pictures. Probably not recommended. But we can use large language models to summarize scientific evidence.

literature for example that's wonderful when it comes to action the quantitative relationship love creating the drug see if it fits in that receptor and developing that all throughout the clinical trial that a job for large quantitative models the data is fundamentally different the models are different the whole field is a new area

And how practical is it in its application right here, right now? When you're raising $300 million, what is that for? Is that for talent? Is that to actually drive the necessary improvements in the models? What is it that you're going to be fine-tuning? Well, the good news is, over the last two, three years since our spin-out, we've now proven

with customer after customer that it actually is having impact. For example, UCSF, University of California San Francisco, one of the best places for biomedical work. Stan Prusiner is a Nobel laureate there, using our software to advance his drugs for neurodegene diseases right now. So this is having an impact today. It's running today on the GPUs on Nvidia and TPUs from Alphabet. It's running right now. And these are quantitative models, again, not trained on the corpus of words of the internet,

it, but trained on the relationships of chemicals and atoms and those kind of dynamic relationships. So it's having an impact right now, Caroline. Because what's interesting, of course, you talked about a spin-off. It was a spin-off from Google. Your chair is Eric Schmidt. We understand the sort of way in which the company first was born. And then we look at what's happening with Google. Quantum, the Willow chip, everyone's deeply excited about real applications to quantum in the next five, ten years. Is that realistic?

Well, it's a great question. Why do we call our company Sandbox AQ? What's the AQ? A for AI, Q for quantum. And so years ago, we already saw that advanced compute really has two engines. It has the AI engine of large language models, large quantitative models, LLMs, LQMs, but it now also has the Q, the quantum. And the breakthrough that Google announced just last week, our colleague Hartman Nevin, who had

who announced that at the Santa Barbara campus of Google, is a wonderful example of the milestones being achieved in the quantum hardware space. We don't build quantum hardware, we use quantum hardware as it progresses to business impact. Today, quantum computers are very early, but what Google showed last week with the Willow chip is that as you scale the number of qubits, you can actually decrease the number of errors. That was a critical milestone, Caroline, in terms of how we can advance quantum computing.

So the future that we see is one that has GPUs and QPUs, quantum processing units, together, working together in a mesh in the hybrid cloud. That, I think, is the future. And we're going to see, I think, very significant progress over the next five, six years in the quantum hardware itself. All of that means your applications become, well, more broad. How quickly are you going to be making money from this for your investors that we've just been seeing?

Well, the good news is we're already generating revenue today. We're creating a lot of value for our customers today. And so be it in biopharma, be it in the chemicals and material space, be it in battery chemistry, we know the importance of batteries, not just for electric vehicles, actually the bigger market for batteries.

are stationary batteries to store energy from renewable sources. That's actually the bigger market, but we must leapfrog beyond lithium-ion technology. This again is a job for an LQM, a large quantitative model, versus an LLM. And so I think that the number of applications are really numerous, and we raise this money in order to advance our investment in the product development. We do want to hire more PhDs, more software engineers. We have quite a few already, but it's time to hire more.

So those listening who have those kind of skills, please contact us. They will. Jack Hiddery is Sandbox AQ CEO.

Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York. Let's dig into what's happening in the crypto side of things, because another risk asset of choice that's trading in a sensitive manner ahead of the Federal Reserve is Bitcoin. We're now at $103,000. Remember, yesterday we managed to peak above $108,000 per token. So we're just seeing a little bit of money coming off ahead of also the holidays as well. Mike's strategy down as, of course, it's basically a Bitcoin prop.

But interestingly, we were hearing from Michael Saylor a little bit earlier, Washington considering a potential crypto regulation, how it's going to basically iterate. And MicroStrategy is continuing to be buying Bitcoin, bringing its total investments to roughly $45 billion. The chairman, Michael Saylor, spoke to Bloomberg earlier on why the company is investing in the digital asset and continuing to do so and whether he'd consider a role in shaping new crypto policy. Take a listen.

I've met with a lot of people in the incoming administration, but I couldn't comment further than that. Okay, can't comment further than that. I was going to ask you about plans, but instead I'll ask you about whether or not you would be willing to serve in the Trump administration in any capacity. Bloomberg has reported that there potentially could be a crypto advisory council. Is that something that you might be interested in?

I'm always willing to provide thoughts on constructive digital assets policy, either in confidence or publicly. And if I'm asked to serve on some sort of digital assets advisory council, I probably would do so, yes.

Michael, I also want to talk to you about MicroStrategy, your own plans. It's amazing. You have announced plans to raise $42 billion over three years. You announced that back in October. But the rate you're going at, and this is through convertible debt offerings, stock sales, the rate you're going at, you could fulfill that target by January. Are you planning to lift that cap and line up more facilities in the pursuit of more Bitcoin?

Yeah, when we announced it, it wasn't clear how enthusiastic the capital markets would be, but we got a very enthusiastic reception. And then after November 5th with the red wave, we saw a big sea change in the political environment. And so we went faster than we had thought we were going to go on October 30th. Our goal is to continue to raise capital, primarily through fixed income markets. So we'll pursue preferred stock,

or convertible bond or other equity-linked financings, as long as it's created for our shareholders. When we get through the 2121 plan, which is $42 billion in capital, we'll revisit our capital plan and we'll put in place a new plan subject to market conditions at the time.

MicroStrategy Chairman Michael Saylor on political roles and the future of his Bitcoin buying. Let's talk a little bit more now with the Defiance ETF CEO and CAO, Sylvia Jablonski. You've got a Defiance Daily Target 2X long MicroStrategy ETF.

How is demand for those sorts of leveraged products on microstrategy at the moment? Demand is on fire. That's the best way I can put it. You know, we've seen billions of dollars of assets flowing into this ETF. It's by far the fastest growing ETF that we've ever seen. And I think the reason is that, you know, Bitcoin has just taken off. And whether that's because of the commercialization of Bitcoin, ETFs holding Bitcoin, you know, favorable policy with the new government coming into office. I just think that there's this huge tailwind

And who is the best proxy for Bitcoin? It's MicroStrategy. So stock listed on an exchange as a single name, it trades as a leveraged version of Bitcoin. And we've now leveraged it two times. And so this short-term volatility traders love the ETF and it's just been wildly popular. And from an institutional perspective as well as a retail perspective?

perspective here. Absolutely. Both institutions and retail. I think what's great about the institutional angle is that some institutions are still sort of weary about holding Bitcoin itself, whether it's through the digital wallet or using an ETF for it. But, you know, MicroStrategy is just a stock, right, that trades on an exchange. And so they are able to put that in their portfolios. And I think that shores up a lot of demand. A very volatile holding in their portfolios. Talk to us about, therefore, when you're looking at the hype cycles around

whether it's crypto or AI, compare and contrast how much you still think people wanting to pour into the infrastructure side of the AI bet and other ETFs you have exposure to that.

Yeah, I think that the demand is at its all-time high, right? Ever since the chat GPT moment and now the Google Willow moment and, you know, crypto and kind of all the buzz around that. You know, there's trillions of dollars of cash sitting on the sidelines. There's the biggest wealth transfer of our generation happening as we speak. And, you know, Gen Z, you know, Gen Z, millennial, Gen X, kind of, you know, the younger traders are, this is where they're allocating their funds to. And, you know, retail has definitely spoken. Institutions have definitely spoken and they're looking for that.

that fourth industrial revolution allocation. And, you know, the biggest trades right now are basically quantum and micro strategy. Let's go into quantum because we just had Jack Hedery on from Sandbox AQ and talking about how we're starting to see quantum

Theory be put into practice you just mentioned willow and their breakthroughs over at Google Which other stocks should people be looking at are they only dominating on the big companies that have got exposure to? Quantum like an IBM or Google are they going smaller? Yeah And so we kind of looked at this space and what I liked about what Jack explained his company has the a and the Q the AI and the quantum right so so chat GPT AI is you know kind of version one Quantum is taking everything to the next level. So you need quantum in order for AI to be efficient You need to process that data quickly

quickly. It will help, you know, essentially healthcare, cryptography, aerospace and defense, you know, blockchain technology, anything you can think of will be better with quantum supercomputing power. And so the most popular stocks right now are a combination of large caps and small caps, right? So you have like the IBMs, the Googles, the NVIDIAs, some of these companies are actually very relevant, HP, IBM, and then the smaller names that are just taking off hundreds and, you know,

are companies like D-Wave, IonQ, Vigradi Computing. We actually marry them in our ETF quantum. So you have the large caps and the small caps, so the ballast and the quality earnings with the high flyers and the movers that are winning. Just look at these high flyers for a moment. We're up basically 1,000% on D-Wave quantum over the last year to date, 200%. How cautious have been people getting into these wildly volatile names, even if they are up and to the right? Yeah, I think...

I think that people have been doing a combination of both, right? So they're getting into these smaller names, but they're also looking at things like the ETF that balances. Yeah. And you know, you, you want to kind of like balance it with the Googles, right? I think Google is a company that does many, many things and can perform quite well. And so it kind of like balances your risk on the small caps, but also again, it comes back to the, you know, administration and administration would be very favorable of quantum, um, you know, rate cuts, um, you know, kind of more freedom for MNA activity in theory. And so that,

also help the backdrop helps along with just the super high flying technology that's moving forward. All eyes on the Fed in about an hour or so's time. Thank you. Thank you. Taking it back to macro policy to defiance ETF CEO Sylvia Jablonski. Happy holidays.

Now, let's just talk about Elon Musk and SpaceX for a moment because they've repeatedly failed to comply with federal reporting protocols aimed at protecting state secrets, triggering several federal reviews. This is all being cited by the New York Times. They're looking at sources there. Now, the Air Force also recently denied Musk a high-level security access, citing potential security risks. Meanwhile, here's what SpaceX president, Wynne Shotwell, said about the company's relationship with the Air Force at an event with the Center for Strategic and International Studies just yesterday.

We have, we had a rough relationship early on with the Air Force. But we have over the last probably 11, 10 or 11 years, I think developed a really, a really great relationship, frankly. I think there's, you know, it takes a long time to build trust. And I think we're, I think we're finally there.

Elsewhere in space, NASA announcing another delay in the mission to bring back two US astronauts who are stranded for months on the International Space Station and now saying they will remain there at least until late March. Tuesday, that's it, time currently for home. Coming up, Databricks' $62 billion valuation. We speak with Ali Godzi, but Databricks' CEO, that's next. This is Blue Meg Technology.

89% of business leaders say AI is a top priority, according to research by Boston Consulting Group. But with AI tools popping up everywhere, how do you separate the helpful from the hype? The right choice is crucial, which is why teams at Fortune 500 companies use Grammarly.

With over 15 years of experience building responsible, secure AI, Grammarly isn't just another AI communication assistant. It's how companies like yours increase productivity while keeping data protected and private.

Designed to fit the needs of business, Grammarly is backed by a user-first privacy policy and industry-leading security credentials. This means you won't have to worry about the safety of your company information. Grammarly also emphasizes responsible AI so your company can avoid harmful bias. See why 70,000 teams and 30 million people trust Grammarly at grammarly.com slash enterprise. That's Grammarly at grammarly.com slash enterprise.

Not everybody likes talking about money. Some people find it awkward.

Sometimes I even find it a little embarrassing. I do not. I like talking about money. Whether it's the boardroom, the newsroom, the trading floor, I've spent the last 30 years talking about money, writing about money, and talking about it and writing about it a little bit more. I'm Erin Summers at Web, and every week, senior reporter John Stepak and I answer your questions about personal finance, and we discuss the best strategies for making the most of your money. Listen in for the kind of insights and explanations everyone can use to help them make better saving and investment choices for themselves and their families.

My question is whether you think maxing out my company pension match is enough for when it comes to saving for my pension. Should I attempt to pay my child's university fees and living costs? My partner and I have excess savings, so should we overpay on our mortgage or should we put the money into stocks? From Bloomberg Podcasts, tune in to Merrin Talks Money. Follow Merrin Talks Money on Apple Podcasts, Spotify or wherever you listen. Music

Databricks, raising $10 billion in new funding, bringing the software maker's valuation to $62 billion. The company says it intends to invest this capital towards new AI products, to acquisitions. Significant expansion in its international go-to-market operations. For more, Databricks CEO Ali Ghazi joins us now. Boy, it's been busy. Let's just talk a little bit about the AI applications and just where you see the wide open space at the moment for Databricks.

Yeah, thank you for having me on. There's so many applications across many different protocols. Lots and lots of customers that are using us for AI and data processing, I should say. Starting with Rivian, for instance, the carmaker uses us to optimize the batteries of their electric vehicles. Walgreens uses us to figure out how much should they stock up their inventory and their supply chain. It's super important for them to be able to optimize their prices and lower their TCOs. And then Square or Block,

They used to have this app where you swipe your credit cards, but to set that up in a store used to be pretty complicated a few years ago. Now it's super simple because you can use generative AI and just tell it, hey, I have these five products, this is the price, and it sets itself up just using generative AI. So before you were unifying, democratizing data, now it's about the applications of AI, but for that also you need talent, Ali. And I'm interested as to where the next layer of talent is coming from, where you need to hone in on, how you get them on board.

Yeah, I mean, there is a crazy war for AI talent right now. I've never seen anything like it before. I mean, it's a, you know, talent war was already crazy last 10 years for software engineers. Now in AI, it's just completely insane. So we are going to use a lot of the proceeds towards that to be competitive. There was a lot of talent, you know, was hired by OpenAI and by Anthropic. What's happened is we've hit this thing called the scaling wall now. Oh, you think there is a wall, do you? Because Sam Altman's determined there isn't one.

There is a wall. I think it's pretty clear that most even those big companies, many of them are now investing in other techniques, not the classic scaling laws. So that actually also has opened up the opportunity where people are now going. There are more companies now that can participate in this next chapter after the scaling wall or the scaling laws. So that's also very exciting times. But you've got to pay up for the talents.

You've got to pay up. Do you pay up for U.S. talent? I'm going to make it personal, Ali, because you yourself are an immigrant. Originally, Iran moved over to Sweden, come over to the United States. And I'm interested in how much you look abroad, particularly in the context of the next administration. Yeah, look, not because of the administration, but when there is this crazy talent war going on, you, of course, start looking at, you know, where could we go where it's not...

so intense, right? Where the competition is not so intense. So we look everywhere. You know, I think Eastern Europe is super interesting. Very smart people that live there. And you know, it's just different. You know, you don't have that intensity of a competition around the talent. Europe and of course Asia, many locations. So we're looking at all of those, but still you don't wanna ignore Silicon Valley or United States. It's still where you have the highest talent density. It's absolutely necessary. So we're gonna compete here as well.

Is it about acqui-hiring? I mean, you've been acquisitive and some of that in ML space, Mosaic ML, for example, some of that in the data side, Tabula, for example. Are you going to make acquisitions because of the people or because of the products being built?

Well, both. You know, there's three things you could get. You could also get revenue, right? But there's a lot of startups that started, super talented people, amazing IP, but they quite didn't get to the revenue. So it's, you know, two birds with one stone. You get that talent and you get the intellectual property. And in this race, you need that, right? You need both of those things. So absolutely, we're going to actually double down on that even more now that we have this funding.

It's a race, but it's also race versus your competition at the moment to be getting those clients. Who are your key competitors? Because I know on LinkedIn you've been throwing some shade at Snowflake, for example. We all think about Microsoft. Are they the two competitors for you?

You know, with Snowflake, I would say that was in previous years. You know, I would say a couple of years ago, we were really intensely focused on competing with them. Now in this AI era, that's kind of shifted. And Microsoft is a super important partner. In fact, Microsoft, Amazon, and Google are investors in Databricks. There is some competition. They have products that sometimes compete as well. But all up, you know, those companies, the majority of the revenue in the cloud is storage, compute, networking.

And that might be 70% of the revenue, I'm speculating. And we're a killer app for that. We drive so much storage, compute, and networking. In fact, we drive close to 30 million machines in the cloud every day that we launch. So we're super close partners, and they love us as customers, and vice versa. But there is that little competition happening as well. And probably that's going to expand over time

AI is becoming more and more important. There's one big game of frenemies out there when it comes to technology. Ali, I'm interested in particular when you're thinking about how you're raising money. Ten billion is a lot, five capital front and center there. You've also got who's who of other investors with A16Z, for example. What's interesting is you're also going to the debt markets, we understand. How is that going? Because that seems to be trying to offset the tax implications to keep your employees happy.

that's great point i think and let's take them one by one let's take the equities uh

you know the equity raise for us it's super important to get partners that are long-term oriented we want investors that are going to say you know we're going to be with you probably 10 years 20 years this is a great price we'll buy again more and later in the ipo we'll buy even more and we'll stick you know to your plan and let you implement that long-term vision and not become too short-term oriented you know the 90-day quarterly sort of mindset so that was the thing we optimized for and we were pretty picky we had 19 billion of interest in this round and basically cut people back

to half of that and we said no to most investors. And then on the debt financing, that makes a lot of sense as well. If the company is growing in valuation so much, then actually you're better off just getting a big loan, even if interest rates are high and you're paying, let's say, just make that number round number 10% interest on that. You're better off taking that as a loan and paying it back in a few years because you can pay that back in equity then. And presumably the company has doubled in valuation, let's call it in 50 years.

Okay, $120 billion, looking at it for the next couple of years, and you've given us the timescale potentially for an IPO as well. Ali Ghazi, always great to have you on. Thank you. Databricks CEO, congrats on the fundraiser.

Meanwhile, let's talk about concerns over AI's global boom. Receiving bipartisan support in Congress in a framework report released on Tuesday recommending guardrails and regulations on AI really being detailed in an effort to protect Americans and maintain national security. We spoke with Senator Amy Klobuchar of Minnesota who had this to say on regulating AI.

My view has been that we should have rules of the road in place, by the way, for all platforms. I have been way out there, as I think you know, in terms of getting not just pornography off the internet, but other very, very difficult things that are on there right now. Let's go back to those regulatory proposals. Bloomberg government reporter Omar Sadiq joins us now. Omar,

It was a comprehensive list of recommendations. What were the key takeaways for you? Right. Congress released this major policy paper this week addressing AI on various areas. They touched on education, health care, financial services, agriculture, national security, because they're trying to examine what AI's impacts are on each of these areas and how Congress should respond. The key takeaway is that Congress is seeking to strike this balance.

They want to promote AI because they believe it has tremendous opportunity, you know, to unleash human productivity, to solve complex issues. But at the same time, they're well aware of AI's risks. And so they want to protect the American people and uphold their civil liberties. Very briefly, urgent is what we expect to come next from Congress.

Right, so that's the key question. How do they translate these recommendations into action? We saw Senator Amy Klobuchar there. She's proposing to combat this issue of non-consensual explicit deepfakes or deepfake pornography, which has been around for a while, but AI has only accelerated the spread, which has alarmed many, many lawmakers. And so that's an area where Congress is eager to act quickly.

Another area that Congress is eager to act is to increase scientific research and development in AI, expand energy infrastructure to meet AI demands, train the workforce, educate folks on AI, and even clarify existing intellectual property law. And so there are many, many key recommendations that are proposed in this report, but it's just a matter of how Congress then transitions into translating that into legislation that gets signed into law.

We'll see how it happens on the next administration. Omar Sidiq, thanks for breaking it down. Let's get back to Micron now. Scheduled to report its fiscal first quarter results after the market closed today. Bloomberg's Ian King joins us some more all about high bandwidth memory.

That's right. Obviously the biggest story in chips has been NVIDIA. Guess what? NVIDIA's chips need a lot of memory to train those AI models and really it's a case of how much can SK Hynix, how much can Micron supply NVIDIA with and this has been a big story for them. A lot of high margin business coming their way but on the flip side, the markets that they depend on, there's a lot of debate about how well they're doing.

Yeah, I mean we're expecting about an 80% increase in revenues for example. We're up on the day but it's been a turbulent time for Micron stock. Still it feels as though most analysts say buy it at the moment. Is it going to be about the forecasting? What are the pitfalls here Ian? Yeah, no, that's exactly it. I mean people are kind of tentatively positive and the concern there is that look, still a lot of money that this company gets comes from the smartphone market, comes from the PC market and guess what?

they're not that great. There's still inventory around, so let's not get too carried away with this AI thing until it really shows that it can take over completely. But meanwhile, everyone's desperate to get totally in on stocks like Broadcom, even if they're just giving us total addressable markets. Do you think we will get a signal of what the market will be like for Micron?

I mean, they have been talking about this for a long time and I'm sure will continue to bang that drum and talk about how this is a different opportunity for them. Once they're designed in, they're designed in. It's not the old commodity market. They'll give us all of that, I'm sure. And they're probably right about that particular area. The key is whether it's big enough to offset what's going on elsewhere. Yeah. Just briefly, China an issue?

China is always an issue. There's a concern there that the access to that market becomes an issue and also local competitors, given the competition between the two countries and the bans and all of the trade war, that's clearly something that's on people's minds. Ian King, you're going to be a busy man later. Thanks so much for stopping in ahead of that set of earnings later in the day.

Meanwhile, that does it for this edition of Bloomberg Technology. You do not want to forget to focus in on the Fed in a minute, but also check out our podcast. You'll find it on the Terminal as well as online on Apple, Spotify and iHeart. This is Bloomberg Technology. Not everybody likes talking about money. Some people find it awkward.

Sometimes I even find it a little embarrassing. I do not. I like talking about money. Whether it's the boardroom, the newsroom, the trading floor, I've spent the last 30 years talking about money, writing about money, and talking about it and writing about it a little bit more. I'm Erin Summers at work, and every week, senior reporter John Stepak and I answer your questions about personal finance, and we discuss the best strategies for making the most of your money. Listen in for the kind of insights and explanations everyone can use to help them make better saving and investment choices for themselves and their families.

My question is whether you think maxing out my company pension match is enough for when it comes to saving for my pension. Should I attempt to pay my child's university fees and living costs? My partner and I have excess savings. So should we overpay on our mortgage or should we put the money into stocks? From Bloomberg Podcasts, tune in to Merrin Talks Money. Follow Merrin Talks Money on Apple Podcasts, Spotify or wherever you listen.