Chapter 1: What is the main topic discussed in this episode?
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Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech. Coming up, we go to AWS re-invent in Las Vegas to discuss the cloud company's new chips, new models, and new AI agents. Plus, Michael Dell donates an unprecedented $6 billion aimed at jump-starting the investment accounts for 25 million children in America.
And Warner Brothers Discovery receives a new round of bids with Netflix flashing mostly cash for its offer. We'll have the details, but first let's check in on these markets, which are flashing green. We actually have a bit of a reprieve after yesterday's sell-off. We're back into risk-on mode, tentatively so, across the benchmarks. We're looking at the Nasdaq 100 up 0.9%.
Of course, Nvidia leading the chart in terms of points, but all of some of the MAG7 really dominating on the day. You're looking at Bitcoin even getting a bid. Yesterday, it was woeful. Today, we find some sort of stability. We're up more than 5%. In fact, largely crypto is in the green.
We also turn our attention to some of the key MAG7 that we want to look at in terms of their own events, their own announcements. And I'm looking at what's happening with Amazon. We're currently trading up 1.5%. We're getting a little nudge higher on some new news coming out about its own large language models, about updates, of course, to its own AI agentic focus.
And key has got to be Tranium 3, all about its chips. Let's get straight over to Ed Ludlow. You're in Las Vegas at the reInvent event.
Yeah, it's probably the Tranium 3 headlines that moved the needle, right? This is a push forward, an acceleration of bringing the latest generation accelerator to market called Tranium, but useful in both the training and inference use case. And much as Amazon has done in prior generations of Tranium, it's talking about the cost and performance metrics of it.
4X the prior generation on price performance. It was interesting when the headlines hit, I mean, we're up one and a half percent on Amazon. A small move lower or pairing some of the gain on both Google and Nvidia. And this is the story, right? Amazon wants to expand the use of Tranium servers. beyond one core customer, which is Anthropic.
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Chapter 2: What new AI products did Amazon announce at AWS re:Invent?
But that's gonna be the question of the story today. You know, AWS is number one in cloud and cloud computing through scale, through leveraging infrastructure. But when does it become number one in AI? You know, not just being a place that hosts others models, but has evidence that its own foundation model is resulting in something tangibly useful, particularly for enterprise customers.
And I'm pretty sure that that's what those that are joining the show today want to talk about.
Yeah, we've got so many conversations come up in this show. But you've got to be sticking around because we thank you, Ed. We're coming back to you because throughout the show, we'll have interviews. But at the end, we'll have a sit-down interview with AWS CEO Matt Garman at 3 p.m. Eastern Time.
Meanwhile, look, this is all a story of infrastructure about big tech companies such as Amazon, but also Alphabet, Meta and Microsoft spending heavily on AI with expected capital expenditure of over $380 billion combined in their current fiscal years.
That's going against big tech's mantra for the past two decades, let's call it, which is more about delivering growth while keeping really tight lid on spending. It's a real flip reverse. Let's talk about it with Bloomberg's tech equity reporter, Carmen Reinecke. And sort of you've all been assessing how investors take this sudden wild capital expenditure.
Yeah, I mean, it has been the talking point and the thing that we've been focusing on the most with some of these big companies. And As you said, it really represents a change from how they've operated over the last two decades. They really had very capital light businesses and were able to be very profitable, grow exponentially in some ways because of that.
And so now having this shift, we're seeing investors reward it on some ends and then really punish it on others. So, you know, Microsoft, we saw you know, jump after its latest earnings report, but Meta sort of got hit because Zuckerberg, you know, didn't explain enough about the return on investment of this spending.
The other thing that's interesting is that this capital expenditures as a portion of revenue have jumped, which to a level that's not normal for tech companies. So for Microsoft, its capital expenditures are now 20% of its revenue. And in addition, you know, Alphabet and Amazon, these spending to sales ratios are some of the highest in the market. Okay, so we now have to perhaps
THANKS FOR WATCHING. digest a period of higher capital expenditure. We're meanwhile worrying about some of the financing that goes on within it, some of the circular financing that's been the narrative. But today the market jumps. Why? What are you hearing from the investors you're talking to? Yeah, I mean, I think that last week was very interesting.
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Chapter 3: What unprecedented donation did Michael and Susan Dell make?
But at the same time, we've been trying to wait to see if more institutional buyers will come in and offset that. But it seems to be, from what we're hearing, a sort of wait and see mode, partly waiting until the Fed decision next week. So it's kind of, in a way, same old with crypto. One day it goes down 8%, the next day it's up 5%.
The asset class seems to be maturing and there's more ways to invest in it, but maybe not much has changed. Bloomberg, Anna Herrera, always great to have you.
Chapter 4: How does the Dell donation relate to the Invest America Initiative?
Thank you very much. And stay with Bloomberg because there's a conversation coming up you won't want to miss if you're in crypto. Fong Lee, strategy president, CEO, coming up in the next hour on Bloomberg Crypto. Elsewhere in that ecosystem, not all is gaining support. We're watching shares of American Bitcoin Corp. Look at that, down 44% at one point, down 50%.
Chapter 5: How is Amazon's Tranium 3 chip different from previous models?
The Bitcoin miner, which counts Eric Trump as a co-founder and chief strategy officer, seeing multiple trading halts amid the volatility. Now coming up, we'll be joined by Colleen Aubrey, Senior Vice President of Applied AI Solutions over at AWS. We are live from the company's reInvent conference in Las Vegas. This is Bloomberg Tech.
Bye. Bye.
Good morning from Las Vegas. Let's talk about some of the announcements out from AWS. Colleen Aubrey is Senior Vice President of AWS Applied AI Solutions. And Colleen, you basically work with the full spectrum of the smallest startups to the biggest enterprise customers that AWS has and the public sector. And it's distilling it as far down as I can.
You basically help them to take technology and innovate, make whatever they do better.
Yeah, the mission I'm on is really to put AI into the hands of the business on a day-to-day basis and really make it work for their business in production every day, helping them to deliver better experiences to their customers.
We have a new generation of AWS Silicon and server design. We have a new generation of Nova model. Yeah. And we have frontier agents. That's right. And I think you probably heard me at the top of the show, but I think the big question about AWS reInvent is...
What is it in this year's offering that takes AWS beyond being the sort of number one cloud computing platform for capacity to giving something tangible, useful, that can improve a company's own technology?
Yeah, there's probably two areas that I'd like to talk about specifically. For me personally, one of my products is Amazon Connect. And this started as a contact center application. Right. But today, you know, I see it really as an agentic product that's actually looking at whole customer experience. And so for me, this is where we're putting our infrastructure, our silicon, our models.
And now today, like bringing that all together in a product that can work for businesses. So we launched 29 new features on Sunday. We announced that. And I would say there's four key agentic capabilities that come with that.
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Chapter 6: What impact does Amazon's new AI technology have on businesses?
So can we break down how these are starting to look? Because they're meant to be sweetened. They've been sweetened, yes. So the bidding is heating up. Yesterday, Warner Brothers had asked for sweetened offers from all of the companies, so we know they received offers from Netflix, mostly cash. That was a big surprise because people were expecting it to be stock.
You know, Netflix's stock has been doing pretty well. They have great currency, but they're also an investment-grade company, so they can't afford to raise a lot of money. We hear they're in the market talking to banks about tens of billions of dollars for a bridge loan. So there's Netflix, there's Comcast, which has also bid.
It only wants the streaming and the studios of Warner Brothers, similar to Netflix. We're still trying to glean the details of that offer, but we have heard that it likely includes a little more stock than the cash offered by Netflix. And finally, Paramount, the one who kicked all of this off. They're the only bidders who have actually made a play for the whole company.
We're hearing that their offer is also completely cash. They have backing from Larry Ellison, David Ellison, you know, some of the wealthiest people on earth. And Middle Eastern money, as well as Apollo, are putting in some of the financing for their offer. And it feels as though that's been the narrative, that the Ellison bid might be one that is more approved of by the administration.
But are there any blockers? Are there any issues from a regulatory perspective for Paramount Skydance just getting any bigger or any of these players getting any bigger? Yes.
So the Warner Brothers board is really I mean, they are in a position where they have lots to assess, but it's not apples to apples because they're evaluating, you know, a bid for the whole company in cash, a bid that might include stock and cash, but only for part. And then, you know, other structures that are unclear.
For Paramount and Comcast, there's clearly lots of synergies that they could achieve by combining the companies, but there's a view that doing that, you know, to achieve those synergies, they would cut a lot of jobs, maybe thousands of jobs at the studios by combining these studios.
Netflix, their argument might be, we're not going to do something like that, and so it'll play better, you know, with labor unions and regulators, but... Netflix also already has a lot of power, so it's a big wild card to see how the regulators are going to view that. Yeah, many are going to say, is YouTube being counted in the numbers?
How we think about this from a regulatory perspective, from a state and federal perspective? Timeline, any sort of idea? We're hearing that they want to get this sorted before the end of the year.
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