Chapter 1: What is the main topic discussed in this episode?
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This is Bloomberg Tech. Coming up, Nvidia strikes a deal to invest $2 billion in chip design software maker Synopsys, one of its own suppliers. Plus, crypto concerns continue amid a wide-ranging sell-off that has strategy and stablecoin Tether in the crosshairs.
And OpenAI is taking an ownership stake in Thrive Holdings, adding to a growing list of circular deals involving the chat GBT maker and its backers. Oh, we're going to be talking circular deals today with that NVIDIA deal with OpenAI. But now we look at the broader market and say, And we're under pressure once again. We're only off by three tenths percent on the overall Nasdaq 100.
But remember, it had a brutal month of November, the worst sell off that we'd seen since March. And more broadly, we are starting to reassess these ongoing narratives of AI, momentum trades, crypto. We're seeing Bitcoin off by another seven percent. We trade at eighty four thousand six hundred seventy eight. We're going to deep dive into that.
But you're going to deep dive on some single names right now. Yeah, are we going to be talking about circular financing? Maybe. Nvidia shares higher, Synoptys shares higher, but off their session highs. Nvidia investing $2 billion, buying into Synopsys at $414.79 a share. You can see we're now pretty far beyond that.
What will happen is Synopsys will take NVIDIA's GPUs and its software library CUDA X and basically integrate it into the number one tool for designing and validating chips. But on a webcast just now, Jensen Wang, NVIDIA CEO, saying there is no requirement that Synopsys buy GPUs as part of the deal. And actually any chip maker that already does business with Synopsys can do so freely.
There's no exclusivity here. Still, that was the reaction, circular financing. It is. And let's dig into the rationale a little bit more deeply now. Mandeep Singh is here with us, covers semiconductors, of course, at Bloomberg Intelligence. Mandeep, what is in it to solidify a partnership that was already very strong? Why take an equity stake, do you think?
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Chapter 2: What is Nvidia's recent investment in Synopsys about?
I mean, who knows? And that's where I think having stakes just give them some skin in the game.
And to be clear, Jensen Wong saying in a webcast that's ongoing, there is no requirement that Synopsys uses the funds from the investment to buy NVIDIA GPUs. Mandeep Singh of Bloomberg Intelligence, appreciate you kicking the show off with that. Let's get more on what's happening in financial markets right now. Fiona Sincoda, senior analyst from Citi Index, joined us.
It is the first day of December. And actually, a couple of hours ago, we started things looking pretty bleak. NVIDIA has turned a corner, which has kind of changed a little bit the tone, but basically tech lower, crypto lower, and we started December in risk-off mode. Why?
Yeah, I mean, we had a really solid rally last week, you know, on those expectations that the Federal Reserve will be cutting interest rates in December. But as we start off this new week, there's been a turnaround in that sentiment. And I think the catalyst for that, for me, came from Japan.
So we had Bank of Japan Governor Ueda adopting a more holistic,
hawkish tone, really ramping up sort of expectations for a December rate hike. Now, what does this mean and why is it important? Basically, there are concerns now that we might see the unwinding of the carry trade. So, that's when we sort of have institutions, investors borrowing in the low interest yen in order to invest in higher yielding riskier assets.
Now, Now, if we're seeing the Bank of Japan raise interest rates, we've got yields in Japan, 10-year yields at a 17-year high. There is this concern that we're going to start to see the repatriation of those funds back to Japan. Now, this is important because liquidity changes.
And those sort of sectors of the market, such as crypto, such as tech, which are really sensitive to liquidity, are where we're seeing that sort of risk-off come through. December, historically strong, particularly for technology, right? And when I was on vacation last week, what a week to pick. We had the Thanksgiving holiday. Circular financing was a factor.
NVIDIA in particular weighing on the index level. You just heard the reporting about how the synopsis NVIDIA deal is not circular financing to the mind of the leaders of those companies. Do you buy it? And how big a factor is that in this market right now?
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Chapter 3: How does Nvidia plan to integrate its technology with Synopsys?
And that fear that there might be a slight reduction in liquidity if that unwinding of the carry trade happens is what I see pulling on crypto. Institutional demand is still very weak. You know, we saw November ETFs, they saw outflows of 3.48 billion. So huge outflows. I think second largest, second worst month that we've seen so far.
So that really does need to turn around before we can expect to see any sort of recovery or solid recovery in the Bitcoin price or crypto prices. Talking about the broad application of AI and perhaps the less broad application in the here and now. For crypto, Fiona Sincotta, it's great to have some time with you, senior analyst over at Citi Index.
Meanwhile, let's talk about data centers for a moment. But when it comes to financial prices, because data centers do support the CME, for example, one of the world's largest derivatives exchanges. But we know that now the data center behind the CME has bolstered its own backup cooling capacity after overheating last Friday.
CME's markets were out for more than 10 hours after a failure in cooling system at the facility run by privately owned Okay, coming up, we're going to dig more into crypto markets and what's behind this week's long sell-off. That's next. This is Bloomberg Tech.
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Cryptocurrencies, Phil, again today. Bitcoin dipping below $84,000 per token at one point. Ether dropping more than 7% to below $2,800.
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Chapter 4: What are the implications of Nvidia's investment for chip design?
Joining us now on the crypto markets, weeks-long sell-off, Bloomberg Senior Digital Finance Editor, Ana Herrera. We're writing on the Bloomberg Terminal about how we started December in risk-off mode, but actually traders in the crypto space are bracing for even bigger moves lower. What are the factors behind that?
So as you know, crypto is not immune to big price swings and we've had these before. We're not a stranger to it. But what's different this time, it seems that there's not been any big crypto event like fraud or something that's very dramatic that's typical to crypto.
It seems like cryptos may be starting to mature in a way and it's starting to follow more the macro environment and starting to behave a bit more like risk assets. So one of the factors today was sort of the Bank of Japan
which you were talking about before and how that trade is unwinding and people are concerned that there will be less liquidity and of course then less money to spend on riskier assets like crypto.
There are some idiosyncratic issues at play here, though, Anna. One of them being perhaps Stalin and Paul's putting out a bit of a risk warning on Tether, the stablecoin most widely used one, and worrying about its collateralization. But then we look to what's happening in strategy.
Of course, a big purchaser of Bitcoin that shook the market by potentially saying it could even sell off that Bitcoin if really forced to do so. But now they try and come in and temper those fears with news of, well, really a reserve fund. Why isn't it working? Why isn't pushing strategy back higher again?
I think, again, perhaps everything in crypto tends to move together still. You know, we had it with Coinbase for a while when it was the only listed company to tend to react to Bitcoin even before the ETFs, right? It was kind of a gauge on the broader crypto market, a way investors could go in. So I think perhaps the mood is just risk off in general.
And so no matter what strategy is saying, investors are still a bit concerned and a bit cautious. And again, you know, we mentioned you mentioned before sort of the big withdrawals and redemptions on the ETFs. Again, until that changes and there is more investment in the ETFs, it's hard to see how, you know, the market, the crypto market will pick up again.
But, you know, crypto is also very strange to predict. So you never know. Tomorrow might be another day and very different.
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Chapter 5: What role does AI play in electronic design automation?
And we've seen massive upswings, downswings.
What we're seeing now, I think there'll be some tight trading. I can see it go up to 200. I'm not one of those that's going to predict that it's going to go to a million.
The reason I ask that, I was trying to marry those two points, the long-term bullishness on the underlying technology and the short-term price volatility. I did find it interesting reading the Bloomberg Terminal that the data set that is giving most concern is lack of inflows into the ETFs, which you've discussed. What would change the psychology of people to push inflows in a positive direction?
Yeah, I think it goes back to certainty. We want to see where the interest rates are headed on a global basis.
The October sell-off in the crypto sector was due to the tariff uncertainty around China.
We also saw people taking profits when Bitcoin went up to $126,000. So in the span of three months or less than three months, we've seen over a 30% drop. That being said, I don't see a downward spiral because there are going to be people who want to get access to the asset. I mean, we just came off of Thanksgiving in the US and dinner table conversation was all around crypto.
Of course, AI also, but crypto was a big part of it. So there's still a lot of retail interest and I think they get concerned when you just see these big price drops, but we'll start to see that reverse. Jalak Jobanputra from Future Perfect Ventures. Great to have you back on the show. Thank you. Carrie. Yeah, now it's time for Talking Tech.
And first up, well, we're looking at Elon Musk expanding at Snail Brook, Texas, a company town tied to the Boring Company. Correspondence between Musk's executives and local officials show plans for new housing, a science center, and a gym. It comes as the Musk Tunnel Building Company negotiates with the county over tax breaks and environmental concerns.
Plus, Australia will become the first democracy to ban its youth from popular services like TikTok and Instagram. Look, a law requiring platforms to block under-16s takes effect December the 10th. If companies don't comply, they could be facing fines as high as $32 million.
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Chapter 6: How does the investment affect Nvidia's supplier relationships?
Josh Kushner, who founded Thrive Capital all the way back in 2010, is now only recently, in April, I think, founded this Thrive Holdings. And it's about buying stakes or even growing accounting companies.
Yeah, I think Thrive at one time was more into smaller investments, and now they're kind of doing the private equity thing. They're launching or acquiring bigger firms, and they see AI as a real opportunity to expand their portfolio in a way that maybe the traditional VC arm doesn't. would not have done, and OpenAI seems very eager and willing to come along for that ride.
Bloomberg's Seth Figgeman out of New York City on the Thrive Holdings OpenAI deal. Thank you. Welcome back to Bloomberg Tech. We have a deal of sorts this Monday, and that's Nvidia investing $2 billion into Synopsys, a leading name in electronic design automation software, or EDA, basically the software tools that help you lay out a chip's design. NVIDIA buying in at $414.79 a share.
Synopsys currently trading at $432.53. It's an engineering agreement. NVIDIA Tech integrated into the Synopsys platform. But what it does not include is any mandatory requirement for Synopsys to buy NVIDIA GPUs. Here is NVIDIA CEO Jensen Wang speaking an hour ago.
There's no purchasing relationship between the investment and anything else. Synopsys is already a customer of NVIDIA's. And in the future, of course, as we move into the world of accelerated computing and AI computing, it's a much larger customer of NVIDIA. I recognize that none of this is exclusive.
Synopsys has a lot of chip partnerships that are going to continue to nurture and continue to advance. NVIDIA has a lot of partnerships with Cadence and Siemens and Dassault that we're going to continue to nurture and advance.
From AI deals to holiday shopping deals, consumer spending is showing some resilience, even if discounts this year haven't been as steep as in the past. So what are we seeing this Cyber Monday and in e-commerce sales more broadly? Bloomberg's Spencer Soper joins us now. The stats, please, for this Cyber Monday. Yes, still very early.
Cyber Monday is one of those days where people really load up their carts all weekend and then sometimes wait for the final minute to push the buy button.
So the activity is really going to pick up this evening before midnight and the deals close. But so far, we are seeing that patience is paying off for people who waited for Cyber Monday. Discounts averaging, I think, 31%. according to Salesforce on Cyber Monday. And that compares to about 27, 28% on Black Friday.
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Chapter 7: What concerns are raised about circular financing in tech investments?
But so far, Shopify merchants consistently outperform the overall market. And we're seeing that they're, you know, they have a lot of buyers right now. Heidi Finkelstein, great to have some time with you. President of Shopify. What a weekend it's been for you, I'm sure. Now coming up, we speak with Runway CEO Cristobal Valenzuela.
As of course, the company's launching its latest texture video model is already top of the leaderboards. This is Bloomberg Tech. Runway, when it's announced the launch of its latest AI model, Gen 4.5, which aims to deliver the best in the world text-to-video. Joining us now to break down why it's that is Cristobal Valenzuela, Runway CEO.
Last time I checked on the leaderboards, some of them already have you at the number one spot. Cristobal, what is it that yours offers versus Sora 2 versus the latest Google offering? Yeah, that's true. So we just released Runway Gen 4.5, our latest video model, and it tops the charts in terms of performance and benchmarks across all other models, which is kind of like a big deal within research.
It's the first time a company has led the leaderboards and this company not being basically a large research lab. It's a model that surpasses pretty much all other models with incredible consistency, really good realistic results, and just like across the board, amazing creative results. So really, really excited to get this model out and have people use it.
Now you had it out there on the leaderboards with a pseudonym before it was launched in public, Cristobal, and you had it called David. Is that a Goliath David construct? How are you competing against these vast generative AI companies?
Yeah, it was a little bit of a play with that with David and Goliath.
I think we've managed to outcompete the largest research labs by being very focused. I think it's the era of both research and efficiency. And if you're able to maintain the focus as a team, you're able to deliver kind of groundbreaking results. And we're proving this.
This is the first time I think we've, again, anyone has kind of topped the leaderboards not being a large, well-funded research lab. And I think part of it is really the team. And it's really also the vision. We've been working on this for almost seven years. We started working on video models when there weren't even the other boards to start with.
And I think eventually you built some sort of intuition and really good momentum as to how to improve these models over time. And look, this is still the worst the models will ever be. And so we have a bunch of more releases coming up that I think will further improve both pre-training and post-training. And so we're very excited for that. Chris Bell, you're not that small.
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Chapter 8: How do market conditions influence Nvidia's stock performance?
Is that what we're going to be hearing about, about the competition in chips?
I think they have to because Google's really put down the gauntlet for all the rest of the hyperscale cloud providers to say that we have this chip that's doing really well. What can Amazon do? In fact, what can Microsoft do down the road in that framework? Because at the end of the day, if you can build your own chip, it's much cheaper in terms of margins and your workloads, et cetera.
You know, reInvent is a developers or industry conference, right? There's going to be things specific to that. But actually, Anurag, I think you'd agree there's like some very general questions that AWS needs to answer about capacity planning, their exposure to one type of GPU or accelerator versus another. What would be top of mind for you just to get the basics from AWS on?
So one of the things we'll be hearing for is What is their expansion plans right now? What are their customers doing in terms of deploying AI? One of the most important parts of AWS story that I don't think people understand, it's like knee deep into enterprises and that's where a lot of the data resides. So for the next level of growth for us, it's not going to come from consumer apps.
It's going to come from enterprise AI adoption and a large portion of that is on AWS. What are they doing with it? What's kind of their partnership with OpenAI right now? How many models do they have on their services and what kind of adoption rate you're seeing?
Started 2025 asking what would happen between AWS and OpenAI. Kind of know a bit more now. How interested are you in that relationship?
I think it's a very important one because at the end of the day, OpenAI will not be able to get into enterprises at that same level as it has on the consumer side if it's not on AWS. Because at the end of the day, if you look at the relative size of AWS companies, in terms of revenue compared to the others, it's still much bigger.
The issue that they are facing is, you know, they don't have a consumer app like ChatGPT that runs on AWS. But when it comes to enterprise workloads, they're still the place to go.
Anna Ragrana of Bloomberg Intelligence teeing us up. Thank you very much. That does it for this edition of Bloomberg Tech. Tune in to Bloomberg Television tomorrow, Caro, for more out of AWS. We'll bring you a live conversation with AWS's CEO, Matt Garman, and actually many other executives at AWS, too. Don't miss it. You're going to be racing there.
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