AI Spending Ripples Across Tech Stack; Nvidia Acquires Hugging Face

**SPEAKER_1** (0:05)
Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.

**Ed Ludlow** (0:14)
This is Bloomberg Tech coming up from chips to servers to software. AI spending is rippling across the tech stack. What earnings from Broadcom, Snowflake and HPE? Tell us about the strength that the AI boom will discuss with the CEOs of Snowflake and HPE later this hour. Plus, Nvidia has agreed to acquire Hugging Face in a transaction valued about $13 billion. We speak with Hugging Face co-founder, Thomas Wolf, about the deal. And self-driving tech startup, Wayve, reaches a deal with Uber to offer robo-taxis in London with a human in the driver's seat. Wayve's CEO later this hour. This is what technology stocks are doing. Higher on the NASDAQ 100, modestly 6 tenths of 1%.
It is earnings from software to chips to other parts of the infrastructure stack that we're focused on. In Snowflake's case, this is a blowout. The stock is on track for its best day since May and trading at a 2021 high.
AI is translating into faster growth. The revenue outlook up to $6 billion for the year. HPE, strong AI server demand, but not as strong as Dell. And there wasn't a read through from that name. We're going to speak to the CEOs of Snowflake and HPE later in the hour. Then there's Broadcom, huge AI chip growth ahead. Doubling in fiscal 27, doubling again in fiscal 28, but not huge enough for this market. And that's where I want to start today's show. Let's get more with Bloomberg's Dina Bass.
Broadcom is a custom silicon story, right? And they posted some big numbers in terms of what's going to come. But it just wasn't enough for this market. It was a high bar.

**Dina Bass** (1:49)
Sure. First of all, their forecast for the current quarter, their fiscal fourth, was pretty lackluster in terms of both regular sales and AI chip sales. And so that came out initially right after the bell and the stock headed downward. Then we got into the call and CEO Hock Tan gave the forecast that you just repeated about AI chip growth for fiscal 27 and 28, doubling each year, which again seemed to, at the time, please investors more, the stock started coming back. But this morning it's back down again.
You know, there are some concerns, one, in light of Nvidia's blowout quarter last week, that neither the Q4 numbers nor perhaps the forecaster may be good enough compared to that.
Two, some of this was priced into the stock already. There's also concern being raised about where that AI chip growth is coming from. You know, Tan basically said that most of it is coming from Anthropic and OpenAI, who are set to become the company's number one and number two customers in 27 and 28, respectively. So there's some concern about those two as the customers.

**Ed Ludlow** (2:54)
The stock's down 6% right now, pretty much on track for its biggest drop since the first week of June. $115 billion in fiscal 27 on AI chips, $230 billion in fiscal 28 Those are big numbers, but like Nvidia is doing now, $100 billion of revenue overall in a quarter. You know, is there any sense that this custom chip game is chipping away at Nvidia's lead in that market, that they're gaining market share on Broadcom's side?

**Dina Bass** (3:22)
It does seem to be chipping away at pieces of it. You know, we've had a lot of discussion from OpenAI over the last couple of weeks about the ways in which they are going to use the custom chip that they're building with Broadcom. But also at the same time, OpenAI will talk about how much Nvidia they're using. So, you know, there is that. The other issue for Broadcom is that even in the custom chip market they're facing greater competition.
Google TPU had been their largest custom, or it still is, but it is set to be replaced by Anthropic. And Google just signed a deal with Broadcom's competitor Marvell. Also more competition for Broadcom for MediaTech. Both of those companies are backed by Nvidia.

**Ed Ludlow** (4:02)
Bloomberg's Dean Abbas, thank you very much indeed. Stay with Bloomberg. We're going to break down the other earnings. We're going to speak with the Snowflake CEO, Sridhar Ramaswamy and the HPE CEO, Antonio Neri, later this hour. By the way, when we came to air, there were some headlines on the Bloomberg Terminal about Chatbot outages. Curiously, the headlines all hit at the same time.
Down Detector is saying that users are reporting issues with OpenAI platforms. SpaceX AI is saying that Grok is experiencing issues and is investigating the outage. And Anthropic is saying, all within the same time span, it's investigating clawed errors and working on a fix. Those all hit the Bloomberg Terminal literally at the same time before the show started. We're trying to work out what's going on with all of the chatbots around the world.