Open-Weight AI Debate Takes Center Stage

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News. Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.

**Ed Ludlow** (0:22)
This is Bloomberg Tech coming up. Tech's biggest names are making the case for Open AI, arguing open weight models are key to innovation, competition, and even security. Plus, Intel showing signs of an AI-driven comeback, forecasting stronger sales as its data center business accelerates. And AMD and Cerebras are teaming up to challenge Nvidia, promising some of the fastest AI systems on the market. We speak with Cerebras CEO, Andrew Feldman. Our top story this Friday, a major push to shape the future of AI, a coalition of technology companies, CEOs and venture firms is urging Washington to embrace open weight AI models, arguing they're critical to American competitiveness, innovation and national security. The signatories include Microsoft, Satya Nadella and Nvidia CEO, Jensen Wong, who used his very first post on X to share the letter. It argues, quote, the United States should lead in building an open AI ecosystem because it expands opportunities, strengthens competition and extends American technological leadership. Bloomberg's tech, managing editor, Cerefriar, is with us.
The idea of open weight and open source, that's not new, but it was very, very interesting, the timing of the heavyweights of this industry coming out almost in unison and saying we need to think about this area.

**Sarah Fryer** (1:45)
I mean, it's a huge issue because right now, and they didn't say it in the letter, there is a really intense discussion happening about moonshots Kimi. This is a model that just came out of China that is pretty equivalent with US models, and it's changing the way people think about it. Whereas previously, the Chinese models were good open weight models and able to undercut US models on price, and they were very popular, but they didn't actually get to the point where the innovation looked like it was about equivalent with what you could get from US, and that's caused a lot of concern in Washington.
Maybe some policy makers threatening to change things, restrict things. And of course, US startups really depend on those open weight models. So if the US were to have something that was equivalent, that would really help a lot of the companies. But everything's getting built right now, and we have a lot of dependence on these Chinese models. I'm very curious what's going to happen in Washington as we digest what this means for the market.

**Ed Ludlow** (2:55)
I don't want to trivialize this, but it was fascinating that Jensen Wong elected to create an X account and use his first post as a mechanism to communicate this. For Jensen, this isn't new. He's talked about the importance of open models, open weight AIs, open source. The distinction is, if you use a closed model, you go via the API, but you can't see the model, you can't download it. In open weight, you can download and run the train model.
The data code aren't necessarily public. On open source, all of it's there available. You were absolutely right to frame this post-Kimi K3, but also with what happened with the open AI mistaken hacking of hugging face, it also raised some of the limitations of US open models, because hugging face wasn't able to defend itself in that respect. What do you think happens next? How serious is this?

**Sarah Fryer** (3:51)
Well, I think that it is serious because the whole market is resting on this idea that all of this tremendous capital expenditure investment, the build out of data centers, it's all going to end up having a return on investment for US companies. There's a whole other factor we haven't talked about yet, which is some concern that these Chinese models are built in part using unauthorized distillation of US models, including Anthropics Clawed. So if all of that investment from the US companies in their future innovation is then just being used to boost what China can accomplish, whether it's through distillation or through unauthorized chips use, that's a matter of big debate too, and that could really affect the ROI for these companies on the many, many billions that they're pouring in to build out for the future of AI.

**Ed Ludlow** (4:49)
That's probably the bit we don't know. Why did they do this and why now? Was it to counter distillation? Was it to try and get ahead of what happened with OpenAI hugging face? We'll find out, Bloomberg's Sarah Fryer, who leads the team here at Bloomberg Tech. Thank you very much. Let's turn to earnings. Shares of Intel, it's interesting. Now down 3%.
When the earnings hit last night, we saw the stock in after hours go as high as a gain of 13%. The chip maker delivered a stronger than expected forecast as demand from AI data centers is fueling a surge in its server business, particularly CPU. CEO Lit Bhutan telling me, CPU demand is now outpacing what is improving supply. Joining us now is Antoine Schuibhan, Head of Global Technology Infrastructure Research at New Street Research. He has a neutral rating on the stock with a $115 price target. I want to get into the technology. I want to get into what Intel is actually doing and well. But the stock, I was sat here last night, and the gains were massive. Then they eroded. Now, we're down 3%.