The Anthropic Rocketship, AI’s Spending Limits, SpaceX IPO

Channel: Alex Kantrowitz

Published at: 2026-02-02

YouTube video id: 1Ya_DMTAn78

Source: https://www.youtube.com/watch?v=1Ya_DMTAn78

Anthropic looks unstoppable as a $10
billion funding round turns [music] into
20. Big tech earnings are in and there's
no margin for error and SpaceX has an
IPO date and is maybe acquiring XAI 2.
That's coming up on a Big Technology
Podcast Friday edition right after this.
Welcome to Big Technology Podcast Friday
edition where we break down the news in
our traditional coolheaded and nuanced
format. We have a great show for you
today. We're going to talk about the
numbers getting even bigger for
Anthropic and OpenAI as they attempt to
raise their latest funding rounds. We're
also going to look at big tech earnings
[music] and ask whether there's any room
for error anymore, especially with
Microsoft having one of its worst days
in years. And then as we close, we'll
talk about SpaceX and whether that IPO
is going to come [music] this year and
whether it will include XAI. It's going
to be a great show. And joining us today
is San [music] Francisco bureau chief of
the Financial Times, Steven Moore.
Stephen, great to see you again.
Welcome.
>> Yeah, great to be back on. Thank you.
>> Okay, so let's start with the big tech,
not the big tech. Let's start with the
AI labs. Um, last week we talked about
how OpenAI was in the middle of this
historic fund raise and whether there
would still be money left or how much
money could they could possibly raise uh
after this. Well, news showed up that
Anthropic is actually also on the
fundraising path and it's like these
companies are always fundraising and uh
they were actually going out for a $10
billion round and then they ended up
raising uh or or doubling that round to
20 billion. Here's here's the Financial
Times story. Anthropic is set to raise
about $20 billion from venture
capitalists and other investors, double
the amount it had targeted and a sign of
surging investor enthusiasm for the
high-profile II startup. The fundraising
deal, which is close to being finalized,
would value the company at $350 billion.
So, a little less than half than OpenAI.
Uh, but Anthropic is clearly having a
moment. So, I'd love to hear your
perspective, especially since the FT has
done the reporting here about just how
intense the interest has been in
Anthropic and why you think that's the
case.
>> Well, as you say, like Dario Amade, his
sister, the whole company, they're
really having a moment in AI. You know,
people have always been very loyal to
Claude. You know, they've liked its
style, but it's had multiple hit
products coming out of this AI research
startup. Um, not least Claude Code,
Claude Workspace, and as a result, we're
really seeing a huge amount of demand
from investors of all stripes all around
the world to be associated with this
company. As you mentioned, we put out a
story this week that they've doubled
their latest funding round. They
initially went out to raise 10 billion.
uh they're actually going to raise
around 20 and they had demand for five
to six time that five to six times that
amount. Um which is a crazy amount of
money, right? Because this is just one
of multiple AI startups in Silicon
Valley raising at the moment, not least
XAI and OpenAI as well. Um, and I think
what this proves like 350 billion
valuation is of course above Elon Musk's
XAI at 250, but as you said like far
below the rumored 750 billion valuation
of OpenAI, but it really shows that
they're able to keep pace at least in
fundraising and and compete on compute
um with their their slightly larger
peers. And we're in a situation now
where people want to be associated with
the name. like when we're reporting out
these stories, we're finding it quite
easy to add extra names uh to the list
of VC and sovereign wealth fund backers.
Um and interestingly as well, we're even
seeing companies that had initially bet
on their rivals like Microsoft uh and
Nvidia putting money into Anthropic as
well. Now, that's partly, you know,
through self-interest. You know, they're
big customers, but it's also because I
think these these big tech companies, at
least when I speak to them, they think
it's good for the ecosystem. You don't
just want to have one, two or three
companies, you know, Elon Musk, Google
and OpenI taking it all. Having
anthropic is a very good buffer, you
know, for the whole sector and and the
whole world.
>> Now, Dario when he goes and gives his
public talks, he likes to say um he
always says this that that um Anthropic
went from a million what no 10 million
to 100 million in revenue. No, they went
from sorry 100 million to a billion and
a billion last year to 10 billion.
They've 10xed their their revenue year
after year. Uh do you think I mean how
thinking through the exponential do you
think that they could do that again? I
mean I think they got close to 10
billion last year. They didn't quite 10x
but they got close. Do you think they
could get in the range of 100 billion?
Because as these numbers get bigger the
task to 10x becomes harder. It's not
like an easy thing to do. [snorts]
>> They're certainly on the right track to
get there. you know, they they've got a
lot of interest. They've embedded
themselves in both very big
corporations, but they also have like a
you dedicated fans in like, you know,
the developer community and like
individuals. So, if you think about the
revenues of some of the big tech
companies now, you know, Google's not
far off generating that much net profit
in, you know, half of that in a quarter,
right? So if you believe that OpenAI and
Anthropic are the next, you know, you
know, the next members of the
Magnificent 7 or the Magnificent 9,
there's no reason why they can't get to
100 billion in annual revenue. Now, of
course, what has to happen for them to
be viable companies long term is that
their costs have to come down because
remember these startups don't actually
make any money at the moment. uh and if
they are going to go for IPOs this year
or next uh you know and they're hiring
advisers, bankers and lawyers to do so
eventually, you know, the whole of their
balance sheet will be laid bare and
people will be able to take take a
better take a better look uh under the
hood and determine whether they're
viable long-term businesses. But
certainly Anthropic is is going about
things in the right way to secure its
funding like lock in lock in more
strategic partners long term. So yeah, I
mean I think it's feasible, but you know
this is remember this is these companies
are have really only been in the public
sphere and have been in have captured
the imagination for two years. So we
just don't really have that much data to
see the trajectory of this.
>> Right. And when you say they don't make
any money, they're not just not making
profit. Like these companies are losing
>> they make money. They generate revenue.
What they don't have is earnings.
>> Correct. And one more thing that really
struck me about this story. I mean of
course we know that like as you
mentioned Claude co-work uh Claude code
are really driving you know at least the
conversation that these investors pay
attention to nuts which is really the
the conversation on X right um and the
question is like who does that who who
would you sort of rope in because of
that buzz and you would think that if
you have such an overs subscribed rounds
it's like the traditional uh Twitter VCs
uh that would come in but it's not u I
mean maybe it's some of But the thing
that really struck me is that it looks
like Microsoft and Nvidia, uh, this is
according to your story, have committed
to invest a total of up to 15 billion in
the company. You know, that's not
Google, that's not Amazon, it's
Microsoft and Nvidia. To me, that's, you
know, people usually when they talk
about the OpenAI universe, they talk
about three companies. They talk about
Microsoft, they talk about Nvidia, uh,
and they talk about Oracle. And now
Anthropic seems like it's attracted some
of the biggest backers of OpenAI, which
is interesting because I think you'll
remember that the rumor was in the
latest funding round Sam Alman was
saying if you invest in any of our
competitors, you're not going to be able
to participate in future rounds. And now
clearly maybe maybe Nvidia and Microsoft
got a waiver or maybe they don't need
one because of their size. But the fact
that they're going to come in with such
power uh and backthropic to me is
remarkable.
Yeah, it's it's extraordinary the way
that the landscape has changed over the
last 12 months. A story we wrote uh at
the Financial Times about um uh Sam
Alman threatening to cut off investors
that invested in rivals actually ended
up in a lawsuit that Elon Musk brought
against the company uh for
anti-competitive practices. Now, Sam
Alman said that he didn't say he'll cut
you out of the funding round. He just
said, "We won't share any advanced data
on our financials or give you our our
tech road map in case you share it with
our rivals." But it looks like since
Microsoft renegotiated its relationship
with OpenAI that all of this exclusivity
is breaking down. Um,
remember Amazon and Google have had the
longest standing cloud and investing
partnerships with Anthropic. They're now
adding Microsoft Azure to that mix. They
also do work with Oracle. So we're
really seeing the whole sector like
diversify and become more strongly
intertwined as the prevailing thought is
now that these models aren't all just
going to commoditize and converge on the
same thing, but they're going to
specialize and they're going to be good
for different things. And what Anthropic
has really been able to show is is very
good for developers and it's very good
for enterprises. I mean, it's it's
probably already lost the kind of
consumer app battle to Open AI with
Google, you know, making some small
inroads in that, but not really for a
company of its size. But in San
Francisco, I'm sure you hear it in the
bubble chamber. You know, if you follow
an account called Overheard San
Francisco, there's a joke going around.
It's like one person walking down the
street says, "Oh, you know, Rome wasn't
built in a day." And the other person
shoots back and says, "Ah, well, they
didn't have clog code."
>> Yeah. No, it definitely shows up in the
data uh because I have some data from
Apptopia that I'm looking at right now
and in June uh 2025, so 6 7 months ago,
the average time spent on the on the
mobile app of Claude was about 10
minutes. Today in January 26, it's above
30 minutes. So time spent per user on
Anthropics Claude has tripled in 6
months. And to me, what's remarkable
about that is it's the mobile app,
right? And you would you would say,
okay, maybe it's because these
developers are spending all this time uh
in, you know, cloud code, but that's of
I think often that's desktop. So, the
fact that there's there's something
going on. I've definitely seen, you
know, I've had these moments where I've
gone back and forth between chat bots.
Um I I like Ron and I we joke that we
used to be clawheads. Um and then we
became I think we called it uh chat
chaps but I don't know if I think
[laughter]
there's a nod to your to the you know
the the British audience but I think we
need a better uh
>> yeah maybe term
>> isn't isn't something you want to say
too much.
No, in fact, but but I'm saying that
like I've now gone back to to um to
Claude for a lot of my work rellated
uses and I'm seeing these numbers and
I'm not surprised.
>> Mhm. No, they they're definitely
capitalizing on their moment. And also,
you know, Dario Amed, the the the
founder, he's very visible, right? Um
I'm not sure if you managed to read all
20,000 words of his essay that he put
out last week. Uh I think a best good
use of Claude would be to put it in
there and crunch it down a little bit
into the most salient bullet points. But
he's also asserted himself into kind of
like the cultural, the social, the
legislative moment here that we have for
AI. Um, being obviously leading research
at one of the one of the top startups,
but also warning about a potential
economic apocalypse, you know, uh, and
dangers from unleashing this technology,
which he believes will become truly
transformational in the next two years.
So, they kind of have that going for
them as well. Um, and we were both at
Davos last week or the week before. Um,
and there was a lot of sniping going
backwards and forwards between these
these different companies. I'm sure you
picked it up. You had Damis of Google
saying, "Oh, well, you only need to look
at what's coming out of these different
AI labs. Look at what the ones run by
scientists." And by this, he was
actually on stage with Dario at the
time.
>> I thought Dario was the one that said
that that
>> my apologies. It was Dario that said
that. Um, and then and then Demis kind
of agreed and then they said, "And look
at what's coming out of these companies
that are run by like VC and like social
media people like a and not too veiled
shot at Meta and Open AI." Later in the
week, Dennis couldn't resist of Google
couldn't resist having a shot at Sam
Alman for putting apps in GPT. He said,
"Well, if we're so close to AGI money
and the stock markets were all becoming
irrelevant in in in two years time, so
why do we even need adverts?" So as the
competition heats up for users and
funding and and kind of you uh space in
the public consciousness, so so are the
barbs flying backwards and forwards
between these uh you know uh between
these very very wealthy but still very
competitive people,
>> right? And so last week we talked a
little bit about how OpenAI was trying
to raise 50 billion and the headline
there was that Sam Alman was in Saudi
Arabia and some other Gulf states trying
to raise that round and I was basically
raising my hands and being like how how
many more times can they do this? Uh and
then eventually they have to go public
and then certainly the numbers are going
to matter then you would imagine. Well
uh it turns out that 50 billion wasn't
the ambition. It looks like it's
actually much larger. uh because we've
gotten a bunch of news in the back half
of this week that OpenAI is looking to
raise much more than that. I'll start
with the Wall Street Journal report,
then we'll move to the FT report because
this uh came out, you know, shortly
shortly before we're speaking. Um so
here's this here's the headline. U it it
is Amazon is in talks to invest up to 50
billion in OpenAI. Uh the chatb maker is
seeking up to 100 billion in new capital
from investors around that could value
it as much as at as much as 830 billion.
Andy Jasse, Amazon's chief executive is
leading the negotiations with OpenAI CEO
Sam Alman. The shape of the deal should
one be reached could still change. Uh by
the way, so I comment on two things for
us if you could. First of all, uh, like
it's a jaw-dropping moment, is it not
that they're actually going to
potentially raise this amount of money?
I think the largest VC round in history
was a couple billion dollars up until a
few years. Now we're looking at a
hundred billion dollar round. And then
talking again about the the accesses
around these companies. Now, the funny
thing, you know, Amazon has long been an
anthropic partner. they have, you know,
marched marched people around their, you
know, their new facility that they've
built with their tranium chips talking
about how they're, you know, deep
partnership with Enthropic has been
what's enabled them to build this data
center and now they're going to go and
put you know an absurd amount of money
uh into open AI. What are the
implications?
>> Well, as we saying the the
interconnections between this the sector
are becoming more and more confused,
intertwined. you know, nobody is nobody
is looking for exclusive agreements
anymore. Microsoft has broken with open
AI. Amazon is seemingly on the break uh
seemingly about to break with, you know,
its pure backing of anthropic. Um 50
billion is obviously an extraordinary
amount of money. I don't think we can
call it a venture capital round anymore
when you have a company as large as
Amazon committing for that. And of
course, as always with these figures,
you know, such as the 500 billion
Stargate project which was announced
this time last year by Oracle and
OpenAI, the devil will be in the detail.
A lot of the way these deals are
structured are actually very circular.
You know, they they will be in the form
of compute credits. So, the money that
Amazon is putting into OpenAI will come
back for using their AWS data center
services. Um, and it'll be interesting
to see how when the details come out of
this fundraising, which you one imagines
would be very soon, exactly what the
terms uh of these contracts are. It's
not just Amazon writing a huge check.
Microsoft going to put a few a few
billion in, we hear, but you know, not
too much more because obviously they
already own 27% of the restructured
company. Uh, Nvidia are putting more
money in, but also SoftBank, the big
Japanese conglomerate. They're talking
about writing another $30 billion check.
to finance this. They sold off a lot of
their holdings of Nvidia, they've pulled
out of a few other deals. So, whilst
OpenAI must have has lost a little bit
of its momentum, uh it's lost a little
bit of its sheen. You may be hearing a
little bit more noise about Gemini or
noise about Claude, this funding round
really shows that they are still able to
compete out compete their rivals, you
know, uh at least their startup rivals
in fundraising. And if you know this is
going to be a blunt force improvement of
models by using more compute, open AAI
is very much still out in the lead. But
it sets up a really interesting 2026 and
2027 because they're all hiring
advisers. You know, one of the the the
talk of Davos were bankers and lawyers
buzzing around trying to win lead roles
on all of these deals. Uh not just them,
but also Elon Musk companies like
SpaceX. And eventually, you're right,
the these pots of money will be tapped
out. You know, investors will hit
concentration limits. sovereign wealth
funds might get cold feet. There could
be another deepseek moment where
everyone gets slightly panicked about,
you know, um closed models and the rate
of development, but at the moment it
seems to be full steam ahead. But in
2027, I can't I I can't see these checks
of these sizes being written again
unless you go to the public markets and
you start giving retail sh your retail
shareholders and big institutional
pension funds, things like that access
to try and finance, you know, their
colossal ambitions for like data center
and inference.
>> Yeah. So I checked the largest IPO in
history raised $30 billion for Saudi
Arabia. Last week I said 40 billion. Uh
it's actually 30 billion. So the check
from Amazon alone, maybe it's a check,
maybe it's AWS credits, we don't know,
would almost double the size of that
round. And so I mean, so you think 2027
is where this ends because there's not I
I just don't think there's enough money
in the world, is there, to continue this
cycle?
>> There's Well, there's two sides to it,
right? There's there's a finite amount
of private capital or institutional
institutional. By institutional I mean
like you know uh big tech money that you
can attract in but there's also a finite
amount of money available on public
markets as you pointed out the biggest
IPO in history was Saudi Aramco 29
something billion in 2019
if you have anthropic coming to market
you valued at 350 privately you know
maybe optimistically double that on the
public markets you have SpaceX which
we'll talk about later looking at a1 to$
1.5 trillion valuation you have open AAI
I looking at over a trillion as well.
You can throw other companies like data
brick, snowflake, stripe, all of them
might choose to come to market and list
a portion. Is there enough money in the
public markets around the world to
absorb all of this? Uh a banker I was
speaking to, you know, a few weeks ago
was like, I actually don't think there
is, you know, so they can't really all
go at the same time because they risk
kind of like hamstringing each other in
their ability to fund raise. So I think
there does have to be like a certain
cadence to this. Um, and also if you
talk to people inside OpenAI and
Anthropic, these are still very young
companies. They're still sorting out
their corporate governance structures.
OpenAI in particular has a number of
like pretty severe looking outstanding
lawsuits from from everything from Elon
Musk trying to block their conversion
away from a nonprofit to the New York
Times suing them for like basically
copyright theft. Um there's a lot to be
ironed out before these companies can go
on a road show, show some confident
financials and really persuade people
that they are, you know, going to be the
next, you know, Google and Meta.
>> Yeah. And before we go, you know, I just
want to talk about one application
that's sort of uh I would say emblematic
of the hype and maybe potential in this
space. And it came up in our Discord
this week. It's something that used to
be called Claudebot. It had to change
its name because Anthropic wrote them a
letter. Um but here's the story. What is
Clawbot and why is everybody so obsessed
with it? It's an open-source messaging
first AI assistant that connect to chat
apps. Can connect to chat apps like
WhatsApp, Telegram, Mess, iMessage,
Slack, Discord, etc. Remember context
over time, send proactive nudges and
trigger automation on a machine where it
runs. Think of Cloudbot as a personal AI
gateway that you talk through uh you
talk to through messaging. You text it
like a colleague, it replies in the same
thread. your phone and laptop and tablet
all day stay in sync because the
conversation lives in the messaging
layer. Then the service connects with
your computer and can go and use it and
accomplish tasks for you. Things like
fetching data, generating summaries,
running routines, and automating repet
repetitive work. Uh people have gone
absolutely nuts over Claudebot uh this
past week. Uh what is your thought on
Claudbot? Is it real? And what do you
think it says about the moment we're in?
Well, it shows that, you know, uh, a
developer sat over in Austria in a very
short period of time, vibe coding, can
come up with a really interesting app
that gains traction largely through word
of mouth and through GitHub, GitHub, and
can like show that AI can be used.
>> Totally. This was totally vibe coded.
This is what they the person said. They
didn't even check their code. They just
put it out there, which is how I'm not
letting it use my machine if it's just
if it hasn't, the code hasn't been
checked. But the fact that it was vibe
coded and is taking off like this is
somewhat remarkable.
>> Yeah. I mean it just shows you that this
the field is really wide open for like
the next killer app or use case for
this. And you know whilst I think quite
rightly all the AI labs are focusing on
you know um consumer users who are most
of whom are just using this as a
replacement for Google search at the
moment right but also the power users
who are using it to code. But the real
money, like the stickiness is getting
these big multi-year 10 to$100 million
contracts with, you know, you you know
existing public companies, you know, to
go in there and like replace a lot of
the that the SAS software that they
already have in there from like Workday
or Salesforce. That's like the biggest
prize at the moment. But that doesn't
really capture the imagination, right,
of anyone but an investor looking for
like better a if you're just an ordinary
person on the street, you're probably
more interested in the video generation
capabilities. And then suddenly
Claudebot or actually what's it called?
Malt maltbot now. Uh the the strongly
worded message from from Anthropic
clearly had its effect. You know that
can come in and like suddenly send
messages and and people are willing to
take a gamble on it even though it might
have slightly janky code. And I just
think it's really interesting that you
know these things can come out of
nowhere. And hopefully hopefully for the
guy it'll work out and you know he'll
gain some traction rather than just kind
of disappearing or be copied by the by
the more major labs. But it's fun,
right? It just shows you don't really
understand the contours of this new
technology yet.
>> Yeah, people are definitely having a
field day uh talking about it. And the
memes are really interesting. I think
they're telling this one uh person on X
Kevin Zu said, "Gave Cloudbot access to
my portfolio." He said, "Trade this uh
trade this to 1 million. Don't make any
mistakes. 25 ST strategies, 3,000
reports, 12 new algorithms. It scanned
every expost, charted every technical,
traded 24/7. It lost everything, but
boy, it was beautiful. Um, [laughter]
Jimat Palapatia, I spent 15 minutes on
Claudebot and saved me 15% on my car
insurance. There's a little Geico code
joke. Uh, this other person said, set up
Claudebot to text my wife good morning
and good night every day. Also casual,
how are you messages during the workday
24 hours? It was having full-on
conversations without me even being
involved. This is absolutely insane
tech. I haven't talked to my wife for at
least two days, and she seems happier
than ever. I mean, I think that these
memes are telling and that there is a
it's a very interest very interesting
moment. There is a desire among people
to trade to to trust these applications
with sometimes even more than they even
know they should.
>> Mhm. And just play around with it and
experiment and have a bit of fun, you
know. Uh I don't think the the big
technology podcast is advising that
anyone outsource their relationship to a
chatbot quite yet, but you know, maybe
>> it might it might help some of you.
Yeah, it might help some people who have
bad texting form. Yeah, but um you know
if it if it can automate those little
annoying parts of your day, you know
that you that that that just like
especially for those of us with like
kids and busy jobs, you know, those
those those precious those minutes saved
can be very precious.
>> Exactly. [snorts] Well, another very
interesting thing happened this week and
I want to get into that in depth, which
is that uh Microsoft and Meta both beat
earning expectations. They beat on
profit and they peed on beat on revenue.
Meta's stock shot up double digits and
Microsoft's dropped double digits and I
think it is very telling in what it says
about the state of technology today. So
we will talk about that when we come
back right after this. And we're back
here on Big Technology Podcast with
Steven Morris, the San Francisco bureau
chief at the Financial Times. Uh
Stephen, you couldn't have come on on a
better week to be honest because we're
in the thick of big tech earnings and
you know while these earnings are
typically like a good opportunity to
check in on profit and loss among these
companies uh we actually have like a
pretty interesting story developing. So
as I mentioned before the break uh Meta
Meta had record sales. It jumped 10%.
Microsoft also beat on revenue and
profitability and it dropped. The market
crushed it. I think it's down 11% on
Thursday. Um, which is when we were
recording. Yes, we're recording Friday
edition on Thursday today. Um, but I
think it still works. Anyway, uh, the
thing about the thing that caused
Microsoft to drop, people are saying, is
that, uh, Azure revenue didn't grow as
fast as they expected. There was some
expectation that Azure revenue would
grow uh, something like 40%, it's only
growing 37 or 38%. both MC Microsoft and
Meta's um capital expenditures are going
to go up. Meadows went from like a
predicted like 110 billion on the year
to something like close to 135 at the
top range. Uh I think this is notable
because uh it just shows that there's so
little room for error in this world that
if you get uh you know if you if you get
anything wrong the market will interpret
that they are going that you're going to
um have some serious problems when it
comes to AI. What do you think?
>> Yeah, I mean it's it's every quarter the
earnings that come out from these big
tech companies. It's sort of a lottery.
Like you look at the numbers initially
and you're like, "Wow, those are big
beats on revenue, big beats on profit."
Like we're seeing a 30 a 39% growth in
Azure and huge increase in in bookings.
And yet the shares plunge. Mic Microsoft
gets absolutely killed in the market.
And there are always games played by
Wall Street, right? People don't just
want to see you beat the analyst
estimates. They want to see you beat the
beat, right? And so Microsoft has found
itself in this very strange situation
where [snorts] a one percentage point
miss in its Azio revenue momentum causes
it wipes you know hundreds of billions
off its share price and then people are
also there are also several other things
going on at Microsoft you know there are
some very interesting things disclosed
uh about open AAI
um but also its capex like Microsoft is
on track to spend 140 billion this
fiscal year which their fiscal year is a
bit weird it runs from to June instead
of to December. Uh and that's pretty
much with on track with what they spent
in in the last quarter of of last year
which was you know 37 billion. But
people are questioning this. This is 66%
more than they spent in the same period
the year before. These are vast jumps.
And then the other thing that caught
people's eye was they had to disclose
their relationship with OpenAI in a
slightly different way now that OpenAI
is restructured as a for-profit company
from a nonprofit. [snorts] uh and they
revealed that they booked uh 10 billion
cash gain from the amount of cash open
AAI has on its balance sheet due to all
these like huge fundraisings that
they're doing. But they also said that
45% of their future Azio contracts were
based on OpenAI. So immediately on the
earnings call all the analysts are like
I was about to say holy s there but I
should say oh my god you know 45% of
your revenue is tied to open AI.
Remember this is a company as we said
before it makes a lot of revenue but it
doesn't make that it doesn't make any
profit. That's for a company the size
and age of Microsoft to be that reliant
on a single customer is a big red flag.
A single customer that has a lot of
noise around it and increasingly has
competition from Google and Elon Musk
and Anthropic. So the CFO spent most of
the call trying to say oh well you know
maybe 45% of it is open AI but that
means that 55% isn't and that's still
350 billion in revenue. But as you can
see, the shares were down 7% at that
point. When I woke up this morning, they
were down 11%. So, I don't think Amy
Hood, the CFO of Microsoft, did a very
good job persuading everybody. But it
plays back into what we were saying
before about this diversification. Like
Microsoft has spent a long time locking
OpenAI down to lots of exclusive
contracts with it, both through its
technology and being and to be its main
compute provider. It's then spent the
last 18 months trying to get out of
those. And that's why it's investing in
Anthropic. That's why it's investing
people miss this. is investing a lot in
Mistral, the French AI house, because it
believes that Europe is not going to let
its AI be run entirely by a bunch of
West Coast tech companies and Elon Musk.
So, Microsoft is now all about the
diversification. Before it was taking
credit for turning a 14 billion
investment into OpenAI into whatever the
hell that will be worth, many multiples
more when the company goes public. Now,
it doesn't want to talk about OpenAI. It
wants to talk about anthropic. It wants
to talk about Mistral. It wants to talk
about its own models and its own chips.
Uh, and I think that's a new story that
it's trying to tell the market, which is
why we saw his shares got hit. And then,
as you said, Meta is this whole other
story.
>> This is my perspective here. I think
we're just so early on in the AI game
that the market is looking for any
signal for where this is going. And it's
like, oh, like there's a little bit of a
slowdown in growth. Microsoft's going to
lose the AI game. Meanwhile, we're so
early in the buildout. We have no idea
what's going to happen. We have no idea
what's going to happen with Meta Super
Intelligence based off of this quarter's
revenue. So, it's all extrapolation
based off of limited data.
>> Exactly. And you look at the quarterly,
the short-term quarterly reaction to the
quarterly earnings, right? They're down
8%. Remember two quarters ago, we were
talking about how Meta had 200 plus
billion wiped from its valuation in a
matter of minutes. Now, we're talking
about how it had 300 billion added in a
matter of minutes. But if you look at
the long-term trajectory of all of these
tech stocks, it's like this. You know,
they're, you know, Google is now worth
more than four trillion. Microsoft is,
you know, lost its actually Google has
bolted its leaprogged it in the kind of
market cap race. Microsoft is still 3.6
and we've got Nvidia way out ahead of
everyone at 5 trillion. The general
trend is still upwards, but we just have
this skittishness in the market as
anyone's looking for any signs of
weakening demand, the bubble, you know,
contracting or even popping. But if it
was just about spending, meta double is
going to double this year its capex. So
like spending on data centers and chips
and servers and everything that goes
into supporting that upgrading power
structure, it's going to double it to
135 billion, you know, from 72 billion
the year before. And that's not all that
Zuckerberg is spending on over there.
He's also spending hundreds of millions
on compensation packages to try and
attract staff, you know, from other
leading AI labs to try and rebuild their
own llama model, which of course felt
fallen badly behind, has been a huge
embarrassment for them to this point.
But Meta was crucially able to show that
AI is improving their ad targeting and
their ad revenue and and their
counterparties love this. You know,
whether it's on Instagram, WhatsApp
threads, Facebook. And so the market
rewarded that. They're like, "Okay,
you're going to double capex, but you're
actually also showing us like some
tangible impacts from AI on AI,
improving your advertising revenue."
Because that's what Meta is, just a big
advertising business.
Microsoft hasn't done that. You know,
Microsoft has made a great early bet on
OpenAI, but it hasn't proven that it's
like Office suite of products. It been
meaningfully improved by integrating AI
and you know, by and if they can
meaningfully improve it, that means that
they can charge more for it and they can
increase their margins. That's the big
game now for Microsoft. Can because it's
a it's a software business and a data
center business and I think the former
has quite a lot of question marks about
how it's integrating the various models
into it.
>> But here's my big point. I don't think
we can read anything into what's
happening already. I mean, it's we're
still in the buildout phase. We're still
in the picks and shovel phase. We're not
anywhere near the point where economic
activity tied to AI is exceeding the
amount of money being spent on
infrastructure. Yes, Meta has done some
things with like um you know generative
like generative AI being used for
creative optimization. Yes, they've done
some things on using you know standard
machine learning to better optimize
their platforms. But there's no way that
what Meta is doing today will have any
bearing on whether its AI program
succeeds because that's all about this
personal intelligence thing. And so, you
know, and Microsoft too, like we'll see
what happens with Microsoft, but you
know, they're, you know, it seems to me
like all the jockeying has been like you
mentioned, so much of their revenue is
going to be coming from open AI, not end
users who are deploying, uh, you know,
AI solutions. And so I think the market
is like blindfolded right now swinging
around trying to be like who's winning
AI who's not whereas like we won't know
even you know who is leading for a
couple of years.
>> Yeah. And who is leading or having a
good moment is anthropic at the moment.
It could be Google again next. Maybe O
Open AI knocks the lights, you know,
blows the lights out with like an
incredible new model with, you know,
something that really captures captures
the public imagination or is
indispensable to, you know, Fortune 500
companies. Uh, everything is so fluid
and flexible. That's why it's so much
fun to cover as journalists, right? But
it's also pretty exhausting as well. And
we haven't even gotten to Elon Musk yet.
>> Oh, yeah. That's coming, Ben. And I I
did hear that GPT6 might be coming uh in
the second quarter this year. So maybe
as soon as you know this spring which
would be interesting. All right, one
more company to touch on with earnings
and then we can get into oh shoot we
have so much to discuss. Uh let's talk
about Apple quickly and then the Amazon
layoffs if we have a moment and then
we'll get into Elon. So first of all
Apple my prediction has been that
Apple's going to have the best year you
know of its history maybe you know in
the past and going forward because it's
in this moment where like there's no AI
device and it's selling like crazy. Uh,
I'll just give one note from your story
uh about Apple's earnings. By the way,
blowout earnings. They did it. They beat
on revenue. They beat on earnings. Um,
the iPhone revenue grew 23%
to 85 80 85.3 billion compared with the
prior year. Uh, I think the the
estimation was it was going to grow
something like 14 no 16. No, yeah, 14%.
It grew 23%. This is a company that's
been struggling to post double digital
iPhone growth for a long time. Uh to me,
it just seems that Apple is kind of in
the driver's seat in 2026. No AI device,
no killer AI consumer app yet. Uh but
the iPhone is selling like hotcakes.
What do you think?
>> Well, the next iPhone was supposed to be
the first AI enabled one. You know, Siri
was going to be overhauled. It was going
to become your de facto like personal
assistant, and that just didn't happen.
I mean, I'm sure we've you you've spoken
about this on the podcast multiple times
before, but what we have seen is the
iPhone 17 was a blockbuster product. You
know, it drove a huge upgrade cycle. Uh
I really interestingly in China as well,
which you know, shows the tightroppe
that tight rope that that CEO Tim Cook
has been walking between Trump and
China. You know, he's he's still on it,
you know, despite claims to the
contrary. Um, conspiracy theorists say
that the the new OS update, Liquid
Glass, performs so badly on the 14
backwards. And I have one of those, and
I can verify that, yeah, it's pretty
janky.
>> I love driving the upgrade.
>> That's amazing. Could be.
>> You make an operating system that's so
complicated to run, the old iPhones feel
slow and annoying, so you upgrade in
order to, you know, uh, for it to look
slightly nicer. But you know after all
these these reports that you know Apple
Apple had lost you know the the
smartphone market in China. It had
bungled the AI opportunity. I mean this
quarter did answer a lot of those
questions right. People are still buying
the iPhone above almost any other
device. Geopolitics haven't disrupted
its supply chains. it hasn't, you know,
enjoyed sort of like hasn't suffered
from a deacto ban in China because of
the because of the trade war that's been
going on. And, you know, they're not
spending the hundreds of billions that
their rivals are on building data
centers and investing or investing in
startups or building models. They just
signed a deal with Google Gemini, much
like their search deal to put to make
Gemini improve Siri. So they're kind of
outsourcing a lot of this AI stuff and
they're just focusing on being the main
device through which most people will
experience it. And you know maybe long
long term you over the next 10 to 20
years that'll be a bad bet but certainly
in the short term they're saving a lot
of money and still selling a lot of
phones.
>> Yeah, they seem like they're going to be
in good shape for a while. And you're
right, I think it is a long-term
liability, but it's going to look really
nice in the short term as all this
spending happens and Apple just kind of
sits there, partners, sells a ton of
phones, um, you know, maybe ships
another bad design and then makes more
people upgrade. They have the fold
coming this year. Um, I I really think
that this is this could be the the the
year of Apple preceding the the last
decade. Um, that's my opinion at least.
and they're going to they they bought a
very secretive Israeli startup today
where the technology analyzes micro
changes in facial expressions which they
sort of say means you can communicate
without talking. Um but I do think it
shows that Apple is as Meta and Google
are as well looking very closely at like
wearables but in particular like
glasses. Um, I guess another big tail
risk for Apple is this Johnny Ive design
um new device, screenless device that
OpenAI is helping finance, which we hear
is a a big part of the reason why Apple
decided to go with Google Gemini instead
of um Open AAI and Chat GPT to power
Siri because you're like, okay, your
Pixel is not really a competitor to the
iPhone. It's proved that over a number
of years now, but whatever this new
Johnny IV device is could potentially be
quite threatening. So, there's a lot of
moving parts. Um, but Apple still looks
pretty healthy. I mean, I don't have an
iPhone 17 myself, but I did go to a h I
did go to a Halloween party uh down uh
in PaloAlto. Um, and the h the house I
went to is next door to um Steve um
Steve Jobs's uh wife. Uh and she hosts
an absolutely enormous Halloween party
there. We're talking animatronics, like
dozens of actors. People come from miles
around to see it. The queue goes around
the block. So, I chose not to take my
daughters into it, but I realized if you
stood in that queue for an hour at the
end, they were giving everyone a bright
orange Halloween themed iPhone 17. So,
maybe I don't think she was she was
giving them away, right? So, those
probably don't count towards the sales
figures, but um you know, people were
absolutely delighted by this device. Uh
and I can testify that looks pretty
cool.
>> I All right, I got to go to her party
next time. That sounds amazing. Um I I'm
going to say first of all an interesting
thing speaking of you know we talked a
little bit at the beginning of Anthropic
having a moment here. Um actually Apple
wanted to go with Anthropic first and
they wanted to use cloud. This is
according to Mark German said it this
week. Um turns out Anthropic you know
was basically trying to charge in a lot
of money. Then they eventually went with
plan B which was Google. So that's an
interesting uh wrinkle. I have to tell
you I don't think the device is going to
threaten Apple at all. at least for the
[laughter] next couple at least for the
next couple years. I I really think that
these AI devices are going to be a big
letdown uh in the near term.
>> Another humane pin. [snorts]
>> I I mean it, you know, it's funny. We
joke about the humane pin and we think,
by the way, created by I think a couple
of people who worked on the iPhone. Um
and we think that of course Apple will
come up with a much better idea than the
humane pin whereas maybe the interaction
layer just sucked. And I think that's
not taken into account as often as it
should be.
>> It didn't help that it also overheated
and exploded.
>> Well, listen, I mean, you never really
want that in your device, but uh you
know, we we've seen we've seen companies
get over that in the past. Yeah. Look,
it was they everything that they could
have done wrong, they did wrong. The
product wasn't great. Uh there were some
issues with the safety side of things
and they they gave they rolled it out
with this very weird like emo uh video.
Yeah, that's right. [snorts]
>> Not not exactly a great roll out, but
also that's what I'm saying. Like, you
know, maybe all those things were the
problem or maybe the form factor was the
problem. And I think we're going to find
out pretty soon uh what the answer is.
All right. Speaking of of companies that
try lots of different versions of
products, um with AI inside, we have
Amazon. And Amazon did not report
earnings this week, but they are laying
off 16,000 people this week. This is uh
from Business Insider. Amazon started
notifying impacted employees Wednesday
morning as part of its plan to cut
16,000 corporate jobs. Uh the head of
HR, Beth Galleti at Amazon, uh wrote
this. I have important but difficult
news to share with you after a thorough
review of our organization, our
priorities, and what we need to focus on
going forward. We've made the hard
decision uh to eliminate some roles
across Amazon. unfortunately your role
is being eliminated as part of the
changes and your employment will end
after a notification period. Um she also
wrote basically like I you know I know
that there's some indication that
there's a new rhythm or some of you
might think there's a new rhythm where
we announce broad reductions every few
months because I think what is this the
fourth mass layoff that they've had over
two years and she said that's not our
fault. uh Amazon is a company that's
like already operating with somewhat
paranoid employees. So, this isn't going
to make things much better. What's your
main uh takeaway about the workforce
reduction here? And do you think it's a
good or a bad sign for the company?
Um there are two things I think that's
going on. One is they hired a lot of
people during the pandemic, you know,
when when delivery surged and they
really needed they needed to surge in
their own workforce to cope with this.
And I think we're seeing a correction on
some of that now as as you know online
commerce you know um normalizes
somewhat. But what we're also seeing is
a company which you know 50 billion
going into open AI plus a lot more into
anthropic. I think this is a company
preparing for an era of of AI whether
that's you know both in its white white
collar jobs but also blue collar jobs
like working in the factories. I mean
it's already one of the most automated
companies in the world. Um, and if
nothing else, Amazon is relentlessly
focused on the bottom line. Anywhere it
can cut costs in particular permanently,
it will try and do so. So, it's a very
uncomfortable situation for you to be if
you are an Amazon employee. Of course,
it working at Amazon is uncomfortable by
design, right? They want to keep you
right on the edge to make sure that
you're constantly as productive and
aggressive as you can be. But what we're
seeing here, I think, is is a company
that's that's getting ready for what it
believes to be a completely different
era of e-commerce, but also, you know,
working in factories and producing some
of the, you know, running and producing
some of the technology behind its its
various websites. Um, it just doesn't
think it's going to need as many people
in the future. I know the HR chief is
trying to calm everyone down by saying
this is not the new normal, but I would
be very surprised as if this this is if
this is the last mass layoff as Amazon
we see in the next 12 months.
>> So one one more question about this. Do
do you think this is AI related as in do
you think AI is take like automating
Amazon employees jobs or do you think
this is a financial decision that might
make room for some of the AI investment?
>> I think it's a little bit of both. I
mean, it always is. They talked about
thinning out layers of bureaucracy as
every company does when they make cuts.
Um, but I also think that they're seeing
some of the, you know, employees that
have been able to integrate AI into
their daily work life and become more
productive. I think they're kind of
looking ahead at that. Um, we don't have
the exact demographic data of who
they've let go, but I think it'll
probably be more heavily weighted into
the older employees that, you know, are
maybe less able or less willing to adapt
to this new AI powered way of working.
Um, and certainly if you look, we get
Amazon results next week, but there's no
slowdown in momentum of the company's
growth. So without even though they've
been taking all these employees out of
the company you see a short-term hit
because you have to pay all of them
severance but longer term your cost base
comes down dramatically.
>> Yeah. Amazon has this has a number of
leadership principles that the company
runs by and one of them is called invent
and simplify. And what you think that
means is like you you sort of put
technological solutions into place and
simplify processes. And generative AI
sort of puts that on overdrive where
like you can just simplify, you know,
invent and simplify your own job. And
that is sort of been a calling card and
something that Amazon employees have
been proud of for a long time. As they
invent, they simplify and they go and
they move on to something else. And I
don't I wonder if that leadership
principle will maintain the prominence
that it's had within that organization
and the and the support it's had among
the employee base. uh if they realize
that at the end of simplify it can be
leave. It has to be invent simplify and
then invent again. If it's invent
simplify and leave, then that spirit of
invention and and efficiency within the
company could really suffer.
>> Yeah, that's true. I mean, if it's
innovate yourself out of a job, it's uh
it's a difficult thing to get your head
around.
>> Yeah. And that used to be something they
used to be proud of because they would
get another job. But when that doesn't
when that security isn't there, that's a
problem. Okay, let's talk about
>> Well, that's sort of what Dario was
Darede was talking about in his
20,000word opus the other day. You know,
we're going to see he predicts at least
a lot of job losses. You know, as you
fewer people are able to do so much more
work or even a completely automated out
of the process once they really start to
get uh agentic, you know, agentic AI
powered like co-workers, you know, uh
working to a degree that they don't
constantly have to be checked.
Okay, very briefly, let's talk about
SpaceX. Looks like an IPO is coming
pretty soon. Uh people are thinking it's
going to be in June, which will coincide
with Elon Musk's birthday and some
planetary alignment where uh on June 8th
and 9th, Jupiter and Venus, this is
according again to the Financial Times.
Thanks for the great reporting this
week. U Jupiter and Venus will be within
little more than one degree of each
other in the sky about the width of a
thumb held at arms length. your
thoughts.
>> I mean, it's it's just another day in
the Elon Musk Inc., isn't it? You know,
reporting on this man is fascinating,
but also extremely difficult because you
often can't tell whether he's joking or
not. Um, but he has gone out there told
investors that he wants he thinks an IPO
in June would would fall on an
auspicious state. as you said the the
conjunction of Mercury uh sorry um
Jupiter and Venus which is then on the
8th to 9th which is then joined again by
Mercury in uh a few days later his
birthday is obviously in that month 28th
of June is a Sunday though so of course
you can't hold an IPO when markets are
closed on a Sunday um but he's thrown
out this idea he likes to light a fire
under people everyone's saying you can't
do an IPO in particular of this scale on
that time you know in that time frame
but you know Musk Musk's first
principles, right? You question
everything. You uh and you force people
to just work hard and get it done.
Um there are other things you got to
take it with a pinch of salt. You know,
this has been a big story in Europe, at
least over the last few weeks. He got
into a bit of an an online spat with
Ryionaire, which is like a budget
European airline. Um over them refusing,
you know, they're notoriously cheap,
like you have to pay for everything if
you don't want to sit on the wing. Um
and they were refusing to put Starlink
on the planes. And obviously Elon wants
Starlink on the planes because it earns
more money and they were arguing about
drag. So he threatened to buy the
company, fire the CEO, guy called
Michael Oolir. He's quite a big figure
in the UK and replace him with somebody
called Ryan. Uh this is how of course
the Twitter acquisition started him
threatening to buy it as a joke for for
um so you never know where it ends up.
But you know the we're hearing the June
timeline despite the planetary alignment
angle is a real thing. But then just
today you you get all these other
stories coming out that he might have
ambitions to merge it with one or more
of his other companies and and you know
that very well could be the case. I mean
we haven't heard anything solid about it
yet but those are the rumors out there.
>> Yeah. I think the rule with Ryionaire is
in the jurisdiction that it's in a
American or a non-European cannot be uh
the owner. So that sort of idea is out
the window. But I'm sure it's not beyond
Elon to set up a set up a European
subsidiary, staff it with one of his
people and and buy it that way.
>> Yeah, it wasn't made to be broken for
Elon.
>> That that could happen. Um the the
company that you you referenced that
people have been talking about uh yeah,
SpaceX merging with is is XAI, which
would be really interesting. Um I think
uh not a great combination if you ask
me, especially, you know, SpaceX is
highly regulated. it's a government
contractor. Uh XAI recently was, you
know, bikinifying people on on Twitter.
I don't think that's I think that's some
sort of risk there. Um but I am I for so
so actually I am curious to hear your
perspective. What is the sort of most
logical reason for why those two
companies would combine? The most
logical reason is that
SpaceX, one of the reasons that have
been given, you know, privately to
investors for wanting to IPO SpaceX is
that it needs to raise money so that it
can develop and build data centers in
space. They argue that it's very cold
when you're facing away from the sun, so
you don't need to pay for cooling. He
already has a network, by he I mean Elon
Musk, a network of 9,000 Starlink
satellites, all linked and coordinated
by lasers. So you've got kind of like
the communications infrastructure out
there. Uh and you have unlimited solar
energy, not not affect not affected by
the atmosphere. So I know it sounds like
crazy sci-fi stuff, but this is what
SpaceX has constantly been based around.
I don't think anyone thought the largest
rocket in the world would be the booster
stage would be caught by giant
mechanical arms um just a few years ago,
but he's proven that that was a
technological challenge that was
surmountable. So the argue the argument
is you put them together. XAI obviously
you know builds the models X which of
course was another Musk company which
was merged I think last March with XAI.
That's the distribution that Grock goes
out under. [snorts] And that's how Musk
is going to win in AI. Like his models
might not be as good. He doesn't have
the same revenue but what he can do is
win the data center race. You you know
and and have these up in space before
anybody else. And he's not the only
person looking at doing this. Google's
also looking at it. Jeff Bezos is
looking at doing it through you through
his blue uh blue origin rocket company.
So that's kind of the bull case. That's
the rational case. The conspiracy theory
is that you know XAI is worth 250
billion but has you know a tiny multiple
of that in terms of revenue. It hasn't
gained that much traction despite
relentless promotion through X and on
social media and that like a lot of
Elon's very wealthy friends are invested
in XAI. Uh, and the easiest way to make
sure their investment is protected, just
like how we made everybody who invested
in his acquisition of Twitter hole is to
merge it with a more successful company
that's the undisputed leader in its
field, which would be SpaceX. So, you
put them together, everyone enjoys the
upside. Uh, nobody loses money and you
um, crucially invest in the next Musk
fundraising knowing that he'll always
have your back and make you whole.
>> Yeah, the training in space thing is
fascinating. I mean the stuff that
people think of and I know Google is
also thinking of doing something
similar. So uh that to me thank you for
offering that. That is the most logical
uh explanation. All right let's end on
this. This IPO SpaceX IPO when it
happens it's going to be massive. I mean
is this you know in some ways a test for
because it will be I I imagine it will
be the biggest IPO ever. Is this going
to be a test case for what it will look
like even though it's completely
different industry for what it what it
will look like when the AI companies
decide to go public?
>> Yeah, I mean we're hearing 50
potentially raising 50 billion at a 1.5
trillion valuation.
It'll be a real test whether the global
markets can absorb this. I mean one of
the people are desperate to invest in
all these hot private companies like
Stripe and SpaceX and Anthropic and you
can kind of get exposure to it by hook
and by crook but the real game changer
would be if Elon's army of online fans
who have propped up the sh Tesla share
price for years become SpaceX fans as
well because then you just have access
to you know pools of liquidity and
capital so much larger than what they've
ever had access to you know in the past.
I think if Musk can show through the
SpaceX IPO that there's huge retail
demand out there through, you know,
either pension funds, but also Robin
Hood or or Revolute or wherever else you
can invest your personal cash. That
could be a real game changer because
that would give the rest of these the
startups that are less mature companies
the confidence that they're not going to
go out there and have a real disaster
because remember there's there are a few
things worse than listing seeing your
stock price decline have having all of
your stuff demoralized because they
thought they would they thought their
stock was worth this and it's in fact
worth that. Uh and then be out there you
know with colleague likes being shown on
your balance sheet like it's a it can be
a very comfortable thing to be private
before you really have established net
income. So we'll see. I mean, it's going
to if it does go ahead in June, you
know, which we're led to believe or, you
know, have have reported out that it
will be, it's going to be an absolutely
blockbuster summer.
>> Yeah, it'll be fascinating to watch. All
right, Stephen, tell people where they
can find your work and the work of your
team.
>> Well, the Financial Times is obviously,
you know, one of these legacy media
instruments. We do print and newspaper.
It's salmon pink, very recognizable, but
you should go to ft.com. We're all over
Instagram, X, wherever. Uh, we've got a
great team here in San Francisco. So,
uh, I hope you have a lot of subscribers
watching this show.
>> All right. Well, love it. I I always
love reading your work and it's really
great to be able to speak with you again
here [music] on the show. So, Steven
Morris, thank you so much for coming on.
>> Thank you for having me.
>> All right, everybody. Thank you for
listening and watching and we will see
you next time on Big Technology Podcast.