The Six Five Pod | EP 277: From Intel's Comeback to Meta's XR Vision - Tech's Pivotal Updates

On this episode of The Six Five Pod, hosts Patrick Moorhead and Daniel Newman discuss the tech news stories that made headlines this week. The handpicked topics for this week include:

1. Intel's Resurgence and Nvidia Partnership: Discussion of Intel's 30% stock gain following the announcement of their partnership with Nvidia. Analysis of the strategic implications for both companies.

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2. Oracle, Silver Lake, and TikTok: The potential of a deal involving TikTok, Oracle, and Silver Lake. A discussion analyzing the data management and algorithm concerns.

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3. Microsoft and Nvidia's UK Investment: $40 billion investment announcement in the UK’s AI infrastructure & how this will impact the UK's position in global AI development.

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4. Groq's Funding Round: Grok raises $750 million at a higher valuation & a brief overview of Groq's technology and market position.

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5. IonQ's Market Performance: IonQ's stock price surged to nearly $70. The hosts discuss recent acquisitions and partnerships.

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6. Meta's New VR/AR Glasses: Reactions to Meta's sleek new VR/XR glasses & a debate on the product’s potential impact on mainstream AR/VR adoption.

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7. Federal Reserve's Interest Rate Decision: Analysis of the Fed's recent interest rate decision & a discussion on the potential economic impacts.

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8. Elon Musk's Tesla Stock Purchase: Musk's billion-dollar purchase of Tesla stock & its impact on Tesla's stock price and market sentiment.

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9. Google's $3 Trillion Valuation: Google reaches $3 trillion market cap – a look at their market position and where Google's AI capabilities come into play.

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For a deeper dive into each topic, please click on the links above. Be sure to subscribe to The Six Five Pod so you never miss an episode.

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Or listen to the audio here:

Disclaimer: The Six Five Pod is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we ask that you do not treat us as such.

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Daniel Newman: We are back. We are all a little fatigued at the end of the week, but for you it's probably the beginning of the week. I don't know when you listen to this and we don't care. We just appreciate that you do. It's episode 277. We want to say hello to everybody out there. It is the week of September. It was the 19th week that we did this podcast. Pat. The only reason I'm calling that out is because on the 18th there was some mega news that dropped, you know, left for dead. Intel rises from the ashes like the Phoenix, and it sees a 30% gain in a week as kingmaker Jensen Huang comes out, says, I don't know what you all think you're doing, but I call the shots in this industry. We'll get to that in a little bit. But Pat, first of all, first and foremost, your sleeves are a little tighter this week. Tell everybody what you're doing and why you've got so much bicep going on. You know, is this gonna be a problem for me at some point? Am I gonna get a confidence issue? You're gonna be like, Pat is more jacked than me.

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Patrick Moorhead: Somehow I don't think that's going to be the case, Daniel, because you keep raising, raising the bar and keep doing that. I think the only possibility of that would be you getting a gigantic injury like tearing a muscle in your bicep or, or something like that. And then still, I still think that you'd be there, you know, like one.

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Daniel Newman: Big bicep and like one complete, completely lame one.

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Patrick Moorhead: Now I've seen that some people inject oil into their arms. I don't know if you've seen that before. It's pretty awful and it's really obvious what's going on there. But I don't know, I. I had a really bad cold last night and I got maybe four hours sleep. I skipped my arm workout today, so, I don't know, you stayed in bed. They're kind of puny. Yeah, I did.

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Daniel Newman: I won't confess to the fact that yesterday, you know, I get up at like 4:30 every day to go to the gym, but I was super tired and whatever it was, like, I got more sleep than you did, but I, I need six hours in like 20 minutes and two hours of restorative. Or I am a complete disaster. And I got 5:30 the night before and I literally was so tired at the gym and I got through the workout, I did okay. But then I went home, ate breakfast and it was only like 7:15 by the time I was home and I took a nap. I napped from 7:30 to 8am so while some people were probably already on TV like five times, I was taking a nap, getting my head out of my ass. And after that I was okay. But it's like I needed that additional 30 minutes to get me to six hours. Six hours or so. But anyways, it's all good. You look great. So that's the important thing. Everybody out there make sure you pay a compliment to Pat's right bicep. It has been an incredible journey for him. He does seem to be fully back, a little happier, a little more engaged. That's what I want to see in you, you know, because that miserable SOB that comes out from time to time. Yeah, I don't like that guy at all.

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Patrick Moorhead: Based on all measurements though, I had a 60 day trough and I linked it back to my surgery and my HRV is back and everything's back. My strength is back. And you know, I met with my doctor yesterday. He explained, he explained to me, even though it was a teeny tiny surgery, just the trauma it puts on your body and it takes a good two months to get back from anything completely. But anyways, I'm back. That's all anybody needs to know.

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Daniel Newman: Well, you're back, Intel's back. Everybody's back this week. And by the way, the only thing older than intel is you. Anyway, so let's talk about. Just kidding you.

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Patrick Moorhead: Look,, actually Intel and I are exactly the same age.

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Daniel Newman: Yeah, see I, I didn't know that. I'm not gonna take credit. Like, I do enough victory laps. I don't need to take credit there. I had no idea how perfect that segue was. We got a great show this week for everybody out there. You've heard me mention it. We are going to spend some time on this Nvidia thing. So many implications of this Nvidia intel announcement came out of the blue. Surprised I think most people. And actually if you look at interiors, it was actually maybe not as surprising as you think. And we'll help hopefully break that down for you. There's more Chinese nonsense going on. We're going to talk about that. We're going to talk about Oracle and Silver Lake and what's going on with Texas TikTok TikTok, by the way, Pat is awesome on TikTok. I'm not gonna tell everybody my stories. We'll tell him the stories later. We're gonna talk a little bit about Microsoft, Nvidia and all the big news that came out of the UK summit this week. Pat, Grok, a company that I think both of us are on that cap table of. Not the Grok LLM. Grok, the inference cloud company just raised $750 million at seven times the valuation of. I don't know, we're pretty smart. And then Ionq just blasted through our friend Nicoleta Masi. Congratulations. I think the stock hit nearly $70 and the company's market cap jumped over $20 billion. I wish at 100 million revenue I could create a $20 billion company. Nicolo, teach us the way. Sensei, teach us what you are doing. We're talking about that a little bit. Then we're gonna get to the flip. You all know the flip. Simulated arguments that I tend to win every week. And then we got a little bit of bulls and bears. It was Fed week, Pat. I mean quietly, because everything became about Intel. But we did have a massive pivot. The Fed this week. We're talking about that. We're going to talk about, you know, Elon Musk and what he's doing. And then we're going to talk a little bit about, you know, I'm going to talk a little bit about how right I was about Google. I'm going to spend a little time on that. But Pat, let's just dive into the topics, go to the decode. All right, so you and I were lucky enough to be read in, get a little bit ahead of the curve, and listen to what was going on. And we got the full read on intel and Nvidia. Man, what happened there? I mean, gosh, you would think strange bedfellows, no?

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Patrick Moorhead: Oh my gosh, where do we start? Mike Rubin, the guy that runs our Business, president of Six Five, just said, hey, you guys can just talk about this the whole time. I think we can. So this is going to be most of the conversation you hear. Been working in and around these companies for over 35 years and these two companies used to be, used to be really good partners. And then Jensen said, hey, I'm going to open up a can of whoop ass on Intel. And then Intel pulled Nvidia's chipset license and Nvidia figured out how to use GPUs for more than, more than gaming and, and workstations. And here, here we are. So, yeah, I was really, really surprised. So there's really, I would say, four elements to this. So on the PC side, Intel is building and selling an x86 SoC for a notebook with a high performance Nvidia RTX GPU chiplet. So intel will do the packaging of that solution. They will fab the CPU and Nvidia and TSMC will fab the GPU chiplet. On the data center side, Intel will be packaging Nvidia custom x86 CPUs from Intel and then an Nvidia GPU. And they will be doing the packaging of that. They will be doing the CPU chiplet of that. So you've got Foundry, you've got CPU, you've got GPU involved here. And Nvidia is investing $5 billion as well. And I know everybody said, hey, it's not a Foundry manufacturing deal, which when it comes to wafers, right? Think of Foundry, they do two things. They make two things. They make wafers and they package stuff. It definitely is a packaging deal. On the data center side, it took me a while to get underneath that because nobody would say on the conference calls and nobody would say in the press releases. They wouldn't be direct. And I finally got a note from intel telling me this. So the enemy of my enemy is my friend. Strategically, this is really good for Intel. There's absolutely no question, there might be a question on what Nvidia gets out of this and why they're doing it. The one thing that I'm thinking through right now, Daniel, is, you know, today you have things like Grace Blackwell and Vera Rubin, right? That's the very tightly integrated ARM CPU and Nvidia GPU for data centers. And now based on at least what everybody's saying is there will be two versions of that. And you know, think two to three years out, this is not anything that's going to be immediate. I just think, gosh, this is super hard to even get Blackwell out of here. Now they're going to have two derivatives of it. My thesis, I think, is that either they're not going to do two. In reality, they'll drop one when it gets close. But probably a better scenario is the x86 version, the converged version, the integrated version is for, let's say enterprise, where they can leverage this combination for things other than AI and they can run applications on those same servers. Then maybe the ARM version is specifically targeted in hyperscaler data centers. You have an enterprise data center, you have hyperscaler data centers, you have x86 and then you have R. But there's a lot of stuff we don't know, right, like what's the ship timing, what's the cadence, what are the specifications? You know, I've been hearing this for two to three years. Like is it two years, is it three years when what it starts showing up on the, on the, on the roadmap? You know, from an ARM perspective, if you listen to everything that's being discussed, it's not an issue for arm. And you know, if everybody keeps to the, keeps to the talking points, there's no impact, there's no impact to arm. Now the interesting part though is, if there wasn't an alternative before and now there is, how can ARM not be impacted? And the way that I look at that is the market's growing so much that even though they're, they're not getting 100% of the integrated share, they're still growing. And then you put on top of that what ARM CEO Renee Haas has been saying on the earnings call, basically I'm going to create chips. But I'm not directly going to say that but, but that's, that's kind of what, what I'm doing. AMD. I think it makes life more difficult for them from an optics perspective. Interesting. You know, Vivek over at bank of America said it's actually a positive for AMD and he upped, he upped his target. He did that, he did that this morning. So by the way, on Blackwell, what I'm hearing out there in my channel checks that the preferred head node for a non-integrated solution is AMD.

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Patrick Moorhead: And, and not Intel for H series. It was Intel for a non-integrated solution. So you know, this is, this is going to be the gift that keeps on giving. Daniel, we're going to be talking about this probably every other week. Something's going to hit. But make no bones about it, this is a positive thing for Intel. We're going to have to figure out, you know, what happens to Intel Graphics, if anything, like what's, what does it mean? There's rumors of an ARM notebook out there at the high end to compete with, with a MacBook Pro working with Nvidia. So like how does that work? We're going to have a super high end notebook on x86 and a super high end notebook from ARM. Optionality is good, don't get me wrong, but it sends an interesting message to, to developers.

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Daniel Newman: Yeah, I mean this was like 5D chess by Jensen. He absolutely likes Intel, a massive beneficiary. Didn't do much for Nvidia's share price or anything. But Nvidia is the king maker. You know, he walks around the Dell tech world and says, you know, l is the company. He gets on stage at one time and he said it's all about ARM. He gets on stage another time and says, now it's all about Intel. And, you know, it instantaneously changes the fortunes of those companies. He just picks companies. You know, he picks Quantum names. This is going to be the Quantum player. He is absolutely in control right now, but he's playing all the sides, so he's got all the partnerships now. He's got x86, he's got arms. So he doesn't really care. He just opened the enterprise to Nvidia because I think where he had real risk of AI and Nvidia struggling to have as much momentum would be in the Enterprise. But x86 dominates the Enterprise. And now you've made it easier for these companies to not have to do the ARM port in the enterprise. And, you know, so he can kind of, he kind of has some ability to say, you know, what ARM is, the hyperscale option. It's all about Grace Blackwell, anybody else. But in the enterprise, when they're buying four, eight GPUs, they can take an internal trip trying to grow the enterprise of opportunity. It's AMD. Epic has been incredibly successful in the enterprise. They've been able to take share, they've been able to grow. That's not a good thing for Jensen because AMD is building full AI solutions. AMD is building software, AMD is trying to build a full stack. And AMD is really directly trying to compete and it's really the only direct competition, albeit at the very small market share, to Nvidia. So he's cornering everyone off at the head. He's basically taking control of the fate of these different markets. He's. And he's doing it very effectively. And then he, of course, is not hurting his chances with President Trump by backing the company. Right, so you've got a company that they invested at $20. Well, President Trump's tweeting pictures of Intel's now $30, 50% investment. So all those people that wanted to give me crap about the fact that the US was smart, the US, the taxpayer, just got a 50% return on investment in two weeks. Okay, all right, now I'm gonna take a breath on that, but I just want to point out that that was smart, that was the right thing to do. And you know, you talked a lot about technology. So I'm gonna stay away from this. I'm gonna actually be somewhat straightforward and not make this overly lengthy. I still think this is a foundry Play. Why did ARM invest $2 billion? Why is Nvidia investing $5 billion? And why do I think so? You're gonna see investments coming in from Broadcom, you're gonna see CR Qualcomm, because they're all making a play to have early input on foundry capacity because they see what is happening. By the way, Jensen's move is a double move for him. One is the capacity that he's actually going to potentially get access to later. It may be because he wants it, it may be because he needs it. But the long and the short of it is he hasn't had any leverage over TSMC in a very long time. And I'm not saying he doesn't love tsmc, everybody loves tsmc. But doesn't that create some risk? It's the same issue with Nvidia. He's basically saying, even you, tsmc, I will build a partnership with this other up and coming foundry. I will build a relationship. Because you know who's raised prices like 20 to 25% multiple times over the last couple of years? TSMC. Now, again, it's not there today, but in the future this is going to matter. And he also knows that with the administrative administration's fickleness, I think he's also trying to get some favors. You know, this week we saw China, you know, get cut off for Nvidia. He wants access to that market. So look, he's playing the good guys, doing the good role. He's saying everybody's great, ARM is great, Intel's great. Vivek is trying to say that AMD is great. I don't agree with that. I think AMD was the biggest loser from this announcement. I think that's also, by the way, indicative that AMD is doing something right. If he wasn't scared and didn't believe AMD had the capability to go rack scale and to build something that people would use. If he didn't believe that inference is an inflection where AMD could win, I don't think he would be necessarily making these moves. So he's got all the power. He's playing the game. He did a great job. This is great for intel, great for the United States. But in the end, I do think there's a lot of sort of everybody's putting their hand in now and saying when 14A hits and when it's up, we want to be the first in line for whatever particular parts that we're going to want to build there. And I think this has a lot to do with that.

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Patrick Moorhead: Hey, Daniel. One of the things that really shocked me is how everybody coddled tsmc. Everybody is so scared. So it's like, who really holds the keys? Is it Nvidia or is it TSMC? We did the pre briefing. Okay. We read the press release, we watched the interviews and you know, I, I heard no less than 10 questions on foundry. And this is not a Foundry deal. Okay, I get it. It's not a foundry deal for wafers, but this is a foundry deal for packaging on the data center part. So what is it, Daniel, that has the fear of TSMC? You know, does TSMC have more power than Nvidia?

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Daniel Newman: Yeah, I think so. Because try to make a chip without them right now. And that's why I said, like, I think there's a really 5D sort of chess thing being played with propping up Intel.

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Patrick Moorhead: Yeah.

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Daniel Newman: Because Samsung hasn't been able to execute, not at scale, and I hope they do. And I think they've, they've made some progress. The Tesla deal, for instance, was good, but like Pat, we do need, like, you could argue like TSMC and ASML could basically get together and just say we're going to charge whatever we want. And actually TSMC has shown over the last few months that they basically can charge anything they want. They are a monopoly right now by all definitions. They're using their unique asymmetrical power to control pricing. And right now nobody can build. You couldn't build iPhones without them. You couldn't build servers without them. You couldn't build Android. Like what could we build without TSMC right now? Real question, nothing.

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Patrick Moorhead: Well, it's not nothing.

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Daniel Newman: Well, I mean, yes, you could build a legacy lagging edge and by the way, you could build some Intel PC chips. But like what data center. Data center GPUs or XPUs could we build without?

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Patrick Moorhead: Well, I mean the Grok part that we love so much is done on 12 nanometer at Global Foundries. But no, of course I would.

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Daniel Newman: I just feel like I just had a conversation with my wife. Thank you. No, found the one.

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Patrick Moorhead: I know, I know, I know. Like, I go to the tiniest corner case on the entire planet.

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Daniel Newman: You're right. I mean you're not wrong, but I still think you're wrong.

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Patrick Moorhead: And the other thing on that, on the video press call, everybody waxed on how amazing TSMC is and Lip-Bu, by the way, Lip-Bu knows CC Way very well. They've had a long term relationship. So there's that, there, there, there's that connection. I totally get mutual respect. Let's not, you know, throw this in TSMC's face, but my God, like they have what, 90% of high performance silicon, right? Like, anyways, I just thought this is a, I think this is going to be the Hallmark story. A story that just keeps on giving and giving and, and giving out there. There's so much we don't know about this right now. And we're gonna get leaks, we're gonna get conjecture, we're gonna get. Oh, it's over for AMD, it's over for ARM, right? Intel's back, you know, and it's just, I think it's. This is, this is what, this is what I'm here for. Everybody out there is grinding on these types of things.

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Daniel Newman: Well, and by the way, I think the implications of the story are much more interesting than the product announcements. I mean that's why I kind of landed on Foundry out. Like when does this even. By the way, when is any of these products gonna hit the market?

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Patrick Moorhead: Oh, two to three years.

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Daniel Newman: But I mean, you see what I'm saying, like look at how much credit they got for something that literally we're gonna. Two to three years, which is nearly a trillion dollars of infrastructure spend is going to happen before this product ships. So, you know, if I'm, you know. It's awesome, but it still is. You are talking about the future state. We're talking almost the next decade before this is material anyway. All right, are we ready to move on this one? You want to say more?

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Patrick Moorhead: You want to say more? No, I think that that's it. That one at least for this hour.

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Daniel Newman: Did we peel this thing apart?

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Patrick Moorhead: Yeah.

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Daniel Newman: All right, it's fully peeled apart. All right, let's get to the next thing. I sort of alluded to this, I don't think. God, we've talked so much about this, but China, so China, apparently now, you know, one week it's us saying don't ship, the next week they're saying don't ship. I talked to, it's funny, I talked to almost many reports about this news. This Week because I did the intel thing. I think you had all the Intel-like coverage. I think you were the guy like Pat Moorhead who got the Intel Nvidia story. You, you were everywhere. CNBC, Yahoo. More CNBC.

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Patrick Moorhead: You know, it's funny, I was happy about that. But you know, what I'm happiest about is, you know, I don't know, I don't know where we are. 380,000 people interacting or looking at, looking at that long tweet.

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Daniel Newman: That tweet was great by the way. Generally you don't get rewarded for being that in depth on Twitter.

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Patrick Moorhead: No, I know it's put out the slop and put a, put a meme in there and picture and a post.

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Daniel Newman: That's what. Yeah, but you know, that was, that was awesome. But this, you know, I've been talking all week, you know, Pat, like, so here's the thing is I still don't believe anything I read about China, US and Nvidia. I genuinely think the idea that they're going to go all in house and do it in any sort of meaningful time line, that they can stay competitive is highly improbable. I had a call with a reporter last night about can vs. Cuda. Even if you can port the code, it's like there's so much work to make it actually run on that hardware. So take this is. I think China has to do this and they're going to do it over many years. But I actually think either A, they're going to find a way to keep getting Nvidia the right way or they're going to keep getting Nvidia the wrong way. But they're literally going to fall further behind by an order of magnitude, years behind by trying to do this on their own. It's too hard. It takes too many generations. Microsoft can't do it out the gate. Amazon's taking three generations. Google took six to seven generations. Huawei has never built at scale a freaking data center AI platform. And it's got something. It's not nothing. But it's not going to happen in a short period of time. And they can make it open source and they can have all their developers contribute code and that will help speed up things somewhat. But it's not going to compete with the frameworks and the libraries and the tools and the community and all the developers even in China that all want to run on Nvidia. So I'm going to say this news is out there. Most of what I hear is political posturing.

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Patrick Moorhead: I, I really loved Jensen's final call on this where he essentially said, this is bigger than any vendor. This is about geopolitics. Zero everything out, I'm out. Right. I love that. I, you know that those weren't his words. I mean, he called it disappointing, but he did characterize geopolitics bigger, bigger than anybody. And the amount of time you can imagine he's spending on this and, and what that's detracting from. I just don't know where this ends. You know, we've got 232 that should be coming in and you know, everybody in D.C. tells me it's right around the corner. It's right around the corner. It's been right around the corner for, for a month. Okay, when does that show up? What is it going to say? There's so many things we have to figure out. Even aside from China, remember all these big Middle east deals that were cut out there. Well, guess what? We still haven't authorized gigantic gbs to get shipped out to be installed there. Right. That's a non-starter right now because one of the biggest customers of those Middle east data centers are going to be likely going to be people in China. So a lot of discussion is going on about this and it's so complex now. I've kind of lost, I've lost the script and maybe I feel like Jensen, like, I'm done. I'm bored with this and you know, we're just gonna wait for the next tweet to come out.

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Daniel Newman: Yeah, this is a, this is ongoing. I'm gonna stick with it being politics. But Pat, speaking of politics, I mean, Oracle, Silver Lake. It's on.

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Patrick Moorhead: Yeah, it is on. You know, this is one another of these in Trump 1.0, this TikTok was going to get banned and then it didn't. And then we went into the Biden administration, it was going to get banned and it didn't. Trump comes back in, it's going to get banned and it keeps getting pushed out and pushed out and, and pushed out. But right now it looks like mid December is the new date. And yeah, the frameworks, Oracle, it's Silver Lake, it's a 16Z out there and that consortium maintains 80% and ByteDance takes 20%. This is all about the data, right? Where Oracle would manage the data, they would have to come up with a new algorithm. And it's so funny, Daniel, I was watching some coverage on some of these broadcast shows and they're, they're talking about how easy it's going to be to replace that algorithm. Let me be very clear, that is the core IP of TikTok now, is that brain rot algorithm that not only tees up content for you, but also tees up the right ads and tees up the right suggested followers. So I just don't think the reality is that's going to happen by, by mid December. It's almost like recreating all of the intellectual property for Google search and in four months. So I don't know how it's going to happen. I do think that it'll probably end up licensing the algorithm for a time until it can recreate it. And the reason for this is that the US doesn't like the idea that a Chinese company can get access to American Pictures location the content that they use. They're afraid of being programmed by the CCP and, and causing disruption, driving disruption out there. So you know, there's, this is the act, this is the investment side, but there's this that, you know, the real reason why this is happening. Final comment. I want to remind everybody that there are no United States social media platforms that are allowed in China.

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Daniel Newman: I don't know, I heard Tick Tock in China is like a math and learning app.

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Patrick Moorhead: Yeah, they probably shut it off. They only let kids on it two hours a day like they do gaming. Did you guys know that out there that if you're a certain age you're, you're limited on the amount of hours you can play games?

Daniel Newman: Yeah, and I'm pretty sure, like I said, they feed the nonsense. I, I don't know if I call it programming, but I mean I see the stuff that's on TikTok and you know, when I literally want to rot my brain, I watch that stuff like it is the lowest common denominator in terms of quality and intelligence required. It's almost as bad as watching bodybuilders shoot up steroids on YouTube.

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Patrick Moorhead: Yeah, I mean, I kind of like that.

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Daniel Newman: No, but it's. What is it? It's your brain rot, right? You watch that. Literally, it's brain rot. Like I said, the deal is a deal. I mean, Oracle's winning, winning and winning and winning. I mean, TikTok's got a huge customer base and Oracle securing this is great. I think they're going to need to figure out the algorithm thing to your point, because if they can't make it work like Tick Tock, the popularity will dwindle. I mean, you know, that's maybe that's the goal. But again I think it's interesting a lot of, a lot of winning for Oracle these days. A lot of winning for Oracle, Pat. I'm not a TikTok guy though, so I don't have a lot of personal investment over there. They don't let me. Yeah, but you look good on it. Let's jump a little bit. We'll cut a few quickies because we've spent a lot of time on the intel thing and we said we would so hopefully everybody doesn't mind that we're moving a little quicker through some of these decodes. Microsoft Nvidia $40 billion more in the UK pays for me more AI diffusion from the US. I thought it was interesting that Ker Sturmer, their Prime Minister over there has hit bottom in terms of popularity. We got national revolts going on across the UK right now about reform and immigration. Again, it's all the pendulum stuff. It swung one way, it's swinging back the other way now. He's very unpopular and he's actually looking for a little backing from the US's great results. I mean the US economy, despite the rumors of it being capitulating, seems to continue to do well. I mean remember the Atlanta Fed and they had like some massive drop in GDP and now they're, they've revised everything up. You got S P up somehow. Pat, by the way, like I, we'll talk about, I'm a little scared. Like you got growth assets up, you've got defensive assets at all time high. So gold and stocks. This is not how it is supposed to work. Okay, all at all time highs. But the bottom line is $40 billion or so planned to be spent. Massive supercomputer builds, 120,000 Nvidia GPUs. You've had commitments from Microsoft to spend. I think 30 of the 40 was a Microsoft buildout commitment. I think another 5 billion coming in from Google. You know the UK wants a little bit of what the US has got right now and they need US technology to do it. And so these announcements was all about going over there and, and I thought it was interesting the UK sort of has you know, obviously a Brexit but they sort of tend to flip in and out of siding with Europe of whether or not they're like this more slow moving data protecting fining or are they going to be more progressive and try to be faster moving more Innovation laden like the US they're showing a little bit more of a pendulum swing towards the U.S. i think they want a little bit of that growth and excitement that we bring here. Because I'm pretty sure Nvidia is bigger than the UK now.

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Patrick Moorhead: Oh, I know. No, I mean we have states that are, that are there, but it still holds its own in the eu, right? It's still the biggest EU player related to tech if you look at investments, if you look at investments out there. So yeah, I think every country will be getting the treatment here. Daniel. And this is the, you know, one of the biggest conversations when you and I were at Davos was this whole, this whole idea of sovereign clouds, right, that you know, countries wanted their own clouds. Now interestingly enough, there was a lot of discussion about the risk of going with a hyperscaler because oh my gosh, like what if, what if they pull the plugs or hold the keys? Which by the way is like zero chance of, of happening. But it sure did stir up the controversy out there. So there was this UK build out that you know, you probably saw, you know, on scale, Nvidia did their own thing, Google did their own thing. And one thing that got totally plastered over, Daniel, that I thought was actually the biggest data center announcement, but it got totally forgotten about was Microsoft's Wisconsin AI data center. Satya got out there, was talking about it, but it was drowned out a lot by the AMD Intel Nvidia army discussions. And they're basically saying, hey, it is the largest AI data center out there. Hundreds and thousands of Nvidia GB2 hundreds, 350 acres, 350,000 gallons of water a day. And these aren't just plans, this is a real life data center here. So what's interesting is, Elon must have gotten wind of this. Him talking about Colossus, which are H series, these are GB series and we're talking hundreds and thousands of those. So I haven't looked closely enough at the data, but I looked at enough data and the confidence that Microsoft has to say this is the highest performance one out there, that Microsoft wins the day. And I think it might, you know, even get people to be asking more questions about Oracle, right? And on Oracle timing and how and how that's rolling out.

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Daniel Newman: Yeah, there was a lot though. I mean every week, Pat, every week this stuff hits. So okay, the 12 nanometer Samsung process delivers the cloud of the future for inference, somehow outperforming some of these sub fives, some of these and now they're raising almost another, you know, three quarters of a billion dollars at a 7 billion valuation. Rock. Not with a K with a Q. What, what happened there Pat?

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Patrick Moorhead: No, I mean this is so, so Grok has a really interesting story. Jonathan Ross, you know tpu, TPU guy from Google decides to pop, pop this thing out and create his own company. First started off as a chip company and then really what it did is it turned into a platform and then a cloud company. Right. You can host workloads there but, also the Middle east has really taken a big liking to this and you know, hopping on the Nvidia can't rule the world for, for everything. Its valuation is going up with the whole data center AI trade. I'm really looking forward to this. What I think is going to be a Samsung based design because the original Grok design I think is 12 nanometer at GlobalFoundries and I think this next one, and again I've got no inside information, maybe it's been put out there. I think the next One is on Samsung 66 or, or Samsung 4. I do think it's pretty cool that you know this. I, I think this whole thing will be made into the, into the US but make no mistake, the biggest customer right now, they are out of the Middle East.

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Daniel Newman: Yeah, I just say congratulations. They're sort of doing it on a, you know, just brute force winning deals in the Middle East, deals in Canada. They've really picked a lane, they're staying in their lane. They're not really trying to be a chip company anymore. They're really trying to be a system company with an out of the box solution that's designed to accelerate the future which is all about inference. That's the killer workload. So keep watching it Pat. You know what, I'm pleased to see that valuation keep growing so quickly. IonQ is up another 3% today, nearing $70 a share. Just to tell you right before it's investor day one week ago today I was in New York City, it was trading in the low 40s. They announced the regulatory approval that day of their investor day to be able to close a 1.1 billion dollar deal. So, so basically just you know, Nicola came in, it was around like a twenty something dollar stock. He doubled it in his first few months. He's done like four, five acquisitions, and did a billion dollar deal. He's done a number of partnerships, Department of Energy, you know, doing stuff with DARPA part building this great ecosystem, you know, working with Nvidia working with Microsoft, working with, you know, the different cloud players. And while there are only 36 logical qubits today and there's not a ton that can be done, he's building quantum computing, he's building quantum systems, he's building quantum sensing, she's playing in all the games. And basically in his, in his, in his overall presentation close, he talked about the fact that there's, you know, he likes to do this comparison with the, with the quantum networking and quantum computing to what Mellanox and Nvidia did. There's a strong belief towards the end of this decade that Quantum is going to drive more efficiency out of LLMs, it's going to drive lower energy usage to, to deliver on AI. And of course you've got quantum encryption, which could be a key key to actually protect things like stable coins and cryptocurrency from being hacked as Quantum can likely start to break that encryption by the end of this decade. So there's a ton going on. Quantum has a huge role to play and this company is just absolutely taking off. So it's not any one thing, it's not just about closing this billion dollar deal. It's not just about its roadmap to a thousand logical qubits, but really to the credit of the company. And I say clearly, I think you are two advisors and we've worked with this company, but it's been very impressive because this industry has had a lot of talk, a little bit like VR and a little, little to show in many ways from a commercial standpoint. But the company I think is on target to do almost 100 million of revenue, real revenue, and continues to innovate, acquire, acquire and make noise. And the market is rewarding it for, for all that it's doing.

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Patrick Moorhead: Yeah, I think IONQ, what I've noticed since Niccolo has come in is some first of all very decisive language that's used about the company. He has taken shades of gray and turned them into black and white. His analogy of, you know, Nvidia I think gets a lot of people in there and there's substance when it comes to it. And with the deals and the alliances that he's put together with a lot of balance sheet activities, I think investors are putting IONQ at the front of the crowd for Quantum. And you know, I think ironically, you know, probably the next biggest competitor is IBM, which is a gigantic company with a lot of resources. And what it does, it shows, you know, I think the value of splitting it apart. It's your singular focus as a company. I like to call that, you know, best in breed versus portfolio plays. And IBM is a portfolio play. But IonQ gets more of the, you know, the investor, the investor tune in because that's all they do. They're the specialty play.

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Daniel Newman: That's exactly right. People that want deep exposure versus ancillary exposure. And so that's clearly the place. And other names like Rigetti have seen huge jumps. But it does seem like Iona is the farthest along in terms of commercialization. That isn't, like you said, a portfolio play because IBM did announce, I think, a billion dollars of income or revenue related to its quantum efforts. I don't know exactly what timetable that's been under. They've been at it a long time as well. All right, Pat, that is the decode we spent most of the time here. We're going to sort of go into hyperspeed mode here. We're going to have a debate and then we'll hit real quickly on a couple of market items. But Pat, Meta came out with new, very sleek, very usable VR XR glasses with displays. Very cool. But you know what, we've heard this before. Here's the new thing. It's Snap, it's Apple Vision Pro. This is going to be the thing that makes AR and VR go. But Meta, you know, one of us has to argue that this is the thing that's going to make VR AR, XR go. Is this XR's big moment? Oh, of course it's a go. I mean, you see how much time I spend on my Vision Pro. I've been wearing these things since day one. I wear these to Starbucks. Look, this is a sure thing, this is an absolute sure thing. Meta has just cracked the code. It did what I've been saying it has to do. It has to create something that's fashionable, something that has displays, something that allows you to be forward looking and out into the public. Something that brings and connects all those great features that you have on your device. And it has to be completely seamless. Sure, maybe the WI fi failed in a demo, but it was just a demo. They're going to get past that very, very quickly. What we saw here was this is the entry point. Something in that, you know, hundreds of dollars as opposed to thousands of dollars, something that is wearable and fashionable, something that does actually in real time not just take a camera outbound, but actually gives display and imagery inbound and something that, you know, can connect right away to our ecosystems. MET has been after this for a while; it sort of took a back seat after the Metaverse spending slowed and the AI focus came into play. But these new pivots and these new devices are going to be critical to making AI real in the real world every single day. And we are going to move to new form factors. You know, out with the Apple, in with the Meta. This is going to be the beginning of the inflection point where Meta is going to start to take momentum. It's going to start to be able to deliver AI experiences. And while Apple continues to fumble and create skinny, fat phones, Meta is actually breaking into the future and doing what needs to be done. There's not much more that needs to be said here. They brought the display, they brought the format, they brought the tools. They've made it affordable. This is the future and this is the past.

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Patrick Moorhead: So I don't know. I spent a few years doing products, which I know I bring up only when it serves my talk track. But I got to tell you, there's a couple elements that make something mainstream. First of all, you can't change too many things at the same time or ask users to do different things. This does not cut it on that point. You're asking people to wear glasses, it's not like with a smartphone, you're asking them to grow a sixth finger, right? It's like you just look at it, right? And oh, by the way, it's like a, it's like a pocket PC sometimes. Glasses. Who wants to wear glasses all the time? And oh, by the way, you don't even have to worry about it lasting all the time because the battery is only six hours of mixed use and it's not, it's not all day. So, you know, I guess maybe you wear it in the morning and then you either charge it or, or something, you know, like that. And then there's privacy, right? Like, this thing is literally going to be always on the camera and the microphone. Are you kidding me? Like, can you imagine what your family is going to say when you walk in and they know you've got these things on and it's recording you the entire time? I mean, that is absolutely. That is an absolute. No, I know. I mean, there, there are, there are use cases where it's like stellar. I mean, you can imagine, you know, wakeboarding or actually, if you, I guess you. They fall off your head and you lose them. But no, I can hear. I can think of a lot of situations where those glasses would be perfect. Let's talk about price, like 799 is still premium for an add on device and I think it needs to be less than, less than $500. We're gonna have to see developers. I mean there's just a handful of developers out there and you know, in the end it comes down to utility and, and what you can do. By the way, I'm the moron who actually paid 3,000 bucks for Google Glass and I am the one who spent $3,500 on Apple Vision Pro. So I mean I'm a disaster. I'm an idiot. So I will probably buy one. Okay. Anyways, this thing is not, you know, it's going to get us closer to the mainstream, but it's not gonna, it's not mainstream at all.

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Daniel Newman: All right. I don't know. Neither of us were that compelling today. I give it a B minus. I do, I do like every chance I get to kind of thrash Apple, you know.

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Patrick Moorhead: Well, you know Apple, I'm an Apple Samsung house here. I'm always carrying two phones. I'm typically wearing two rings but they're just at a higher bar. Right? They should be. There should be critical people because right now the clicks are all about oh, how great Apple is. And I just, I do think people are getting tired of, of, of the meme. I, I really do. Maybe this, maybe this iPhone air will be it. I've got my AirPod AirPod Pro 3 coming in. It's funny, I thought the translation was only available on that but apparently it's available on AirPod Pro 2. But I think, you know, I'm going to test the, test the anc. I do like my own little cocoon. When I throw earbuds in, I want to hear nothing.

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Daniel Newman: Did you get the new ones? Did you get the new ones?

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Patrick Moorhead: Yeah, yeah, they showed up today.

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Daniel Newman: Okay, I want to hear how those are because I heard the noise canceling. There's. That was a big, big thing. That's the reason. And by the way, I heard they, they, they, they, they did an over the air update to make everything else suck worse. I had a couple people share that after those phones were announced their battery life got like half. I still don't know if that's true. True with God if it is. All right. By the way, since we when Talking IonQ broke 70, it actually went up another dollar and a half in the. Oh my gosh in that segment. So God, it's good to know people who are super successful. Someday I hope to also be super successful like that. Pat, let's quickly just go through a couple items in Bulls and Bears. Then we'll get everybody on their way. I mean, not that you'd ever want our show to end. I. Is there anyone out there that wants a 24/7 Dan bot. Pat bot. Just dialog, I think.

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Patrick Moorhead: No, I mean, listen, we could get. We could both get two pairs of those meta goggles and just stream the entire day. Right.

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Daniel Newman: We could actually hang out together at work.

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Patrick Moorhead: I would. I do miss that. I miss hanging out with you. We had our Cisco desk pros. We would just keep them on like we were during.

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Daniel Newman: During the panty period of time. We would keep them on and we would just watch each other work and, and brag about deals we were closing.

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Patrick Moorhead: I know, that was fun. I know. It really was.

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Daniel Newman: You get another one of those. Make it happen. Whoever made the first one happen. Oh, wait, it was a. It was a wet market or whatever. Okay. Okay. All right, let's hit Bulls and. All right. Pat FOMC week. I mean, you know, it almost got. It was almost. It was a nothing burger. Everyone expected it and we got exactly what everyone expected. Right. A 25 bit cut. But it is the pivot. Right? This was the moment of the pivot. The initial response actually saw some stuff sell. And then the next day, everything has been ripping again. President Trump is sharing pictures of all time high in his office with his computer on. I mean, he. It is kind of like, are we in an alternate reality? Is this even the universe we live in anymore? I mean, you and I covered why we need to cut rates. I don't know that this gets us there, but you've seen the rates are sort of dropping ahead of this. Like people see it happening. Mortgage rates have come to new lows. Some rates on things like automotive are coming down. And that's going to be what's important for sort of stimulating housing, stimulating vehicle purchases and other things. But it is really funny, Pat, because all the assets at all time highs, inflation still above what was the level. The job market cracked a bit, which I think is what ultimately happened. The. The excuse for making the pivot. I've been positive about it because I do think it stimulates. I do think people spend more money when they have less interest to pay and they can get more for their dollar. But mostly a nothing burger. It was mostly already. I think a lot of this was sort of cooked in that this was going to happen. And it did.

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Patrick Moorhead: Yeah, I, I think it's. To me, they're meaningless to home loans, credit card loans and auto loans. And that's where, that's where it matters. And if we're not seeing full point, full point reductions, I don't see things moving. The typical American looks at this as, what does this do to my monthly payment? And how much can I, how much can I afford? And what is it going to take to get people selling homes and buying homes again? So, I don't know. This, to me, is a yawner. This is, until we get to a full point of reductions, whether it's.

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Daniel Newman: You know, it does send, it does send a let them cook kind of signal. Let it cook. Let the economy just cook. I mean, it is red hot. It overheats. I am joining the ride as someone who's very active in investing and everything, but I'm also taking some defensive positions right now just because I do think that it just feels right. You know, we haven't had a single correction over 3% since April. Not one. And it's just to go up like this. I mean, again, I'm sure. Trump. This is definitely Trump's stock market now, right? President Trump. This is his market. He's gonna, he's not, he's taking credit now, right? We're at that point.

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Patrick Moorhead: If it's up, it's his. Yes.

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Daniel Newman: So it's up, it's his, it's his market. All right. A couple quick other items, Pat. Not a lot. No earnings this week. So this is kind of nice. We don't have to do that. Sometimes I like it, sometimes I don't. Depends whose earnings it is. But Musk, you know, jumped in and, you know, there's no better way to send a stock that's as sort of polarizing as Tesla up than buying almost a billion dollars worth of your own stock.

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Patrick Moorhead: Yeah, it's amazing what a billion dollars of insider conviction can do to a sentiment chart. And yeah, I mean, Tesla's not a meme, but if I look at forward PE and stuff like that, it's, it's, it's a meme. It's a meme that's backed by science. Right. We're not talking about Blockbuster Video or something. That's a joke, folks. Don't correct me. And what, what I want him to do now is, and I think Elon Musk is, I think he should buy a billion dollars of stock per week. Okay. And, and then see how far he can, he can get this thing going. Why? Just to see if he can. Well, wait a second. Isn't he covered by the different purchasing and sales schedules based on him being a corporate officer? Yes. That's fine. He could buy it personally and. Well, wait a second. Well, what about all the cash? Where is he going to find this? Well, he doesn't have just billions sitting in cash, but what he can do is what other billionaires do, which is take loans against his assets and, and buy that stock. Wouldn't that be fun, Daniel, to have a billion dollars, make a billion dollar bet every week on that, or do you think the market would just internalize that?

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Daniel Newman: Well, I mean, I think the real question is, does he have that kind of liquidity? I. I know how much he's worth.

Patrick Moorhead: But I just don't know how far it is. Like, all billionaires don't have cash sitting around. Right.

Daniel Newman: They don't tend to have that much cash ever. I actually want a billionaire to go into a bank and ask for their money in a bag. Like, just put my cash in the bag?

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Patrick Moorhead: Yeah.

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Daniel Newman: Like, could you even find a billion dollars? Like, you know, like, you probably have to go to the reserve, Right? You actually have to go to the reserve. I don't know.

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Patrick Moorhead: By the way, while you're there, you can see if there's any gold.

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Daniel Newman: Let's. Let's go check it out. Let's go check out and see if there's any gold. All right. I just want to do that. We're going to end up here with a victory lap. I just want to say that, you know, I've been the guy and I don't think you disagree with me. I just don't think you've been as impassioned as me about this. That has been saying that Google was mispriced. Google is being underestimated. It's not getting credit for what it has and its capabilities in AI that it needed to be completely rerated. And it had a little overhang. It had some serious antitrust overhang. It had some people that had basically never forgiven it for its early bard failures and just didn't really think it would ever have a chance to compete with ChatGPT. But as we're seeing how fast this is moving and the leapfrogging that's going on, you know, Google has the infra. Google has a brain. Google has DeepMind. Google has Waymo. Google has its cloud business. Google has Vertex. Google has agents. And Google now has a $3 trillion valuation. Is it high enough? I think it's getting there. I, I'm not going to say that it doesn't deserve more, but I'm going to say the market finally, I think after it got the peace of mind that it's not going to have to be broken up, at least not, you know, in any really material way is finally giving credit for the fact that they also on all those other things I said have the data. Remember Chat GPT wouldn't be chat GPT without YouTube. It wouldn't be without all of what Google has. So Google has all the ingredients. But Google had been long mistreated and mispriced. So congratulations to all the Googlers out there and the people that have been backing it and that have been believing it. And mostly congratulations to me for being right again. I just want to put that out there because once again I made the call and a lot of people like to give me crap about it. But you know, go ahead.

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Patrick Moorhead: I mean I say it a couple of times, then I get bored with it.

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Daniel Newman: Yeah, no, I get it. You don't really stick to things. You become like the person, you know what I mean? I've become convinced of this and I want to put this on the record that the more average people tell me my ideas are bad, the better I think my ideas are.

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Patrick Moorhead: Yeah.

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Daniel Newman: So if you're listening to this pod, you're probably not an average person. You probably are really really smart and really really wise and you're really really successful. But those people that like to argue with me, especially on X but sometimes on LinkedIn too. LinkedIn by the way sucks. I, I absolutely want to talk to someone over there. I hate that platform and I love Microsoft. I really do believe in the company. I just wish they would make LinkedIn suck less. I used to love that platform. It's. It's no longer a place to really share anything but self serving, job related and career related stuff every once in a while. Like your post yesterday about intel will work but like 99% of the time dumb image with a meme and some self serving. I am so proud and happy that blah blah blah, you know it's worse than Facebook anyway I just want to call that out. Fix it.

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Patrick Moorhead: Yeah, yeah. LinkedIn is basically a corporate process dribble. So listen, I still post there. I get a couple bangers there every once in a while. So on Google I never did not just. I never said you were always with that well but to put it like you would have believed that they would have gone scot free from the antitrust stuff like and holy cow like it was a mere flesh wound right? That to share data, so what? Right? And they can't do exclusive contracts. So the biggest thing was the ad network. Right. This idea that they would have to split. Split out. Double click, which is the leading ad. I think it has like 70 or 80% market share out there. Now, that would have left a major, A major flesh. I think they could have recovered by breaking out the browser as well. So, yeah, you would have had to have predicted that. And I think what I give Google the most credit for is the ability to, you know, they were essentially sitting, you know, in, in a seat on search and, and YouTube that. That was more like, let's protect this thing than anything else. Bard was a disaster. Gemini one was awful. And to their credit, they. They pulled out. So, you know, kudos to them. You know, the beta, the beta on the stock declined, which wizards are positive. And let's not forget how many times Sundar went to Washington D.C. and kissed the ring. And I think that helps too.

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Daniel Newman: Ring has been kissed. Speaking of kissing, I look forward to seeing you later, Pat. Yeah, totally. I don't know exactly when, but whenever it is, it's always great. It was great to see a little bit this week in person.

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Patrick Moorhead: Yeah.

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Daniel Newman: And it's great to see all of you here remotely, virtually listening on Spotify, iTunes, wherever it is that you listen to the pod or watching the video. We hope you watch the video. We think we're really great to look at, especially Pat's biceps. That is very impressive. But we would, we would ask you to, you know, hit that. Subscribe, Share this with all your friends. I hope you find it valuable. If you don't, I don't really care. Don't tell me about it. Tell Pat. He likes to get the feedback he reads, by the way, all his DMs. So if you're on X, send him some DMs. He loves to get messages.. But for this week, for this show, for this episode, it is time to say goodbye later.

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