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Gavin Baker says the physics PhDs calling orbital data centers impossible on X have not out-thought the 10,000 SpaceX engineers who treat it as solved
"It's very hard for me to engage. There are all these people on X and they're like, I am a physics PhD and this is impossible."
"There's a friend, another investor, who actually is a physics PhD, who I had many arguments about it with him, and he's like, I am a PhD and this is impossible. And then he goes to the SpaceX day and talks to the SpaceX engineers, and he's like, well, I was wrong."
"So let's say you're an astrophysics PhD. You are brilliant, you're hanging 100 IQ points on me. Have you thought about this for an hour? Have you thought about it for 10 hours?"
"Because you have 10,000 of the world's smartest engineers at SpaceX who've thought about this each for hundreds if not thousands of hours. And the sum of that, working with very sophisticated engineering tools, is it's a solved problem."
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For more on Gavin Baker: firesidealpha.substack.com/p…
Gavin Baker re $SPCX: Investors should start to consider Grok when they think about SpaceX, very few of them talk about Grok at all
"I talk to a lot of investors about SpaceX. And what's just amazing to me is everyone will have a nuanced view on Starlink."
"Maybe they're a skeptic on Starlink direct-to-cell. I think the plan to use these distributed Starlink effectively almost as, we'll call them, small cells, femtocells, is interesting."
"Everybody will have a nuanced view on orbital compute -- whether they're bullish or bearish, they will have a view. They'll have a view on terrestrial compute."
"Very few of these investors talk about Grok at all."
"And it is Pareto dominant on a lot of measures."
"And we have an existence proof that Anthropic went from, whatever it is, $1 billion to $50 billion really fast."
"And if Anthropic is worth, with the $2 trillion per the FT, $3 or $4 trillion, maybe the numbers settle out -- I said I thought that was a market-clearing price, I didn't say that's where I thought it was worth."
"Maybe people should start to consider Grok when they think about SpaceX."
SpaceXSI engineer Lauren Tan reveals her Grok Bot agents now auto-merge their own pull requests, and she woke up to 20 already landed
“So over the past five months, I feel like I’ve really been able to ascend this trust curve. And now I’m at the point where, this sounds kind of scary to say this, and it makes me sound like a slop artist, but I promise I’m not. But I actually have my agents now auto-merging PRs for me, which is like a wild thing to say. But I woke up today, and there were like 20 PRs landed, and I just reviewed them on main, like they were already landed. And they were good.”
Great presentation from SpaceX's Lee Robinson @leerob going over their work on agents, tried to break down into topics and attached corresponding clips
Intel’s Chris Auth says High-NA EUV pays off for Intel but not for TSMC, because Intel has backside power and TSMC doesn’t
“High-NA is a good example of where, because of the architecture of our technology versus TSMC’s, we make different conclusions off of the same toolset."
"We use backside power. That means that you actually alleviate some of the pitch requirements you have on the front side, and that allows you to print that directly with High-NA."
"TSMC has to run tighter pitches because they don’t have backside power, and they can’t do that with High-NA, so they have to use double patterning EUV. So for them, it’s not very helpful. For us, it is very helpful.”
Intel CTO explains why Intel is helping Elon Musk build Terafab, and what a new fab needs besides tools
DWARKESH: “I think it’ll be interesting to discuss the partnership you guys have with Elon on Terafab. What’s going on there?”
PUSHKAR RANADE (CTO): “Well, I think Elon’s publicly talked about his desire to build a fab.”
[Musk clip spliced in]: “We either build the Terafab or we don’t have the chips. And we need the chips, so we’re going to build the Terafab.”
RANADE: “Sort of the same thinking. I think he’s seeing just an enormous increase in demand for silicon, for compute and for memory. And I think he came to the conclusion that his own businesses are going to require a lot of silicon. And so he thought maybe he should just do it all on his own. Unlike building a car, for example, this is such an intricate and complicated process. We thought we could work together to help accelerate his bringing up his fab.”
DWARKESH: “But because of the bottleneck at the tool level, it seems like the net amount of silicon in the world won’t increase. It’s just that maybe if somebody were to start a new fab, they would get access to guaranteed supply in a way that they wouldn’t have if they’re working with another person’s foundry.”
RANADE: “It’s actually not just tools. I mean, a fab does require a lot of power, a lot of water, a lot of consumables. There’s many other input variables as well.”
DWARKESH: “But those can be scaled in the way that tools cannot.”
RANADE: “Yea. Some more than others, but yes. In one sense, yes, we need a lot more equipment. But it is true, we also need a lot more just raw fab space, raw clean room capacity.”
Blackstone CEO Steve Schwarzman says he has seldom seen a market as supply-constrained as AI compute, with demand accelerating and no signs of slowing
“As we’ve stated before, we believe the transformative power of AI has precedent in the industrial revolution and the commercialization of electricity, and we are in the earliest stages of its development."
"Demand for compute is accelerating, and we see no signs of that slowing down, as AI use cases ramp for both businesses and consumers, and the world increasingly engages with the vast potential of this technology.”
“At the same time, there’s a critical scarcity of supply that has only intensified. Seldom in my career have I seen such a supply-constrained market of this scale. Current public attitudes towards data centers will likely only amplify this scarcity.”
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For a breakdown of Blackstone's AI presentation: firesidealpha.substack.com/p…
$BX Jon Gray reveals Blackstone's portfolio companies grew their Anthropic spend 21-fold in a year to a $525 million run rate
"Now you may ask, is this really happening? Well, we have an amazing lens at Blackstone through our portfolio companies."
"This data comes from our portfolio companies, our GP stakes portfolio companies, and our borrowers. We had, amongst these 1,400 companies, $25 million of run-rate revenue in September of '25. That number is up 21-fold, annualized run-rate revenue, to $525 million of spend with Anthropic."
"That is what's happening out there because these companies are getting extraordinary returns on the investment."
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For Jon Gray's full set of takeaways and slides: firesidealpha.substack.com/p…
[Comment made prior to $WDC selloff in AH]
Western Digital CFO: capex will run above WD’s 4–6% of revenue target for the next two years, as they invest in heads and media technology and factory automation
Kris Sennesael (CFO): “As we look ahead, demand remains robust, customer engagements continue to deepen and broaden, and our visibility continues to improve. And as we execute on our technology and product transitions, we expect to accelerate exabyte supply growth throughout fiscal year 2027 and 2028."
"Our strong balance sheet and free cash flow generation give us the ability to make targeted investments that strengthen our technology leadership and support our customers’ growing storage needs."
"While we expect capital expenditures to average 4 to 6 percent of revenue over a five-year period, we anticipate that CapEx as a percentage of revenue will be modestly above that range over the next two years, as we continue to invest in heads and media technology and factory automation, supporting our industry-leading areal density and higher capacity drives, without having to spend capex to add unit capacity.”
Western Digital CEO: WD has demand visibility out to 2030–2031 from all seven of its top customers, and sees demand signals increasing over time
Irving Tan (CEO): “I think in terms of visibility outlook, if you take our top seven customers as an example, we have good visibility up to 2030, 2031 across all seven of them."
"And that’s something that we’ve highlighted, that we’ve always really much appreciated, so we can make sure we deliver both the technology and the supply to meet that growth in demand going forward. And so we have good visibility in that."
"In fact, we see quarter after quarter the demand signal actually increasing over time. And as we move forward into the ‘28, ‘29, ‘30 timeframe, we see that demand continuing to be very durable.”
Western Digital CEO says high-bandwidth hard drives could take over KV-cache workloads in AI inferencing from costlier storage, and reveals WD is now working out pricing after sampling them with many customers
Irving Tan (CEO): “I think the opportunity is still somewhat nascent today. Our primary focus is obviously to get capacity into the hands of the customers. But as we move into the latter part of calendar year ‘27, ‘28 and beyond, this becomes what we feel a big differentiator for us, because things like high bandwidth drives provide customers with an opportunity to use HDDs for different workloads that they may have to use alternative storage media for, which may be much more costly. For example, KV cache workloads in AI inferencing, and in video streaming as well.”
“So we’ve been actually providing samples to many of our customers in terms of this product so that they can test out different use cases, and as I highlighted, that’s been very positively received. And so we’re working through sort of the commercial structure of how we would price those high bandwidth capabilities to customers. But from a technical capability standpoint, very positive. We are working through the sort of commercial construct of how we would price that going forward.”
Western Digital CEO: WD has demand visibility out to 2030–2031 from all seven of its top customers, and sees demand signals increasing over time
Irving Tan (CEO): “I think in terms of visibility outlook, if you take our top seven customers as an example, we have good visibility up to 2030, 2031 across all seven of them."
"And that’s something that we’ve highlighted, that we’ve always really much appreciated, so we can make sure we deliver both the technology and the supply to meet that growth in demand going forward. And so we have good visibility in that."
"In fact, we see quarter after quarter the demand signal actually increasing over time. And as we move forward into the ‘28, ‘29, ‘30 timeframe, we see that demand continuing to be very durable.”
Western Digital CEO says this quarter is “the floor” for exabyte growth as drives go from 32TB to 44TB to 55TB
Irving Tan (CEO): “We sort of see the current quarter as being sort of the floor in terms of exabyte growth, and we see that accelerating through the rest of the fiscal year, and obviously, as Kris highlighted in the script, to ‘28 and beyond that as well. That’s really driven by the confidence that we have in the new platforms that we’ll be introducing.”
“Obviously, we have HAMR coming out in the first half of fiscal ‘27, and then, as I highlighted, we have our second-generation HAMR drive starting qualification in the second half as well. So we’re very quickly at the top end going from a 32-terabyte drive to a 44-terabyte drive to a 55-terabyte drive and beyond. And that’s the best way and the most economical way for both our customers and for us to be able to meet the demands that they have in terms of our products.”
“To your question around the demand, as I said, we see that continuing to grow. We see it being very doable. There hasn’t been any diminishing in demand, and we don’t see the gap in supply or demand that exists today perishable in the near term as well. So we continue to focus on supporting our customers the best we can with the technology that we have.”
Western Digital CEO: WD has demand visibility out to 2030–2031 from all seven of its top customers, and sees demand signals increasing over time
Irving Tan (CEO): “I think in terms of visibility outlook, if you take our top seven customers as an example, we have good visibility up to 2030, 2031 across all seven of them."
"And that’s something that we’ve highlighted, that we’ve always really much appreciated, so we can make sure we deliver both the technology and the supply to meet that growth in demand going forward. And so we have good visibility in that."
"In fact, we see quarter after quarter the demand signal actually increasing over time. And as we move forward into the ‘28, ‘29, ‘30 timeframe, we see that demand continuing to be very durable.”
Western Digital CEO: WD has demand visibility out to 2030–2031 from all seven of its top customers, and sees demand signals increasing over time
Irving Tan (CEO): “I think in terms of visibility outlook, if you take our top seven customers as an example, we have good visibility up to 2030, 2031 across all seven of them."
"And that’s something that we’ve highlighted, that we’ve always really much appreciated, so we can make sure we deliver both the technology and the supply to meet that growth in demand going forward. And so we have good visibility in that."
"In fact, we see quarter after quarter the demand signal actually increasing over time. And as we move forward into the ‘28, ‘29, ‘30 timeframe, we see that demand continuing to be very durable.”
$WDC CFO @ Citi TMT: "Currently we don't see a digestion. It's actually the opposite. Every time we go and talk to our customers, myself or my CEO or our salespeople, they come back with a stronger demand signal and better visibility for longer term."
Jensen Huang says he doesn’t see a memory glut coming in 2029, because HBM “will be used for years to come”
“I don’t think so. One of the things that’s really great about memory is that you could always use more of it. And of course, through architecture ideas, and Nvidia owns the architecture of our systems, through architecture ideas, we could shift around the resources as necessary, but HBM memory will be used for years to come, and LPDDR.”
Nvidia CEO Jensen Huang says demand for neoclouds is “off the charts” and their capabilities are "extraordinary," and the only thing missing is the working capital to fund their growth
“The demand for the neoclouds is off the charts. Their capabilities are extraordinary. And so what is missing in the middle is the working capital to fuel that growth, to fund that growth. And because there’s just so much demand across so many sectors of AI, there’s a scarcity of capital. The demand of the capital is much greater than the availability of the capital. That’s going to get solved. That’s going to get solved because fundamentally, the most important things are the values that these guys are providing, these companies are providing. The demand for it is so strong.”
Nvidia CEO Jensen Huang says demand for neoclouds is “off the charts” and their capabilities are "extraordinary," and the only thing missing is the working capital to fund their growth
“The demand for the neoclouds is off the charts. Their capabilities are extraordinary. And so what is missing in the middle is the working capital to fuel that growth, to fund that growth. And because there’s just so much demand across so many sectors of AI, there’s a scarcity of capital. The demand of the capital is much greater than the availability of the capital. That’s going to get solved. That’s going to get solved because fundamentally, the most important things are the values that these guys are providing, these companies are providing. The demand for it is so strong.”
DEVELOPING: American Airlines CEO backs Starlink when pressed on Elon Musk and Ukraine, saying customers demand the "best" connectivity
LEBEAU: “...But it raises the question, are you comfortable doing business with Starlink?”
ROBERT ISOM (CEO): “American has always been the leader in satellite Wi-Fi. We’ve had more aircraft equipped with satellite Wi-Fi than anybody for longer. As we take a look forward, our customers, they want connectivity. They demand it. And this is something that we are going to make sure that our customers have the best product in the marketplace.”
LEBEAU: “And that means Starlink?”
ISOM: “It’s Starlink.”
Intel CTO explains why Intel is helping Elon Musk build Terafab, and what a new fab needs besides tools
DWARKESH: “I think it’ll be interesting to discuss the partnership you guys have with Elon on Terafab. What’s going on there?”
PUSHKAR RANADE (CTO): “Well, I think Elon’s publicly talked about his desire to build a fab.”
[Musk clip spliced in]: “We either build the Terafab or we don’t have the chips. And we need the chips, so we’re going to build the Terafab.”
RANADE: “Sort of the same thinking. I think he’s seeing just an enormous increase in demand for silicon, for compute and for memory. And I think he came to the conclusion that his own businesses are going to require a lot of silicon. And so he thought maybe he should just do it all on his own. Unlike building a car, for example, this is such an intricate and complicated process. We thought we could work together to help accelerate his bringing up his fab.”
DWARKESH: “But because of the bottleneck at the tool level, it seems like the net amount of silicon in the world won’t increase. It’s just that maybe if somebody were to start a new fab, they would get access to guaranteed supply in a way that they wouldn’t have if they’re working with another person’s foundry.”
RANADE: “It’s actually not just tools. I mean, a fab does require a lot of power, a lot of water, a lot of consumables. There’s many other input variables as well.”
DWARKESH: “But those can be scaled in the way that tools cannot.”
RANADE: “Yea. Some more than others, but yes. In one sense, yes, we need a lot more equipment. But it is true, we also need a lot more just raw fab space, raw clean room capacity.”
DEVELOPING: American Airlines CEO backs Starlink when pressed on Elon Musk and Ukraine, saying customers demand the "best" connectivity
LEBEAU: “...But it raises the question, are you comfortable doing business with Starlink?”
ROBERT ISOM (CEO): “American has always been the leader in satellite Wi-Fi. We’ve had more aircraft equipped with satellite Wi-Fi than anybody for longer. As we take a look forward, our customers, they want connectivity. They demand it. And this is something that we are going to make sure that our customers have the best product in the marketplace.”
LEBEAU: “And that means Starlink?”
ISOM: “It’s Starlink.”
Intel CTO Pushkar Ranade says the world’s chipmaking tools could only double leading-edge wafer output, not 10x it, even as AI compute demand triples every year
DWARKESH: “Are there enough tools in the world to 10x the amount of wafers you’re producing at the leading edge?”
RANADE: “Not 10x, but probably like 2x, yes.”
DWARKESH: “That’s quite interesting because the AI industry for a decade has been 3x-ing compute year over year. And you’re saying that that just can’t continue.”
RANADE: “Unless the entire supply chain, starting from the equipment suppliers, their suppliers, their sub-suppliers, unless everybody produces more, you can’t increase the output collectively.”
DEVELOPING: American Airlines CEO backs Starlink when pressed on Elon Musk and Ukraine, saying customers demand the "best" connectivity
LEBEAU: “...But it raises the question, are you comfortable doing business with Starlink?”
ROBERT ISOM (CEO): “American has always been the leader in satellite Wi-Fi. We’ve had more aircraft equipped with satellite Wi-Fi than anybody for longer. As we take a look forward, our customers, they want connectivity. They demand it. And this is something that we are going to make sure that our customers have the best product in the marketplace.”
LEBEAU: “And that means Starlink?”
ISOM: “It’s Starlink.”
DEVELOPING: American Airlines CEO backs Starlink when pressed on Elon Musk and Ukraine, saying customers demand the "best" connectivity
LEBEAU: “...But it raises the question, are you comfortable doing business with Starlink?”
ROBERT ISOM (CEO): “American has always been the leader in satellite Wi-Fi. We’ve had more aircraft equipped with satellite Wi-Fi than anybody for longer. As we take a look forward, our customers, they want connectivity. They demand it. And this is something that we are going to make sure that our customers have the best product in the marketplace.”
LEBEAU: “And that means Starlink?”
ISOM: “It’s Starlink.”
DEVELOPING: Southwest CEO announces Starlink will be on Southwest’s entire fleet by this time next year, making it the first airline to get there
United Airlines CEO says it has more Starlink flights than the rest of the US airline industry combined, with about half of its departures already on Starlink and the whole fleet done by the end of 2027
Starlink is now a “motivating factor” in which airline people fly, so United launched a new tracker to show which flights have it.
“You’ve heard me say in the past that hope is not a strategy. Instead, we’re focused on things we can control, and those are the big investments we’ve made over the past several years in products, service, and technology."
"And one of those things is Starlink, a new and truly differentiating RASM tailwind in 2027."
"Today, about half of United departures are on Starlink-equipped aircraft, and we offer more Starlink flights than the entire U.S. airline industry combined."
"We currently expect to reach 61% of departures by the end of 2026, 87% by June 1st, and available fleet-wide by the end of 2027."
"Importantly, we’re also seeing evidence that Starlink is a motivating factor for customers to choose which airline they fly. That’s why we launched a new tracker so people can check if their flight has it and can follow along as we outfit our fleet.”
Meta CFO Susan Li says over 20% of U.S. Muse users are already $1,000-plus annual ARPU users, skewing to Meta’s highest-value base
“Muse right now skews to our highest value users. I think over 20% of U.S. Muse users today are $1,000-plus annual ARPU users. So, it gives you a sense of kind of what the early adopters look like, and so they are not totally representative of the overall U.S. user base.”
Mark Zuckerberg says Muse users already bring Meta “several hundreds of dollars” a year each across its family of apps, and Muse itself should eventually earn even more per user, mostly through fees on the shopping it handles
“From a business perspective, the average revenue per American user for our existing Muse users is, sorry, for our existing family of apps users is several hundreds of dollars annually."
"And we expect that Muse will reach an even higher level over time due to the amount of commerce that we already see taking place. This will take some time, but we’re starting to work on this now."
"Our business model will have a few components. For most people, the product should be free and we will build commerce tools. So we get paid a fee based on the transactions that we help facilitate. We expect this will be paid for by businesses."
"For people who want the most advanced models or to use extra tokens, they subscribe directly and pay. For business owners who want additional features to use Muse to grow their businesses or for companies that want people to use Muse for work, they will be able to subscribe directly and pay as well."
"And for those who want Muse to help improve the personalization and quality of their content and ads across Meta, they will be able to connect to those experiences as well."
"Just to clarify, the average revenue that I was talking about before is the family of apps revenue for our existing Muse users.”
Sam Altman says OpenAI cannot responsibly open-source its current best internal model until internet cyber defenses are fundamentally rebuilt, and admits similarly capable open models may not be far behind
“I don’t think we could responsibly open-source our current best internal model anytime soon.
"I'm trying to think of what would have to happen to the world. The total cyber-defense model of the way the internet works would have to change. We’d have to build up this bio layer and a long list of other stuff too.
“The reason that this is an interesting and live question is: How far ahead does anyone really believe that model is from someone who will open-source a model of that level? Not super.”
Elon Musk says Sam Altman is “so deceptive, it's crazy” and explains why AI labs should test each other’s models before release
“In fact, I’ve recommended that we do that exact thing. Because there’s a lot of talk of having a regulatory agency. But the thing is that regulatory agencies, it takes a long time to get one established. And their rulemaking is very slow."
"And I said, guys, why don’t we just have a call once a week, just like you’re saying. And that maybe a week before we release a model, we give access to our competitors to say, hey guys, why don’t you try out the new model, see if you see any problems with it."
"I think competitors would keep each other honest in that situation. You know, if they say, oh, I was able to make a nuclear bomb with your AI, it’s like, oh, we better fix that before we release it, you know, type of thing.”
“He’s so deceptive, it’s crazy.”
