Speaker 1: Bloomberg Audio Studios, podcasts, radio news joining us now to
Speaker 1: get out to the tech earnings in the tech space.
Speaker 1: Deep water asset managers Gene Munster can't say enough about
Speaker 1: Gene's commitment to Bloomberg surveillance in combination with Dan Eyves
Speaker 1: Eyes Monster Munster Eyes we saw on July fourth with Gene,
Speaker 1: thank you for that commitment to doing that.
Speaker 2: You're on it, love it, Gene.
Speaker 1: I brought up Microsoft, which I never look at, and
Speaker 1: they got they're modeling twelve thirteen percent revenue growth. Do
Speaker 1: you have a conviction on mags seven blended revenue growth?
Speaker 1: Does it sustain or is there a direction to it?
Speaker 3: Well, I can tell you what the numbers are that basically,
Speaker 3: if you look at everything, with the exception of Nvidia,
Speaker 3: the street expectations for this year is thirteen percent growth
Speaker 3: and maybe as expected a similar growth rate for twenty
Speaker 3: twenty six. Now, typically when you see rising numbers, the
Speaker 3: comps get more difficult and the street anticipates a deceleration
Speaker 3: and growth, and what we're seeing is kind of the opposite.
Speaker 3: This is kind of a rare chapter. My sense is
Speaker 3: that next year, counter twenty six is going to surprise
Speaker 3: to the upside, and I just want to caution is
Speaker 3: when the market set all time highs, I think that
Speaker 3: that kind of gets people a little bit more enthusiastic,
Speaker 3: and I'm backing out what the market's doing. I just
Speaker 3: want to kind of zero in on what the fundamentals are,
Speaker 3: and the bottom line is that these companies are just
Speaker 3: fundamentally having more success and squeezing juice out of their
Speaker 3: existing business and just adding additional spice to their growth.
Speaker 3: And so Tom, I feel really good about how these
Speaker 3: companies are going to play out. The one I would
Speaker 3: mention that I'm less optimistic. You mentioned Microsoft. That is
Speaker 3: one that I don't think has the dynamic upside that
Speaker 3: a lot of the other big tech companies do.
Speaker 1: Using that as a model, yet a COVID recovery. Ye
Speaker 1: had a twenty twenty two pause and then up, up
Speaker 1: and away with the YARDNNI and compore October twenty twenty
Speaker 1: two bottom geene Monster. Do you, as a tech guy,
Speaker 1: do you extrapolate that trend from the autumn of twenty
Speaker 1: twenty two.
Speaker 2: I do.
Speaker 3: I think that when you uh, there's gonna be ebbs
Speaker 3: and flows in terms of kind of optimism and pest, sex, skepticism, skepticism,
Speaker 3: the Liberation day back in April, optimism we're at now.
Speaker 3: But if you if you step back and look at
Speaker 3: the broader trend over the next three years, Let's say
Speaker 3: I think that this is gonna continue to be a
Speaker 3: bull market. I think it's gonna go materially higher, and
Speaker 3: ultimately I think it's going to end in a in
Speaker 3: a bursting of a bubble.
Speaker 2: Uh. And the reason why I mentioned that kind.
Speaker 3: Of that that that that rough edge of kind of
Speaker 3: how this plays out is that if I'm right about
Speaker 3: what the next three years look like and we get
Speaker 3: just across the board optimism levels that I think are
Speaker 3: hard to kind of comprehend, I think that ultimately there
Speaker 3: probably is some sort of bubble bursting. But Tom, to
Speaker 3: answer question, I think that you know, we're very.
Speaker 2: Optimistic deep water.
Speaker 3: We are about seventy percent of our investments are AI
Speaker 3: related and I sleep well at night.
Speaker 1: Jem, you said you were maybe a little bit cautious
Speaker 1: on Microsoft that looked at the A and R function
Speaker 1: for Microsoft sixty five buys seven holds zero cells. What's
Speaker 1: your current view of Microsoft here?
Speaker 3: You just have better places to invest in they've study revenue.
Speaker 3: There is a lot of that predictability, which is attractive.
Speaker 3: I just maybe to give some context to why the
Speaker 3: stock is working.
Speaker 2: That piece is attractive.
Speaker 3: And second is Microsoft has probably been the most forward
Speaker 3: thinking company when it comes to using AI to save costs.
Speaker 3: They've talked about this five hundred million dollars in annual
Speaker 3: savings just in terms of coding moving that over to
Speaker 3: the machine. And so I think that investors are expecting
Speaker 3: some margin expansion. So I think that, you know, that's
Speaker 3: the reason why it's moving up. But the reason why I.
Speaker 2: Just think there are better places to be is that.
Speaker 3: Ultimately the upside to the numbers, if you look at
Speaker 3: across the rest of the mag seven, I think there's
Speaker 3: just more upside to you know, Microsoft, for example, is
Speaker 3: not going to grow at twenty percent, Micro at fourteen
Speaker 3: and a half percent, whereas you have a company like Apple,
Speaker 3: surprisingly the streets looking for mid single digit growth next
Speaker 3: year and you could see percent growth.
Speaker 1: Geo's in a Klaim Bloomberg food court the other day
Speaker 1: looking at the Red Sox box scores. I don't know
Speaker 1: if you're word gene, but the Red Sox have won
Speaker 1: ten in a row and one of our fancy artificial
Speaker 1: intelligence people walked up to me and said, you know, Tom,
Speaker 1: you need a brief So I got briefed. Do you
Speaker 1: parse a difference between Chat, GBT, Google, Gemini? Help me here?
Speaker 1: Anthropic perplexity is something? Are these all equal things? Gene
Speaker 1: Munster or for our listeners and viewers? Do we need
Speaker 1: to learn nuances of them?
Speaker 2: Well, the answers, it's nuanced.
Speaker 3: And this is something we're actually working on a bigger
Speaker 3: project right now. We're going through and testing these different models,
Speaker 3: and there are there's like broadly accepted testing benchmarking like
Speaker 3: chat Bottterina for example, which is widely recognized, but there's
Speaker 3: a lot of gamification in terms of how the companies
Speaker 3: go up against those those benchmarks. And then there's just
Speaker 3: the coding side, how well there's a code, And then
Speaker 3: there's just like the real world, like does give you
Speaker 3: the answer you're looking for? And it turns out that
Speaker 3: each of these models, the exception of Lama Lama is
Speaker 3: pretty weak and so but if you look at the
Speaker 3: other four primary models, they all have kind of different strengths.
Speaker 3: And so ultimately is that I think of AI as
Speaker 3: more of like a personality is that the world isn't
Speaker 3: going to be centered on one personality.
Speaker 2: We won't want that.
Speaker 3: And so each of these models as a slightly different
Speaker 3: personality and slightly different strengths. And so that's what we
Speaker 3: are seeing is if you're going to say, what's like
Speaker 3: the BS model kind of putting everything all together, it's
Speaker 3: it's probably open AI GPT today, and then GROC and
Speaker 3: Gemini kind of close behind.
Speaker 2: So Gene today.
Speaker 1: The news is on the chip side. The US government says,
Speaker 1: I don't know in Vidia AMD they can start sending
Speaker 1: some of these advanced AI chips to China. What's the
Speaker 1: backstory there with stocks are trading up on this news.
Speaker 3: Well, it's big news obviously from Vidia, and they talked
Speaker 3: three months ago about this impact being a negative fifteen percent.
Speaker 2: To the overall growth.
Speaker 3: So if you think about the street numbers, maybe just
Speaker 3: to Paul the kind of zero in on what's going
Speaker 3: on with Nvidia is company three months ago says we
Speaker 3: can't sell these age twenties to China and that's going
Speaker 3: to cost us fifteen percent of our revenue. The reason
Speaker 3: why that the street numbers are not going to go
Speaker 3: up by fifteen percent today is twofold. Number one is
Speaker 3: the four analysts that cover in VideA, about eight of
Speaker 3: them had anticipated that these curbs be released in this
Speaker 3: current quarter, and so you saw some of the analysts
Speaker 3: already expecting this announcement. And then separately, is that this
Speaker 3: is good news. It's good news for Nvidia, but like
Speaker 3: the whole geopolitical conversation around how chips play into rare
Speaker 3: minerals and all.
Speaker 2: That, that hasn't been solved.
Speaker 3: And if one thing we've learned over the last three
Speaker 3: months is that you really can't take one development in
Speaker 3: a day and extrapolate over the next couple of years.
Speaker 3: So that's why this stock's up five percent a day,
Speaker 3: not fifteen percent.
Speaker 1: Quickly, Let's do that with the Apple. Why not? Okay,
Speaker 1: chine monster on Apple? Are they going to surprise people
Speaker 1: with a plus plus here in the announcement?
Speaker 2: You know?
Speaker 3: As far as like the geopolitical side, like announcements there,
Speaker 3: I don't know if anything's going to happen there. I
Speaker 3: can say this is that if you look at the
Speaker 3: mag seven and look at where is the likely most
Speaker 3: upside in the September quarter, so pretty narrow near term focused.
Speaker 2: Apple's at the top of the list.
Speaker 3: The streets looking for flat revenue growth in the September quarter,
Speaker 3: They're continuing they're going to benefit from that huge thirty
Speaker 3: seven percent growth back in twenty twenty one. Of those
Speaker 3: upgrades are going to be coming in. It's not flashy,
Speaker 3: it's not AI. But in terms of going into this
Speaker 3: print and the commentary about the September quarter, I think
Speaker 3: Apple is gonna show well.
Speaker 1: Jane, thanks for the brief. She Monster with us Steve
Speaker 1: Water on technologists