Speaker 1: From the heart of where innovation, money and power collide
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Caroline Hyde and Ed Ludlow.
Speaker 2: Like from New York, I'm Caroline Hyde and I'm Jackie
Speaker 2: Devalas in San Francisco, this is Bloomberg Technology coming up.
Speaker 3: Amazon plans to spend at least one hundred billion dollars
Speaker 3: this year to keep up with AI demand. We break
Speaker 3: down the earnings, plus US Treasury Secretary Scott Besson says
Speaker 3: Elon Musk's Doge effort isn't altering treasury systems.
Speaker 4: More on our exclusive.
Speaker 3: Interview and with the Super Bowl this Sunday, we dig
Speaker 3: into the sports spending industry with DraftKings CEO Jason Robbins.
Speaker 3: But first we dig in to these markets. But the
Speaker 3: number one name that is dragging down the NASAC, it's
Speaker 3: Amazon by three point six percent. The worst day of
Speaker 3: the stocks is December the eighteenth. This is all about
Speaker 3: the earnings that we get the fact that they managed
Speaker 3: to be in line for their fiscal fourth quarter ten
Speaker 3: percent growth in revenue. We see earnings overall showing sixty
Speaker 3: percent more than growth in operating profit. But it's the
Speaker 3: forward looking guidance that once again has us a little
Speaker 3: bit anxious. And it's all about AWS. Let's get to it,
Speaker 3: Bloomberg Intelligence analyst Phunam Goyle. And first off, with AWS,
Speaker 3: they're committing to yet more spend one hundred billion dollars.
Speaker 3: That's going to be the run rate that's necessary to
Speaker 3: capture the extent of demand for cloud right now.
Speaker 4: Yeah, you said it, absolutely right.
Speaker 5: So we're not still surprised by that because we heard
Speaker 5: that from Microsoft and Google earlier too. But one hundred
Speaker 5: and five billion dollars in twenty twenty five and likely
Speaker 5: thereafter means they're spending more on AI. But that's a
Speaker 5: good thing, right We want to see them spend more
Speaker 5: because there is going to be higher demand for AWS
Speaker 5: services and Amazon needs to make sure that they're investing
Speaker 5: and not behind the curve.
Speaker 2: What did the company say about it's eco commerce business?
Speaker 2: We forget this now and all the talk about artificial intelligence.
Speaker 2: How is it fending off competition there?
Speaker 6: Yeah?
Speaker 5: E commerce actually had a very nice quarter on the
Speaker 5: heels of a very strong holiday season. They did well,
Speaker 5: surprisingly in their physical store business, which is also a
Speaker 5: small piece of the business. But the fact that it
Speaker 5: grew nearly high single digits was surprising and promising on
Speaker 5: the efforts there for the online side. Very good growth there,
Speaker 5: and we are looking to see what happens in twenty
Speaker 5: twenty five with the added terrace.
Speaker 3: Let's just talk about whether or not commerce can be
Speaker 3: supporting ultimately the amount of capital expenditure that's going on here, Poonam.
Speaker 3: It feels as though this is a company that is
Speaker 3: cash rich. Most analysts have upgraded their price targets on
Speaker 3: the company today even though we see those weaknesses in
Speaker 3: the SHES.
Speaker 4: People are willing to wait.
Speaker 5: Right, Yeah, people are definitely willing to wait. I mean
Speaker 5: there's a lot of profitability that will come out of
Speaker 5: Amazon over the coming years from the AWS business, but
Speaker 5: also from advertising, which is a key driver here to
Speaker 5: profitability with even higher margins than AWS, and retail is
Speaker 5: the driving force behind that higher advertising momentum.
Speaker 2: That's Bloomberg Intelligence analyst Punem Gooil, thanks so much.
Speaker 4: Let's go to.
Speaker 2: China, where tech stocks have helped power a bull run
Speaker 2: for their market show me among shares surging to a
Speaker 2: fresh record on the back of new product launches. Let's
Speaker 2: bring in Bloomberg's Peter Elstrom for more. Peter, what does
Speaker 2: show Me unveil that got investors so excited?
Speaker 7: Yeah, Hi, Jackie. Yeah.
Speaker 8: Shaumi is best known for its smartphones, of course, and
Speaker 8: they've competed with Apple and Huawei in the market quite effectively.
Speaker 8: But they also have this whole ecosystem of other devices
Speaker 8: that they're able to tap into that includes cars. Now
Speaker 8: they want ahead with a car venture while Apple pulled
Speaker 8: away from that. They also have a lot of wearable devices.
Speaker 8: So there are a couple of bullish sentiments there. One,
Speaker 8: there's this overall sentiment that the China market is quite
Speaker 8: strong right now. On top of that, Shaumi seems to
Speaker 8: be growing quite a bit, and the Chinese government is
Speaker 8: offering subsidies in a number of different areas, including wearables.
Speaker 7: Could benefit show Me in the long run.
Speaker 8: So they have this whole ecosystem that is probably going
Speaker 8: to be able to benefit from some of these growth opportunities.
Speaker 3: Looking at Shaomi, auto's another auto that's been on a
Speaker 3: tap byd We're all looking at autonomous. We're looking at
Speaker 3: a key competitive threat here for Tesla that saw Chinese
Speaker 3: sales fall like they have done around the world.
Speaker 8: Right bid of course, surpassed Tesla in terms of the
Speaker 8: number of electric vehicles sold. They've been a breakout success
Speaker 8: from China really, and they've had a success beyond the
Speaker 8: country in a number of different areas. So they didn't
Speaker 8: even announce anything that gave the shares this big bump.
Speaker 8: There's a report that they're going to have an announcement
Speaker 8: next week, and the anticipation is they're going to talk
Speaker 8: about their autonomous driving capabilities. They think they're going to
Speaker 8: take a step forward there, and that really benefited the shares.
Speaker 8: On top of this overall bullish sentiment in China, there's another.
Speaker 2: Boost here that's helping lift Chinese tech stocks Deep Seek,
Speaker 2: which is completely the opposite reaction that US tech markets had.
Speaker 4: Kind of explain that for US, Peter right.
Speaker 8: Deep Sea, of course, is this AI model that has
Speaker 8: come out over the past few months, but really a
Speaker 8: couple weeks ago captured the world's attention because it's an
Speaker 8: AI model that is competitive with open aiyes alternative offering.
Speaker 8: But they did it at just a fraction of the cost.
Speaker 8: It's unclear exactly whether the costs that they announced at
Speaker 8: exactly in line, but nevertheless it was certainly much much
Speaker 8: cheaper than what the companies in Silicon Valley are doing.
Speaker 8: So Deep Seak itself is of course not publicly traded,
Speaker 8: but that's given the sense of optimism for the rest
Speaker 8: of the Chinese market, and you've seen an uplift and
Speaker 8: a number of different stocks.
Speaker 7: In particular, Ali Baba.
Speaker 8: Best known for its e commerce business, announced an AI
Speaker 8: model that's supposed to be quite good. They said theirs
Speaker 8: is actually better than Deep Seeks.
Speaker 7: It's not clear.
Speaker 8: Whether that's the case, but their stock has been rising
Speaker 8: quite a bit.
Speaker 7: Now.
Speaker 8: This comes against the backdrop that Ali Baba got beat
Speaker 8: up for years by the Chinese government, So they're still
Speaker 8: far far off their highs from twenty twenty to twenty
Speaker 8: twenty one, but they're recovering a fair bit here.
Speaker 3: The sentiment, of course come whipsaw, and a lot of
Speaker 3: that's to do with just the economy over in China.
Speaker 3: There's tariffs and concerns about US China relationship going forward.
Speaker 3: But for now, does this sort of bullish sentiment feel resilient?
Speaker 3: Is it all just pegged on the latest day I development?
Speaker 8: Peter, It's it's so hard to tell, really, especially in China,
Speaker 8: because there's a lot of things that you can't see
Speaker 8: that are going on beyond the numbers, beyond.
Speaker 7: The specifics that we see.
Speaker 8: There certainly are analysts who believe that this is going
Speaker 8: to be sustainable from here. One analyst put out a
Speaker 8: report called China is going to eat China will eat
Speaker 8: the world, you know, very bullish sentiment for some of
Speaker 8: these China stocks, including Alli, Baba and Tencent, which had
Speaker 8: been leaders in the past. But again, the Chinese government
Speaker 8: had really beat up those companies in the past, so
Speaker 8: they're just getting back some of that ground.
Speaker 2: Peter, let's talk about trade tensions, because I'm ad all
Speaker 2: this optimism. What does all of this mean in the
Speaker 2: long term or even really in the short term as
Speaker 2: some of these tensions escalate with President Trump and Beijing.
Speaker 8: Right, Jackie, you're hitting on another one of the very
Speaker 8: key actors and the unpredictability of the whole sentiment.
Speaker 7: Here.
Speaker 8: You have a number of Chinese companies that will get
Speaker 8: caught in the crossfire between the US government and the
Speaker 8: Chinese government if in fact they escalate from here. We've
Speaker 8: already seen the US put these ten percent tariffs on
Speaker 8: Chinese goods. Also, they eliminated this rule the deminimous rule
Speaker 8: that really helped PDD Holdings, the parent company of Timu,
Speaker 8: that the e commerce player that has been on such
Speaker 8: a terror and also Shean. Those companies are certainly going
Speaker 8: to get hit by some of these changes. It's a
Speaker 8: matter of whether they're going to continue with those. The
Speaker 8: Trump administration, of course, has gone back and forth on
Speaker 8: some of these tariffs. We saw them announce them for
Speaker 8: Mexico and Canada and then back off of them. So far,
Speaker 8: the Chinese tariffs are in places probably aren't going to
Speaker 8: go away, but you can imagine the Trump administration negotiating
Speaker 8: a bit here. So unpredictability is really going to be
Speaker 8: the key.
Speaker 4: Doesn't it.
Speaker 3: Just bloking back its Peter Elstrom, thanks so much. Coming up,
Speaker 3: we're going to hear from the US Treasury Sectory Scott
Speaker 3: Besson on Elon Musk's doge efforts that exclusive eminem it.
Speaker 3: But first we're watching shares of pinterest too. Earnings abound
Speaker 3: Pindress surging almost eighteen percent.
Speaker 4: Revenue for the current period expected to.
Speaker 3: Be about eight hundred and thirtyeven to eight hundred and
Speaker 3: fifty two million dollars that exceeded estimates. They also really
Speaker 3: managed to push across expectations in the holiday quarter for
Speaker 3: revenue and profitability.
Speaker 4: From New York San Francisco. This is bloom Meg Technology.
Speaker 3: US Treasury Secretary Scott Beresen says a lot of misinformation
Speaker 3: is floating around DOGE and that he personally vetted the
Speaker 3: Treasury employees on Elon Musk's Government Efficiency Team with read
Speaker 3: only access to federal payment data. He sat down with
Speaker 3: Bloomberg Silehemosen yesterday for an exclusive interview.
Speaker 4: Just take a listen.
Speaker 6: These are Treasury employees. It are two Treasury employees, one
Speaker 6: of whom I personally interviewed in his final round. Is
Speaker 6: no tinkering with the system. They are on read only,
Speaker 6: they are looking. They can make no changes. It is
Speaker 6: an operational program to suggest improvement. So we make one
Speaker 6: point three billion payments a year. And this is two
Speaker 6: employees who are working with a group of long standing employees.
Speaker 9: The letter that the Treasure Department sent earlier this week
Speaker 9: talked about how the team currently does not have access
Speaker 9: to change the system. Have they at any point this
Speaker 9: year had the ability to make changes.
Speaker 6: Absolutely not. This is no different than you would have
Speaker 6: the at a private company. And by the way, the
Speaker 6: ability to change the system sits over at the Federal Reserve,
Speaker 6: so it doesn't even lie in this building. So they
Speaker 6: could make suggestions on how to change the system, but
Speaker 6: we don't even run the system.
Speaker 9: And if they ask for if they request the ability
Speaker 9: to change the system, would you grant that.
Speaker 6: No, again, they have no ability to change the system.
Speaker 6: I have no ability to grant that change. That they
Speaker 6: can make suggestions, then it would go to the Federal
Speaker 6: Reserve and just like any large erp system, there would
Speaker 6: be tests. There would be this, there would be that,
Speaker 6: and then the FED will determine whether these changes are.
Speaker 10: Robust or not.
Speaker 9: As the Secretary of Treasure, you also oversee the IRS.
Speaker 9: Do you know what kind of access the team has
Speaker 9: to IRS data or individual taxpayer data?
Speaker 6: Well, I'm glad you asked that too, because look that
Speaker 6: THERS the privacy issue is one of the biggest issues,
Speaker 6: and over the past four years we've seen a lot
Speaker 6: of leaks out of there. The IRS systems are quite poor.
Speaker 6: When I started in college in nineteen eighty, I learned
Speaker 6: the program in COBAL. I think there are twelve different
Speaker 6: systems at the IRS that still run on cobD. But
Speaker 6: as of now, there is no engagement at the RS.
Speaker 9: And if they request that access, would you sign off
Speaker 9: on that request?
Speaker 6: They haven't, so we'll take that when it comes to it.
Speaker 6: I think there is a lot to do there, but
Speaker 6: the president was elected with a big agenda and to
Speaker 6: the extent that getting the IRS in better shape is
Speaker 6: part of that. Sure, because look, with the IRS, what
Speaker 6: am I concerned about? I am concerned about collections. I'm
Speaker 6: concerned about privacy, and I am concerned that the system
Speaker 6: is robust.
Speaker 2: That was US Treasury Secretary Scott Bessened along with Bloomberg
Speaker 2: Sillia Mosen. Let's bring in Bloomberg's Mike Shepherd. Now, Mike,
Speaker 2: before we get into Doge, I want to address a
Speaker 2: story that just crossed the wire from Reuter's Trump plans
Speaker 2: to issue reciprocal tariffs as early as he told Republicans
Speaker 2: yesterday of his plans. Can you kind of break down
Speaker 2: what we know so far?
Speaker 11: Well, we're still trying to confirm this report, Jackie, but
Speaker 11: it is significant in the sense that one of the
Speaker 11: biggest concerns that investors have had and companies have had
Speaker 11: about the incoming administration will be what happens on trade
Speaker 11: and on tariff's just owing to the widespread potential economic impact.
Speaker 11: The Reuters report does not specify which countries would be targeted.
Speaker 11: It's unclear how detailed Trump got in the conversation with
Speaker 11: Republican lawmakers, but we are going to hear from the
Speaker 11: President later today. He is holding a news conference with
Speaker 11: the visiting Prime Minister of Japan at the White House
Speaker 11: in the one o'clock hour, and this is certain to
Speaker 11: be one of the top questions at the agenda, and
Speaker 11: he may even use the moment to make the announcement
Speaker 11: himself right there.
Speaker 3: And look, taris feed into inflation anxiety, that feeds into
Speaker 3: the lower consumer confidence data we got today as well,
Speaker 3: so there is a wider economic impact here. I wonder
Speaker 3: if with Japanese leadership we hear more about AI as well.
Speaker 3: And we know that Mark Zuckerberg, riding high on his
Speaker 3: share price at the moment, has gone to the White
Speaker 3: House to discuss AI leadership too well.
Speaker 11: Caro AI has been one of the early themes of
Speaker 11: the Trump administration, and the President, in his very first
Speaker 11: day in office, rescinded the Biden executive order that sought
Speaker 11: to put more guardrails in the industry, and he since
Speaker 11: signed his own order looking to launch further development of
Speaker 11: the industry here. And then of course we saw the
Speaker 11: announcement with SoftBank's Masseo she Soon Open Ai, Sam Altman
Speaker 11: and Oracles Larry Ellison in the Oval Office at the
Speaker 11: White House to talk about potential investment here in the
Speaker 11: US of up to five hundred billion dollars. And we'll
Speaker 11: be looking to see if Masseo she Saan even shows
Speaker 11: up again at the White House today. He has been
Speaker 11: a frequent companion to Trump late leap at mar A
Speaker 11: Lago and more recently at the White House to talk
Speaker 11: further about this what the Japanese investment firms plans are
Speaker 11: here in the US, but also what Japan's plans are
Speaker 11: for developing AI there as well.
Speaker 2: Mike, there's another companion that Trump has, and that's Elon
Speaker 2: Musk and his group. DOGE has been storming across Washington
Speaker 2: looking for savings. But in that video you saw Besson
Speaker 2: trying to allay concerns that he did not have access
Speaker 2: to non read only information. But what did he say
Speaker 2: about having access in the first place. Does he agree
Speaker 2: with what DOJE is doing in Washington?
Speaker 11: Well, he endorsed it, and he indicated that he was
Speaker 11: completely aligned with Elon Musk when he came to this
Speaker 11: effort to find savings to reduce the size of the
Speaker 11: federal government and to also make the systems more efficient.
Speaker 11: And of course, during the conversation with our colleague Sileia Mosen,
Speaker 11: we heard the Treasury Secretary point to the IRS and
Speaker 11: its antiquated systems, you know, those networks and that hardware
Speaker 11: is decades old, and it has been repeatedly cited by
Speaker 11: the Government Accountability Office as something that federal agencies and
Speaker 11: administrations need to address. That Congress needs to fund the
Speaker 11: agency more to replace the systems, to find money to
Speaker 11: do that. And yet decades later, here we are. And
Speaker 11: one of the reasons it is difficult to simply march
Speaker 11: in and do this is that these older systems can
Speaker 11: be sensitive and that you know, you heard the Treasury
Speaker 11: Secretary talk about tickering. Even small changes carry the risk
Speaker 11: of perhaps a disruption of some sort, and that is
Speaker 11: probably the last thing this administration wants to see.
Speaker 4: Mike Sheppard breaking all down. Thank you time now for
Speaker 4: talking tech.
Speaker 3: First up, Apple's latest budget iPhone is set to be
Speaker 3: unveiled as soon as next week the long awaited lower
Speaker 3: cost iPhone SE. It's expected to feature a new design
Speaker 3: and Apple Intelligence. The updated SE is part of Apple's
Speaker 3: efforts to boost its iPhone business, which saw one percent
Speaker 3: decline in sales during the holiday quarter. Plus open Ai
Speaker 3: is close to selecting additional data center campuses in Texas.
Speaker 3: The sites are part of Stargate, the joint venture aiming
Speaker 3: to invest five hundred billion dollars in USAI infrastructure over
Speaker 3: the next four years, and speaking in Berlin earlier, open
Speaker 3: Ai CEO Sam Altman said he'd also quote love to
Speaker 3: help build a similar project in Europe, but added the
Speaker 3: continent's regulations would determine how quickly the technology advances. And
Speaker 3: cryptocurrency firm Gemini is said to be considering an IPO
Speaker 3: as soon as this year. According to the sources, the
Speaker 3: VINKLVAS backed firm is in talks with potential advisors, but
Speaker 3: no final decision has been made yet.
Speaker 2: Jackie and we stay on crypto, Elise Colleen Stellmark, managing partner,
Speaker 2: joins us now Alice. Can this Gemini IPO spread a
Speaker 2: wider wave of IPOs across the crypto space, or is
Speaker 2: Gemini just an outlier.
Speaker 4: Well, I hope so.
Speaker 12: So the companies in the field have been maturing and
Speaker 12: hopefully at the same time as ipo market is opening.
Speaker 3: You, of course, are someone who has been in the
Speaker 3: bitcoin space for years.
Speaker 4: Not to age anyone here, but at least a decade.
Speaker 4: You've been playing in this field time and time again.
Speaker 3: We're seeing a broader adoption here, but it will talk
Speaker 3: from a white house perspective, is reality being struck from adoption.
Speaker 4: And an institutional level.
Speaker 12: We are seeing incredible adoption and in twenty twenty five
Speaker 12: there's great tail winds to that. At the end of January,
Speaker 12: for example, Tether announced that it would launch on Bitcoin
Speaker 12: and on Bitcoin's payment network Lightning, which means that it's
Speaker 12: that trillions of dollars in activity and over four hundred
Speaker 12: million Tether users could now be hosted on Bitcoin and
Speaker 12: Lightning network. Those users are, in turn and Tether will
Speaker 12: get the value of Lightning's instant settlement and cheaper transaction capabilities.
Speaker 4: So fine.
Speaker 3: You know, with speed, with ease, maybe comes this border adoption,
Speaker 3: but stable coin regulation is not necessary for us really
Speaker 3: for us to see the wave of us.
Speaker 4: Doing payments through crypto.
Speaker 12: Finally, regulatory clarity will is certainly overdue and will be helpful.
Speaker 12: It's helpful both in terms of the startup ecosystem, and
Speaker 12: because the startup ecosystem is relevant to bitcoin's adoption, it's
Speaker 12: helpful to bitcoin itself as well.
Speaker 2: Let's stick on this topic of regulation, as boring as
Speaker 2: it may be sometimes, but crypto at this point in
Speaker 2: its life cycle is still somewhat vulnerable to the whims
Speaker 2: of Washington. We've seen that really wax and wane. What
Speaker 2: can the administration do in the short term to really
Speaker 2: cement crypto's momentum.
Speaker 12: Sure, so, as I said, regulatory clarity will be helpful.
Speaker 12: That bitcoin and startups don't exist in a silo. What
Speaker 12: happens in the economy is also incredibly important, and both
Speaker 12: the startups and to bitcoin, and we've seen that in
Speaker 12: bitcoin's recent volatility. Now, what we're hoping is that as
Speaker 12: regulatory clarity is available, that startups can continue along the
Speaker 12: path that they have pursued, but more efficiently because their
Speaker 12: capital doesn't need to be spent in creating sort of
Speaker 12: redundancies and alternative paths that hedge against.
Speaker 4: Future regulation.
Speaker 2: There's some common ground between crypto and artificial intelligence. When
Speaker 2: it comes to data centers, this has been a huge
Speaker 2: topic and earnings for Microsoft and Amazon trying to build
Speaker 2: out the capacity to run their models, and not so
Speaker 2: dissimilar from Bitcoin, it takes a lot of energy consumption
Speaker 2: and there's concerns that the power grid might not be
Speaker 2: able to handle this demand. Are you worried at all
Speaker 2: that perhaps these infrastructure constraints might impact Bitcoin's future growth.
Speaker 12: That's a great question. So there is an important convergence
Speaker 12: between bitcoin technologies and what's happening in generative AI and
Speaker 12: the proliferation of llms and apps built on top.
Speaker 4: Now, from an.
Speaker 12: Energy perspective, of course, Bitcoin has been very productive in
Speaker 12: providing anchor tenancy and mining off of renewable energy sources.
Speaker 12: Bitcoin can do that because it can scale up or
Speaker 12: down its mining demands based on the price of energy
Speaker 12: at the time, which makes it responsive to demand cycles.
Speaker 12: The Bitcoin mining can be applied to AI's energy needs
Speaker 12: as well in the way that I just explained. But
Speaker 12: bitcoin technologies can do more than that because of Bitcoin
Speaker 12: Bitcoin's payment network lightning networks ability to scale payments. As
Speaker 12: generative AI matures, it will it will need to access
Speaker 12: micro payments at scale on a reliable network, and Lightning,
Speaker 12: architected as a payment channel network, can uniquely do that
Speaker 12: in the cryptosphere.
Speaker 4: We've only got a minute left.
Speaker 3: Lightning Labs is a course in your portfolio. Interestingly, so
Speaker 3: social Energy is as well, and that's about renewable energy
Speaker 3: feeding bitcoin minus. Where else is about to sort of
Speaker 3: take off when it comes to portfolios, how what are
Speaker 3: the startups?
Speaker 4: Are you looking at?
Speaker 12: Yes, So what's really taking off in twenty twenty five
Speaker 12: is companies that are advancing the financialization of bitcoin itself.
Speaker 12: So those are companies like, for example, a portfolio company
Speaker 12: Causa that provides enterprise tools so that BTC can be
Speaker 12: added to the balance sheet. We've seen that happen in
Speaker 12: public companies. Bitwise recently reported that over seventy public companies
Speaker 12: hold bitcoin. We're seeing the same sort of activity in
Speaker 12: the private market that's facilitated by enterprise tools that allow
Speaker 12: for auditability and internal controls that are otherwise standard. We
Speaker 12: are also seeing products develop like bitcoin denominated life insurance
Speaker 12: that's happening with our portfolio company meanwhile, which allows for
Speaker 12: bitcoin holders to mature their own portfolios so that they're
Speaker 12: represented with the bitcoin ETF holding bitcoin directly and.
Speaker 4: With products to mature and.
Speaker 3: Lias Colleens still Mark managing partner or it's great to
Speaker 3: have you here in New York. Welcome back to Blue
Speaker 3: Mead Technology. I'm Caroline Hide in New York and.
Speaker 2: I'm Jackie Devalas in San Francisco.
Speaker 4: They've got to check in on the market.
Speaker 3: But actually one single name is what I want to
Speaker 3: call out right now because even with lower markets, Meta
Speaker 3: continues to be higher on the day, and extraordinarily it
Speaker 3: is up for the fifteenth straight day. This is all
Speaker 3: about AI commitment. This is all about general to AI.
Speaker 3: We giving you a return on AI already because we're
Speaker 3: seeing that investment pay off from large language model development
Speaker 3: to indeed the advertising model that underpins Meta's performance. We're
Speaker 3: up fifteen percent in the last month alone, So keep
Speaker 3: an eye on that particular stock, Jackie. But we're also
Speaker 3: looking at what's happening with the buzz around Sunday and
Speaker 3: the Super Bowl draftkins carting off by one on a
Speaker 3: quarter to percent. We want to see how much money
Speaker 3: is placed in terms of sports betting ahead of this
Speaker 3: integral game to those that like a little bit of
Speaker 3: a flutter.
Speaker 4: Jackie we're talking all things super Bowl.
Speaker 2: It's the big Super Bowl weekend and fifteen billion dollars
Speaker 2: in sports betting is about to get even bigger. For
Speaker 2: more on the sports betting business and how the Super
Speaker 2: Bowl plays a role, we're joined by Jason Robbins from DraftKings. Jason,
Speaker 2: you're the chief executive of one of the largest sports
Speaker 2: books out there, but you're also facing some tough competition,
Speaker 2: especially from those that are actually using contracts linked to
Speaker 2: sports games but aren't the traditional sports books. I'm talking
Speaker 2: crypto dot com call sheet. What kind of competition are
Speaker 2: you seeing.
Speaker 13: Well, I think a lot of different forms of gaming
Speaker 13: right now, and those aren't exactly gaming. They're classified as
Speaker 13: I think financial contracts. But a lot of different forms
Speaker 13: of gaming are appearing. Those are in the regulated market.
Speaker 13: There's actually a much larger illegal market. It's competitive with us,
Speaker 13: and they're much more difficult to compete with because they
Speaker 13: don't have to follow any rules or regulations. So definitely
Speaker 13: a lot of competition out there right now. But we
Speaker 13: feel like we have the best product and the best
Speaker 13: customer experience, and in the end, we think that'll win
Speaker 13: the day.
Speaker 3: And regulator after regulator, you convince Jason, what are the
Speaker 3: winnings for you this weekend?
Speaker 4: Do you think how many bets will be placed? What
Speaker 4: are your takeaways?
Speaker 13: Oh, I can't really say what I think the numbers
Speaker 13: will be. But each year the Super Bowl gets bigger
Speaker 13: and bigger, so I expect this to be our biggest
Speaker 13: day ever. The Sunday, I should say, to be our
Speaker 13: biggest day ever. You know, hard to know exactly what
Speaker 13: the numbers will be, and right now it's a pretty
Speaker 13: balanced line, so you know, in some ways that's good
Speaker 13: because that means it won't be as volatile. Although right now,
Speaker 13: because we have so much money on player props, it's
Speaker 13: much bigger deal. Whether you see Saquon Barkley, Jalen Hurts,
Speaker 13: and Travis Kelcey get in the end zone and who
Speaker 13: actually wins the.
Speaker 3: Game, they'll get our producers started on paulag as well.
Speaker 3: But I'm really interested, Jason more broadly on what this
Speaker 3: means for your marketing efforts.
Speaker 4: Ultimately, this must be a.
Speaker 3: Massive role for people to then come back time and
Speaker 3: time again.
Speaker 13: Well, Super Bowl is not only the biggest betting day
Speaker 13: of the year, it's our biggest day of the year
Speaker 13: for customer acquisition activation. So it's a huge day for
Speaker 13: us marketing wise. We have a ton of stuff going
Speaker 13: on all week leading up to the game and obviously
Speaker 13: throughout the game, so big time for our marketing team,
Speaker 13: and they've done a great job each year. We've won
Speaker 13: the customer acquisition battle the last two Super Bowl I
Speaker 13: think the last three Super Bowls, so we're very confident
Speaker 13: in them and feel like we're gonna have a great
Speaker 13: showing this year too.
Speaker 2: There's another thing that's taking more people to their televisions
Speaker 2: to watch the NFL. That's Taylor Swift. She's driven major
Speaker 2: viewership since she's dating one of the Chiefs players, and
Speaker 2: I'm curious DraftKings is capitalizing on this increase viewership in
Speaker 2: any way.
Speaker 13: Well, more viewership always is better for us, and I
Speaker 13: think it's sort of this you know, positive cycle where
Speaker 13: people bet more and they tend to watch the games
Speaker 13: more and they watch longer, and then more people watching
Speaker 13: needs more opportunities from them place wagers with us. So
Speaker 13: that's a really good thing for our business. Obviously for
Speaker 13: the ratings of the NFL. And I don't know how
Speaker 13: much Tailor is contributing to it, but if she is
Speaker 13: and thank you.
Speaker 2: I'm not much of a gambler, but what can you
Speaker 2: tell us about your current user base? Have you seen
Speaker 2: any major shifts and who is putting wagers online?
Speaker 13: You know, it's definitely been growing in terms of female
Speaker 13: audience obviously, you know, for us, that's an important vector
Speaker 13: because right now our audience is largely male, so we
Speaker 13: think there's a lot of room to grow.
Speaker 10: On that front.
Speaker 13: In general, though the demographics haven't changed a whole lot.
Speaker 13: Typically tends to be you know, on average age in
Speaker 13: the mid thirties to let thirties, lots of people we think,
Speaker 13: you know, coming from technology and educated backgrounds, typically a
Speaker 13: you know, higher income consumer. So those tend to be
Speaker 13: the demographics we see and that really hasn't changed we launch,
Speaker 13: but definitely seeing more women betters coming in, which is
Speaker 13: a great thing.
Speaker 3: I'm interested in sort of the fundamentals of the business
Speaker 3: in large part and not dictated by you, But how
Speaker 3: what the outcome of the games are. I mean, customer
Speaker 3: friendly wins was something that hit the numbers on the
Speaker 3: last time that you came on and discussed them. So
Speaker 3: how do you manage to navigate that and control your
Speaker 3: own destiny?
Speaker 13: Well, There is always that, and you know, this is
Speaker 13: a business where we are taking a side of the action,
Speaker 13: so there's going to be volatility in the results over
Speaker 13: time that normalizes. So the things that we can control
Speaker 13: or what we focus on, which are making sure we
Speaker 13: provide a great product for our customers and trying to
Speaker 13: create more ways for them to bet and more ways
Speaker 13: for them to engage, and you know, making sure we
Speaker 13: have a really great back end operation to our trading.
Speaker 13: Risk management is a plus, using our marketing to help
Speaker 13: drive parlays and other forms of betting that we think
Speaker 13: are good for margins and different customer So those are
Speaker 13: the things we focus on and the outcomes will be
Speaker 13: the outcomes. There's been some years so we've had good
Speaker 13: in twenty twenty two, we had a good year last year,
Speaker 13: you know, twenty twenty four wasn't. But it definitely can
Speaker 13: vary year to year and that's part of the business.
Speaker 6: But overall it.
Speaker 13: Doesn't really change fundamentals nor the trajectory of our business.
Speaker 2: Well, growth drivers going forward, we've heard generative AI of
Speaker 2: course is being kind of the key driver for a
Speaker 2: lot of companies out there. How is Draftking starting to
Speaker 2: incorporate this across the business, any chance we could see
Speaker 2: any tasks taken over by AI versus a human in
Speaker 2: the short term.
Speaker 13: We think general of AI is a huge opportunity, and
Speaker 13: it's really more about getting better outcomes for our customers.
Speaker 13: Efficiency internally is simply a means to an end for that.
Speaker 13: So everything from how do we make sure we have
Speaker 13: great customer service and using chatbot and AI do that
Speaker 13: to making sure that our products are as interactive as
Speaker 13: possible and easy to use as possible. Lots of areas
Speaker 13: for us to play AI really across the entire business.
Speaker 13: A good chunk of our code. I think I read
Speaker 13: a memo recently about fifteen percent something like that of
Speaker 13: our code right now is being written by generative AI.
Speaker 13: So we really feel like we have a long way
Speaker 13: to go, but also are seeing some great traction with
Speaker 13: internal adoption.
Speaker 3: Jason Robbins, it's been great having you on thirty one
Speaker 3: buys on the stock zero cells and I'm sure you
Speaker 3: might be having a great time this weekend. Jason Robins,
Speaker 3: Draft King See thanks for stopping by. We want to
Speaker 3: stick with, of course, the Super Bowl and how people
Speaker 3: are making bets in the outcome meany megs Ara Boodoay
Speaker 3: is with us for more and ira just how much
Speaker 3: money is going to be paced and how are they
Speaker 3: pacing these bets?
Speaker 14: So the best estimates are somewhere from one point four
Speaker 14: to one point five billion in legal wagers, So that's
Speaker 14: in the thirty eight states in Washington, DC that now
Speaker 14: allow it with regulated sports books. But that is a
Speaker 14: fraction of some unknown number that's probably at least as
Speaker 14: much or more than the legal wagers still being placed
Speaker 14: with offshore books, illegal bookies, casual bets. So the bet
Speaker 14: we don't know kind of the full size of that
Speaker 14: dark pool of money, but that is kind of part
Speaker 14: of the job of DraftKings and fandals to keep pulling
Speaker 14: people into the regulated environment and adding to the number
Speaker 14: of states that allow it.
Speaker 2: There's new entrance coming into the space, and you know,
Speaker 2: not so long ago Robin Hood was offering the opportunity
Speaker 2: to be able to participate in Super Bowl bets. What
Speaker 2: are you seeing in the competitive landscape?
Speaker 14: Yeah, I mean that is the latest wrinkle in this.
Speaker 14: We're seeing derivatives, exchanges, futures markets get into this. Crypto
Speaker 14: dot Com and Calshi both come forward with swaps that
Speaker 14: function a lot like sports bets, and they have used
Speaker 14: the Super Bowl, which is the biggest betting day on
Speaker 14: the US calendar, as a way to introduce this idea.
Speaker 3: It's interesting almost around the election as well, you certainly
Speaker 3: saw the predictions market and crypto come in as a
Speaker 3: way of placing bets and bypassing regulations. Ultimately here in
Speaker 3: the US, what is it apart from this being a
Speaker 3: customer acquisition tool for the likes of DraftKings, fangil what
Speaker 3: else can they use from this day?
Speaker 4: How else can they drive?
Speaker 3: Like the cannabis industry also has biggest competition, is basically illegal.
Speaker 4: How do you turn attention to that? For the White
Speaker 4: House and the administration?
Speaker 14: I mean, I think the sportsbooks in the background are
Speaker 14: asking regulators for clarity around this. You know, they want
Speaker 14: to know do we need to go through state regulators
Speaker 14: or can we go through the CFTC. You know, what
Speaker 14: is the state of play? Because I think ultimately, if
Speaker 14: it's possible to run a federally regulated sportsbook in some
Speaker 14: fashion or exchange market that includes sports events, then they
Speaker 14: might want to do that. Right So that is I
Speaker 14: think right now it's really about sort of letting regulators
Speaker 14: pride clarity, They hope soon about kind of what's allowed
Speaker 14: and what's not. Because you're right, you know that this
Speaker 14: is a huge day for bringing in new customers, and
Speaker 14: I think they see this as potentially a competitive threat.
Speaker 3: It's been great talking to you. We all ahead to
Speaker 3: the Sunday big game. Blue megs are a bad way.
Speaker 3: We thank you, Jackie.
Speaker 2: Coming up, shares of Affirm jump after posting a second
Speaker 2: quarter earnings beat and a strong outlook. We speak with
Speaker 2: CEO Max Levchin next. Shares a fintech company, Affirm are
Speaker 2: soaring in today's trade as the company posted second quarter
Speaker 2: results that beat estimates along with a strong outlook for more.
Speaker 2: I have Max left Chin, a firm CEO, with me
Speaker 2: here in San Francisco. Max, what are your results telling
Speaker 2: us about the consumer? Because as I think about it,
Speaker 2: does it mean that they're spending more or does it
Speaker 2: mean that their budgets are pinched and resorting to breaking
Speaker 2: up their payments.
Speaker 15: I think our results are telling you that consumers prefer
Speaker 15: a firm. They chose us as their preferred shopping tool. Obviously,
Speaker 15: we outgrew the industry. We outgrew a lot of the
Speaker 15: retail numbers. So clearly folks are recognizing that the tool
Speaker 15: we've built for them is safe and useful, and we
Speaker 15: are delighted to help them with their holiday shopping.
Speaker 4: And beyond what are they spending on.
Speaker 2: What sorts of new merchants as well have come on
Speaker 2: the platform.
Speaker 15: You know, we're available at almost eighty percent last I
Speaker 15: checked of old US e commerce, and so we're really
Speaker 15: very widely distributed at this point, from general merchandise to
Speaker 15: everything in between. The standoard categories over the holiday period
Speaker 15: were travel, which continues, by the way to be really
Speaker 15: strong even now, dissipation of super goals. People need to
Speaker 15: get to super role and tickets are not cheap and
Speaker 15: so we're there to help. But also electronics, general merchandise
Speaker 15: is always really strong.
Speaker 10: So across the board there's been just a lot of
Speaker 10: really good results.
Speaker 3: Interesting the Expedia also did very well given its exposure
Speaker 3: to travel Max. I mean, the analysts love the numbers.
Speaker 3: Mazoo Hoo just says you're crushing it. Where do you
Speaker 3: want to even more finess? Where is your target right now?
Speaker 10: You know, we have a lot of work to do still.
Speaker 15: You know, I appreciate Dan dolv and the picture of
Speaker 15: perfect comment. I think that that's just extremely kind of him,
Speaker 15: and we're very proud of these results. Obviously, we got
Speaker 15: another half a fiscal year to go. We got a
Speaker 15: date with GAP operating income positive.
Speaker 10: It's coming up. Very excited about that.
Speaker 15: We just launched in the UK, so going to keep
Speaker 15: growing there, keep signing new merchants.
Speaker 10: We have exceptionally strong growth with our.
Speaker 15: Card product that just order than doubled both on the
Speaker 15: active cards and the volume on these cards. So just
Speaker 15: continue investing in what's really going well for us there,
Speaker 15: and you know, many things to do.
Speaker 3: What's so interesting is look basically, credit rating company Fico
Speaker 3: recently did a big study with your help showing about
Speaker 3: the impact of by now pay later loans opening closing them,
Speaker 3: what it does for credit scores. It actually makes them
Speaker 3: higher or stays the same max.
Speaker 4: How can you really breathe this into the.
Speaker 3: Market to shake off some of the negativity around by
Speaker 3: now pay later and show that really the data proves
Speaker 3: out that this is strong and it doesn't impact you.
Speaker 15: I think the most important metric I care about and
Speaker 15: we care about as a company is consumer adoption and
Speaker 15: last quarter strong growth and prior quarters show that folks
Speaker 15: understand the value that we bring, the certainty, the sense
Speaker 15: of control we uniquely perhaps in the industry, don't charge
Speaker 15: late fees, don't compound interest, don't do deferred interest.
Speaker 10: To the product really is a healthy financial choice.
Speaker 15: It's a much better product than your credit card and
Speaker 15: just let anything else out there. And so I think
Speaker 15: the consumer has long understood the value we provide. This
Speaker 15: study is gratifying because it shows that when consumers use
Speaker 15: a firm, given that we already report majority of these
Speaker 15: loan results to the credit reporting agencies, they're actually building
Speaker 15: their credit history and improving their credit scores so long
Speaker 15: as they are responsible barbers. And so it's just another
Speaker 15: confirmation point that what we've built works. It helps consumers
Speaker 15: on a daily basis and for the long term.
Speaker 2: Okay, speaking of other consumers across the pond, you mentioned
Speaker 2: the United Kingdom. You just expanded there, But it's also
Speaker 2: coming at a time when regulators are starting to scrutinize
Speaker 2: by now pay later practices. How does that affect your
Speaker 2: expansion plans?
Speaker 15: So in part because we are so focused on being
Speaker 15: honest and transparent. Our mission literally states that we must
Speaker 15: build honest financial products to improve lives. We've always taken
Speaker 15: the position that we want to engage with the regulators,
Speaker 15: want to make sure thoughtful regulation takes place. And so
Speaker 15: my first meeting, literally when I landed across the pond,
Speaker 15: was to meet with several of His Majesty's Treasury officials
Speaker 15: to make sure they understand who we are, what we
Speaker 15: stand for, and understand the regulatory goals. And we will
Speaker 15: continue to engage with regulators, certainly in the UK, but
Speaker 15: in the US as well in Canada where we also operate.
Speaker 15: So we're very pro thoughtful regulation.
Speaker 2: Talk to us, Talk to us about AI. Because you
Speaker 2: have a chatbot that handle twenty thousand inquiries on Black Friday,
Speaker 2: as you rate per day per day, I mean, at
Speaker 2: what point will you be able to kind of use
Speaker 2: that AI technology perhaps across your platform. Could we expect
Speaker 2: to see them taking over any human tasks for example?
Speaker 10: We see AI as a productivity enhancer.
Speaker 15: We're not replacing humans with robots here and that's definitely
Speaker 15: not our plan, but there's incredible productivity gains to be had.
Speaker 15: So the chatbot is widely available. It handles two thirds
Speaker 15: of consumer queries today without any human involvement. But any
Speaker 15: time you wish to speak to a human, you can, like,
Speaker 15: all you need to do is say, please put me
Speaker 15: through to a person, and that's what happened, and that's
Speaker 15: exactly what we intend to do. Not just with customer service,
Speaker 15: we use AI to do all sorts of really really
Speaker 15: interesting things. For example, we must, as part of our
Speaker 15: regulatory obligation, track that merchants advertise and promote a firm
Speaker 15: responsibly and don't promote things that we want finance.
Speaker 10: Or misrepresented terms.
Speaker 15: So we have an LM based system that we've built
Speaker 15: internally to track it, called the Prohibited GPT. Funny name
Speaker 15: but extraordinarily effective, something that humans cannot do.
Speaker 10: There are millions and millions of.
Speaker 15: Points across the web where our name is mentioned and
Speaker 15: it is our responsibility to make sure this the terms
Speaker 15: being advertised are accurate and so it's a great tool
Speaker 15: that AI can do for us and humans will never
Speaker 15: be able to keep up with.
Speaker 10: So that is a blueprint of how we use AI everywhere.
Speaker 3: Briefly, is that your main area of investment? Where else
Speaker 3: do you have to be spending to grow?
Speaker 15: You know, we grow primarily with the help of our merchants.
Speaker 15: We look at our numbers, we'll see that our advertising
Speaker 15: and marketing budgets are incredibly modest, and that is because
Speaker 15: we partner with extraordinary companies, extraordinary scale, extraordinary consumer obsessed ethosite,
Speaker 15: just Amazon and Walmart and Target and many many brands
Speaker 15: that folks know and love. They promote our service to
Speaker 15: their shoppers, and that's how consumers first find out what
Speaker 15: we stand for, who we are, and how we.
Speaker 10: Can help them.
Speaker 15: So our growth is predominantly driven by our partnerships investments
Speaker 15: in technology. That's where we invest in exciting things like
Speaker 15: Genera AI and productivity, and we know exactly how to
Speaker 15: budget it, so we don't ever spend in those things either.
Speaker 3: Nx Levchin, a firm CEO, numbers out best day for
Speaker 3: the stocks.
Speaker 4: It's November the eleventh. Thanks so much for joining.
Speaker 14: Boy.
Speaker 4: It has been a week of earnings.
Speaker 3: Let's just dwell on what's come out after the bell
Speaker 3: yesterday and what drives the stock market today. Amazon on
Speaker 3: the downside, biggest points contribution, dragging indices lower or off
Speaker 3: by four percent. AWS growth not accelerating.
Speaker 4: Because it can't meet demand.
Speaker 3: We're going to talk about one hundred billion dollars invested
Speaker 3: in capacity Pinterest having its best day since May of
Speaker 3: last year, up sixteen percent as it beats expectations. All
Speaker 3: about GENAI investment. Expedia best day says November twenty twenty three,
Speaker 3: all about holiday bookings, beating expectations as well.
Speaker 4: But let's get to it.
Speaker 3: Amazon, the juggernaut manna seeing is here with us to
Speaker 3: go through so many stocks, Let's just start with Amazon,
Speaker 3: because most analysts seem to be upgrading Hoot price targets.
Speaker 3: They lost their only cell rating. They are convinced that
Speaker 3: this investment is worth it.
Speaker 7: Weok.
Speaker 16: I mean Amazon does have the largest cloud business almost
Speaker 16: one hundred and fifteen billion dollars run rate growing at
Speaker 16: nineteen percent, so it's quite impressive what they are able
Speaker 16: to do. The one I would say kind of negative
Speaker 16: I would cite here is that Microsoft is the only
Speaker 16: one that has quantified their AI contribution. They said it
Speaker 16: was thirteen billion dollar run rate this quarter. Now, in
Speaker 16: the case of Google and now Amazon as well, we
Speaker 16: don't know exactly what the AI workload contribution is. And
Speaker 16: remember Amazon only competes in the infrastructure layer, whereas Microsoft
Speaker 16: is selling you Office Copilot, GitHub Copilot, and Google is
Speaker 16: also selling you other types of software. So that's where
Speaker 16: I think if we had kind of known what the
Speaker 16: AI contribution was, then it will be more clear in
Speaker 16: terms of how that makes the shifting between traditional cloud
Speaker 16: and AI workloads.
Speaker 2: Wendy really quickly about thirty seconds left here, but this
Speaker 2: across the wire not too long ago. Bill Ackman says,
Speaker 2: Pershing Square owns about thirty million Uber shares.
Speaker 4: What does this mean? What do you make of it?
Speaker 16: Well, I mean when you look at Uber's valuation, Yeah,
Speaker 16: I think clearly there was a case to be made
Speaker 16: that you know, they trade at a cheaper valuation relative
Speaker 16: to other marketplaces. So it looks like that valuation argument
Speaker 16: is coming in compared to all the noise about autonomous
Speaker 16: driving that we've been.
Speaker 3: Hearing eight and a half percent best days since February
Speaker 3: of this year. So in a few days ago, Man
Speaker 3: deep Thing of Bloomberg Intelligence, thank you. That does it
Speaker 3: for this edition of Bloomberg Technology