Speaker 1: From Marhart.
Speaker 2: We're Innovation, Money and Power Collne in Silicon Valley, NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Love Love.
Speaker 3: I'm Caroline Hyde at Bloomberg's World headquarters in New.
Speaker 4: York, and I'm Ed Lovelow in San Francisco. This is
Speaker 4: Bloomberg Technology.
Speaker 3: Coming up, Amazon, Meta, Apple all out with their latest earnings.
Speaker 3: We'll dig into the latest results from Big Tech.
Speaker 4: Plus Vision pro hits stores. We'll take a closer look
Speaker 4: at Apple's latest bet on the future.
Speaker 3: And an exclusive interview with the Nvidia CEO where he
Speaker 3: sees the biggest benefit from the AI boom. But first,
Speaker 3: let's get straight to some of these big moves. When
Speaker 3: it comes to tech ed and we are record highs.
Speaker 3: When it comes to Meta, extraordinary.
Speaker 4: Yeah, record high Meta. There's like a comparing contrast here. Apple.
Speaker 4: I kind of think it's the story we expected. They
Speaker 4: did grow overall in the quarter, gone just just and
Speaker 4: they avoided five straight quarters of sales decline. But the
Speaker 4: stock is down significantly back to where it traded in November.
Speaker 4: Why Greater China sales and Greater China missing by like
Speaker 4: three billion dollars. But the narrative on the call. Yeah,
Speaker 4: we are four of the top six handsets in urban
Speaker 4: China in congruous messaging. We'll dig deep into the gross
Speaker 4: story for this stock, and then there is meta, right
Speaker 4: meta to me, is the story today? Probably we're on
Speaker 4: track for the biggest jump since February of last year.
Speaker 4: The stock is touching fresh record highs. Is this an
Speaker 4: AI story or is this a cyclical rebound in ads?
Speaker 4: Either way, one year ago we lamented the spending cash
Speaker 4: burn from Facebook reality labs on the metaverse, But one
Speaker 4: year ago we also said, Okay, your efficiency is here.
Speaker 4: This is good. They're back to hiring, and he's thrown
Speaker 4: in an additional fifty billion dollar buyback and a divvy
Speaker 4: and it's a wonder what it can do for the
Speaker 4: stock character.
Speaker 1: Funnily enough, investors like it.
Speaker 3: And let's dig into the meta earnings and really what
Speaker 3: it says about cost discipline. Jusmin Enburg is with us
Speaker 3: some piece of say principle analyst insider intelligence, where you
Speaker 3: lead the coverage to social media the creator economy. And
Speaker 3: before we get into some of the juiciness for the
Speaker 3: investor base, what do you make of the out and
Speaker 3: out numbers? Of revenue growth at this particular moment.
Speaker 5: Yeah, well, it's clear that Meta's year of efficiency has
Speaker 5: really paid off. Many of the measures that it took
Speaker 5: last year helped it reduce its cost, it reduced its headcount,
Speaker 5: and even with this leaner team and operations, it was
Speaker 5: really able to exceed expectations really across the board, and
Speaker 5: importantly of course, in its core line of business, which
Speaker 5: is advertising. And to me, this is really a testament
Speaker 5: to Meta's execution power. If you look across the social landscape,
Speaker 5: it isn't the coolest or the most exciting social player
Speaker 5: out there, but it is the most sophisticated and it
Speaker 5: knows how to drive business and advertisers really like that.
Speaker 3: Yeah, they were investing in the underlying advertising technology to
Speaker 3: better serve their clients. But what do you make of
Speaker 3: also the talk generative AI. The larmer has become basically
Speaker 3: the giveaway when you go to AI events. So much
Speaker 3: of that is a course based on their large language model,
Speaker 3: But what does it do in terms of future revenues? Jasmine?
Speaker 5: Look, Meta wants to be an AI heavy hitter, and
Speaker 5: it is working hard and investing in AI to be
Speaker 5: able to do that.
Speaker 1: On the earnings call. Just in the prepared remarks, you.
Speaker 5: Heard executives mention the word AI about fifty times, which
Speaker 5: really shows how much they're trying to emphasize their work
Speaker 5: there as well as how much they truly.
Speaker 1: Are working there.
Speaker 5: And It's AI investments have already proved to have a
Speaker 5: positive impact on its ad business.
Speaker 1: They talked a lot about its automated.
Speaker 5: Tools and AI driven ad formats really driving performance. And
Speaker 5: at the end of the day, advertisers they want efficiency
Speaker 5: and they want effectiveness, and those investments have really paid
Speaker 5: off there and that bodes well for its broader ambitions
Speaker 5: in AI as well.
Speaker 4: I think what we're understanding Jasmine is the relationship between
Speaker 4: the ad business ANAI now right, and so Bloomberg writes
Speaker 4: in the blog, Meta is still the king of digital advertising,
Speaker 4: but what they point out is that the boost is
Speaker 4: coming from China based companies on spending in its association
Speaker 4: with AI generated content. Do you understand that relationship and
Speaker 4: how AI is basically growing interest in its ad.
Speaker 5: Base absolutely, I mean AI of course is growing interest
Speaker 5: in its ad base and generative AI in terms of
Speaker 5: the creative tools that Meta is also rolling out for advertisers,
Speaker 5: will do a lot to prove that. I mean, the
Speaker 5: China based advertisers is a potential risk factor, though I
Speaker 5: wouldn't say it's necessarily the biggest one, because they have
Speaker 5: been buoying spending as well throughout twenty twenty three.
Speaker 4: Later in the program, we're going to go very deep
Speaker 4: on Apple's vision pro and it makes you think about
Speaker 4: the metaquest three. You know, it is hard to keep
Speaker 4: up with meta We were a social media company and
Speaker 4: then we were a metaverse company, but it was expensive,
Speaker 4: so we stopped. And now we're in an AI company.
Speaker 4: Did you get any sense of like where the hardware
Speaker 4: fits into all of this and if the metaverse dream
Speaker 4: is still alive?
Speaker 1: Well, the metaverse dream is very much still alive.
Speaker 5: They didn't talk about it as much on the earnings
Speaker 5: call yesterday. Again, the focus was really on AI, and
Speaker 5: for me, the big challenge now is for Meta to
Speaker 5: be able to prove that those two big bets, one
Speaker 5: being AI and the other being the metaverse, really are complementary.
Speaker 5: It started to lay some of the foundation for that
Speaker 5: thinking about the ray Bank smart glasses, and you know,
Speaker 5: it talked about good sales for its metaquest in the
Speaker 5: last quarter, so there are some signs of progress there
Speaker 5: still for me, you know, the meta versus is somewhat
Speaker 5: of an ill defined concept, and it's something that you know,
Speaker 5: Meta is going to have to continue to prove as
Speaker 5: it continues to form this vision. It also has to
Speaker 5: store that it can keep up the momentum in its
Speaker 5: advertising business, or investors won't be as willing to overlook
Speaker 5: those losses that continue to mount in reality labs.
Speaker 3: Interestingly, maybe Apple's vision pro serves as some boost to
Speaker 3: sales to Meta going forward as they help with outlining
Speaker 3: the vision. Jasmine, I'm interested though you said that China,
Speaker 3: for example, isn't the biggest risk for you. What is
Speaker 3: the biggest risk? Is it regulation?
Speaker 1: It's certainly one of them.
Speaker 5: I mean, just this week as well, CEO Mark Zuckerberg
Speaker 5: testified in front of Congress about protecting children online. That
Speaker 5: was a really heated conversation and it's clearly going to be.
Speaker 1: One of their biggest challenges this year.
Speaker 5: Teen popularity has become, you know, somewhat of a liability,
Speaker 5: at least in the eyes of lawmakers, but young people
Speaker 5: also represent Facebook and Instagram's largest or one of their largest,
Speaker 5: really opportunities for growth.
Speaker 1: And it's going to have to walk a really fine line.
Speaker 5: In terms of protecting their safety on these platforms and
Speaker 5: generating revenue. There's also, of course a lot of other
Speaker 5: regulated regulation that Meta has to think about, both here
Speaker 5: in the US and in the EU.
Speaker 1: And then there's the digital ad market.
Speaker 6: You know.
Speaker 5: I think Meta was able to allay some concerns already
Speaker 5: in the earnings call yesterday, but it is susceptible to
Speaker 5: fluctuations in the economy that really can impact advertiser demand.
Speaker 4: Jasmine Mberg, principal analysts over in Insider Intelligence, with the
Speaker 4: Meta story, thank you very much. Let's get to the
Speaker 4: Apple story and Apple earnings with Dani's, senior analysts of
Speaker 4: equity research at web Bush Securities, Danish real quick. The
Speaker 4: stock is pairing its decline were now six tenths of
Speaker 4: a percent. We had been down significantly more. What is
Speaker 4: the story? A return to growth overall or China is
Speaker 4: a problem.
Speaker 7: Yeah, I mean the streets reading through this is iPhone
Speaker 7: growths coming back next quarter is essentially massively conservative guidance.
Speaker 7: And now you have AI coming into the Apple store,
Speaker 7: so Jo nor One's selling Apple heading into that narrative,
Speaker 7: and in my opinion, this is the start of the
Speaker 7: renaissance of growth or.
Speaker 4: Apple conservative guidance. So I mean go back, like what
Speaker 4: we hang on are the words of Luca Maistreet. Basically
Speaker 4: he said that that December quarter would be essentially flat.
Speaker 4: We ended up with slight growth overall and weakness in China.
Speaker 4: You know, we're not talking about like a big rebound here, Dan,
Speaker 4: We're talking about them staying out of five consecutive quarters
Speaker 4: of growth declines. If there is growth, where does it
Speaker 4: come from.
Speaker 7: What our view is you don't need to have hypergrowth
Speaker 7: and iPhones row to mid single digit iPhone growth is
Speaker 7: really what you need. Services is the key to evaluation
Speaker 7: one point five to one point six trillion. And then
Speaker 7: look at their active in Starblands when they just need
Speaker 7: the update two point two billion. So you now have
Speaker 7: that that golden and stall base and now you're selling
Speaker 7: AI and so that that's a narrative that in my
Speaker 7: investors are just going to continue to sit here and
Speaker 7: buy up the depths.
Speaker 3: So when you're looking at the overall strength of new products, Dan,
Speaker 3: there has been so much hand ringing about the iPhone fifteen,
Speaker 3: then today we're going to talk about it.
Speaker 1: A lot.
Speaker 3: In a moment the Vision Pro goes on sale. How
Speaker 3: much is that in any way going to be a
Speaker 3: catalyst for liking Apple's tech because it was under pressure
Speaker 3: when we started to think about, well, the fact that
Speaker 3: the overall watch was pulled and we questioned ultimately the
Speaker 3: underlying technology of Apple.
Speaker 7: Look, I think, but again again and Apple continues to
Speaker 7: count out. I mean, you will talk more about the
Speaker 7: Vision Pro, but originally we had three hundred thousand units
Speaker 7: for Vision Pro. Now we think for the year it's
Speaker 7: six hundred two thousand and two years from now, I
Speaker 7: think this is a sub fifteen hundred dollar device that's
Speaker 7: going to look like Sunblosh. And it just goes back
Speaker 7: to the form factor and why you own Apple here
Speaker 7: some of the parts. I believe a year from now,
Speaker 7: it's a four trillion dollar market.
Speaker 3: Okay, So give us that catalyst. Give us what is
Speaker 3: it a slow grind, a slow belief, a commitment of investors,
Speaker 3: or is there something that snaps down that makes us
Speaker 3: rebuy and decide to drive the stock back to a
Speaker 3: four trillion Well.
Speaker 7: I think it's the AI app store, we believe starts
Speaker 7: to get talked about it. WWBC in June and then
Speaker 7: iPhone sixteen as well as iPhone seventeen. They're gonna have
Speaker 7: more AI technology, generative AI driven into that. And then
Speaker 7: you look at that install based two point gwo billion.
Speaker 7: There was one hundred million more than we were expecting.
Speaker 7: This is the start of a renaissance of growth. It's
Speaker 7: my view of where Meta was eighteen months ago. Street
Speaker 7: did not realize at the time. I think eighteen months
Speaker 7: from now we worked back at This is a seminal moment.
Speaker 4: Dan, I want to go back to China. I want
Speaker 4: to understand what's happening. This is what Luka Maistreet told
Speaker 4: us that Apple's disappointed with the decline in China, but
Speaker 4: it's a very competitive market. Compare that with what he
Speaker 4: said in his opening remarks on the call. He cited
Speaker 4: that Cantar data that Apple occupies four of the top
Speaker 4: six handset slots in Greater China in the prior quarter.
Speaker 4: They said, this isn't an iPhone problem, this is Mac
Speaker 4: and iPad where we had not had a refresh cycle.
Speaker 4: Explain the contrast in those two statements.
Speaker 7: Yeah, Well, there's definitely not Chimpan and Rosemes in Beijing.
Speaker 7: I mean they're clearly going through a headwinds. Huawe to geopolitical.
Speaker 7: But our view is, you have two hundred million iPhones
Speaker 7: in China and they gained three inchre BIPs of market
Speaker 7: share the last eighteen months. But Apple has been here before.
Speaker 7: They've navigated challenges again and again. So I think when
Speaker 7: you look for you've been able to do and the
Speaker 7: installers they're basically being cautious. But I think we see
Speaker 7: growth second after the year return and we view this
Speaker 7: as more of them navigating headwinds rather than the start
Speaker 7: of some structural problem that the bears have been talking
Speaker 7: about for the last two trillion of marketcap.
Speaker 8: Up con.
Speaker 3: Dan, I's always great to catch up with you. Where
Speaker 3: in the world are you? We don't know. Potentially, it
Speaker 3: looks like an airport at the moment analysts of equity
Speaker 3: research where Bush Securities stay well, friend, have a great weekend.
Speaker 3: If you are coming up, we're going to be breaking
Speaker 3: down the latest numbers from the jobs report. Sylvia and
Speaker 3: Martin shivik Is can be joining our CEO of the
Speaker 3: Workforce Management Platform, Deputy. Let's go back to where these
Speaker 3: markets are training at the moment. In amongst the earnings
Speaker 3: there is a whole load of impact coming from the
Speaker 3: macro picture. Today NASDAK drives higher one point two percent, lead,
Speaker 3: of course, by some mega moves in meta that we
Speaker 3: were just discussing Amazon doing well. We're digging into that
Speaker 3: in a moment. But the ten year yield phenomenal sell
Speaker 3: off eighteen basis points higher on the two year. We're
Speaker 3: seeing significant moves on the tenure as well across the curve.
Speaker 3: Why absolutely blow out report when it comes to the
Speaker 3: overall job surge three undred fifty three thousand in the
Speaker 3: last month. What then, of all the tech layoffs that
Speaker 3: we've been seeing. It seems as though this economy is
Speaker 3: still going strong, and it means the Federal Reserve is
Speaker 3: unlikely to be cutting anytime as soon as March, and
Speaker 3: certainly it's vindicated and holding rates steady. Bitcoin, as I show,
Speaker 3: actually up six cents percent despite the US dollar managing
Speaker 3: to rally on the back of those numbers that make
Speaker 3: macro data as well. But ed, this picture is so
Speaker 3: surprising when you think of our area of technology and
Speaker 3: just the ongoing narrative of job losses.
Speaker 4: I'm just going to read the numbers again, because you're
Speaker 4: exactly right and if you've got X look at the
Speaker 4: number of finn what do we used to call it whatever?
Speaker 4: People that talk about finance on formerly known as Twitter
Speaker 4: platform finish number exactly, but it's a blowout, right, three
Speaker 4: hundred and fifty three thousand jobs added in January, higher
Speaker 4: than all economist estimates. The bulk of the data showing
Speaker 4: more employment, higher pay, and payroll increases across all industries.
Speaker 4: I guess the question where do we sit with technology?
Speaker 4: So let's bring in Sylvia Martinshevik for her take on this.
Speaker 4: She's the CEO of Global Software Platform Deputy, which recently
Speaker 4: put out a report on the change is expected in
Speaker 4: the workforce this year. We're trying to understand what's happening
Speaker 4: in the economy and in the technology sector. There is,
Speaker 4: forgive the pun, but an artificial thing happening with artificial intelligence,
Speaker 4: the muddies the picture of hiring, in particular your reaction
Speaker 4: to that number this morning.
Speaker 6: Good morning, and thank you so much for having me. Yes,
Speaker 6: we are seeing that for the twenty fourth consecutive month,
Speaker 6: the unemployment rate is sub four percent. And yet you know,
Speaker 6: we're hearing so much about AI taking jobs away and
Speaker 6: what we at Deputy obsess about is how will AI
Speaker 6: impact hourly workers? These are the frontline workers, whether they're
Speaker 6: nurses or retail workers. And what we're hearing from hourly workers,
Speaker 6: they themselves are reading the same reports, and you know,
Speaker 6: they believe that AI is going to impact and change
Speaker 6: their jobs and roles. But what we find is that
Speaker 6: in most scenarios, AI is more likely to complement specific
Speaker 6: work tasks rather than replace the workers.
Speaker 1: And really, when you think.
Speaker 6: About the workers that we support at Deputy, whether that
Speaker 6: again are workers and elderly care or hospitality or services,
Speaker 6: we all prefer the human touch in those jobs, and
Speaker 6: those jobs are there's still a lot of lack of
Speaker 6: employees in those jobs.
Speaker 3: And what's interesting about your report as well, humans are
Speaker 3: still cheaper than AI in many of these roles at
Speaker 3: the moment, and well, we're still all testing artificial intelligence,
Speaker 3: whether or not we really get the implication of being
Speaker 3: able to do more with less. But Sylvia, what's really
Speaker 3: interesting this job support was women one hundred and ninety
Speaker 3: eight thousand increase in employment for women, so participation going up,
Speaker 3: making up for a callback in men. And you had
Speaker 3: some interesting thoughts about how much AI is going to
Speaker 3: help or hinder females in the workforce.
Speaker 6: Absolutely, we cannot talk about labor markets without talking about women.
Speaker 6: The constitute over fifty percent of hourly workforce, So this
Speaker 6: is an incredibly important topic.
Speaker 1: And when you think about.
Speaker 6: Historically what were the barriers to women entering workforce, we
Speaker 6: know it's childcare, accessibility, and affordability, and it's also lack
Speaker 6: of predicative But you know, at Deputy we ask what
Speaker 6: do women want from their work and how can technology
Speaker 6: enable that? And what we found is that women want
Speaker 6: more predictability and they want more flexibility when it comes
Speaker 6: to their weekly work schedules. And you know, our mothers
Speaker 6: and grandmothers work nine to five, but women of today
Speaker 6: Gen Z and millennials, they don't want nine to five shifts,
Speaker 6: And so how can technology help that is Actually.
Speaker 1: We believe that it can be a great enabler.
Speaker 6: Micro shifts is one specific trend that we're seeing where
Speaker 6: women work for a couple of hours in the morning,
Speaker 6: then they take care of their kids or their aging parents,
Speaker 6: and then they go back to work and work a
Speaker 6: couple of hours at night. So that micro shift trend
Speaker 6: is something that we believe technology can help. So We
Speaker 6: really do believe that more tech in this space will
Speaker 6: provide more opportunities for women to continue to re enter
Speaker 6: workforce after childbearing.
Speaker 3: Love a bit of optimism around the AI story on
Speaker 3: what felt like a week weather wasn't much. Sylvia mantinshevik me,
Speaker 3: thank you so much, CEO of Deputy.
Speaker 4: It's the official release day for Apple's big bet on
Speaker 4: virtual reality, the Vision Pro.
Speaker 1: Bloomberg.
Speaker 4: Stavely is live from Manhattan outside the flagship Apple's store.
Speaker 4: The doors are open, it's on sale. What have you
Speaker 4: been up to?
Speaker 9: Well, I've been here since about seven o'clock when it
Speaker 9: was slightly warm than it is now, I have to say.
Speaker 9: And at seven there was a healthy line of people
Speaker 9: waiting to head straight in and be some of the
Speaker 9: first to buy this new Vision Pro, which of course
Speaker 9: went on sale today for thirty five hundred dollars. Tim Cook,
Speaker 9: the Apple CEO, has expected. He was here. He opened
Speaker 9: the store, came out, greeted everyone said thanks very much,
Speaker 9: and all the usual things we've come to expect from
Speaker 9: these first sales days for Apple, and then downstairs to
Speaker 9: say there's a decent amount of excitement people. It takes
Speaker 9: about twenty minutes to get this thing fitted. So people
Speaker 9: were doing that and you know, seeing all the features
Speaker 9: were and then emerging shortly after. So it's not quite
Speaker 9: an iPhone day ed. I mean, the line is definitely
Speaker 9: gone now you can just head straight in if you'd like.
Speaker 9: But a significant amount of excitement I think for the
Speaker 9: vision pro on this first morning.
Speaker 3: Dave as lucky enough to be flanking you at seven
Speaker 3: am and heading down there and having a chat with
Speaker 3: Tim Cook, and he seemed to be thinking that really
Speaker 3: it's the intuitive nature of this device that's got people
Speaker 3: really excited. The fact that you're just using your eyes,
Speaker 3: the fact that you're just using your own hands, you
Speaker 3: haven't got a controller. He himself also really liking the
Speaker 3: productivity use of it. But from your perspective, what do
Speaker 3: you like about it? You've tried and I know you're
Speaker 3: a bit of an addict to the quest for example,
Speaker 3: what about this particular iteration. Well, let's see what I.
Speaker 9: Think is interesting here, Caroline, is you know, what are
Speaker 9: we going to use these things for? And in Apple's case,
Speaker 9: they seem to you know, they're targeting extremely premium I guess,
Speaker 9: more immersive, higher quality experience where productivity and entertainment seem
Speaker 9: to be the focus. Meta's approach has been something a
Speaker 9: bit cheaper. It's only five hundred dollars compared to thirty
Speaker 9: five hundred dollars, and you can move around with it.
Speaker 9: You can do the exercise is something I think is
Speaker 9: really fun on that device. They're two sort of different philosophies,
Speaker 9: and Apple's philosophy comes with that bigger price point as well.
Speaker 9: Where I think Apple may over time get the upper
Speaker 9: hand is that, you know, this is the V one
Speaker 9: of this product, and Tim Cook has been kind of
Speaker 9: stressing that as well, but this is a new entry
Speaker 9: for them into a new computing format. The idea that
Speaker 9: this is going to get better and cheaper, you know,
Speaker 9: that's clear and the same way the iPhone improves over time.
Speaker 9: So I think that's what's going to be interesting here.
Speaker 9: Is not V one as we've seen today, but V two,
Speaker 9: v three. If you can come down in price, be
Speaker 9: a bit lighter, maybe less bulky, I think that would
Speaker 9: be when you can really tell whether this is genuinely
Speaker 9: a new, a smash hit, new Apple product, or whether
Speaker 9: it's something a bit more.
Speaker 3: Niche savely doing your duty down there in rain, we
Speaker 3: really appreciate your opinion on this particular device. We thank
Speaker 3: you for it. Davely on Fifth Avenue, I said a
Speaker 3: quick check on these markets, said because, but the NASDAK
Speaker 3: manages to outperform even though we're worried about a strong
Speaker 3: macro picture. That means perhaps a federal reserve ain't going
Speaker 3: to be cunning as soon as Mart. But dig into
Speaker 3: what's driving the Nasdaq one hundred, just sea of Green.
Speaker 3: Even Apple turns up to run well less than a
Speaker 3: point higher, but that's after their numbers showed, yes, a
Speaker 3: return to revenue growth, aching out that two percent. The
Speaker 3: market had anticipated a one percent. But remember after four
Speaker 3: straight quarters of declines in revenue, that was a standout.
Speaker 3: Despite that weakness in China where we saw revenue off
Speaker 3: by thirteen percent, but better absolute extraordinary up twenty percent,
Speaker 3: new record high, and we're still seeing of course, they're
Speaker 3: managing to be tripling profit. They're really driving up revenue growth.
Speaker 3: They're going back to the basis of what's good at
Speaker 3: advertising as well as still investing in their AI. And
Speaker 3: then we leave you to Amazon up more than seven percent,
Speaker 3: best online sales growth since early in the pandemic. This
Speaker 3: is about quickert shipping times. It's about job cuts. This
Speaker 3: is about discipline, and we can get to it with
Speaker 3: our next guest ed.
Speaker 4: Yeah, I think that there's a really interesting difference with Amazon,
Speaker 4: and that is principally, hey, look at the profit we're
Speaker 4: going to hit in the current course, so let's stick
Speaker 4: with Amazon. With Stephan Slewinski, global head of Software Research
Speaker 4: at BNP powabout exam and it just goes down to fundamentals.
Speaker 4: We love exciting stories metas about AI and competition in
Speaker 4: ads and apples about China and vision pro. For me,
Speaker 4: Amazon is just about we're going to make a lot
Speaker 4: of money in the current period, and it's a lot
Speaker 4: more than the street thought.
Speaker 10: Hi, thanks for having me on. So you're absolutely right. Aws.
Speaker 10: Amazon Web Services squeaked by with thirteen percent growth, but
Speaker 10: that was good enough. They are still losing share, we think,
Speaker 10: to Microsoft Azure, but we're seeing a recovery in cloud computing,
Speaker 10: large deals being signed, optimization ending, and that allowed for
Speaker 10: the market to focus on those North American margins, which
Speaker 10: they're able to lift and beat expectations. And I think
Speaker 10: what was important as well is with the Q one guidance,
Speaker 10: they've actually left more room for upside. So if you
Speaker 10: look at the Q one guide eight to twelve billion
Speaker 10: of EBIT, if you assume Amazon Web Services margins remain
Speaker 10: flatish at twenty nine thirty percent, you assume internationals to
Speaker 10: loses some money, that actually implies the North American margins
Speaker 10: would go down from six to four percent. That's unlikely.
Speaker 10: The company gave us reasons why we should continue to
Speaker 10: see efficiencies there, so I think people see potential for
Speaker 10: beats coming ahead as well.
Speaker 4: I've not ever heard of that a company guiding conservatively
Speaker 4: and leaving room for upside. I'm just kidding the thing
Speaker 4: that I'm interested into the advertising business because aws one
Speaker 4: on one with Azure, we know the competition there, but
Speaker 4: Microsoft doesn't have that right now, add business, how much
Speaker 4: of a strength is that for Amazon?
Speaker 10: I mean, certainly the ad business plays a good part
Speaker 10: of their online business, and that's been growing healthily in
Speaker 10: the mid twenties, and that's helping that margin as well. So,
Speaker 10: as you pointed out earlier, you know, Amazon was a
Speaker 10: company that in twenty twenty two was doing sort of
Speaker 10: a one percent margin. The market thinks that that can
Speaker 10: get up towards ten percent. Here in twenty twenty five,
Speaker 10: and growing ADS is a part of that. But I
Speaker 10: do think we need to keep an eye on what's
Speaker 10: happening with AWS versus Azure. Amazon Web Services is fifty
Speaker 10: percent of the cloud computing market if you look at
Speaker 10: just Microsoft, Amazon, and Google together, But in twenty twenty three,
Speaker 10: if you just look at the incremental revenue those three
Speaker 10: generated in twenty twenty three, actually Amazon's share was down
Speaker 10: to thirty five percent, with Microsoft Azure at forty five percent,
Speaker 10: and that's thanks to obviously the open eye relationship and
Speaker 10: what Microsoft and Google are doing on AI. I do
Speaker 10: think that gap may close again as AWS benefits maybe
Speaker 10: a bit more from the end of optimization, but that
Speaker 10: is something to watch as some of those share losses
Speaker 10: continuing on the cloud computing side.
Speaker 3: I'm interested in your price target an ultimate sort of
Speaker 3: neutral rating on this stop when we're thinking of one
Speaker 3: point seven trillion dollar market capitalization, that's still enormous. You see, though,
Speaker 3: what I think a price targeting correct me if I'm
Speaker 3: wrong of one hundred and fifty so below where we're
Speaker 3: currently trading. Why that conservative nature of coming from U Steffan.
Speaker 10: We did raise that today one sixty, but we are
Speaker 10: still neutral. But we do think that all three cloud
Speaker 10: computing companies benefit this year from Jenai. So that's Microsoft Azure,
Speaker 10: that's Google Cloud, that's Amazon Web Services, and we actually
Speaker 10: think that that's a better way of playing Jenai this
Speaker 10: year than the SaaS companies where we may see some disappointments,
Speaker 10: and that's Microsoft Copilot, it's maybe Adobe Firefly or even
Speaker 10: Service now with proclus where we may not see that
Speaker 10: revenue generation this year. When we look at Amazon versus Microsoft,
Speaker 10: we do prefer Microsoft. We are outperformed there, there is
Speaker 10: a valuation gap. It's shrunk, but you are on sort
Speaker 10: of twenty seven times earnings for Microsoft on twenty twenty five,
Speaker 10: about thirty times for Amazon, and you still do have
Speaker 10: much higher margins, of course, much better returns at Microsoft,
Speaker 10: and probably even higher revenue growth. So we think all
Speaker 10: three will benefit, but we have to have some preferences,
Speaker 10: and that's why we sick with Microsoft.
Speaker 3: Stefan great for that context into play for us. We
Speaker 3: thank you so much. Stefan Stowinski, Global head of Software
Speaker 3: research over at BMP parabat Exam. We thank him for it. Meanwhile,
Speaker 3: let's get back to the other big stock on Deck
Speaker 3: Capital's earnings. BlueBag Intelligence senior analyst an rag Rana joins
Speaker 3: us An Anurag. Well, the share is actually turning positive
Speaker 3: after a four percent slump. Are we managing to counteract
Speaker 3: it with the Vision pro news or is it more
Speaker 3: that we're getting okay in fact, that China will be
Speaker 3: short term in nature.
Speaker 11: Yeah, I have no idea. I'm a bit surprised at
Speaker 11: that too. I mean, I think the print last night
Speaker 11: basically said there's going to be very little growth this year.
Speaker 11: So it is concerning, and I don't think Vision broken
Speaker 11: off said that. Listen, even if you sell one million units,
Speaker 11: which is way above anybody else in the world, as
Speaker 11: the model as well, that's three and a half billion
Speaker 11: in revenue Apple generates, or you know, the consensus is
Speaker 11: around three around four hundred billion, so that would be
Speaker 11: you know, less than one percent of total you know,
Speaker 11: revenue addition to Apple. So this is not a needle
Speaker 11: movement when it comes to sales. I mean, China is
Speaker 11: a big factor and then we see nothing but disappointment there.
Speaker 4: Karen Ana Rag's keeping it real, which if you read
Speaker 4: some of the notes out this morning, is a bit
Speaker 4: of a standout in that respect because a lot of
Speaker 4: people do see growth. I still don't understand this issue
Speaker 4: of China. You know, we've done a lot of it
Speaker 4: on the show, but one thing that we haven't discussed
Speaker 4: is services revenue in Europe and the installed base. You know,
Speaker 4: the installed base continues to grow. So even if you
Speaker 4: look at one market geographically and say weakness in China
Speaker 4: or one product category, weakness in whatever, overall more people
Speaker 4: are buying Apple products and they have Apple products, and
Speaker 4: the services side is doing good.
Speaker 8: Yeah.
Speaker 11: See one of the things I have to talk about.
Speaker 11: We all know Apple's a phenomenal company, amazing you know,
Speaker 11: install based services, all sorts of things that's going. But
Speaker 11: at the same time, you want to talk about the
Speaker 11: revenue model. How much can this grow this year, next year.
Speaker 11: This year it's going to be less than five percent.
Speaker 11: Next year maybe five percent. So the question is how
Speaker 11: much do you pay for a stock it's going to grow,
Speaker 11: you know, four five percent. And you know, I was
Speaker 11: listening to your colleague before. When you look at somebody
Speaker 11: something like an aw sort of Microsoft, you're going to
Speaker 11: get double digit growth for multiple years to come. So
Speaker 11: you you take that into account.
Speaker 12: And then you you know, match up.
Speaker 11: Apple has a lot to explain here that how do
Speaker 11: they get to that seven eight percent growth here? And
Speaker 11: I think it's it's going to be a challenging task
Speaker 11: at least for this year and next year because at.
Speaker 3: The moment, the market price is for yet another revenue
Speaker 3: decline in their fiscal second quarter. So back to what
Speaker 3: we were seeing all of last year. I mean, any
Speaker 3: exuberance about this new VRAR reality that we get on
Speaker 3: sale today on our.
Speaker 11: No, not on that, but you know he did utter
Speaker 11: the magic word Jenny I on the call, and then
Speaker 11: you're gonna talk about launching some new tubes and Slash
Speaker 11: products sometime in the second half of this year. I
Speaker 11: think that's a wild guard that could you know, basically
Speaker 11: prove me wrong, because if they're able to come up
Speaker 11: with certain things that are embedded in iOS eighteen that
Speaker 11: will really make productivity higher, then you don't really need
Speaker 11: to download an app and do a lot of that stuff.
Speaker 11: And for that maybe you need to go to iPhone
Speaker 11: sixteen or the next version of the iPhone that may
Speaker 11: have some capabilities and then can drive the refresh cycle
Speaker 11: of iPhone that we've been.
Speaker 4: All waiting for Bloomberg Intelligence senior analysts Andamgrana keeping it real.
Speaker 4: Thank you very much.
Speaker 1: Happy Friday.
Speaker 4: Coming up on the program, my exclusive conversation with invidiac
Speaker 4: Jensen Huang. This was big picture and it was t
Speaker 4: check it out next. This is Bloomberg Technology. Jensen Wang
Speaker 4: says that artificial intelligence will matter to every single country
Speaker 4: and industry on the planet, and crucially that's going to
Speaker 4: drive up sovereign AI demand for his company's products. I
Speaker 4: spoke to Nvidia's CEO yesterday. Listen to this.
Speaker 12: You have seen India, Japan, and France, Canada, now Southeast Asia,
Speaker 12: Singapore speak up about the importance of investing in sovereign
Speaker 12: AI capabilities. It has become abundantly clear to each one
Speaker 12: of the countries that their natural resource, which is the
Speaker 12: data of their country, should be should be refined and
Speaker 12: produce intelligence of their country for their country. And that
Speaker 12: capability of refining the data of their country, of their
Speaker 12: country and turn it into their artificial intelligence, it is
Speaker 12: now possible in quite a quite a democratized way. Almost
Speaker 12: every country should be able to do it for themselves.
Speaker 12: And and what's needed, of course is the technology and
Speaker 12: the know how of standing up AI infrastructure, and that's
Speaker 12: where we could be quite helpful to to various regions.
Speaker 12: And so I think that the the recognition of the
Speaker 12: importance of sovereign AI capabilities is now quite quite global.
Speaker 4: Jensen, does that recognition and your ability to help extend
Speaker 4: to China.
Speaker 12: Well, we're American company and we have to comply with
Speaker 12: American policies, and whatever the rules and regulations are and
Speaker 12: the laws are, will number one, comply with them, work
Speaker 12: closely with the regulators and understand understand their intentions and
Speaker 12: their desires, work within those boundaries, and be able to
Speaker 12: create products for for the various countries that are involved.
Speaker 12: Fully in compliant with the regulations that are never front
Speaker 12: of us UH and beyond that, once we once we comply,
Speaker 12: our goal are in the United States would love to
Speaker 12: see us be a successful country and in one of
Speaker 12: the pillars of national security of successful industries, and it
Speaker 12: creates jobs and allows our country to stay ahead and technologically,
Speaker 12: and so it is of a great interest of our
Speaker 12: nation that our American companies are successful around the world.
Speaker 12: And so once once we comply with the regulations, we'll
Speaker 12: do our best to serve the local markets, and we
Speaker 12: have full the we have excellent communications with with the administration.
Speaker 4: How should we think about sovereign AI as a business
Speaker 4: line for you? Is there a way that we can
Speaker 4: understand how in videos work. Even if it's building supercomputers
Speaker 4: like in the UK, for example, what proportion of your
Speaker 4: overall business that will represent.
Speaker 12: That's majority of the computing market has been the United
Speaker 12: States and to a small to a much longer smaller
Speaker 12: degree in China. For the very first time, every industry
Speaker 12: would be every single country will become a computer industry,
Speaker 12: and every industry will become a technology industry. And so
Speaker 12: artificial intelligence or the automation uh the production at scale
Speaker 12: of intelligence matters to every single country. It matters to
Speaker 12: every single industry. And so for the very first time,
Speaker 12: there's a there's a whole new computer market that is
Speaker 12: going to be uh in in every single country, in
Speaker 12: every single every single market. And UH it starts with
Speaker 12: it starts with, of course, uh the native computer industry itself.
Speaker 12: But you're seeing you're seeing a great adoption in healthcare,
Speaker 12: great adoption and logistics uh in in transportation of course,
Speaker 12: uh in many factoring in the large industry, so heavy
Speaker 12: industries for the very first time. Because of generative AI,
Speaker 12: computers are going to be computer technology is going to
Speaker 12: impact literally every single industry in every single country.
Speaker 4: And Nvidia CEO Jensen Van Kara is saying that data
Speaker 4: is a country's natural resource. But for them, let's be honest,
Speaker 4: it's a big growth market opportunity.
Speaker 3: Absolutely phenomenal interview, just so wide ranging, so global in
Speaker 3: its nature, kind of well, exactly what you do so well,
Speaker 3: and we thank you for it. Great deep dive. Meanwhile,
Speaker 3: we've got some breaking news coming to us in terms
Speaker 3: of the podcasting area. Once again, we're starting to see
Speaker 3: that continue to mount. We have Joe Rogan set to
Speaker 3: renew his podcast deal with Spotify. We understand so Joe Rogan,
Speaker 3: of course one of the number one players in terms
Speaker 3: of the Spotify podcast offering and indeed one of the
Speaker 3: most expensive for them. Joe Rogan is set to renew
Speaker 3: his podcast deal with Spotify, and we will bring you
Speaker 3: the deep dive as to how much that is all
Speaker 3: going to be costing. Spotify TikTok Well users will no
Speaker 3: longer hear the music of artists like Taylor Swift, like
Speaker 3: Drake while using the app, since talks between the social
Speaker 3: media platform and Universal Music Group. They failed here with
Speaker 3: the details blue most Chris Palmery and Chris the date
Speaker 3: was January the thirty first. It wasn't able to be
Speaker 3: agreed upon. And the fight seems to be what from
Speaker 3: UMG's perspective over AI and money and from TikTok's perspective
Speaker 3: that we'll give you loads of free advertising.
Speaker 8: Basically, yeah, I'm smiling because this is Grammy Week in
Speaker 8: LA parties everywhere gearing up for Sunday's awards. It may
Speaker 8: have been a total coincidence, but this was the perfect
Speaker 8: time for Universal to do this. I'm going to get
Speaker 8: a lot of sympathy from artists. It's going to be
Speaker 8: the number one topic of conversation everywhere, and very awkward
Speaker 8: for TikTok. They're a huge part of the marketing of
Speaker 8: music these days. You know, billion users, over one hundred
Speaker 8: billion in revenue, and yet only one percent of Universe
Speaker 8: Music's revenue. And so this is going to have an
Speaker 8: impact on TikTok, lesser impact on Universal, but everyone is
Speaker 8: going to have something to say about this.
Speaker 4: Chris, let's get some more in this breaking news sources
Speaker 4: and telling Bloomberg that Joe Rogan's close to renewing a
Speaker 4: deal with Spotify.
Speaker 8: What are the details, Well, what we hear could be
Speaker 8: announced you know this morning. It's going to be another
Speaker 8: multi year extension. Is probably going to be an eye
Speaker 8: popping number of the last deal was for two hundred
Speaker 8: million for three years, although we may not get the
Speaker 8: details immediately they Spotify has been taking a different tack
Speaker 8: with their podcasts recently. The last deal with Rogan was exclusive,
Speaker 8: although they put some highlights up online. This one may
Speaker 8: be available on other platforms, so that would be a departure, all.
Speaker 4: Right, Bloombos Chris Palm Mary with that breaking news and
Speaker 4: some more details. Spotify up two percent.
Speaker 12: Interesting.
Speaker 4: Sticking with the music space, what if you could invest
Speaker 4: in a hit song? Jukebox, which is currently seeking SEC approval,
Speaker 4: is a platform that aims to provide people with the
Speaker 4: opportunity to hold interests in music related investments. Here and
Speaker 4: tell us more ahead of the Grammys is the company
Speaker 4: CEO Scott Cohen. So for clarity, this is not something
Speaker 4: you yet have approval for that is pending. But I
Speaker 4: guess I start with the demand side. You must know
Speaker 4: that this is something that either the everyday retail investor
Speaker 4: or firms actually want to buy into.
Speaker 9: Yeah.
Speaker 2: I mean you're talking about maybe the first time they've
Speaker 2: actually truly understood an investment they made. When we're talking
Speaker 2: about the retail investor, they may invest in a tech sta,
Speaker 2: but do they really know what's driving that. But when
Speaker 2: you talk about music, there's something fundamental that people know
Speaker 2: about music that this is a hit song and I'm
Speaker 2: gonna listen to it at my ten year high school
Speaker 2: reunion and my twenty year reunion, and we'll play it
Speaker 2: at my wedding. You have a real feel for what
Speaker 2: songs are valuable and what are not.
Speaker 3: You've got the music rights yourself exclusively secured. I think
Speaker 3: last time we wrote about it, is it about one
Speaker 3: point seven billion dollars worth. Where are you sourcing that from?
Speaker 3: There's been so many interesting deals. Beaver selling his catalog
Speaker 3: to of course Hignosis. We seen Bob Dylan do the same,
Speaker 3: John Legend. But where do you access the assets from?
Speaker 2: What exactly those types of players? You know, as people
Speaker 2: are acquiring these these catalogs, they're looking for new ways
Speaker 2: to exploit them. And when I say exploit them, it's
Speaker 2: bring it to the very people that made these artists
Speaker 2: big in the first place, and allow the retail investor
Speaker 2: to get in on these deals because we've all read
Speaker 2: about it, you know, Bruce, and as you said, Bob
Speaker 2: Dylan and Justin Bieber, like, these are amazing deals, but
Speaker 2: nobody offered up any piece of it to the public.
Speaker 2: So for the first time, now the public can join in.
Speaker 4: So there's a question on value and valuation and appreciation.
Speaker 4: Like we've done this on this show about sneakers. There
Speaker 4: are platforms where you can trade sneakers and part of
Speaker 4: the value relates to their scarcity or rarity. In the
Speaker 4: context of a song, Isn't it just like whether everyone
Speaker 4: likes that song or not.
Speaker 2: No, No, I would look at it a very different way.
Speaker 2: I mean, think about it. When music is played, somebody's
Speaker 2: getting paid. I mean, I don't care.
Speaker 1: You can go back however far you want, you know,
Speaker 1: So what if it doesn't get played, what if it's
Speaker 1: not get well.
Speaker 2: What we're doing is listing songs that already will have
Speaker 2: an earning's history. It's not songs that have never made it.
Speaker 2: This isn't speculating on whether a song will be successful.
Speaker 2: This is looking at once a song is successful, it's
Speaker 2: always making money.
Speaker 3: I mean making much money. Scott given for example, at
Speaker 3: the moment UMG is at a loggerheads with TikTok because
Speaker 3: they're not paying enough.
Speaker 2: That's, if anything, that supports the thesis that music is
Speaker 2: really valuable and and and and that is why they're
Speaker 2: fighting for it. When we look at music, there's a
Speaker 2: there's a very typical decay curve. Sure a song makes
Speaker 2: a lot of money when it's first released and it
Speaker 2: becomes a hit, and then it drops off pretty steadily
Speaker 2: over the next few years. But then it hits its floor,
Speaker 2: which is non zero, and then it earns money forever.
Speaker 2: And if you look at the Goldman Sacks Report, I
Speaker 2: think they're pegging it somewhere between six and eight percent
Speaker 2: annual growth for the music industry over the next decade.
Speaker 3: Yeah.
Speaker 2: I mean, once a song makes money, it makes a
Speaker 2: lot at the beginning, drops to a new level and
Speaker 2: then slowly climbs. But then there's always this kind of
Speaker 2: wild card. Maybe it gets into a big film or
Speaker 2: you know TV, Like think about what happened on Stranger
Speaker 2: Things last season.
Speaker 1: Kate Bushy.
Speaker 3: Jukebox CEO Scott Cohen diversification of investment. There, we thank you.
Speaker 3: That does it for this edition of Bloomberg Technology.
Speaker 4: Check out the pod. What a week this is Bloomberg
Speaker 6: M