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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive

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Speaker 1: from coast to coast with Caroline Hide in New York

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Speaker 1: and Vla Lowe in San Francisco.

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Speaker 2: This is Bloomberg Tech coming up.

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Speaker 3: Alphabet, Microsoft and Meta all outward results showing heavy spending

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Speaker 3: on AI and data center construction.

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Speaker 4: Plus Roebrock CEO David Zooki joins us to discuss the

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Speaker 4: company's earnings as users and jumping, but so are costs.

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Speaker 3: And we'll break down what was said during the meeting

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Speaker 3: between President Trump and China's Jugen King, what wasn't discussed

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Speaker 3: and vidiots, blackweld chips.

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Speaker 5: Let's turn our attention to these markets.

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Speaker 4: And after record high, after record high, we take a breather.

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Speaker 4: Then that's that one hundred HUNDERD pressure off by almost

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Speaker 4: a percentage point. This as we think about the FED

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Speaker 4: maybe not baking in that December cut as much as

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Speaker 4: the market had anticipated.

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Speaker 5: You add to that some concerns about AI spending. You

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Speaker 5: add to that a.

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Speaker 4: China US trade deton for a year that many felt

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Speaker 4: were priced in ed and we just come down some

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Speaker 4: across all asset classes. But you're looking under what's in

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Speaker 4: the ecty moves yep.

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Speaker 3: Let's get through the top stories, and Video is down

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Speaker 3: two percent. Blackwell, its latest processor was not discussed in

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Speaker 3: the meeting between President Trump ands Ujenping. Later in the

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Speaker 3: show out to South Korea to get the details of

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Speaker 3: that meeting. Then there's earnings Microsoft thirty nine percent top

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Speaker 3: line growth in Azure, the cloud computing unit, the only

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Speaker 3: unit that mattered, but the stock selling off high bar

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Speaker 3: for investors.

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Speaker 2: Alphabet is the one that's higher.

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Speaker 3: It told us what its capital expenditures are this year,

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Speaker 3: but it also told us about growth a real number

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Speaker 3: on AI or generatorve AI related products. Then Meta, it

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Speaker 3: is the biggest decliner and the biggest drag capital expenditure concern.

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Speaker 3: Then this morning, coming to market with an up to

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Speaker 3: six part bond sale maturities ranging five to forty years.

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Speaker 3: The forty year note one point four percent over treasury

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Speaker 3: above treasuries. There's a lot to discuss in Meta's capital

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Speaker 3: requirements and then what it has to show for it.

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Speaker 3: Let's do that with Brent. Phil Jeffrey's analyst joins us.

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Speaker 3: Right now, let's start with Meta. That's kind of the equation, right, Okay,

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Speaker 3: Capital expenditures will be higher next year than they were

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Speaker 3: this year. Then what give us more, give us some

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Speaker 3: longer term outlook. There just wasn't a formal guidance. Is

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Speaker 3: that what spooked the market.

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Speaker 6: Yeah, Meta was just in a period of being really comfortable.

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Speaker 6: Zuck had been very comfortable. The company had executed, they

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Speaker 6: had invested, and they were harvesting those investments, and now

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Speaker 6: they're going back into invest mode. So I think at

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Speaker 6: the beginning of the year, advertisers were seeing that Meta

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Speaker 6: was more sheltered because they didn't know what Google was

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Speaker 6: going to do with AI, and we didn't know what

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Speaker 6: was going to happen to TikTok. And then halfway through

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Speaker 6: the year, everyone realized, hey, Google's got their act together

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Speaker 6: and AI, and we know that TikTok now has more

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Speaker 6: of the foundation. So I think, as I call it,

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Speaker 6: there's less.

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Speaker 2: Of a tailwind for Meta.

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Speaker 6: It's not a headwind, but it's less of a tailwind

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Speaker 6: that they had at the beginning of the year when

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Speaker 6: you talk to advertisers, and I think what Zuck said

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Speaker 6: last night on the call was the investments in AI

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Speaker 6: are paying off, and they just need more of them

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Speaker 6: because everything they built, they felt like they had overbuilt

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Speaker 6: and they sold out of what they built.

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Speaker 2: Yeah, so they have to build more and so yeah.

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Speaker 6: It doesn't have anything to do with the fundamental position.

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Speaker 6: It's are we going to see margin compression and then

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Speaker 6: when does that return come back? But we already know that.

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Speaker 6: Then they have a return. We've saw with Microsoft. They've

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Speaker 6: given this margin expansion even in the face of AI.

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Speaker 6: So this whole concept that AI doesn't pay off is silly,

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Speaker 6: you see, because but the.

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Speaker 5: Stock move is so big that we question.

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Speaker 4: Yes, we see Zuck on the call saying, look, I'm

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Speaker 4: worried about underinvesting. We hear once again from Susan Lee

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Speaker 4: that they're going to make notable investments. Everyone new Capex

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Speaker 4: is going to go up into the right. Why is

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Speaker 4: there such an air pocket on this stage?

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Speaker 6: You think, well, I think the outperformance of Google, I

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Speaker 6: think you have money chasing weren't a momentum market. I mean,

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Speaker 6: look at yesterday before any year, Needs everything and applications

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Speaker 6: went down aing, and AI went straight up in infrastructure.

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Speaker 6: So if you have Capex going this high, the pushback

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Speaker 6: is why do I invest in internet and software right now?

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Speaker 6: I should be invested in energy and land, and it

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Speaker 6: all the enabling infrastructure, and the infrastructure goes up every day.

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Speaker 6: Look at all the energy names, they're all ripping. And

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Speaker 6: so I think there's a common pattern with tech investors

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Speaker 6: right now.

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Speaker 2: They're just broader.

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Speaker 6: Investors are moving their investments to other categories, and then

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Speaker 6: they're chasing momentum. It's just the market's so narrow and

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Speaker 6: you're seeing this. So there was nothing that was fundamentally offline.

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Speaker 6: They're making any investment. They've done this before. How many

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Speaker 6: times have we seen mat to do this and then

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Speaker 6: return the stock goes hired. They're going to do thirty

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Speaker 6: dollars running to power, put a thirty multiple on it.

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Speaker 6: You're nine hundred dollars on the stock. It's a buy

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Speaker 6: on the pullback, Brent.

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Speaker 3: The name of momentum is Alphabet and Google. Right, they

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Speaker 3: gave us two data points cap too Expenditch is ninety

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Speaker 3: one billion to ninety three billion dollars. But revenue from

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Speaker 3: products that are built on Google's generaty of AI models

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Speaker 3: grew more than two hundred percent from a year earlier.

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Speaker 3: That second part your reaction to it.

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Speaker 6: I mean AI is working, and I think the fear

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Speaker 6: that investors have had is what happens when I go

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Speaker 6: from a world of search to AI. And I think

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Speaker 6: Google is showing they can do the high wire act.

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Speaker 2: Very well between search to AI.

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Speaker 6: Everyone thought search would implode in the last two quarters,

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Speaker 6: they beat the search number.

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Speaker 2: This quarter they accelerated their search number. So what they're

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Speaker 2: seeing is that search can be anywhere. It can be

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Speaker 2: inside AI, can be in their own.

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Speaker 6: Engine, it could be a YouTube, it could be across

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Speaker 6: different properties. And I think what what Google is demonstrating.

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Speaker 6: And we've said this kind of for a while. They

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Speaker 6: have better AI underneath the hood than they're articulating, and

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Speaker 6: it's now coming out.

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Speaker 7: You can see it.

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Speaker 2: We said, you know, they kind of pulled up.

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Speaker 6: To the I race, you know, on a Toyota Camry

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Speaker 6: body that they have the biggest engine and they pop

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Speaker 6: the hood and everyone's like, whoa, this is incredible. And

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Speaker 6: so I think everyone was realizing. When you look at Gemini,

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Speaker 6: I mean we ran bench tests, it's almost equivalent to

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Speaker 6: chet GPT. And then you look at the breadth of

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Speaker 6: their offering. And again remember they own the world's Internet data,

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Speaker 6: so you need data users in capital for AI to work,

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Speaker 6: and they have all of those almost better than Meta, Microsoft,

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Speaker 6: many of the others. They have more data on anything

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Speaker 6: in the world than anyone.

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Speaker 2: So I think they're proving that this engine's working.

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Speaker 6: The body didn't look great, you know, they're upgrading the body,

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Speaker 6: but the engine look is really really good.

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Speaker 4: But what's so interesting is clearly Microsoft is still working.

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Speaker 4: When you're looking at asure growth of thirty nine percent,

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Speaker 4: that was better than the market I anticipated. Sure it

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Speaker 4: might not be much of a growth uplift, but what

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Speaker 4: was it? What was the fly in the ointment for Microsoft?

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Speaker 4: Where Aimyhood again is saying, my issue is supply, not demand.

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Speaker 6: I don't understand the market because they just put up

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Speaker 6: over fifty percent RPO backlog growth and one hundred and

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Speaker 6: ten one hundred eleven percent commercial bookings.

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Speaker 2: Those numbers are insane, and that.

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Speaker 6: Didn't even include opening eyes two hundred and fifty billion

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Speaker 6: incremental dollars. So I think the market's got this wrong honestly,

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Speaker 6: that you got to look at the backlog. The backlog

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Speaker 6: is leaning indicator of health. The reported AZURE number does

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Speaker 6: not matter. When you're putting those backlog numbers up, that

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Speaker 6: tells you their capacity constrained. You can't book that kind

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Speaker 6: of revenue and not take it to Azure. And the

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Speaker 6: differential is they just can't get the capacity up right now.

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Speaker 6: But their customers want to spend, and their customers are

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Speaker 6: spending and they know that what Microsoft has. So I

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Speaker 6: think this is a common pattern where you're seeing massive

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Speaker 6: backlog growth commitments to AI from their customers, but Microsoft

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Speaker 6: can't literally physically provision it fast enough. And when we

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Speaker 6: talk to Microsoft offline, like the Azure number would be

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Speaker 6: way higher if we now have the capacity constraints. So

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Speaker 6: this is not a demand issue, This isn't a competitive issue.

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Speaker 6: This is an issue that the industry is facing right

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Speaker 6: now across the board is they can't get enough of

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Speaker 6: it to their customers. That number of have been way

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Speaker 6: higher because you can't describe the math of the backlog

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Speaker 6: being so high and Azure where it's at.

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Speaker 2: So I think again, we look at it.

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Speaker 6: It's important Wall Street cares like Wall Street should care

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Speaker 6: more about backlog and bookings. This is again what all

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Speaker 6: Oracle trades on. They don't care about revenue. Why does

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Speaker 6: everyone just care about revenue now? So I think again,

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Speaker 6: I think the Street's got it wrong.

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Speaker 4: Streets got it wrong. Brent phil and Jeffrey's putting it right.

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Speaker 4: We thank you so much. But coming up more about earnings.

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Speaker 4: Roblock CEO David Zuki joining us to discuss the company's

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Speaker 4: numbers daily active users for the gaming platform and toping

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Speaker 4: one hundred and fifty one million ED.

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Speaker 2: Let's look at Core.

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Speaker 3: We've shares down more than six percent. Core Scientific investors

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Speaker 3: have voted no on Core We've acquiring the company. You'll

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Speaker 3: remember that Core. We've tried to buy Core Scientific in

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Speaker 3: July nine billion dollars and the advisory firm said that

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Speaker 3: undervalued it. BI reacting saying it actually won't impact operations

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Speaker 3: of Coreweed but another headline on the terminal. As soon

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Speaker 3: as that vote was decided, Core weave to buy Marimo

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Speaker 3: terms not discos, maybe a sense that it's moving on

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Speaker 3: very quickly. We'll have more when we can. This is

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Speaker 3: Beningberg Tech.

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Speaker 4: Grow regard ninety nine Nights in the Forest, still a

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Speaker 4: brain rot three games, propelling Roadblocks to its highest level

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Speaker 4: of daily active users, a company also posting nearly two

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Speaker 4: billion dollars in bookings in the third quarter. Still shares

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Speaker 4: of the company trading lower after the earnings. Let's talk

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Speaker 4: all through all of this with Dave Zuki foundacy of

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Speaker 4: Roadblocks and Dave this growth, this is real playing commitment

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Speaker 4: comes at a cost, an infrastructure cost, and we see

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Speaker 4: costs go up because of safety that you're enacting.

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Speaker 5: But also the cloud compute.

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Speaker 4: How do you start to monetize to make up for

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Speaker 4: some of those costs.

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Speaker 7: Yeah, thanks for noting the amazing quarter we just had.

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Speaker 7: Both bookings growth was up seventy percent year on year

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Speaker 7: at one point nine billion, and as you noted, our

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Speaker 7: daily active users passed one hundred and fifty million, which

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Speaker 7: is up seventy percent year on year. In addition to

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Speaker 7: those three games you mentioned, we had seven games on

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Speaker 7: Roadblocks in the last quarter, past ten million daily active

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Speaker 7: users and a really healthy content ecosystem. Five of those

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Speaker 7: seven experiences were created in the last year. We've hit

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Speaker 7: some really peak numbers. We had forty five million concurrent

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Speaker 7: players all at the same time. What we said on

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Speaker 7: the earnings call is with all of this growth, which

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Speaker 7: is cumulatively averaging thirty seven percent over the last two years,

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Speaker 7: we are going to be spending on infra. What we

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Speaker 7: said is the continued decreases in costs for infra, we

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Speaker 7: may slow that down a bit as we spend, But

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Speaker 7: the final thing I want to generate is the cash

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Speaker 7: flow that we generated on the platform. We generated over

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Speaker 7: four hundred and forty million of free cash flow in

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Speaker 7: Q four.

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Speaker 2: DAVE.

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Speaker 3: Looking forward, then, how are you managing out some of

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Speaker 3: the technology plays that you made age verification technology in

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Speaker 3: a way that doesn't impact or slow the growth of

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Speaker 3: both active users in the bookings.

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Speaker 7: We've made a commitment a while by to what we

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Speaker 7: believe will be the cold standard for safety on platforms

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Speaker 7: like Roadblocks and throughout the industry. With new advances in AI,

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Speaker 7: we're going to use facial age estimation to estimate the

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Speaker 7: age of everyone on our platform. And in addition to

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Speaker 7: the text filtering we do the critical harms monitoring the

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Speaker 7: prevention of any image sharing. We're going to use that

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Speaker 7: to help gate who communicates and who they communicate with.

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Speaker 7: I was just in an executive staff meeting on Tuesday

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Speaker 7: playing with the role out of this product. It's really

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Speaker 7: elegant and we of course want to highlight there may

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Speaker 7: be some friction, but I'm really optimistic this is the

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Speaker 7: long term good play for Roadblocks, which is really establishing

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Speaker 7: the standard of how we believe safety and civility is

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Speaker 7: going to run in the future.

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Speaker 4: And that your CFO made the point that's going to

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Speaker 4: have long term value for shareholders. You make it again, Dave,

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Speaker 4: talk to us there for about the new technology, not

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Speaker 4: just in safety, but also in how you build gate

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Speaker 4: and high fidelity feeling of a game. But some of

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Speaker 4: these big winners that we've had, we just them at

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Speaker 4: the top. They are kind of more old school feeling

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Speaker 4: in many ways, but they're the ones breaking records, grow

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Speaker 4: a garden, more classic and blockie.

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Speaker 5: How do you compromise on that.

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Speaker 7: We've highlighted our vision of getting the ten percent of

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Speaker 7: all the global gaming content market running on roadblocks. In

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Speaker 7: this quarter we pass three percent, so there's a lot

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Speaker 7: of room to go. We have an enormous amount of

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Speaker 7: new technology coming to support more diverse experiences, to support

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Speaker 7: different types of avatars, to support competitive gaming and genres

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Speaker 7: like racing or sports, to support role playing games and

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Speaker 7: other types. And we really do have a vision for

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Speaker 7: genre expansion, but in a really future looking way, and

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Speaker 7: that when creators make experiences on roadblocks, they run well

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Speaker 7: either on low end Android devices like a two gigabyte

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Speaker 7: Android phone, or on high end gaming piecs and they

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Speaker 7: run around the world. So we're optimistic. With the new technology,

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Speaker 7: our economics and discovery, we're going to see a diversification

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Speaker 7: of the types of experiences we see on our platform.

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Speaker 3: Dave, you want ten percent of the gaming content market?

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Speaker 3: That changed in the quarter. I saw layoffs at Amazon

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Speaker 3: and Microsoft's gaming divisions. Electronic Arts elected to go private.

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Speaker 3: The big publicly traded peer that you have private with

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Speaker 3: the saudis. React with your interpretation of what that signals

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Speaker 3: for the market you're trying to grow in well.

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Speaker 7: People estimate the global gaming market somewhere between one eighty

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Speaker 7: and two hundred billion. What we've seen on Roadblocks is

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Speaker 7: really a future forward optimistic look at gaming. We've seen

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Speaker 7: new types of genres given the Roadblocks platform, the ability

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Speaker 7: to play with friends on different devices.

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Speaker 1: You know.

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Speaker 7: Addressed to Impress last year was a whole new type

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Speaker 7: of experience. People competing in a fashion show grow a garden.

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Speaker 7: I'm really proud of because hitting those top numbers, making

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Speaker 7: new records for over twenty million. Concurrence is literally a

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Speaker 7: game you can play either while you're there or when

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Speaker 7: you're not there. Your garden keeps growing when you're not playing.

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Speaker 7: So I think the way to think about this is

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Speaker 7: not just protecting a bunst the history of gaming, but

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Speaker 7: looking at whole new types of games that are going

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Speaker 7: to be built on platforms like Roadblocks and accelerated with

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Speaker 7: AI as every game starts to have access to AI

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Speaker 7: as well.

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Speaker 3: David Zuoki, Roadblock CEO, thank you very much. Let's stick

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Speaker 3: with earnings in tech. Comcast was also out before the

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Speaker 3: bell this morning, the company managing to slow the tide

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Speaker 3: of broadbanding cable TV customer defections in the third quarter

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Speaker 3: with help from an Internet price lock guarantee and some

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Speaker 3: bundle plans. Let's get out to Bloomberg's entertainment reporter Kelsey

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Speaker 3: Griffiths and DC give us the need to know on Comcast.

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Speaker 8: Ist tenth straight quarter of broadband losses. So the company

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Speaker 8: came into this quarter knowing that they had to do

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Speaker 8: something to start stemming this tide. Like you just said,

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Speaker 8: they did in fact succeed in kind of slowing some

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Speaker 8: of those losses, even though those numbers weren't positive. Necessarily,

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Speaker 8: they were losing customers at a slower rate than usual,

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Speaker 8: and so the executives were saying that some of the

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Speaker 8: changes they've made over this year earlier seemed to be working.

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Speaker 5: Seeming working, but the share price is still lower.

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Speaker 4: And what's interesting maybe in some of the analyst notes

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Speaker 4: there is a concern that maybe they'll spend more, particularly

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Speaker 4: when they're thinking making a bid for parts of Warner Brothers.

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Speaker 5: What do you make of that, Kelsey, that's right.

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Speaker 8: Warner Brothers is one piece of the strategy that Comcasts

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Speaker 8: said they're looking at, although they didn't express a really

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Speaker 8: high level of interest. They said, when something like this

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Speaker 8: in our industry comes on the market, it is something

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Speaker 8: that we have to take a look at. But look,

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Speaker 8: we're good with our content strategy even without M and A.

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Speaker 8: They just succeeded in Laurene Taylor Sheridan over from Paramount

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Speaker 8: Plus and he is going to be a really big

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Speaker 8: part of that content links get going forward for them.

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Speaker 8: They also have NBA TV rights and those are things

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Speaker 8: that they're really excited about in the nearer term.

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Speaker 5: Great roundup, Kelsey Griffiths.

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Speaker 4: We appreciate you on Comcast, and let's just stick with

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Speaker 4: the Warner Brothers story a little bit more. Because CEO

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Speaker 4: David Sazov said that the board would need a higher

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Speaker 4: bid to justify a sale at the company. He said

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Speaker 4: those comments during a town hall meeting for employees yesterday,

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Speaker 4: according to sources. Now Sazadov also told the staff that

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Speaker 4: the board had rejected three.

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Speaker 5: Offers from Paramount Skydin send.

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Speaker 2: Okay coming up.

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Speaker 3: President Trump and China Jijingping attempt to ease trade tensions

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Speaker 3: inside their high stakes talks on the future of the

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Speaker 3: global supply chain. We have all the details. Next, this

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Speaker 3: is bloom Bag Tech. M H.

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Speaker 9: We did discuss chips and he's going to be They're

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Speaker 9: going to be talking to the video and others about

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Speaker 9: taking chips. We're not talking about the black one that

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Speaker 9: just came out yesterday, but.

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Speaker 2: A lot of chips, you know, a lot of the chips,

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Speaker 2: and that's good for us.

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Speaker 3: I was President Trump speaking to reporters on board Air

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Speaker 3: Force one after meeting with Chinese President Jijingping, saying chips

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Speaker 3: were in discussion, but in Nvidia's latest blackwell was left

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Speaker 3: off the table.

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Speaker 2: Blueboks.

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Speaker 3: Tyler Kendall has been traveling with the President and joins

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Speaker 3: us from South Korea.

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Speaker 2: What is the absolute latest?

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Speaker 3: What do we need to know about that came out

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Speaker 3: of those talks between Trump and Jijingping.

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Speaker 10: Yeah, hey, Ed, Well, when it comes to in video chips,

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Speaker 10: it certainly dampens a speculation that Washington would go on

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Speaker 10: to approve the sale of such chips to China. President

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Speaker 10: Trump went on in that gaggle on Air Force one

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Speaker 10: to be asked specifically whether or not anything was brought

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Speaker 10: up about the potential for a downgraded version of the

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Speaker 10: Blackwell processor. He said that it was not, but that

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Speaker 10: ultimately in Vidia the company itself, is going to continue

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Speaker 10: direct talks with Washington, as you well know, and Vidia

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Speaker 10: has been trying to regain market access in China since

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Speaker 10: twenty twenty two, after going from a ninety five percent

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Speaker 10: market share peak down to zero. But I have to

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Speaker 10: say this was welcome news in Washington this morning for

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Speaker 10: those defense hawks who have previously advocated against such sales

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Speaker 10: over national security concerns, Which brings us to the broader

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Speaker 10: issue of the general trade talks, because while we are

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Speaker 10: getting this easing intentions, our own analysts at Bloomberg Economics

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Speaker 10: say those more fundamental issues, including national security, were not

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Speaker 10: ultimately addressed. But Ed and Caroline, of course, a welcome

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Speaker 10: news that we are seeing what appears to be at

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Speaker 10: least a year extension when it comes to the broader

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Speaker 10: trade troops.

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Speaker 3: Yes, blueboth, Tyler Kendall, thank you so much. That's the

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Speaker 3: latest from South Korea. Let's get more news, Carol.

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Speaker 4: Yeah, it's time now aired for talking tech and first up.

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Speaker 4: Open Ai is said to be preparing to file for

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Speaker 4: an IPO as soon as next year that could value

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Speaker 4: the company at one trillion dollars. But it's all according

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Speaker 4: to a report from Reiters. The company is said to

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Speaker 4: be considering finding the paperwork with regulators soon as second

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Speaker 4: half of twenty twenty six plus. Microsoft says its cloud

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Speaker 4: services are recovering from an outage that disrupted workplace software

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Speaker 4: products and impacted several companies. For the outage prevented people

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Speaker 4: from checking into Alaska Airline flights, for example, and disrupted

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Speaker 4: features in Microsoft's own copilot AI. We are ex consultants

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Speaker 4: from McKinsey, from Bain, from BCG are recently contracted to

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Speaker 4: train AI models on entry level consulting work for open Ai.

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Speaker 4: Now bluemeggers learn that our gentum project is run by

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Speaker 4: the same third party firm using ex bankers to train

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Speaker 4: open ai on financial.

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Speaker 2: Models, said Okay coming out.

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Speaker 3: We have more magnificent seven earnings coming up after the

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Speaker 3: bell today with Apple and Amazon, and we're going to

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Speaker 3: have what to expect from those giants next. Apple up

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Speaker 3: treading water three ten percent, Amazon down nine tens to

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Speaker 3: one percent. Maybe there's more read through there from the

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Speaker 3: other cloud names and what that might or might not

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Speaker 3: spell for Amazon or at least investors attitude towards it.

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Speaker 2: Elsewhere. We know what the story is.

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Speaker 3: And the top stories of the day stops moving in

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Speaker 3: different directions on the earnings context. Met Us down twelve percent,

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Speaker 3: really interesting, notably higher capex in twenty twenty six and

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Speaker 3: twenty twenty five. Alphabet gave us the same number of capex,

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Speaker 3: but they also told us how revenues directly tied to

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Speaker 3: AI are growing, and right now the market's rewarding that

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Speaker 3: with the Google pairing up five percent.

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Speaker 11: This is Bloomberg Tech. Welcome back to Bloomberg Tech.

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Speaker 3: Let's recap the three magnificent names that already reported last night.

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Speaker 2: Different stories.

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Speaker 3: Microsoft down three percent, as your growth was thirty nine

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Speaker 3: percent above consensus, but it was a high bar quarter.

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Speaker 3: Same story across all three of them, as we know

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Speaker 3: the capital expenditures environment. Meta told us that capital expenditures

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Speaker 3: would be notably larger next year than they were this year.

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Speaker 3: But the investor bases spooked a little bit because we

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Speaker 3: don't have this kind of longer term outlook for how

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Speaker 3: that translates to sales apart from we do from Alphabet

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Speaker 3: the parent of Google. So they told us what the

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Speaker 3: capital expenditures picture looks like, but also that they're products

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Speaker 3: that result from investment in data center capacity. AI models generative.

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Speaker 3: AI grew two hundred percent year in year, and that

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Speaker 3: name is up five percent in direct reaction, and there.

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Speaker 2: Are so many more earnings out there current.

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Speaker 4: There are, and another one on the rise is Service

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Speaker 4: now ed it gave an outlook for strong revenue growth,

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Speaker 4: said AI of course is helping the company reduce its

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Speaker 4: own costs. We spoke with Service Now CEO Bill McDermott

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Speaker 4: a little while ago.

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Speaker 12: The most important thing is to reinvent and all of

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Speaker 12: these back office operations and companies. So for example, in

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Speaker 12: our company, whether it's IT support or customer support or

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Speaker 12: security and risk, ninety percent of this work now is

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Speaker 12: being done by agents, but not at the expense of people.

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Speaker 12: The people in our company now have an AI teammate

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Speaker 12: on their shoulder to do the things.

440
00:23:24,960 --> 00:23:27,720
Speaker 2: That they'd really never really liked very much.

441
00:23:29,119 --> 00:23:32,760
Speaker 3: Earning cities and continues with both Amazon and Apple reporting

442
00:23:32,800 --> 00:23:36,040
Speaker 3: later today. Let's talk about what to expect, Bloomberg Execute's

443
00:23:36,080 --> 00:23:39,280
Speaker 3: reporter Ryan Vastellika. Let's start with Amazon. Then it's down

444
00:23:39,359 --> 00:23:43,040
Speaker 3: a percentage point. Maybe this read through from what we

445
00:23:43,119 --> 00:23:46,760
Speaker 3: learned about cloud computing from the three that went last night.

446
00:23:47,240 --> 00:23:48,280
Speaker 2: What are we expecting at.

447
00:23:48,800 --> 00:23:51,800
Speaker 13: Yeah, absolutely, I'd say there's absolutely people looking at the

448
00:23:51,800 --> 00:23:55,000
Speaker 13: results we saw last night from Microsoft and Alphabet and

449
00:23:55,119 --> 00:23:58,680
Speaker 13: kind of extrapolating into what we could expect from Amazon.

450
00:23:58,720 --> 00:24:01,639
Speaker 13: I will say that there has been growing concern about

451
00:24:01,640 --> 00:24:04,840
Speaker 13: the strength of AWS, that's Amazon Web Services, the cloud

452
00:24:04,880 --> 00:24:08,400
Speaker 13: computing business. There some concern that it is falling behind,

453
00:24:08,560 --> 00:24:11,960
Speaker 13: maybe losing some market share, not as quite well positioned

454
00:24:12,000 --> 00:24:14,560
Speaker 13: for the AI era, and maybe the fact that we

455
00:24:14,600 --> 00:24:18,760
Speaker 13: saw such strong results, especially out of Alphabet, maybe indicates

456
00:24:18,760 --> 00:24:20,560
Speaker 13: that maybe it's going to be on the back foot

457
00:24:20,600 --> 00:24:23,000
Speaker 13: a little bit here. There also continues to be a

458
00:24:23,040 --> 00:24:26,920
Speaker 13: lot of focus on how much these companies are spending. Amazon,

459
00:24:26,960 --> 00:24:30,040
Speaker 13: of course has very high CAPBAX levels, not only with

460
00:24:30,359 --> 00:24:32,639
Speaker 13: building out its data center, and cloud business, but all

461
00:24:32,640 --> 00:24:35,200
Speaker 13: of US logistics operations. I'll be very curious to see

462
00:24:35,200 --> 00:24:37,320
Speaker 13: there if we get any sort of improvement on the

463
00:24:37,359 --> 00:24:39,640
Speaker 13: margin front, especially when it comes to commerce. I say

464
00:24:39,680 --> 00:24:42,000
Speaker 13: that those are the two major things people are looking

465
00:24:42,080 --> 00:24:42,440
Speaker 13: at there.

466
00:24:42,920 --> 00:24:46,000
Speaker 4: A I use deployment all about for Amazon, almost for Apple,

467
00:24:46,119 --> 00:24:49,160
Speaker 4: it's ignored. We're just wondering how iPhones seventeen in air

468
00:24:49,200 --> 00:24:49,560
Speaker 4: are doing.

469
00:24:50,400 --> 00:24:51,239
Speaker 2: Yeah, absolutely so.

470
00:24:51,240 --> 00:24:53,320
Speaker 13: So far, it seems like the iPhone seventeen is selling

471
00:24:53,359 --> 00:24:56,440
Speaker 13: pretty well, especially the higher end model. So that is

472
00:24:56,480 --> 00:24:59,159
Speaker 13: atail one, especially when it looks at average selling prices

473
00:24:59,240 --> 00:25:01,640
Speaker 13: right there. People I spoke to have said that maybe

474
00:25:01,720 --> 00:25:03,800
Speaker 13: a lot of people who bought phones during the start

475
00:25:03,840 --> 00:25:06,600
Speaker 13: of COVID and the pandemic five years ago, maybe they're

476
00:25:06,600 --> 00:25:08,520
Speaker 13: just at a point right now where they're starting to upgrade,

477
00:25:08,600 --> 00:25:12,520
Speaker 13: even without AI features, even without the foldable phone that's

478
00:25:12,560 --> 00:25:14,919
Speaker 13: expected next year. So there is a lot of optimism

479
00:25:14,960 --> 00:25:17,920
Speaker 13: that the strong iPhone sales that we've been seeing indications

480
00:25:17,960 --> 00:25:20,600
Speaker 13: of so far, maybe there's room for this to grow

481
00:25:20,880 --> 00:25:23,960
Speaker 13: over the coming quarters, especially as we get new designs,

482
00:25:24,080 --> 00:25:26,240
Speaker 13: more AI features and so forth. Of course, now the

483
00:25:26,359 --> 00:25:28,840
Speaker 13: question is you have a stock that's valued at four

484
00:25:28,880 --> 00:25:31,879
Speaker 13: trillion dollars. It's in hitting record levels. Is all this

485
00:25:31,920 --> 00:25:34,000
Speaker 13: optimis is going to be justified by the results that

486
00:25:34,040 --> 00:25:35,119
Speaker 13: come out this afternoon.

487
00:25:35,640 --> 00:25:37,760
Speaker 4: I mean, while Amazon languishes only about two and a

488
00:25:37,800 --> 00:25:41,040
Speaker 4: half turning Bloomberg ran Plastelica, thank you very much, And

489
00:25:41,160 --> 00:25:43,480
Speaker 4: let's just talk about where investors' heads are at, how

490
00:25:43,480 --> 00:25:46,560
Speaker 4: they're reacting to this really busy week of earnings. Ibek

491
00:25:46,640 --> 00:25:49,640
Speaker 4: oskodeshkay is with our senior market's analysts over at Swiss Quote.

492
00:25:49,680 --> 00:25:51,439
Speaker 4: We had Brent sil from Jeffrey's on the top of

493
00:25:51,440 --> 00:25:53,000
Speaker 4: the show, and he said he doesn't.

494
00:25:52,840 --> 00:25:54,200
Speaker 5: Understand the market right now.

495
00:25:54,359 --> 00:25:56,440
Speaker 4: Do you understand the market if you're looking at Meta

496
00:25:56,480 --> 00:26:00,360
Speaker 4: being sold off so hard, Alphabet rising after earnings. We'll

497
00:26:00,359 --> 00:26:02,520
Speaker 4: get back to her in a minute. Technology on technology

498
00:26:02,520 --> 00:26:05,280
Speaker 4: shows and this many years into zoom, sometimes we don't

499
00:26:05,320 --> 00:26:07,160
Speaker 4: press the right button, head, but really, I do think

500
00:26:07,200 --> 00:26:09,120
Speaker 4: the one cell coming from Meta is a key one

501
00:26:09,119 --> 00:26:12,640
Speaker 4: to be discussing because we have got this five vocated

502
00:26:12,720 --> 00:26:15,960
Speaker 4: market where we're selling off certain names, in particular when

503
00:26:15,960 --> 00:26:17,560
Speaker 4: we're worried about capital expenditure.

504
00:26:17,800 --> 00:26:19,240
Speaker 5: But what more was better.

505
00:26:19,119 --> 00:26:21,360
Speaker 4: To do twenty six percent growth in terms of revenue

506
00:26:21,359 --> 00:26:24,960
Speaker 4: record numbers. We're also thinking about what therefore that pushes

507
00:26:25,000 --> 00:26:27,000
Speaker 4: forward to Amazon and how much they have to vindicate

508
00:26:27,000 --> 00:26:28,520
Speaker 4: the spend on capital expenditure too.

509
00:26:29,320 --> 00:26:30,920
Speaker 3: Yeah, one thing I'd say is we go back to

510
00:26:31,000 --> 00:26:33,280
Speaker 3: Epek Deshkai, who I think is now good, and back

511
00:26:33,280 --> 00:26:35,560
Speaker 3: with us is with respect?

512
00:26:35,680 --> 00:26:37,280
Speaker 2: Do investors have short memories?

513
00:26:37,600 --> 00:26:40,600
Speaker 3: Because Meta told us in the prior quarter that CAFTO

514
00:26:40,640 --> 00:26:43,480
Speaker 3: expenditures would be higher in the next fiscal year, they

515
00:26:43,600 --> 00:26:46,840
Speaker 3: used a different language this time around, which was notably

516
00:26:46,960 --> 00:26:49,080
Speaker 3: larger in fiscal twenty six and twenty five.

517
00:26:49,560 --> 00:26:50,960
Speaker 2: But maybe it's what they didn't say.

518
00:26:51,040 --> 00:26:53,240
Speaker 3: They didn't tell us what top line or bottom line

519
00:26:53,280 --> 00:26:56,360
Speaker 3: growth directly from AI investments looks like what's your read?

520
00:26:57,400 --> 00:27:00,640
Speaker 14: Well, actually, for Meta, the investments look more more riskcared

521
00:27:00,680 --> 00:27:02,880
Speaker 14: than they are for Microsoft or Amazon.

522
00:27:02,960 --> 00:27:06,240
Speaker 15: We do have these data centers and they say that

523
00:27:06,280 --> 00:27:08,919
Speaker 15: if we over invest, we will have the option to

524
00:27:09,000 --> 00:27:10,600
Speaker 15: sell this excess capacity.

525
00:27:10,960 --> 00:27:13,199
Speaker 14: And if you're looking at the market reaction and the

526
00:27:13,280 --> 00:27:17,240
Speaker 14: mixed reaction there, we also think that macraeconic context is

527
00:27:17,280 --> 00:27:18,639
Speaker 14: here is very important.

528
00:27:18,960 --> 00:27:21,280
Speaker 15: Important in the sense that just before these.

529
00:27:21,040 --> 00:27:24,280
Speaker 14: Earnings came out yesterday, the Federal Reserves said that they're

530
00:27:24,320 --> 00:27:26,280
Speaker 14: not sure that they will be cutting the interest raised

531
00:27:26,320 --> 00:27:29,000
Speaker 14: by twenty five bases point. So I think that that

532
00:27:29,240 --> 00:27:32,840
Speaker 14: also dumpened the mood just before the earnings came in.

533
00:27:33,160 --> 00:27:35,880
Speaker 14: Looking at the spending these companies must spend in order

534
00:27:35,960 --> 00:27:38,040
Speaker 14: to keep up with the man and Microsoft has been

535
00:27:38,119 --> 00:27:40,840
Speaker 14: very clear about the fact that they have not been

536
00:27:40,880 --> 00:27:43,840
Speaker 14: able to catch up with the significantly higher demand. So

537
00:27:43,920 --> 00:27:46,480
Speaker 14: they must invest. They do have the free cash to invest,

538
00:27:46,640 --> 00:27:48,880
Speaker 14: and if they do not invest and miss the turn,

539
00:27:49,240 --> 00:27:51,440
Speaker 14: the AI turned that that would be worse for.

540
00:27:51,520 --> 00:27:53,960
Speaker 15: Investors then seeing them over investing.

541
00:27:54,080 --> 00:27:56,720
Speaker 14: So I think that in the in the context of

542
00:27:56,800 --> 00:28:00,000
Speaker 14: the actual growth, these companies must invest and it doesn't

543
00:28:00,119 --> 00:28:03,040
Speaker 14: really bother us as long as there are no concerns

544
00:28:03,080 --> 00:28:05,720
Speaker 14: about oversupply, and this is not the case right now.

545
00:28:05,920 --> 00:28:08,400
Speaker 4: You got Meta said if they have too much compute,

546
00:28:08,440 --> 00:28:09,840
Speaker 4: they can start selling it to others.

547
00:28:09,880 --> 00:28:11,399
Speaker 5: So is this an air pocket?

548
00:28:11,440 --> 00:28:13,879
Speaker 4: Is this just where people buy into weakness or is

549
00:28:13,920 --> 00:28:16,199
Speaker 4: there going to be a significant pullback in questioning of

550
00:28:16,240 --> 00:28:18,199
Speaker 4: the market rit large if the FED isn't going to

551
00:28:18,200 --> 00:28:19,800
Speaker 4: be cut in come December.

552
00:28:20,359 --> 00:28:24,720
Speaker 14: Well, I think that the FED situation could eventually lead

553
00:28:24,800 --> 00:28:28,120
Speaker 14: to a certain pullback in valiations. But I don't think

554
00:28:28,160 --> 00:28:30,399
Speaker 14: that that's going to be a bubble pop kind of

555
00:28:30,720 --> 00:28:34,320
Speaker 14: a market's reaction, because these companies must invest now in

556
00:28:34,400 --> 00:28:37,119
Speaker 14: order to make sure that they don't hit into capacity

557
00:28:37,160 --> 00:28:39,640
Speaker 14: constraints one year, one and a half year from now.

558
00:28:39,840 --> 00:28:43,040
Speaker 14: I believe that investors understand that there is a bpoort

559
00:28:43,120 --> 00:28:47,960
Speaker 14: showing that or claiming that the data capacity computing needs

560
00:28:47,960 --> 00:28:51,360
Speaker 14: will be doubling every nine to eighteen months due to

561
00:28:51,440 --> 00:28:55,240
Speaker 14: our AI application, So these companies must keep up with

562
00:28:55,360 --> 00:28:58,280
Speaker 14: that pace. And again I believe that these fending plants

563
00:28:58,280 --> 00:29:00,920
Speaker 14: have been almost in fairly you know.

564
00:29:00,960 --> 00:29:03,360
Speaker 15: Put out there, so they have being revised higher. But

565
00:29:03,440 --> 00:29:06,880
Speaker 15: this is not this is not a surprise coming in

566
00:29:06,960 --> 00:29:07,400
Speaker 15: right now.

567
00:29:07,440 --> 00:29:09,880
Speaker 14: Looking at the deals and the strength of the demand

568
00:29:09,880 --> 00:29:12,560
Speaker 14: that we see in the sector, these companies are out

569
00:29:12,600 --> 00:29:15,040
Speaker 14: there trying to keep up with the demand. And I

570
00:29:15,160 --> 00:29:18,520
Speaker 14: believe that again, as the executives are also saying, not

571
00:29:18,680 --> 00:29:21,040
Speaker 14: keeping up with the demand or risking to head into

572
00:29:21,080 --> 00:29:25,880
Speaker 14: capacity constraints is worse than over investing right now.

573
00:29:26,960 --> 00:29:30,280
Speaker 4: What's interesting is, of course, perhaps just to show the

574
00:29:30,280 --> 00:29:33,280
Speaker 4: amount of spend that was necessary, Meta comes to market

575
00:29:33,360 --> 00:29:36,920
Speaker 4: with a ginormous twenty five billion dollar bond sale and

576
00:29:37,440 --> 00:29:40,800
Speaker 4: talk to us about demand across assets for AI related companies.

577
00:29:40,840 --> 00:29:43,560
Speaker 4: Should we pull back inequities that their record highs. How

578
00:29:44,200 --> 00:29:46,360
Speaker 4: is demand looking for the bond side of the equation.

579
00:29:47,280 --> 00:29:49,520
Speaker 15: Well, I think the bond side is also looking well.

580
00:29:49,880 --> 00:29:52,200
Speaker 14: Especially right now we have seen that the bond sales

581
00:29:52,240 --> 00:29:55,360
Speaker 14: are have been quite interesting for these companies. I believe

582
00:29:55,400 --> 00:29:57,960
Speaker 14: that in the actual environment as well, the bond sales

583
00:29:58,000 --> 00:30:00,440
Speaker 14: are going to be interesting. So the investors who are

584
00:30:00,440 --> 00:30:02,920
Speaker 14: not necessarily willing to take the equator risk at the

585
00:30:03,000 --> 00:30:05,880
Speaker 14: higher valuations, they will be plugging into the bond side

586
00:30:05,920 --> 00:30:09,320
Speaker 14: of the market. You are not expecting them to move separately.

587
00:30:09,600 --> 00:30:12,360
Speaker 14: You expect them to do to move in tandem. But

588
00:30:12,480 --> 00:30:15,760
Speaker 14: on the bond side the potential of rises less and

589
00:30:15,920 --> 00:30:17,320
Speaker 14: the risk that we're taken for.

590
00:30:17,320 --> 00:30:18,600
Speaker 15: It is also less.

591
00:30:18,640 --> 00:30:21,360
Speaker 14: So this is another way of taking exposure and passive

592
00:30:21,440 --> 00:30:25,400
Speaker 14: exposure to these companies without however, taking the risk of

593
00:30:25,480 --> 00:30:27,160
Speaker 14: the equity fluctuations.

594
00:30:27,560 --> 00:30:27,960
Speaker 2: Epeck.

595
00:30:28,200 --> 00:30:31,000
Speaker 3: If I take the earning statements and cool transcripts of

596
00:30:31,040 --> 00:30:33,000
Speaker 3: all the tech earnings we have so far, run them

597
00:30:33,000 --> 00:30:37,000
Speaker 3: through chat GPT and ask chat GPT to cross reference

598
00:30:37,040 --> 00:30:40,600
Speaker 3: for a theme that is not capital expenditures what would

599
00:30:40,600 --> 00:30:42,840
Speaker 3: I get. What else do you see that they have

600
00:30:43,000 --> 00:30:44,000
Speaker 3: common between them?

601
00:30:44,320 --> 00:30:47,280
Speaker 15: Well, the couple of expenditures are actually rising.

602
00:30:47,360 --> 00:30:47,760
Speaker 10: I don't know.

603
00:30:47,800 --> 00:30:48,680
Speaker 15: I have an ass chat.

604
00:30:48,640 --> 00:30:51,240
Speaker 14: Topt what he thinks about it. But what we see

605
00:30:51,360 --> 00:30:54,520
Speaker 14: is that this is growing exponentially and there is investment

606
00:30:54,600 --> 00:30:57,160
Speaker 14: worries about that. But if you do not invest today

607
00:30:57,320 --> 00:30:59,400
Speaker 14: again a year and a year and a half from now,

608
00:30:59,480 --> 00:31:03,240
Speaker 14: you might into bigger capacity constraints. What's happening right now

609
00:31:03,360 --> 00:31:06,480
Speaker 14: is if today, for man one prosoft for example, you

610
00:31:06,480 --> 00:31:08,760
Speaker 14: are not able to catch up with the demand, then

611
00:31:08,800 --> 00:31:10,760
Speaker 14: tomorrow is going to be a harder because you know,

612
00:31:11,000 --> 00:31:13,840
Speaker 14: we're just going divergently because the demand is going to

613
00:31:13,880 --> 00:31:15,200
Speaker 14: be exponentially rising.

614
00:31:15,280 --> 00:31:16,600
Speaker 15: And that's the main issue.

615
00:31:16,640 --> 00:31:20,360
Speaker 14: That's why these companies are investing so badly or so highly.

616
00:31:20,640 --> 00:31:23,200
Speaker 15: And this is I think what chatteropt will tell you.

617
00:31:23,480 --> 00:31:27,160
Speaker 14: Because as AI applications will be and running, demand for

618
00:31:27,280 --> 00:31:30,560
Speaker 14: competing is going to rise exponentially. And this is exactly

619
00:31:30,560 --> 00:31:34,600
Speaker 14: why Nvidia is also not only concentrating today on the

620
00:31:34,680 --> 00:31:38,160
Speaker 14: AI applications, but all on the networks and intelligence networks

621
00:31:38,200 --> 00:31:41,040
Speaker 14: as well, to make sure that even the networks and

622
00:31:41,080 --> 00:31:44,200
Speaker 14: the pipelines will be able to handle all that data

623
00:31:44,320 --> 00:31:45,800
Speaker 14: flow down the road.

624
00:31:46,280 --> 00:31:48,800
Speaker 3: We did get a FED cut quarter point for a

625
00:31:48,840 --> 00:31:51,080
Speaker 3: second consecutive meeting, and we did get a warning that

626
00:31:51,160 --> 00:31:54,280
Speaker 3: a December rate cut is not a foregone, foregone conclusion.

627
00:31:55,080 --> 00:31:58,120
Speaker 3: Ipek Oskar Deshkaya Senior Markets and list at Swiss Quote

628
00:31:58,320 --> 00:32:00,160
Speaker 3: having earnings and FED story ic