Speaker 1: Bloomberg Audio Studios, Podcasts, radio news from.
Speaker 2: Mark Hard We're Innovation, Money and Power Collie in Silicon.
Speaker 3: Valley, NBN.
Speaker 4: This is Bloomberg Technology with Caroline Hyde and.
Speaker 5: Ed Love Love.
Speaker 6: Live from New York and San Francisco. This is Bloomberg
Speaker 6: Technology Broadcom. It's falling hard after a disappointing forecast despite
Speaker 6: robust demands for AI products.
Speaker 5: Tech stocks flirting with their worst week since twenty twenty
Speaker 5: two ahead of Apple's big launch event, and the.
Speaker 6: White House is targeting China again, planning a fresh round
Speaker 6: of chip related export controls. We discussed, but first we
Speaker 6: have some macro breaking news from the Federal Reserve and
Speaker 6: the Mann To bring us the details is one McKee Bluemost,
Speaker 6: Chief International Economic Suppose, the correspondent coming from FED speak.
Speaker 7: Well, this is what everybody's been waiting for all day.
Speaker 7: The job's number comes in at one forty two and
Speaker 7: unemployment falls back to four point two. What will the
Speaker 7: Fed do fifty or twenty five? We get a hint
Speaker 7: from Chris Waller, the Federal Reserve governor, often seen as
Speaker 7: the leading guide to FED activity, and he says today's
Speaker 7: data show it's time to cut rates. Determining the pace
Speaker 7: of rate cuts and ultimately the total reduction in the
Speaker 7: policy rate are decisions that lie in the future. As
Speaker 7: of today, I believe it is important to start the
Speaker 7: rate cutting process at our next meeting. If subsequent data
Speaker 7: show a significant deterioration in the labor market, the FOMC
Speaker 7: can act quickly and forcefully to adjust monetary policy. Now,
Speaker 7: while Waller says we are not in recession and it
Speaker 7: doesn't necessarily look like we are going into recession, the
Speaker 7: economy looks pretty strong. He says the risks are now
Speaker 7: tilted towards the downside on growth, Inflation has gotten better.
Speaker 7: He doesn't say whether it'll be fifty or twenty five,
Speaker 7: but says that's a decision that's coming up team.
Speaker 5: Once we get through the yield, show me the Nasdaq
Speaker 5: one hundred, or show me the S and P five hundred,
Speaker 5: and let's show our audience that the market's kind of
Speaker 5: changed direction on those headlines. Mike, I want to read
Speaker 5: one specific bit back to you, which is the current
Speaker 5: batch of data no longer requires patients. It requires action,
Speaker 5: but there's no size and scope to what action means.
Speaker 5: We don't have a basis points number do we.
Speaker 8: We don't, And that's a little bit odd.
Speaker 7: And in the sense that Chris Waller goes on to
Speaker 7: say that he was an advocate of front loading rate
Speaker 7: increases when inflation went up, and if the data supported
Speaker 7: he would be an advocate of front loading rate cuts.
Speaker 8: What data is he talking about.
Speaker 7: We really don't get much more before the next FED meeting,
Speaker 7: So I'm not sure why he wasn't more specific, other
Speaker 7: than perhaps he doesn't want the markets to get ahead
Speaker 7: of themselves in pricing.
Speaker 6: That's what markets do. They get ahead before dugging. Michael McKee,
Speaker 6: just brilliant to have you on this market moving story.
Speaker 6: We appreciate it. Let's get analysis from the market. Shannon
Speaker 6: Sicil is with us for more, CEO of Bannery and
Speaker 6: Capital Management, which helps independent advisors with alternative investing options.
Speaker 6: And currently you've got four billion dollars under advice. And
Speaker 6: I'm really interested into ultimately how much macro the FED
Speaker 6: is guiding investment choices right now, or how much you
Speaker 6: can think about AI and productivity and technology still winning out.
Speaker 9: So I think you've got to think of those things
Speaker 9: in two separate ways. Right there is the current economic
Speaker 9: environment in which the FED has been tightening, They've been
Speaker 9: raising rates for a while, they've tried to get inflation
Speaker 9: under control. The ramifications of that is that it softens
Speaker 9: labor markets, it slows growth. The goal, of course, is
Speaker 9: for it to slow growth, not growth go negative, and
Speaker 9: we're seeing that kind of play out because it's more
Speaker 9: expensive to borrow money in the capital markets are reacting accordingly.
Speaker 9: You can think of that as the current environment and
Speaker 9: still believe that technology trends like AI win longer term.
Speaker 9: And it doesn't change the fact that companies, when they
Speaker 9: look at where they're going to deploy capital and where
Speaker 9: the opportunities lies, are going to do it in the
Speaker 9: places they think they need to develop in order to
Speaker 9: compete going forward. And so as they make those capital
Speaker 9: deployment decisions, they are looking at things like AI, which
Speaker 9: is the number one thing that they need to be
Speaker 9: considering to continue to stay competitive. A great example is Apple, Right,
Speaker 9: everybody was down on the stock prior to their announcements
Speaker 9: of how they were going to be incorporating AI into
Speaker 9: their iPhone platform and into their other devices. Right before that,
Speaker 9: everybody was like, oh, there behind the eight.
Speaker 8: Ball shown on the stock.
Speaker 5: Hurt let me jump in there, and I'm sorry to
Speaker 5: cut you off. I actually want to continue with some
Speaker 5: of the real time reaction to those fed wallheadlines. One
Speaker 5: of the alternatives that you track closely is bitcoin, right,
Speaker 5: And when we got the jobs numbers, bitcoin jumped and
Speaker 5: was in positive territory for much of the session. Going
Speaker 5: into those fed wallheadlines at the top of the eleven
Speaker 5: east an hour, it was markedly lower, about two and
Speaker 5: a half percent.
Speaker 8: It came off that a little bit.
Speaker 5: Use that case study of one single session to explain
Speaker 5: why you track bitcoin so closely for your clients.
Speaker 9: So again we think bitcoin is using or even ease
Speaker 9: it's crypto in general. Art right are taking advantage of
Speaker 9: a technology of the future in blockchain.
Speaker 10: You know, blockchain is.
Speaker 9: A protocol, and we've seen the revolutions of protocols throughout
Speaker 9: out the history of the Internet. You know, everything from
Speaker 9: voiceover Internet protocol to HGTP is a protocol, like these
Speaker 9: are all protocols.
Speaker 6: Blockchain is a protocol.
Speaker 9: Bitcoin works on that protocol, and that is a future
Speaker 9: technology that we believe will be great.
Speaker 11: You know, more largely adopted.
Speaker 9: What we saw in the short term reaction to information
Speaker 9: had more to do with a risk on risk off trade,
Speaker 9: not necessarily the adoption of the protocol. So you can
Speaker 9: believe two things at once. This is the difference between
Speaker 9: a trader and a long term investor. Right, you can
Speaker 9: believe that in the short term you're going to have
Speaker 9: the market movements that you can profit from, and you
Speaker 9: can also believe that, I don't care about what happens
Speaker 9: on one individual day, but the longer term trend wins
Speaker 9: out in the long term.
Speaker 6: That's what happening when we're looking at the likes a
Speaker 6: Broadcom today or in video last week, that it's the
Speaker 6: trading that said them so much lower on actually pretty
Speaker 6: fundamentally decent numbers in the long term, but they disappoint
Speaker 6: because expectations have run so far so fast.
Speaker 9: It's exactly right now. There's two different type of analysis
Speaker 9: in finance, right, there's technical and there's fundamental. So the
Speaker 9: fundamentals remain strong, but the technicals broke down, and the
Speaker 9: technicals drive a lot of the algorithms that move the
Speaker 9: markets these days, and so that's why you can see
Speaker 9: these short term price dislocations that occur even though fundamental
Speaker 9: information and the actual company itself is in good shape.
Speaker 5: Seana, you stated the line that I've been using all week,
Speaker 5: which effectively is one session a market does not make.
Speaker 5: But I just want to stick with what's happening right now.
Speaker 5: You know, we had that statement from Waller, you know,
Speaker 5: tie it all together the post mortem of Nvidia, what
Speaker 5: the expectation of what the FED will or won't do
Speaker 5: this month is, and where you go from here.
Speaker 10: So the post mortem of in Vidia is that in
Speaker 10: Vidia is a great company doing great things, and that
Speaker 10: has really attractive growth, just not the attractive growth that
Speaker 10: they had before.
Speaker 9: So when you were experienced in three four hundred percent
Speaker 9: increases in revenue and you fall to one hundred and fifty,
Speaker 9: that is a decline in your earnings momentum, but it's
Speaker 9: still one hundred and fifty percent increase in your revenue.
Speaker 9: And so overall, as a long term holder of in Video, personally,
Speaker 9: I believe that the stock wins in the long term.
Speaker 9: I follow the stock forever and the short term, what
Speaker 9: you're seeing is that disappointment and the stock coming back
Speaker 9: to reflect more closely, it's fundamentals when you start to
Speaker 9: look at price to earnings and things of that nature.
Speaker 9: So post mortem, I think long term and vida good
Speaker 9: short term would probably have some volatility in terms of
Speaker 9: the FED and what happens next. I think today's data
Speaker 9: and the comments that came from Waller suggests that the
Speaker 9: FED is still in line to make a rate cut
Speaker 9: this month, and it will be the first of many.
Speaker 9: And the question really becomes how big will that ratecut be?
Speaker 9: And there was nothing that came out in today's data
Speaker 9: that suggests that it should be anything more than twenty
Speaker 9: five basis points in my opinion.
Speaker 8: Shanna Sisters CEOBE, you messed up?
Speaker 9: Did I miss another question you asked?
Speaker 6: I think you have no?
Speaker 5: I mean, my goodness, you took what I asked and
Speaker 5: you really ran with it. We appreciate it. Shanna Sissl's
Speaker 5: CEO of Bandary and Capital Management, Thank you very much.
Speaker 5: Docu sign shares up in today's trading after the signature
Speaker 5: company reported second quarter results, posting revenue of seven hundred
Speaker 5: and thirty six million dollars billings growth of two percent.
Speaker 5: But it's margins where a lot of the streets focuses.
Speaker 5: Let's bring in doc you sign CEO Alan Tigerson, who
Speaker 5: here in San Francisco with me. I just want the story,
Speaker 5: the DOCU signed story, right. I think historically you've beat
Speaker 5: the market's expectations on billings, and so everyone was very excited.
Speaker 5: They're a little concerned on that. The story behind billings growth.
Speaker 8: Well, you know, so.
Speaker 2: When I joined a little out of two years ago,
Speaker 2: I think there were three questions. One, could we stabilize
Speaker 2: the business, could we become more efficient? And then could
Speaker 2: we develop our next chapter? And so this quarter I
Speaker 2: think is a nice milestone. I think we have really
Speaker 2: stabilized the business. We've made the business much more efficient,
Speaker 2: the profitability as you mentioned, and we are now poised,
Speaker 2: I think for growth. We've launched our new product line,
Speaker 2: which is much broader than the signature that everyone's so
Speaker 2: familiar with, and we saw some early, very positive results
Speaker 2: this quarter. It's still early, but we're very encouraging.
Speaker 6: Dig into those positive results. AI Infused. We're thinking about
Speaker 6: broadening out from contracts. How is it working for the
Speaker 6: companies that use it?
Speaker 2: Yes, So we launched it to North American commercial customers
Speaker 2: and we've had a number of folks that have not
Speaker 2: only ordered, but deployed, and the early results are really good.
Speaker 2: You see, what they're saying is They love the fact
Speaker 2: that we can ingest all of their agreements and give
Speaker 2: them immediate insight into every contract that they have. And
Speaker 2: this is valuable for every role in the company. Whether
Speaker 2: you're a CFO or a frontline seller or purchasing agent
Speaker 2: or an HR recruiter. You want to know the agreements
Speaker 2: that are relevant to you, what are the essential terms,
Speaker 2: and how are things going. And that's what we provide,
Speaker 2: and we can do that fairly instantaneously.
Speaker 5: When you have an AI enabled product, or a product
Speaker 5: is made more valuable by AI, it's usually required an
Speaker 5: investment on the talent side or the compute side. What
Speaker 5: can you tell me and your investors and the audience
Speaker 5: convince us that that investment is paying off fully?
Speaker 2: Yeah, well, so as if you look at our past
Speaker 2: performance here, we've been doing AI for a long time.
Speaker 2: We've had AI embedded our products since before the allms
Speaker 2: came out, and that's been feature that we've embedded as
Speaker 2: well as charged separately for. But obviously with the advent
Speaker 2: of these new models, we were able to take a
Speaker 2: significantly forward. And the feature that I just described is
Speaker 2: AIAI enabled so we take your contract data, run it
Speaker 2: through some of these models, score them and then give
Speaker 2: you back the central data about your agreements, and we
Speaker 2: could do that in a very lightweight, instantaneous way. From
Speaker 2: an investment perspective, we have ramped up our investment in
Speaker 2: product and technology, and we are moving to the public cloud.
Speaker 2: We have a big partnership with Microsoft. But I think
Speaker 2: we're holding the line pretty well on expenses. We can
Speaker 2: do this efficiently, and of course the costs of AI
Speaker 2: continue to drop. The cost of processing and agreement has
Speaker 2: dropped tremendously to the last six months.
Speaker 6: We're looking at the moment at an interday, you're up
Speaker 6: three point seven percent. I look back over the five years.
Speaker 6: At one point your share price it clips three hundred,
Speaker 6: And I'm just wondering as to whether you think this AI,
Speaker 6: your foury, is ever going to infuse itself into the
Speaker 6: capitalization the market capitalization of your business once again on
Speaker 6: as the pandemic did once before.
Speaker 2: Well, I think you know those were days when doc
Speaker 2: time's growing at fifty sixty percent a year. So I
Speaker 2: don't know that we have a path to that yet.
Speaker 2: I certainly love that, but I'm not projecting that. I
Speaker 2: think for now we're setting ourselves a milestone and return
Speaker 2: to double digit profitable growth.
Speaker 8: I think we have a.
Speaker 2: Path to that, and the early signs here are encouraging,
Speaker 2: and we'll see how the market's response to that. We're
Speaker 2: obviously a much more profitable company now and operating at
Speaker 2: bigger scales, so I'm not going to predict where the
Speaker 2: market's going to value us, but we are really really
Speaker 2: pleased with the early progress here.
Speaker 8: It's very quickly.
Speaker 5: Something you just said, Alan, the cost of AI is dropping.
Speaker 5: I don't know that I've heard many people say that
Speaker 5: to me at least, what do you mean.
Speaker 2: Well, so, if you look at the efficiency of these
Speaker 2: models and the cost per item process, whether it's an
Speaker 2: image or an our case in agreement, the cost has
Speaker 2: dropped very significantly, by a couple orders of magnitude. With
Speaker 2: that said, obviously people are taking on more ambitious tasks,
Speaker 2: the models are getting larger, and so the compute costs
Speaker 2: for the large vendors, for example, the amount of capital
Speaker 2: investment they're making is going up and up. I think
Speaker 2: it's because of the expansiveness of the opportunity that they see.
Speaker 2: But I'm telling you, as a customer on a per
Speaker 2: item process perspective, costs of dropping very.
Speaker 6: Rapidly fascinating take. We thank you so much, doctor side
Speaker 6: An anti Guison for joining us. Now let's go elsewhere
Speaker 6: in the C suite. Shares of enterprise automation and AI
Speaker 6: software company UiPath that they're down in today's training following
Speaker 6: the software companies actually ten percent revenue growth results and
Speaker 6: a small upward revision and its recurring revenue forecast. That's
Speaker 6: amid a CEO transition and job cuts. AT's bringing UiPath
Speaker 6: CFO and COO Ashim Gutta for more. You're taking on
Speaker 6: more roles and responsibilities. We're seeing an investor base that
Speaker 6: wants certainty, that wants confidence in this period of change,
Speaker 6: you're showing execution. Can you give them that at the
Speaker 6: moment issue?
Speaker 12: Yeah, And I think this quarter was a good testament
Speaker 12: to that, Caroline. We beat our mental across the board
Speaker 12: from what we got into last quarter. We raised our
Speaker 12: overall operating margin and free cash flow by twenty five
Speaker 12: million dollars, which projects our confidence in our ability to
Speaker 12: execute both efficiently and at the same time with minimum
Speaker 12: distraction on the top line results that we're going to
Speaker 12: continue to drive. And then we've also executed well against
Speaker 12: our buyback. We increased our authorization for another five hundred
Speaker 12: million dollars, bringing to a billion dollars in total. I
Speaker 12: think that really projects the confidence that we have in
Speaker 12: the company and our ability to execute, and then that's
Speaker 12: translating well in the investor discussions that we've had today.
Speaker 6: What about executing against your competition A shame Your role
Speaker 6: before was with about customer excellence and look service now salesforce,
Speaker 6: they are rolling out AI agents, they're fueling productivity aims.
Speaker 6: I'm interested to seeing your ability to compete here.
Speaker 11: Yeah, it's a great question.
Speaker 12: We feel very good about actually our position and the
Speaker 12: execution of our field competing. We close the largest test
Speaker 12: automation deal in the history of the company in one
Speaker 12: of the world's largest tech companies. We've expanded our cloud
Speaker 12: platform significantly. You saw that cross almost eight hundred and
Speaker 12: fifty million dollars of arr now into our into our
Speaker 12: overall top line results. And when you look across our
Speaker 12: customer base, we've increased our customers greater than a million
Speaker 12: dollars by fifteen percent year over year, and that cohort
Speaker 12: of customers or customers greater than one hundred thousand and
Speaker 12: two a million is expanding at one hundred twenty percent.
Speaker 12: That shows that we're winning in the market. There's increased
Speaker 12: competition in personal productivity, you know, smaller ROI mundane tasks
Speaker 12: type automations. But where we're competing and where where we're
Speaker 12: winning is in large scale enterprise automations and where AI
Speaker 12: and automation come together. That is what customers want, and
Speaker 12: we are winning in those types of use cases, as
Speaker 12: evidenced by the demo that we actually provided in our
Speaker 12: earnings call that shows them do we can have with
Speaker 12: healthcare customers as the across the industry for a simple
Speaker 12: use case that can save them hundreds of millions of.
Speaker 8: Dollars A shame.
Speaker 5: Congratulations on being given a second job on top of
Speaker 5: the one you've already got, CFO and COO.
Speaker 8: Now, I actually want.
Speaker 5: To talk to you about saying I think we probably
Speaker 5: looked at earlier in the year, which is this bigger
Speaker 5: picture of license to subscription. There are lots of people
Speaker 5: that watch this program where that is something that they
Speaker 5: will confront each day because they either administer software agreements
Speaker 5: or whatever. Can you just extrapolate out from your earnings
Speaker 5: of what that trend looks like for you guys going forward.
Speaker 8: Yeah, when you.
Speaker 12: Look at our you know, we really look at our
Speaker 12: annual recurring revenue as akin to our subscription model, and
Speaker 12: that is growing nineteen percent at a billion five five
Speaker 12: of skill. So we really look at that as a
Speaker 12: very good indicator of where we are as a company
Speaker 12: and how customers look at us as a long.
Speaker 11: Term part of their architecture.
Speaker 12: The second piece is our net dollar expansion rate that
Speaker 12: is still at one hundred and fifteen percent at the.
Speaker 11: Scale that we're at.
Speaker 12: So when you look at you know, customers buying in
Speaker 12: not just for one time type project, but really subscribing
Speaker 12: to us, it's because we provide continuous and long term
Speaker 12: value in their enterprise processes. So as you extrapolate that
Speaker 12: forward and you say one hundred and fifteen percent net
Speaker 12: dollar expansion rate, continuing to launch new products such as
Speaker 12: Autopilot that is that brings natural language processing for automation
Speaker 12: developers and puts that in their hands, and expanding our
Speaker 12: platform into test automation, and continuing to drive more and
Speaker 12: more complicated use cases.
Speaker 11: We feel very good about the trajectory of that subscription
Speaker 11: model for US.
Speaker 8: A shame. How is your day to day going to
Speaker 8: be different now that you so as well?
Speaker 12: Look, I think I have a great team in finance
Speaker 12: that has done so much and has built a great foundation. Really,
Speaker 12: Daniel and I look at execution and driving prioritization and
Speaker 12: then dividing and conquering where he can spend time continuing
Speaker 12: to lead us into this agentic wave that is there.
Speaker 12: And agentic is such a powerful wave that requires both
Speaker 12: go to market and product innovation, and continuing our leadership
Speaker 12: in that area is great for me to be able
Speaker 12: to help Daniel and help the team by providing day
Speaker 12: to day ownership over the enabling functions that really drive
Speaker 12: our ability to execute against our broader vision. That's where
Speaker 12: I'm going to spend more and more of my time.
Speaker 12: It's frankly an honor and a really good part to
Speaker 12: be a part of the larger team of viipath.
Speaker 6: It's a hard time because you're cutting people. How much
Speaker 6: is AI able to offset and replace some of that talent?
Speaker 8: Yeah, we look.
Speaker 12: I think first, as you're right, it's never easy to
Speaker 12: part with employees. And at the same time, I think
Speaker 12: driving continuing to drive shareholder value is important for us
Speaker 12: and efficiency and making sure we have streamlined processes that
Speaker 12: are there.
Speaker 11: I think AI is a really important part of us.
Speaker 12: We actually use our platform internally than three hundred and
Speaker 12: fifty automations live doing everything from invoice processing to even
Speaker 12: complex areas like vendor engagements.
Speaker 11: That is a big part of our productivity.
Speaker 12: With autopilot, we're able to launch that into other areas
Speaker 12: such as our sales processes. And I think that efficiency
Speaker 12: gives us not just productivity and dollars, but really of
Speaker 12: mind shure to spend more time with customers and customer
Speaker 12: centricity is a really key tenant of Daniel's priority for
Speaker 12: the company.
Speaker 5: As we go forward, UIPAF CFO and now COO as well. Actually,
Speaker 5: and goodt thank you very much. Like coming up on
Speaker 5: the program, Americans are shifting their stance on a potential
Speaker 5: TikTok ban. We'll have all the details next And as
Speaker 5: we head to the break, take another look at the
Speaker 5: NASDAQ one hundred actually trading their session lows, now heading
Speaker 5: for its biggest weekly decline since November twenty twenty two,
Speaker 5: down two and a half two point four percent. In
Speaker 5: this session, you can see the little sort of spike
Speaker 5: or pair in those losses. After the faire wallerheads, we'll
Speaker 5: talk more about the markets in the hour. This has
Speaker 5: boonbo technology. It's time now for talking tech and first start.
Speaker 5: Americans are less supportive of a possible TikTok ban than
Speaker 5: they were eighteen months ago. According to a new Pew
Speaker 5: Research survey, just thirty two percent of US adults back
Speaker 5: a TikTok ban, while that number was at fifty percent
Speaker 5: back in March of last year. Plus TikTok parent Bike
Speaker 5: Dance is raising as much as six hundred million dollars
Speaker 5: for its car information and trading platform, dong Cheede. According
Speaker 5: to sources, The fundraising round values the platform at close
Speaker 5: to three billion dollars. And Telegram CEO Pavel Durov defended
Speaker 5: the encryptive messaging app in his first public comments since
Speaker 5: being arrested in Paris last month. He acknowledged quote growing
Speaker 5: pains from a rapid expansion to nine hundred and fifty
Speaker 5: million users and promise to tackle criminal abuse.
Speaker 6: Character it's just take a look at these markets and
Speaker 6: anticipate what we're discussing next. Broadcon I mean slumping on
Speaker 6: the back of its numbers. They were pretty strong in
Speaker 6: Ai but the forecast disappointed word by nine percent and
Speaker 6: the NASAQ one hundred offer five point six percent over
Speaker 6: the last five training days, the worst week since November
Speaker 6: twenty twenty two. This is Blue Meg Technology. Welcome back
Speaker 6: to Blue Meg Technology. I'm Caroline Heid in New York.
Speaker 8: And I'm Ed Ludlow in San Francisco.
Speaker 6: It is a brutal end to this week. When it
Speaker 6: comes to being long these markets, it is the macro data,
Speaker 6: the job's data showing once again a calling in that
Speaker 6: job's market. Wage growth ticked up, but overall we are
Speaker 6: looking for reasons to sell it fields this Friday and
Speaker 6: we are down on the NASA by two point three percent.
Speaker 6: In fact, the Nasdaq one hundred having its worst week
Speaker 6: since twenty twenty two. We're on a risk averse environment,
Speaker 6: so bomb market catches a bid. The two year yield
Speaker 6: falls down some nine basis points, off of some fourteen
Speaker 6: basis point collapse earlier in the day. This as we
Speaker 6: start to bake in, is there a fifty basis point
Speaker 6: cut as soon as September. I'm looking at bitcoin also
Speaker 6: basically in line with risk sentiment. We're off by three
Speaker 6: point three percent. Look at what so many individual movers
Speaker 6: are doing. I just want to shine a light on
Speaker 6: what a brutal week it has been also for chips.
Speaker 6: More broadly, the socks off by another four percent. We're
Speaker 6: basically down nine ten percent on the week. Broad Com
Speaker 6: today is the victim of choice, and we're currently seeing
Speaker 6: it collapse in percentage point perspective, even though it's forecast
Speaker 6: like relatively bright. We're going to dig into that on
Speaker 6: a micro basis, but also super microcomputers. Get this, JP
Speaker 6: Morgan slashing its price target on this company all the
Speaker 6: way down to five hundred, nine hundred and fifty after
Speaker 6: short seller note we're worried about it's ten k. When
Speaker 6: it gets back into compliance is when you're going to
Speaker 6: have to sit on the sidelines until ed. But let's
Speaker 6: just dig into what's happening with Broadcon.
Speaker 8: Yeah, the Broadcom story is important.
Speaker 5: Falling after the company delivered it's sales forecast, which was
Speaker 5: hurt by the parts of its business that are not
Speaker 5: tied to artificial intelligence. I want to bring in Congensubani
Speaker 5: from Bloomberg Intelligence and Okay, so the fistful fourth quarter
Speaker 5: overall revenues fourteen billion not as strong as hoped full
Speaker 5: fiscal year twelve billion dollars in AI sales.
Speaker 8: That's good.
Speaker 5: So we're basically concluding that this sort of more legacy
Speaker 5: businesses for Broadcom aren't doing as well right now?
Speaker 8: Is that your Reid exactly?
Speaker 13: I mean, that was the only negative, But in my opinion,
Speaker 13: it was not very surprising if we have heard the
Speaker 13: same story across of most of its peers who have
Speaker 13: already reported, because remember Broadcom is the last one to report,
Speaker 13: so that should not have caused this kind of a reaction.
Speaker 13: I think another thing going here is the AI which
Speaker 13: was upsided to twelve billion. Maybe investors were hoping for
Speaker 13: even stronger upside there.
Speaker 5: That's been the story of this entire earning season. I
Speaker 5: do want to look at the sort of non AI
Speaker 5: part because, as you know, Apple and Monday and the iPhone,
Speaker 5: did we learn anything new about that business?
Speaker 8: Yes, and perhaps the trajectory of it not.
Speaker 13: Really from along with Broadcom and Qualcom and other chip players,
Speaker 13: we have not seen significantly stronger than seasonal outlooks coming
Speaker 13: into this iPhone launch, despite the reports that we have
Speaker 13: been hearing that Apple iPhone shipments are preparing for five
Speaker 13: to ten percent higher shipman volume this year now, twenty
Speaker 13: twenty three was a down year, so we do expect
Speaker 13: volumes to be higher because of that, but we are
Speaker 13: not seeing anything out of ordinary from at least Broadcom.
Speaker 6: Yesterday. I want to go to what sort of truest
Speaker 6: securities are saying. I hope to name other people on
Speaker 6: the street, congen because your expertise is so important to us,
Speaker 6: But he's saying, basically, it's unpredictable. It's a lumpy when
Speaker 6: it comes to AI revenue growth. Because as and when
Speaker 6: we're going to get customers named, we were thinking there
Speaker 6: might be more. When will we hear of actual customers
Speaker 6: warning that chips made by Broadcom?
Speaker 13: Well, at this point it's not clear, but you know
Speaker 13: the fact about being it lumpy, that's true. However, does
Speaker 13: that should not take away anything from the strength of
Speaker 13: the growth.
Speaker 8: We expect both the.
Speaker 13: Ask and the connectivity businesses to grow even stronger next year.
Speaker 13: And remember these are still very highly concentrated, few customers
Speaker 13: three at this point, so you are going to expect
Speaker 13: lumpiness from quarter to quarter as they adjust their timing
Speaker 13: of purchases and buildouts.
Speaker 6: We asked you yesterday a slightly unfair question, but I
Speaker 6: ask it to you again because you are a fundamentally
Speaker 6: driven person. But the market just seemed to be so
Speaker 6: exuberant around these AI names. We've got a deja vu.
Speaker 6: Nvidia sold off when its numbers were good, broadclm doing.
Speaker 13: The same exactly. I mean, what we're seeing is even
Speaker 13: solid or strong reports are not strong enough because the
Speaker 13: expectations are just stronger higher than that. But I just
Speaker 13: remind people to go back to fundamentals and see. We
Speaker 13: saw the same thing again from Broadcom, we saw from
Speaker 13: in media. The demand signals keep going stronger and stronger.
Speaker 13: Their bookings and backlocks continue to increase. So there's no
Speaker 13: such real fundamental risk factors here, especially when it comes
Speaker 13: to AI chips.
Speaker 6: Kanjan Sabani, thank you for your expertise being meg Intelligence.
Speaker 6: Now let's talk about another chip name. Intel is considering
Speaker 6: options for its stake and it's struggling automated driving systems
Speaker 6: to provide a Mobili as part of a major strategy overhaul.
Speaker 6: That's all according to sources who say the chip maker
Speaker 6: could offload just some of its eighty eight percent holding
Speaker 6: a Mobili on the public market or via sale to
Speaker 6: a third party shares a mobili as you can see,
Speaker 6: falling to a record loan in King joining us. The
Speaker 6: nuance is important here Ian, but this is a company
Speaker 6: struggling to do something to change its poor fortunes.
Speaker 3: Yeah. Two things here.
Speaker 4: First one is, let's put this in a world context.
Speaker 4: Right Intel needs money to execute on.
Speaker 3: This ambitious plan that it's put together.
Speaker 4: Doesn't really have that amount of money from its operations
Speaker 4: right now, is having to scale back some of the ambitions.
Speaker 4: And it's also looking at, you know, other parts of
Speaker 4: what it has and whether those can be monetized in
Speaker 4: some way or find better value in some way. MOBILEI
Speaker 4: would obviously be a part of that, and it's already
Speaker 4: made moves in that direction, selling a stake in the
Speaker 4: IPO and then selling a further steak.
Speaker 3: But and the important but here is if you look
Speaker 3: at where MOBILEI is a relative to what Intel.
Speaker 4: Paid, which is considerably lower, it wouldn't make sense to
Speaker 4: just be dumping it right now unless you could find
Speaker 4: an individual seller that would be willing to pay the
Speaker 4: price that you paid or better.
Speaker 8: There are some basics that we should go over.
Speaker 5: I think you know, Intel has been over a period
Speaker 5: of time chipping away at its stake in mobili anyway.
Speaker 5: But our understanding from sources in right is that Intel's
Speaker 5: looking at a lot of different things, and I think
Speaker 5: on the Mobilize side, you know, their board's got to
Speaker 5: get together at some point embrace for something that might
Speaker 5: potentially happen.
Speaker 2: Yeah.
Speaker 4: I mean again, putting Mobile in the general context of
Speaker 4: Intel is probably the safest thing to do.
Speaker 3: Here, what used to be called Terror another Intel acquisition.
Speaker 4: They've already started to move that towards independent status. There
Speaker 4: are other business divisions within Intel that perhaps aren't as
Speaker 4: central to the care of what it does.
Speaker 3: And you know, we had this FO this week talking
Speaker 3: at a conference.
Speaker 4: We had the CEO last week talking at a conference
Speaker 4: on They're saying, look, we're looking at these things.
Speaker 3: We want to be streamlined.
Speaker 4: We want to be quicker to respond to the circumstances
Speaker 4: that we're in and be able to make the kind
Speaker 4: of decisions and rapidly deploy capital to make sure we
Speaker 4: take hold of opportunities. At the same time, Mobilized not
Speaker 4: in the great shape the old terror business is and
Speaker 4: the fantastic shape. So it's a difficult set of circumstances
Speaker 4: and they've not really made concrete decisions yet, is what
Speaker 4: we've been made to understand.
Speaker 6: I mean, this is a bad time to have to
Speaker 6: offload Mobile. I when shares have been off by what's
Speaker 6: seventy percent year to date, can you remind us of
Speaker 6: the issues that are going on there?
Speaker 14: Yeah?
Speaker 4: I mean, anybody who has been playing into the auto
Speaker 4: market going back two three years ago, was you were
Speaker 4: a bell of the ball.
Speaker 3: You were fantastic.
Speaker 4: The whole world was going ev the whole world was
Speaker 4: going self driving, we were going to have robot taxis
Speaker 4: on every street corner. Clearly, what's happening and this, whether
Speaker 4: your mobilize, whether you're Intel, whether you're in video, whether
Speaker 4: you're anybody, that hasn't happened at the pace with which
Speaker 4: some had projected. And Mobile has been a victim of
Speaker 4: that kind of up and down cycle, and if you
Speaker 4: look at you know it clearly has had a bad
Speaker 4: particularly in the first quarter earnings.
Speaker 3: Reports that have obviously dim sentiment considerably.
Speaker 4: Long term, everybody believes in the direction that they're heading
Speaker 4: in and believes that they have an important role to play,
Speaker 4: but right now they're into.
Speaker 5: Spot Bloombergsine and King along with the team reporting so
Speaker 5: deeply on this thank you. In the chip sector, TSMC
Speaker 5: achieved production yields and it's Arizona facility on par with
Speaker 5: established plants back home, an early indicator that its Marquee
Speaker 5: US project is on track to achieve its targets. That's
Speaker 5: according to a source, TSMC had said it started engineering
Speaker 5: wafer production in April with advanced four nanometer process technology,
Speaker 5: and we've been tracking their progress there. I think, Caroline,
Speaker 5: we should go back to what's happening in markets. And basically,
Speaker 5: since we got those comments from fed Waller, bonds have rallied,
Speaker 5: and despite a moment of relief, the story is still
Speaker 5: equities under pressure with that pressure coming from technology, I think.
Speaker 6: Yeah, if you're looking at some of the key points
Speaker 6: drags on the SMP, it is currently no Surprise in
Speaker 6: video dragging us down by some fourteen points. We've got
Speaker 6: Broadcom dragging us lower. But then who's who of the
Speaker 6: mags seven, Amazon, Microsoft, Tesla, Google, Meta, Apple, No wonder
Speaker 6: you're seeing such a pressure across the board on the benchmarks.
Speaker 6: And then this has been an ugly week. More broadly,
Speaker 6: then aw's that one hundred having its worst week since
Speaker 6: twenty twenty two.
Speaker 5: And real quick just bitcoin for what it's worth, continuing
Speaker 5: this slide down more than three percent below fifty five
Speaker 5: thousand US dollars for token. Good job getting that up, guys,
Speaker 5: I appreciate it. I went a little bit rogue there.
Speaker 5: But there's a lot happening in real time on the week,
Speaker 5: as you know, Carro a tough week broadly for risk.
Speaker 6: Assets totally and volumes actually up on the SMP for
Speaker 6: this Friday. But coming up, we want to dig into
Speaker 6: the micro news again. A UK watchdog is sending a
Speaker 6: warning to Google saying it abuses one area of its
Speaker 6: business that accounts to eighty percent total revenue. You can
Speaker 6: guess what it is. This is a blood technology. Now
Speaker 6: the Biden administration is preparing strict to export rules for
Speaker 6: quantum computing and semiconductive products. It's once again taking aim
Speaker 6: at China Room Megs Mackenzie Hawkins joins us for more
Speaker 6: and this is getting ever clutting edge. Mackenzie right.
Speaker 14: So the rules that we saw the Baden administration released
Speaker 14: yesterday as an interim final rule, meaning there's still a
Speaker 14: comment period, nothing is quite set in stone. Are trying
Speaker 14: to take aim at sort of the next generation of technologies,
Speaker 14: looking at a chip architecture called gate all Around that's
Speaker 14: expected to be widely introduced into the market next year,
Speaker 14: as well as cutting edge quantum computing and computer components,
Speaker 14: sort of trying to align with countries around the world
Speaker 14: that have also introduced similar or in some cases identical
Speaker 14: rules and by doing so limit themselves from the impact
Speaker 14: of US export control.
Speaker 11: So we have this sort of global coalition forming.
Speaker 14: It includes the US, Japan, and the Netherlands, which are
Speaker 14: home to key countries and the chip supply chain, as
Speaker 14: well as other allies such as the UK, Canada.
Speaker 8: And Italy. Mackenzie and your story.
Speaker 5: You quote Alan Estevez, who runs the Commerce Department's Bureau
Speaker 5: of Industry and Security, and in the quote he talks
Speaker 5: about the alignment of controls being I'm going to read
Speaker 5: it frankly difficult for our adversaries. So adversaries is different
Speaker 5: kind of words competitives. Can you just explain the strategy
Speaker 5: from the US.
Speaker 14: So a lot of the US measures on chips and
Speaker 14: other emerging technologies are specifically geared towards China as well
Speaker 14: as Russia, North Korea and Iran. So we're talking about
Speaker 14: geopolitical adversaries as opposed to just cutting edge technological rivals.
Speaker 11: The US has companies that of.
Speaker 14: Course have significant foreign rivals headquartered in US allied countries,
Speaker 14: and this is not trying to get at those companies,
Speaker 14: but rather at the ability of particularly Beijing, to develop
Speaker 14: cutting edge technologies that Washington warriors could run China a
Speaker 14: military edge. And the US has been leading this push
Speaker 14: for several years. But you know, while this particular rule
Speaker 14: is an example of pretty significant multilateral alignment, there are
Speaker 14: also really difficult measures that the US is asking allied
Speaker 14: governments to impose. Who are worried about retaliation from China
Speaker 14: or don't necessary only buy into the same degree of
Speaker 14: national security and geopolitical threat felt here in DC.
Speaker 5: Bloomberg's Mackenzie Hawkins with more important reporting, thank you very
Speaker 5: much from China to the United Kingdom. Britain's Competition and
Speaker 5: Markets Authorities says Alphabet's Google is abusing its dominant position
Speaker 5: in advertising technology, paving the way for potential finds and
Speaker 5: changes to one of Google's most lucrative businesses. Bloomberg's Catherine
Speaker 5: Gammill joins US and reported on the news the CMA
Speaker 5: what is the basic conclusion that they've reached.
Speaker 1: Yes, So today the CMA announced its statement of objections
Speaker 1: that it's sent to Google. So these are preliminary findings
Speaker 1: that Google has broken competition law here by using its
Speaker 1: dominant market possession and the add tech sector to favor
Speaker 1: its own services. So these preliminary findings are still at
Speaker 1: the primary stage, but this basically means that Google's using
Speaker 1: its powers to take the competition away, and it means
Speaker 1: that you know, UK advertisers and other services are losing out.
Speaker 6: Because of that. The CMA, it's got tathe, right, Catherine,
Speaker 6: kind of exists some pressure.
Speaker 1: Yeah, it does have teethe and we've seen that with
Speaker 1: its recent probes over the years, and you know, it's
Speaker 1: grown prominence. I think that it's really interesting that now
Speaker 1: the UK has joined the EU and the US and
Speaker 1: these similar probes. And on Monday we've got the DJ's
Speaker 1: case against Google for ad tech and last year as
Speaker 1: well in Europe we got these charges laid out on
Speaker 1: the ad tech sector. So, you know, Google is in
Speaker 1: a bit of trouble here because it's got three major
Speaker 1: global regulators that are on its back for this.
Speaker 6: It's in trouble because also it could be fined quite
Speaker 6: a lot of money. I just want to go into
Speaker 6: what Google's actual responses said, Catherine, what have they told you,
Speaker 6: because ultimately they dispute it. Yeah, one hundred percent.
Speaker 1: So Google's response today was that the cmea's findings are
Speaker 1: based on flawed understanding of the markets.
Speaker 6: It said, it's this agreed and it will respond to this.
Speaker 1: So at this stage with the statement of objections, Google
Speaker 1: can respond and then the cme will then come to
Speaker 1: a final conclusion from a separate panel. After that, in
Speaker 1: the UK, findings from these sorts of investigations it can
Speaker 1: be up to ten percent of global turnover.
Speaker 6: That's a really extreme end.
Speaker 1: Or they can also, you know, offer other sort of
Speaker 1: remedies that might be able to solve this issue.
Speaker 6: Whatever issue have got.
Speaker 1: I mean, it is worth bearing in the mind of
Speaker 1: the US and the EU have both said that they
Speaker 1: would like divestments of.
Speaker 6: Google's ad tech as well.
Speaker 5: I've heard this before, sort of Google basically saying, you
Speaker 5: don't understand the market that you're trying to address, but
Speaker 5: there are other participants in the market. I'm assuming the
Speaker 5: CMA spoke to the advertisers themselves what's their position.
Speaker 8: In all of it.
Speaker 1: Yeah, so, I mean this has been a long run
Speaker 1: in investigation from the CME. These competition sort of probes
Speaker 1: can go on for years. This one has been going
Speaker 1: on for two years, and the CMA does talk to
Speaker 1: a broad range of market participants. We didn't get specifics
Speaker 1: on that today, but that's something that they've they've brought
Speaker 1: up previously in their studies on digital advertisement and other
Speaker 1: things as well.
Speaker 8: Bloomberg's Catherine Gemmel out of London, thank you very much.
Speaker 5: Let's get to another story that we're watching, and that's
Speaker 5: dark Trace CEO Poppy Gustaffson will be leaving the British
Speaker 5: cybersecurity firm effective today. This is the company gets absorbed
Speaker 5: by pe firm Toma Bravo. Gustavhfsen co founded dark Trace
Speaker 5: more than a decade ago and helped to position the
Speaker 5: company for its IPO in twenty twenty one, as well
Speaker 5: as its ultimate sale to Toma Bravo in April.
Speaker 6: Apple has greenlitter version of ten cents we chat app
Speaker 6: ahead of the company's I Phoned sixteen debut. Now the
Speaker 6: tech giant approved and update that as new features like
Speaker 6: moments and live streaming to the app. That's according to sources.
Speaker 6: The approval taps down some speculation of a dispute between
Speaker 6: the two companies over app store fees, with many believing
Speaker 6: it could have smoothalled to a potential WeChat ban from
Speaker 6: the latest iPhones ed.
Speaker 5: One of the most well read stories on bloomberg dot
Speaker 5: com this morning, Let's talk more about Apple. Apple is
Speaker 5: holding a product launch event at its head courses on Monday,
Speaker 5: where it's set to announce details of the iPhone sixteen
Speaker 5: and some other new devices. Bloomberg's Mark Gunman has already
Speaker 5: reported on and told us what to expect. But it's
Speaker 5: work going back to the iPhone sixteen. What's different? That's
Speaker 5: the question every year, what's actually going to make me
Speaker 5: upgrade this time around?
Speaker 15: Well, if you have an iPhone fifteen Pro or Promax,
Speaker 15: I don't necessarily think you're going to upgrade this year
Speaker 15: unless you get a pretty good deal or you're on
Speaker 15: an upgrade path.
Speaker 12: Right.
Speaker 15: The changes here are going to be on the more
Speaker 15: incremental side. We're going to focus on Apple Intelligence, which
Speaker 15: of course the fifteen Pro in promacs will already support,
Speaker 15: and then there's also going to be some major upgrades
Speaker 15: on the camera. The ultra wide lens is.
Speaker 6: Going to move to a forty eight megapixel to match.
Speaker 11: The standard lens.
Speaker 15: But if you're coming from an older phone, if you're
Speaker 15: coming from a fourteen or earlier, getting Apple Intelligence, getting
Speaker 15: those new cameras, getting the Titanium, those who are going
Speaker 15: to be some nice upgrades. There's going to be some
Speaker 15: new callers as well. The most significant feature is going
Speaker 15: to be a new camera button on the right side
Speaker 15: of the phone, next below the power button that you'll
Speaker 15: be able.
Speaker 8: To use take pictures and videos.
Speaker 15: It's going to be capacitive, so you can swipe on
Speaker 15: it to zoom in and out, move between still and video.
Speaker 15: So that's going to be a nice upgrade there. So
Speaker 15: it's really all about AI and the camera. The bigger changes,
Speaker 15: of course, will come to the Apple Watch.
Speaker 8: And the AirPods.
Speaker 6: Bless you, Mark and just talk us about the air
Speaker 6: pods and the Watch. What do we anticipate there, how
Speaker 6: big a change.
Speaker 15: So this is going to actually be the ten year
Speaker 15: anniversary to the date of the original Apple Watch introduction
Speaker 15: in twenty fourteen, and you're going to see a new
Speaker 15: series ten Watch. It's going to have displays, it's a
Speaker 15: little bit bigger. You're going to see faster processors. You're
Speaker 15: going to see sleep apnea detection as a major new
Speaker 15: health feature. You're also going to see that sleep appne
Speaker 15: detection come to the Apple Watch Ultra, though that will
Speaker 15: retain the same design that's been running since the introduction
Speaker 15: in twenty twenty two. AirPods Apples revamping the low end
Speaker 15: of the line, so you're going to see a new
Speaker 15: entry level and mid tier AirPods bringing noise cancelation down
Speaker 15: the line from the pro models for the first time.
Speaker 15: You're going to see quite a boost there to Apples
Speaker 15: for Wearable's business between the new watches and the new AirPods,
Speaker 15: and I think that's going to be quite exciting for
Speaker 15: customers who have been waiting for a new version of
Speaker 15: the AirPods.
Speaker 6: It happened, Mark German, we embrace ourselves. Thank you. Let's
Speaker 6: also just check in on these markets. It is an
Speaker 6: ugly finish to an ugly week, and Nvidia the biggest
Speaker 6: points drag on the benchmarks right now we're seeing off
Speaker 6: by more than five percent. We are now just a
Speaker 6: two and a half trillion dollar company. Folks. Broadcom is
Speaker 6: off by nine percent, and this is the worst day
Speaker 6: for Wallcom since March twenty twenty.
Speaker 5: Socks also ugly, s and P five hundred down the
Speaker 5: most since I think March of twenty three. Na's that
Speaker 5: one hundred worse week since November of twenty two, in
Speaker 5: Vidia having its worst week since September of twenty twenty two.
Speaker 5: The story we're writing about Carr, though, is that you know,
Speaker 5: technology is under pressure in spite of and on top
Speaker 5: of the economic data in the Fed speet we got today.
Speaker 8: Ugly, I think is a fair word to use.
Speaker 6: And put it into context. These are stocks that have
Speaker 6: run up more than a one hundred percent over the
Speaker 6: course of the year to date, so we have to
Speaker 6: acknowledge that. But when you get a four hundred and
Speaker 6: thirty three billion dollar erosion in market cap in five
Speaker 6: days alone, that matters to everyone who has a four
Speaker 6: at one K who is exposed to these sorts of benchmarks.
Speaker 8: Just one quick comment on Nvidia.
Speaker 5: Look at the number of retail investors that have gone
Speaker 5: into that name and then think about that on a
Speaker 5: week or a day like today.
Speaker 6: Incredible and those that are two x leveraged. That does
Speaker 6: it for this edition. Of Bloomberg Technology have.
Speaker 8: To say, what a Friday show. It's been. Recap on
Speaker 8: the podcast.
Speaker 5: You know where to find it, Apple, Spotify, iHeart and
Speaker 5: of course we publish it all over the Bloomberg platforms.
Speaker 5: Thank you to everyone in New York and in San Francisco.
Speaker 5: This is Bloomberg Technology.