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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. Bloomberg Tech is a

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Speaker 1: live from coast to coast with Caroline Hyde in New

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Speaker 1: York and Eva low in Sent Francisco.

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Speaker 2: This is Bloomberg Tech coming up. Microsoft, Meta, Google, and

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Speaker 2: Amazon all report earnings when the market closes. Blockbuster AI spending,

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Speaker 2: but is there Blockbuster AI sales growth?

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Speaker 3: Plus?

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Speaker 4: We continue to beat the earnings drum with the CEO

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Speaker 4: of SOFI, which just released its own results. That conversation

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Speaker 4: later this hour.

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Speaker 2: And Elon Musk is set to continue testifying today in

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Speaker 2: his suit against Open Ai and its co founders, Sam

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Speaker 2: Altman and Greg Brockman over the startup's pivot from.

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Speaker 3: A charity to a for profit business.

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Speaker 4: First, we talk about the businesses that are publicly traded

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Speaker 4: ed and Ashley some resilience coming from the Nazak one hundred.

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Speaker 4: We're up five ten percent. There is a wall of

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Speaker 4: warrior and anticipation today. We know that we have a

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Speaker 4: FED decision not to mention the inflation pressure of oil

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Speaker 4: once again showing up today. There is, as we know,

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Speaker 4: a standstill on the straight off for moves between the

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Speaker 4: US and Iran. However, all fixated on one thing and

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Speaker 4: one thing earning in his earnings.

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Speaker 2: Yeah, four pm Eastern time, one pm Pacific time. Some

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Speaker 2: people this calendar is scary. To others, it's deeply exciting.

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Speaker 2: Four of the biggest technology companies with a big focus

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Speaker 2: across all of them on capital expenditures, the spending on

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Speaker 2: AI infrastructure in particular. But a lot of people now

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Speaker 2: want to see something coming out the other side. Growth

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Speaker 2: for three of those names, Microsoft, Alphabet, and Amazon. It's

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Speaker 2: cloud growth, simple for Meta just overall revenues advertising made

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Speaker 2: better because of AI.

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Speaker 4: Carroc Yeah, what is the adoption of AI? What is

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Speaker 4: the return on AI investment? We look at this with

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Speaker 4: just a mere eighty seconds for the four tech juggernauts

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Speaker 4: of Microsoft, Alphabet, Meta and Amazon to release results that

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Speaker 4: will decide maybe the fight of this month's five trillion

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Speaker 4: dollar rally that we've seen on the SMP. That's schedubly

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Speaker 4: most common rhyinicky to talk about the high stakes trade

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Speaker 4: heading into the bell today. Boy, just talk us around

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Speaker 4: the eighty seconds because we've never already seen these full

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Speaker 4: bohemoths will come at once.

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Speaker 3: Yeah, it's true.

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Speaker 5: So if everything goes according to plan and everyone reports

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Speaker 5: around the same time, that they did last quarter. We're

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Speaker 5: going to get the four biggest hyper scalers reporting earnings

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Speaker 5: in eighty seconds. That's going to be a flurry of

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Speaker 5: the you know, excitement activity on our desk especially, And

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Speaker 5: what we're really looking for here is how investors are

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Speaker 5: reacting to the numbers that come out right at you know,

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Speaker 5: when they report earnings at these headlines. Top of mind

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Speaker 5: obviously are going to be capital expenditures and then how

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Speaker 5: those are balancing out with revenue growth from AI and

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Speaker 5: cloud growth for the companies you know that have large

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Speaker 5: cloud businesses. And there's so much at stake here. I mean,

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Speaker 5: these are some of the biggest you know stocks in

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Speaker 5: the S and P five hundred and options data is

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Speaker 5: showing that there's seven hundred and fifty pillillion dollars of

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Speaker 5: market value sort of on the line tonight. As investors

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Speaker 5: you know, react to price swings.

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Speaker 2: Common how the shares of these four companies react really

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Speaker 2: matters for markets. Broadly taught me through this chart right

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Speaker 2: the market bottomed in March, and what we're looking at

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Speaker 2: if you strip out in video alphabet, Microsoft, Amazon have

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Speaker 2: all been huge factors in the rally We've seen inequity

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Speaker 2: markets to this point.

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Speaker 3: Yeah.

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Speaker 5: I mean, the thing that's been so interesting this year

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Speaker 5: is we've seen a lot of breadth right coming back

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Speaker 5: into the market. But I think last month or this

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Speaker 5: past month has shown us overall that tech stocks are

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Speaker 5: still the most important part of the S and P.

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Speaker 5: And that's really what drove us back to record highs.

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Speaker 5: There's just so much money in these stocks. So you know,

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Speaker 5: when we have so many reporting at once, there's the

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Speaker 5: huge potential for huge market moves because there's so much

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Speaker 5: market value just represented in these companies. And it's not

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Speaker 5: just the hyperskillers. And we have Qualcomm tonight as well.

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Speaker 5: We'll get Broadcom in a few weeks, and then tomorrow

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Speaker 5: we have Apple. So these are the biggest companies in the.

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Speaker 3: S and P five hundred.

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Speaker 5: They are the most important names in the AI trade,

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Speaker 5: and so they're very very.

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Speaker 2: Important, boom, most common Ryan, OK, thank you very much.

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Speaker 2: Going into tonight, it's still all about Capex.

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Speaker 6: The question is whether Meta and Amazon and Google will

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Speaker 6: need to raise more net gabitol in order to support

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Speaker 6: this level of demand by investing in gapex. So I

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Speaker 6: think that it's going to be viewed negatively unless we

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Speaker 6: see some material inflection in their top line growth.

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Speaker 2: Our next guest believes AI demand is now verifiable at

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Speaker 2: every layer of the stack. Natalie Gallaher, principal economists and

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Speaker 2: director at Board, joins us. Now, pretty simple equation, isn't

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Speaker 2: it capital expenditures in what's coming out the other side

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Speaker 2: in terms of revenue growth? How do you see that

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Speaker 2: playing out in our economy right now?

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Speaker 7: This is a really challenging point in time for the

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Speaker 7: economy because the global macroeconomic backdrop is one of increasing uncertainty.

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Speaker 7: We have the Strait of Hormos, which is still struggling

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Speaker 7: to act as a global energy artery. We have a

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Speaker 7: blockade that has escalated from having a bit of leakage

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Speaker 7: to being fully structural, and we have the economic impacts

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Speaker 7: from that hitting right at the time where we're getting

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Speaker 7: these massive releases. So the backdrop is absolutely fascinating. The

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Speaker 7: cost structure is inherently changing, and so there's going to

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Speaker 7: be quite a bit of demand on these hyperscalers to

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Speaker 7: continue to deliver.

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Speaker 2: Nati, I want you to explain that a little bit further.

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Speaker 2: Let's bring up what the capital expenditures for this year

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Speaker 2: are of those four big names, right, they are at

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Speaker 2: those levels because they would argue that's what's required to

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Speaker 2: build the infrastructure to meet the demand that's out there

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Speaker 2: on AI. But with the Strait of Horror moves, we've

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Speaker 2: learned about the supply chain. You're basically saying we're in

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Speaker 2: a higher cost environment now, so that capital expenditure is

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Speaker 2: also impacted by the higher cost base of what it's

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Speaker 2: being spent on.

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Speaker 7: Explain it, Yeah, absolutely, I mean part of the cost

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Speaker 7: basis is transitory, right, so if the Strait of Hormose

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Speaker 7: reopened tomorrow, some of that volatility in input prices and

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Speaker 7: energy it would come back down to more of an equilibrium.

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Speaker 3: Now.

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Speaker 7: Part of it is absolutely structural though as well, and

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Speaker 7: that's what we really have to account for in the

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Speaker 7: changing cost side of the equation. We have LNG and

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Speaker 7: helium production that is taken offline for months too years.

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Speaker 7: We have an added policy layer as well with the

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Speaker 7: sulfuric X acid export band from China going into effect

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Speaker 7: May first, And we also have premiums on key logistical

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Speaker 7: routes that have been repriced, and history tells us those

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Speaker 7: premiums don't go back to where they were in terms

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Speaker 7: of pre conflict, and so when we talk about overall

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Speaker 7: CAPEX investment, the cost side has inherently changed. Even if

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Speaker 7: the Strait of Hormuz reopens again tomorrow, we're not going

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Speaker 7: back to I twenty twenty six pricing.

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Speaker 4: And yet demand from what we understand, remains resolute. That

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Speaker 4: we can factor in some of the reporting that was

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Speaker 4: around open AI yesterday and whether or not it's meeting

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Speaker 4: its own internal expectations for adoption of its use and

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Speaker 4: adoption of its products.

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Speaker 3: But what we.

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Speaker 4: Seem to hear time and time again is that Microsoft

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Speaker 4: cannot keep up with the sheer demand for its Azual

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Speaker 4: product and indeed for the compute, we're seeing bottlenecks in

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Speaker 4: memory and storage. Natalie, do you think we'll see the

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Speaker 4: productivity gains that we need to see to vindicate this

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Speaker 4: level of CAPEXY?

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Speaker 7: Know, it's been fascinating so far. We have seen a

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Speaker 7: bit of productivity movement. We've also seen industries that are

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Speaker 7: more immediately exposed to AI. We've seen movement there that

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Speaker 7: absolutely implies we can continue to see the productivity gains

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Speaker 7: we need to see. Now, a broader question really being

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Speaker 7: raised top of mind for myself is with this new

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Speaker 7: cost structure. Can it enable the continued infrastructure build out

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Speaker 7: to support at the utilization trends? And I'm hoping to

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Speaker 7: get some answers in the forward guidance of the releases tonight.

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Speaker 4: Yeah, Natadie, if we get forward guidance that still says yep,

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Speaker 4: we're sticking to these numbers. We're currently showing that almost

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Speaker 4: six hundred and fifty billion dollars is what we're anticipating

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Speaker 4: just these four names, Microsoft, Meta, Alphabet, and Amazon to

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Speaker 4: spend on capital expenditure in their fiscal twenty twenty six. Now,

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Speaker 4: where could that come into some sort of logjam because

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Speaker 4: we're hearing from when we spoke to Andy Jasse it's

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Speaker 4: a worry about power. When we think about Alphabet's exposure

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Speaker 4: or ability to get his hands on memory. That is

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Speaker 4: something that analysts are bringing up today. Where do you

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Speaker 4: think this could be not put to work as it's

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Speaker 4: needed to.

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Speaker 7: You know, I'm going to be looking for softness and

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Speaker 7: cohorts that are more exposed to the macro economic headwinds.

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Speaker 7: So thinking Asia facing cloud deals right, European power grid deals,

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Speaker 7: we should see some hints that even if the forward

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Speaker 7: guidance remains persistent there should be some signals right that

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Speaker 7: maybe that's not a completely repair of.

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Speaker 2: Bet Natalie, we have a FED decision today. I'm only

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Speaker 2: just going to state that because it's not on our calendar,

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Speaker 2: but it's on many other people's calendar. We'll put it

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Speaker 2: to one side. The executives on the calls tonight are

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Speaker 2: going to argue that AI is real and it's doing

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Speaker 2: very meaningful things in the real world for the economy.

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Speaker 3: Do you see any evidence of that? Yes?

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Speaker 7: Absolutely, I think we're in the early stages right, So

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Speaker 7: what I see in the data is that AI is

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Speaker 7: augmenting workflows rather than replacing employment. Right now, we do

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Speaker 7: see productivity gains. Are we seeing productivity gains to the

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Speaker 7: extent that validates the current narrative from these CEOs?

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Speaker 3: Maybe?

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Speaker 7: Maybe not. When we start talking about the Federal Reserve,

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Speaker 7: right the hope is that these productivity gains can give

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Speaker 7: us an environment where we're actually in a lower rate,

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Speaker 7: longer term environment because of those productivity gains. So absolutely,

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Speaker 7: tying back to the Federal Reserve and what a rate

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Speaker 7: sensitive sector wants is lower rates.

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Speaker 4: Nason Gallia, Principal economist and Directorate Board thanks much of

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Speaker 4: your time today coming up with sticking with earnings and

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Speaker 4: after SOFI is released this morning, shares are under pressure

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Speaker 4: and then some we're going to talk to the CEO

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Speaker 4: on loan origination, on guidance, all about next this is

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Speaker 4: blue bed Tech. Let's take a look at shares of

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Speaker 4: SOFI right now, in fact, down the most in a year.

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Speaker 4: We're off by thirteen percent, so the biggest move in

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Speaker 4: a year, despite the company reporting strong loan origination. Let's

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Speaker 4: talk through all of this to the SOFI CEO, Anthony Notto,

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Speaker 4: and look, there was real strength in the quarter that

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Speaker 4: you reported. An analysts are saying that time and time again,

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Speaker 4: particularly in loan origination across the board. But well many

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Speaker 4: are saying, look, you uncharacteristically didn't raise your revenue Outlook

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Speaker 4: what held you back from doing that?

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Speaker 8: Yes, we had a record quarter, actually saw excelrating revenue

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Speaker 8: growth of forty one percent year of your growth, and reported.

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Speaker 9: Over a billion dollars of revenue.

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Speaker 8: Our view was we went into the year with a

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Speaker 8: view that we'd have at least two rate cuts and

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Speaker 8: that was one of the key assumptions to our outlook

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Speaker 8: for revenue guidance.

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Speaker 9: And while we beat the quarter.

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Speaker 8: We're not raising for your guidance because we now expect

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Speaker 8: no rate cuts and that will be a more difficult

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Speaker 8: environment to operate in than if we had two rate cuts.

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Speaker 9: The business is performing incredibly well.

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Speaker 8: I'm not sure there are many companies that are generating

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Speaker 8: over one billion dollars of revenue with forty one percent

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Speaker 8: growth year of year and thirty one percent EBADAM margins.

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Speaker 8: We like to look at the rule of forty, which

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Speaker 8: is revenue growth plus Ebadam margins, and we've had more

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Speaker 8: than a rule of forty for eighteen consecutive quarters, including

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Speaker 8: this quarter, and we're still forecasting that. But we saw

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Speaker 8: no reason to raise guidance in this environment given the

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Speaker 8: uncertainty as it relates to markets and interest rates, as

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Speaker 8: well as global issues with the Middle East and the

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Speaker 8: pressure on oil and inflation, generally a.

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Speaker 4: Lot of macro headwinds that you're navigating. What about in

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Speaker 4: particular private credit, Anthony, because I'm looking at the slowan

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Speaker 4: volume in the loan platform business. You said it's not

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Speaker 4: because of that, but still as to kind of.

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Speaker 3: Worried about it.

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Speaker 8: Yeah, I think generally when you don't raise guidance, you

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Speaker 8: give something you give people something to worry about. So

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Speaker 8: we had record personal loan originations, a twelve point nine

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Speaker 8: billion dollars records, student loan and financing originations, and record

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Speaker 8: home loans.

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Speaker 9: In fact, our home loans business.

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Speaker 8: Doubled the year of year, as did our student loan

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Speaker 8: and financing business. The loan platform business is one where

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Speaker 8: we produce loans for other partners, and that business was

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Speaker 8: very strong. It wasn't as strong as it was prior

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Speaker 8: quarters because we made the conscious decision to put more

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Speaker 8: of the loans we origiated on our bound sheet because

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Speaker 8: we had capital to do it. Those loans will produce

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Speaker 8: cash flow over the next three years, as opposed to

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Speaker 8: the loan platform business, where we just generate our revenue.

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Speaker 8: In this quarter, we're not seeing any issues with credit performance.

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Speaker 9: It's been quite strong. The concerns about private credit are

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Speaker 9: really not relative appropriate for our business.

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Speaker 8: Our partners in the loan platform business are buying consumer

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Speaker 8: unsecured loans from US, not financing companies with corporate debt.

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Speaker 2: Your goal is to kind of be this one stop

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Speaker 2: stop shot, particularly for.

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Speaker 3: The category of young and affluent.

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Speaker 9: Right.

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Speaker 2: We talk about that a lot with you on the program.

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Speaker 2: You didn't call out the economy this quarter, and forgive

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Speaker 2: me if I missed it in the call, you didn't

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Speaker 2: call out the economy, and a lot of people looking

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Speaker 2: at how solid credit quality signals are your borrows are

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Speaker 2: holding up. Would you tell me a little bit about

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Speaker 2: how you see the economy, but particularly people that are

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Speaker 2: young and people that are affluent.

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Speaker 8: Sure, we're not seeing any economic headwinds for our consumer.

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Speaker 8: As you mentioned, they're younger, they're mass affluent. We saw

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Speaker 8: very strong trends in spending through our debit exchange interchange revenue.

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Speaker 8: We also saw strong trends in investing or investing business

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Speaker 8: double on a year of year basis, and we're also

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Speaker 8: seeing strong trends and performance in our credit card So

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Speaker 8: as we think about the breadth of our businesses and

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Speaker 8: the activity that we see, we're seeing no slowan down

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Speaker 8: and consumer spending, consumer's ability to deliver the obligations they

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Speaker 8: have on their debt or their desire for more products

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Speaker 8: like invest So no issues whatsoever with our underlying consumer

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Speaker 8: or their profile. I think the concerns about AI creating

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Speaker 8: unemployment among white color workers is a lot of hype.

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Speaker 8: We're not seeing in any of our businesses.

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Speaker 2: You're a technology company, but you also have this goal

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Speaker 2: of being a top ten financial institution or so Bloomberg

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Speaker 2: Intelligence Rights.

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Speaker 3: You have that goal.

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Speaker 2: When you talk the team internally, how do you hold

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Speaker 2: yourself on milestones to get to that? When will you decide, Anthony,

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Speaker 2: that yeah, you know what, today we are a top

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Speaker 2: ten financial institution.

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Speaker 9: Sure to be a top ten finance institution. It's measured

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Speaker 9: by market cap.

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Speaker 8: We've seen a great increase in our valuation over the

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Speaker 8: last eight years that I've been here. When I arrived,

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Speaker 8: our capitalization was private, but the value of the company

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Speaker 8: was in the on a common stock basis, within the

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Speaker 8: two billion dollar range.

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Speaker 9: You know, we're now well.

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Speaker 8: Over twenty billion dollars of market cap, and so we're

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Speaker 8: on our way there. We've made great progress in that

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Speaker 8: eight years. We've taken our member base from six hundred

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Speaker 8: and fifty thousand members to fourteen point seven million this quarter,

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Speaker 8: our revenue from about two hundred and fifty million dollars

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Speaker 8: of revenue to last year over three point five billion,

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Speaker 8: and on our way to five billion twenty twenty six.

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Speaker 8: But ultimately we'll measure it based on market capitalization, and

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Speaker 8: I think we're in rare rarefied air, growing forty one

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Speaker 8: percent year of year with over a billion dollars of

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Speaker 8: quarterly revenue and as I mentioned, thirty plus percent even

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Speaker 8: down margins.

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Speaker 9: So it's just a matter of when that If.

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Speaker 4: We're looking at the twenty plus percent increasing the share

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Speaker 4: price over the last year, but today it's down by

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Speaker 4: three billion, does that frustrate you the day to day gyrations,

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Speaker 4: if that's how you're measuring yourself in terms of making

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Speaker 4: the top ten.

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Speaker 8: I think it's just the reality of the investment markets.

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Speaker 8: The markets do not like uncertainty. But not raising our

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Speaker 8: guidance for the full year, people think there's some degree

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Speaker 8: of uncertainty. While the outlook for the market is different

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Speaker 8: today than what it was when we gave guidance three

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Speaker 8: months ago. If the interest rates do actually come down,

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Speaker 8: we'll see a big pickup in our business. That would

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Speaker 8: cause us to be more bullish than we already are.

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Speaker 8: It's not like we're growing a very slow rate even

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Speaker 8: on our current guidance. Our current guidance calls for thirty

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Speaker 8: percent plus revenue growth and thirty percent margins. There just

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Speaker 8: aren't a lot of companies with a billion dollars of

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Speaker 8: quarterly revenue growing thirty percent with thirty percent margins. So

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Speaker 8: we're focused on two things, driving durable growth through product

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Speaker 8: innovation and brand building, and then.

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Speaker 9: Delivering great returns. And that's what we continue to do.

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Speaker 8: And so I understand why people are concerned about the

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Speaker 8: outlexis we're going to raise guidance. But the world is

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Speaker 8: changing every day around us. We're executing incredibly well. Our

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Speaker 8: goal is to generate escape velocity so that we're the

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Speaker 8: winner that takes most in the industry. As you mentioned,

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Speaker 8: we're in everything digital financial services app that's in place,

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Speaker 8: the brand building in place, the executions in place.

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Speaker 9: We just have to keep delivering it. Everything else will

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Speaker 9: take care of itself.

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Speaker 2: Anthony Notto, sofi see. Great to have you back on

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Speaker 2: the show. Thank you very much. Now coming up, Apple

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Speaker 2: plans an AI overhaul for its photo editing features.

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Speaker 3: We've got the details. Next, this is billion bag tech.

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Speaker 4: It's time now for talking tech and first up, moon

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Speaker 4: Pay has acquired Sodarts, an Israeli cryptosecurity startup, to launch

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Speaker 4: a new unit focused on institutional customers.

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Speaker 3: Now.

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Speaker 4: The new business will connect large audicial financial firms to

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Speaker 4: a variety of crypto and blockchain services. It's part of

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Speaker 4: what they call quote a unique inflection point in the

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Speaker 4: maturation of the digital asset ecosystem.

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Speaker 3: Plus, a group.

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Speaker 4: Of junior bankers tied to gruntwork build an AI tool

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Speaker 4: to end the drudgery a chools like formatting slide decks.

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Speaker 4: Their startup, Rogo, now valued at two billion dollars, promises

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Speaker 4: to automate the tedious data entry and long been a

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Speaker 4: write a passage on Wall Street and help financial firms

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Speaker 4: enter more markets. And moveshot focused VC firm a Clip

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Speaker 4: just had Meta's former VP of the Generator AI a

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Speaker 4: mere friend Call as its first ever chief AI officer.

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Speaker 3: Now fresh off for one point.

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Speaker 4: Three billion dollar fundraising, Clips is tapping friend Call to

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Speaker 4: help founders align their technical ambitions for AI.

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Speaker 2: In Apple's ownings on't out until tomorrow, but the iPhone

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Speaker 2: makers AI ambitions will be in focus for investors, and

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Speaker 2: we've got an update on that effort.

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Speaker 3: According to sources.

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Speaker 2: Apple is planning a major overhaul of the built in

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Speaker 2: photo editing feature powered by its Apple Intelligence platform. As

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Speaker 2: get the details, Bloomber's Mark German. I absolutely love this

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Speaker 2: reporting because every time we go down to Koubatino for

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Speaker 2: a new generation of iPhone launch and we read your reporting.

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Speaker 2: For lots of people, the camera's capabilities on an iPhone

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Speaker 2: are so important, but therefore so is the capability of

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Speaker 2: what you do with those photos taken with a camera.

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Speaker 2: So you're telling us that within the iOS ecosystem, big

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Speaker 2: changes are coming.

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Speaker 10: Yeah, this year is a very big year for both

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Speaker 10: the camera functionality and the photo app functionality on the iPhone.

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Speaker 10: You know, first things first, the iPhone eighteen Pro and

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Speaker 10: Pomax are going to have a major camera update, one

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Speaker 10: of the biggest camera hardware updates in the device's history,

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Speaker 10: using a new manual technology, a new manual sensor for

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Speaker 10: letting more light in. It's a pretty cool concept, a

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Speaker 10: cool idea that makes it more of like a.

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Speaker 9: Pro point and shoot camera.

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Speaker 10: On the software side, you're going to see a revamp

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Speaker 10: to the editing features in the photos app using Apple Intelligence.

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Speaker 10: So right now you have the cleanup tool, which means

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Speaker 10: you can, you know, take your finger circle something and

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Speaker 10: remove it from the image. It doesn't work particularly well,

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Speaker 10: but it is. There Three more AI features coming part

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Speaker 10: of iOS twenty seven that'll be announced in June. The

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Speaker 10: first is the ability to reframe a shot. So if

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Speaker 10: you shoot a picture in spatial you're able to move.

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Speaker 3: Photo to change the perspective.

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Speaker 10: So if you take a picture of a car and

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Speaker 10: it defaults to the front of the car, you can

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Speaker 10: tilt the photo so the perspective is perhaps the side

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Speaker 10: of the car, even towards the back of the car.

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Speaker 10: There's also in an ants feature coming. You press the

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Speaker 10: button and it uses AI to up the ante in

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Speaker 10: the image, improve the color, improve the pop. And then

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Speaker 10: there is expand, which is similar to a feature that

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Speaker 10: Google has had for years on Pixel and Android, where

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Speaker 10: you can drag the edges of the photo to increase

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Speaker 10: the size of the photo, and then it'll use generative

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Speaker 10: AI to fill in more content around the scene that

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Speaker 10: you captured with the camera.

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Speaker 4: Mark go there a feature that Google has had for

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Speaker 4: years in Pixel. It does feel again kind of Apple's

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Speaker 4: playing catch up here.

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Speaker 10: Oh, absolutely, Apple is playing catchup and it is a

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Speaker 10: bit of a reversal. When they announced Apple Intelligence, they

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Speaker 10: said they only had very limited functionality for AI related

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Speaker 10: to the camera and photos because they believe in art,

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Speaker 10: they believe in people taking make sure they don't want

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Speaker 10: to put AI at the center of that experience and

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Speaker 10: take away from natural photography. Now, maybe that was their

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Speaker 10: philosophy two years ago. I'd like to bet that that

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Speaker 10: philosophy was only something they came up with because they didn't.

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Speaker 9: Have those features.

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Speaker 10: Clearly, AI and being implemented into every part of technology,

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Speaker 10: into every smartphone operating system and every part of the

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Speaker 10: overall package, and so you're going to see them try

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Speaker 10: to put AI everywhere that they theoretically can.

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Speaker 4: Mark German fantastic reporting, Thank you very much. Indeed, and

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Speaker 4: here's another AI application that's picking up steam. Humanoid robots,

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Speaker 4: promising flexibility, the ability to learn and perform any tasks.

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Speaker 4: But with billions of dollars invested, can these robots deliver

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Speaker 4: real world value when they for short of the hype.

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Speaker 11: In the last few years, there's been a lot of

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Speaker 11: excitement about the potential of artificial intelligence, specifically with the

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Speaker 11: breakthrough of chat SHEPT, which is a huge paradigm shift

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Speaker 11: in the field of AI, and so that's the speculation,

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Speaker 11: it's the GPT moment for robotics.

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Speaker 4: Him more from the team at Bloomberg Originals and of

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Speaker 4: our own ed Ludlow's in it on today's episode of Primeer,

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Speaker 4: focused on humanoid robots. It's tonight Bloomberg at six pm

442
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Speaker 4: ET and on Bloomberg Originals at eight pm ED.

443
00:22:17,760 --> 00:22:20,120
Speaker 3: The robots are coming and coming up.

444
00:22:20,280 --> 00:22:22,320
Speaker 2: We're going to come back on what to expect from

445
00:22:22,359 --> 00:22:24,960
Speaker 2: big tech earnings. They are certainly coming after the market

446
00:22:25,000 --> 00:22:28,120
Speaker 2: close today, more than six hundred billion dollars of capex

447
00:22:28,160 --> 00:22:29,320
Speaker 2: commitments expected.

448
00:22:29,640 --> 00:22:32,200
Speaker 3: Where is the growth and the other side.

449
00:22:31,960 --> 00:22:34,440
Speaker 2: Of that equation when it comes to AI, and this

450
00:22:34,520 --> 00:22:37,000
Speaker 2: is what markets look like going into it with sort

451
00:22:37,000 --> 00:22:39,600
Speaker 2: of treading water and as that one hundred level chips

452
00:22:39,600 --> 00:22:41,600
Speaker 2: out performing, which has been a story for a while.

453
00:22:41,680 --> 00:22:46,040
Speaker 2: Bitcoin seventy six thousand, two hundred dollars halftime. This is

454
00:22:46,040 --> 00:23:00,119
Speaker 2: Bloomberg Tech. Welcome back to Bloomberg Tech. It's time for

455
00:23:00,200 --> 00:23:03,600
Speaker 2: today's big number. And the big number is more than

456
00:23:03,640 --> 00:23:07,440
Speaker 2: six hundred billion dollars. That's just across the four companies

457
00:23:07,480 --> 00:23:11,160
Speaker 2: that are reporting earnings after the bell, the big tech companies,

458
00:23:11,200 --> 00:23:13,600
Speaker 2: and it is the capex that they've either guided to

459
00:23:13,760 --> 00:23:17,760
Speaker 2: for this year or that Wall Street has estrapolated out

460
00:23:18,000 --> 00:23:20,720
Speaker 2: for the balance of the year. And we will keep

461
00:23:20,800 --> 00:23:24,960
Speaker 2: looking at this, but it is an extraordinary calendar after

462
00:23:25,000 --> 00:23:29,560
Speaker 2: one pm Eastern today, Microsoft, Meta, Amazon, and Alphabet, the

463
00:23:29,600 --> 00:23:33,760
Speaker 2: parent of Google, will report earnings within eighty seconds eight

464
00:23:33,840 --> 00:23:36,680
Speaker 2: zero seconds. That's based on the timing when they dropped

465
00:23:36,760 --> 00:23:42,560
Speaker 2: last quarter. Brace, Caroline, Brace, Alphabet. Let's start there. It's

466
00:23:42,600 --> 00:23:45,480
Speaker 2: under the microscope today. Is investors look for proof that

467
00:23:45,600 --> 00:23:48,160
Speaker 2: it's massive one hundred and eighty five billion dollar AI

468
00:23:48,200 --> 00:23:52,960
Speaker 2: infrastructure BET is translating into real business games. Mandy Singh

469
00:23:53,119 --> 00:23:57,359
Speaker 2: of Bloomberg Intelligence joins us with their preview and their analysis.

470
00:23:57,840 --> 00:24:00,000
Speaker 2: You know, in some ways it's easy. We know that

471
00:24:00,080 --> 00:24:02,920
Speaker 2: kapex number there or thereabout, so you can track how

472
00:24:02,960 --> 00:24:05,760
Speaker 2: that's going quarter on quarter towards that goal. And then

473
00:24:05,760 --> 00:24:08,360
Speaker 2: we have Google cloud growth. Is it as simple as

474
00:24:08,359 --> 00:24:09,639
Speaker 2: that for Bloomberg Intelligence.

475
00:24:10,920 --> 00:24:11,000
Speaker 9: No.

476
00:24:11,240 --> 00:24:15,240
Speaker 12: I think it's more nuance in the sense that Alphabet

477
00:24:15,359 --> 00:24:18,040
Speaker 12: is one of the only companies out of the four

478
00:24:18,119 --> 00:24:23,159
Speaker 12: hyperscalers you mentioned that actually gives their token metric. And

479
00:24:23,720 --> 00:24:26,480
Speaker 12: what I mean by that is they have this monthly

480
00:24:26,680 --> 00:24:32,159
Speaker 12: troken trajectory around how much is the consumption of the

481
00:24:32,200 --> 00:24:36,040
Speaker 12: Gemini model, and from that perspective, they are at least

482
00:24:36,040 --> 00:24:39,000
Speaker 12: two to three times higher than the other frontier labs

483
00:24:39,119 --> 00:24:43,480
Speaker 12: like Entropic and open AI, and I think what I

484
00:24:43,520 --> 00:24:46,600
Speaker 12: would want to know is how does that token metric

485
00:24:46,720 --> 00:24:50,560
Speaker 12: translate into revenue growth? So it will show up in

486
00:24:50,640 --> 00:24:53,800
Speaker 12: their search line, it will show up obviously in the

487
00:24:53,800 --> 00:24:57,440
Speaker 12: cloud line, and you know, the magnitude of the beat

488
00:24:57,520 --> 00:25:01,240
Speaker 12: will kind of show at what rate are they monetizing

489
00:25:01,280 --> 00:25:05,320
Speaker 12: their tokens generated versus what we know about Anthropic over

490
00:25:05,359 --> 00:25:08,120
Speaker 12: the past two three months and open Ai. And from

491
00:25:08,119 --> 00:25:11,800
Speaker 12: that perspective, I think that token consumption metric for me,

492
00:25:11,920 --> 00:25:15,359
Speaker 12: that is the key, along with cloud growth and cloud margins.

493
00:25:15,720 --> 00:25:19,320
Speaker 12: But you want to see more of that tokens translating

494
00:25:19,359 --> 00:25:20,240
Speaker 12: into revenue growth.

495
00:25:20,320 --> 00:25:25,520
Speaker 4: For alphabet sufficiency, let's talk about GCP growth powder in particular,

496
00:25:25,880 --> 00:25:28,119
Speaker 4: what could constrain that. There's some notes that landin on

497
00:25:28,160 --> 00:25:31,160
Speaker 4: my desk today saying flash storage could be a constraint

498
00:25:31,160 --> 00:25:33,359
Speaker 4: there for Google in particular, is that a war for

499
00:25:33,400 --> 00:25:34,760
Speaker 4: you they bottlenecks?

500
00:25:35,359 --> 00:25:40,040
Speaker 12: Well, I mean, Google, like everyone else, relies on supply chain,

501
00:25:40,200 --> 00:25:43,879
Speaker 12: you know, for a lot of the components from TSMC's

502
00:25:43,920 --> 00:25:47,480
Speaker 12: fab capacity to you know, getting a memory from one

503
00:25:47,520 --> 00:25:51,159
Speaker 12: of the three players to storage. So from that perspective, yes,

504
00:25:51,560 --> 00:25:54,800
Speaker 12: there are a lot of constraints, and if in this environment,

505
00:25:55,359 --> 00:25:58,640
Speaker 12: if you haven't really prepaid for your capacity for all

506
00:25:58,680 --> 00:26:01,720
Speaker 12: of these components, you will have a hard time sourcing

507
00:26:01,800 --> 00:26:04,879
Speaker 12: even if you are the size of Alphabet. So look

508
00:26:05,160 --> 00:26:08,480
Speaker 12: all these things aside. I do think, you know, when

509
00:26:08,600 --> 00:26:11,639
Speaker 12: Alphabet said their capex is going to be around one

510
00:26:11,720 --> 00:26:15,359
Speaker 12: hundred and eighty five billion dollars, they are you know,

511
00:26:15,440 --> 00:26:18,720
Speaker 12: putting the numbers and the you know, investments in terms

512
00:26:18,720 --> 00:26:22,120
Speaker 12: of getting that capacity. The question is how much are

513
00:26:22,119 --> 00:26:26,119
Speaker 12: they allocating for external use versus what is being allocated

514
00:26:26,160 --> 00:26:29,320
Speaker 12: across their family of apps. And then external use we

515
00:26:29,400 --> 00:26:32,680
Speaker 12: will see that in that cloud line. But the internal use,

516
00:26:32,800 --> 00:26:36,480
Speaker 12: you know, the AI overviews, the AI mode monetization, that

517
00:26:36,640 --> 00:26:39,760
Speaker 12: will get reflected in the search and YouTube lines. And

518
00:26:40,160 --> 00:26:42,840
Speaker 12: that's what you want to see in terms of ad

519
00:26:42,880 --> 00:26:46,639
Speaker 12: pricing because Meta is expected to grow top line thirty

520
00:26:46,680 --> 00:26:50,560
Speaker 12: percent and ad pricing is quite visible over there, so

521
00:26:50,640 --> 00:26:53,560
Speaker 12: you want to see that getting reflected in Google's results

522
00:26:53,560 --> 00:26:54,720
Speaker 12: when it comes to search.

523
00:26:55,040 --> 00:26:57,959
Speaker 4: In meg intelligence is many saying we thank you for

524
00:26:57,960 --> 00:27:02,080
Speaker 4: pushing us ahead on Alphabet. Stop we're watching today, not earnings.

525
00:27:02,080 --> 00:27:04,040
Speaker 4: It's Disney. Take a look at the two day chart.

526
00:27:04,119 --> 00:27:07,600
Speaker 4: Shares falling yesterday after the Federal Communications Commission said it

527
00:27:07,640 --> 00:27:10,200
Speaker 4: would do an early review of the licenses of eight

528
00:27:10,560 --> 00:27:14,240
Speaker 4: ABC TV stations. Let's get the latest of Bloomberg's telecoms

529
00:27:14,240 --> 00:27:17,160
Speaker 4: reporter Kelsey Griffiths. Now, the context of this.

530
00:27:18,000 --> 00:27:19,200
Speaker 3: Is that there is.

531
00:27:19,560 --> 00:27:23,359
Speaker 4: Uproll once again coming from the administration, directed in particular

532
00:27:23,520 --> 00:27:26,719
Speaker 4: at one particular host on ABC. Can you talk us

533
00:27:26,720 --> 00:27:27,040
Speaker 4: through it.

534
00:27:28,560 --> 00:27:32,400
Speaker 13: Yes, Caroline. So we've seen a clash over the last

535
00:27:32,480 --> 00:27:35,879
Speaker 13: year between the Trump administration and Jimmy Kimmel on ABC.

536
00:27:36,359 --> 00:27:40,199
Speaker 13: What's interesting about the latest action from the FCC is

537
00:27:40,240 --> 00:27:43,520
Speaker 13: that it doesn't mention Jimmy Kimmel at all. It actually

538
00:27:43,600 --> 00:27:48,560
Speaker 13: says eight licenses that ABC holds in major markets are

539
00:27:48,800 --> 00:27:54,639
Speaker 13: up for early review because they have potentially been engaging

540
00:27:54,720 --> 00:27:59,359
Speaker 13: in discrimination internally. So this review is based on a

541
00:27:59,440 --> 00:28:03,560
Speaker 13: letter FCC Chairman Brendan Carr sent over a year ago

542
00:28:03,680 --> 00:28:07,520
Speaker 13: to the Disney CEO investigating some of the hiring and

543
00:28:07,720 --> 00:28:11,760
Speaker 13: employment practices inside of the company. So that's really what

544
00:28:11,920 --> 00:28:15,600
Speaker 13: this review is about on paper. Internally, I am hearing

545
00:28:15,720 --> 00:28:18,239
Speaker 13: that a lot of people do suspect that this is

546
00:28:18,240 --> 00:28:19,080
Speaker 13: in fact related.

547
00:28:20,520 --> 00:28:20,920
Speaker 3: Kelsey.

548
00:28:21,280 --> 00:28:24,000
Speaker 2: There's an individual at the heart of this which is

549
00:28:24,000 --> 00:28:26,879
Speaker 2: Brendan Carr. Lucas was on the show yesterday and we

550
00:28:26,920 --> 00:28:30,880
Speaker 2: went through the kind of specific incident of the last

551
00:28:30,880 --> 00:28:33,200
Speaker 2: week and then what happened at the end of last year.

552
00:28:33,760 --> 00:28:36,720
Speaker 2: What role is the FCC chad is does he play

553
00:28:36,760 --> 00:28:40,040
Speaker 2: in this? What power does he or the actual committee

554
00:28:40,040 --> 00:28:41,600
Speaker 2: actually have to do anything about it.

555
00:28:43,040 --> 00:28:46,040
Speaker 13: The FCC Chairman is all powerful in terms of what

556
00:28:46,240 --> 00:28:50,400
Speaker 13: gets done by the agency, So Carr definitely knows about

557
00:28:50,440 --> 00:28:54,840
Speaker 13: this probe. Nothing gets done without his knowledge and his consent,

558
00:28:55,120 --> 00:28:58,200
Speaker 13: so that is one thing to keep in mind. The

559
00:28:58,320 --> 00:29:02,200
Speaker 13: FCC would then kick off review of these licenses in

560
00:29:02,240 --> 00:29:06,040
Speaker 13: a semi judicial process. This could either play out in

561
00:29:06,080 --> 00:29:08,760
Speaker 13: front of the Full Commission, where the Commission essentially holds

562
00:29:08,840 --> 00:29:13,280
Speaker 13: court and investigates whether the stations have been behaving in

563
00:29:13,320 --> 00:29:16,280
Speaker 13: the public interest, and then it could also go to

564
00:29:16,320 --> 00:29:20,680
Speaker 13: an administrative law judge internally at the FCC. Either way,

565
00:29:20,840 --> 00:29:23,479
Speaker 13: the FCC Chairman has a lot of oversight about how

566
00:29:23,520 --> 00:29:24,680
Speaker 13: this process plays out.

567
00:29:25,760 --> 00:29:28,040
Speaker 3: Bloomberg's Kelsey Griffin, thank you very much.

568
00:29:28,520 --> 00:29:32,720
Speaker 2: Indeed, now coming up, the courthouse showdown between Elon Musk

569
00:29:33,120 --> 00:29:37,440
Speaker 2: and Open Ai continues with another day of testimony from

570
00:29:37,440 --> 00:29:38,640
Speaker 2: the Tesla boss we're going.

571
00:29:38,640 --> 00:29:40,760
Speaker 3: To discuss next. This is Bloomberg Tech.

572
00:29:52,840 --> 00:29:54,960
Speaker 4: It is day three in the trial putting some of

573
00:29:55,000 --> 00:29:58,440
Speaker 4: the biggest AI players against each other. Elon Musk, you'll remember,

574
00:29:58,960 --> 00:30:01,880
Speaker 4: is suing open Ai, its co founders, and Microsoft over

575
00:30:01,920 --> 00:30:04,640
Speaker 4: the AI startups pivot from a charity to a not

576
00:30:05,040 --> 00:30:08,040
Speaker 4: for a for profit business. That's got the latest roomags

577
00:30:08,080 --> 00:30:12,080
Speaker 4: AI reporter Rachel Metz. Rachel must start at his testimony yesterday.

578
00:30:12,600 --> 00:30:14,200
Speaker 4: Remind us what we learned yesterday and what we can

579
00:30:14,240 --> 00:30:14,800
Speaker 4: expect today.

580
00:30:15,880 --> 00:30:18,680
Speaker 14: Sure, I mean yesterday it was a lot of talking

581
00:30:18,760 --> 00:30:21,840
Speaker 14: through the founding of open ai, what happened in the

582
00:30:21,880 --> 00:30:27,960
Speaker 14: early days, and Musk's feelings that this was a company

583
00:30:28,240 --> 00:30:32,320
Speaker 14: that was created as a charity and that it cannot

584
00:30:32,600 --> 00:30:35,640
Speaker 14: do this transaction that it has already done, which is

585
00:30:35,720 --> 00:30:38,959
Speaker 14: to entern into a for profit company. And we're going

586
00:30:39,000 --> 00:30:41,400
Speaker 14: to see a lot of that right now. We're seeing

587
00:30:41,440 --> 00:30:43,040
Speaker 14: a lot of that happening again today, a lot of

588
00:30:43,080 --> 00:30:45,920
Speaker 14: talking to Musk. He's on the stand. He may be

589
00:30:46,040 --> 00:30:49,240
Speaker 14: there through most or even all of today, talking about

590
00:30:49,440 --> 00:30:51,800
Speaker 14: right now, the early days of open ai is what

591
00:30:52,080 --> 00:30:54,320
Speaker 14: they're getting into, how the company was set up and

592
00:30:54,800 --> 00:30:58,160
Speaker 14: why he says it was intended to be a charitable organization.

593
00:30:59,240 --> 00:31:02,000
Speaker 2: We're watching page of mister Musk yesterday, going through the

594
00:31:02,040 --> 00:31:06,000
Speaker 2: metal detector several times. It seems his principal kind of

595
00:31:06,080 --> 00:31:09,840
Speaker 2: opening argument was that he needed to file this suit

596
00:31:10,400 --> 00:31:14,320
Speaker 2: to stop Sam Altman looting open ai. Explain a little

597
00:31:14,320 --> 00:31:18,120
Speaker 2: bit about what he meant and actually the core issues

598
00:31:18,160 --> 00:31:18,800
Speaker 2: of this case.

599
00:31:20,000 --> 00:31:24,320
Speaker 14: Sure, as open ai moves from being this company that

600
00:31:24,320 --> 00:31:28,280
Speaker 14: had a pretty complicated structure but was chiefly considered a

601
00:31:28,480 --> 00:31:31,640
Speaker 14: company that was a non profit to a company that

602
00:31:31,720 --> 00:31:35,160
Speaker 14: has a for profit entity, Musk is saying, hey, you

603
00:31:35,240 --> 00:31:38,360
Speaker 14: can't do this. It was meant to be a non profit,

604
00:31:38,640 --> 00:31:42,400
Speaker 14: so he's fighting against that. There's also a lot of

605
00:31:42,440 --> 00:31:46,560
Speaker 14: other background and backstory there. There's been a long time

606
00:31:46,720 --> 00:31:50,680
Speaker 14: acrimonious relationship between Musk and some of open AI's founders,

607
00:31:50,920 --> 00:31:54,920
Speaker 14: chiefly sim Altman and Greg Brockman, who Musk has filed

608
00:31:54,920 --> 00:31:59,040
Speaker 14: this suit against. And Musk also has his own AI

609
00:31:59,160 --> 00:32:02,440
Speaker 14: company that he wants to advance. So you've got a

610
00:32:02,480 --> 00:32:05,920
Speaker 14: lot of competing opinions and ideas here about what should

611
00:32:05,960 --> 00:32:06,840
Speaker 14: happen to open ai.

612
00:32:07,920 --> 00:32:11,280
Speaker 4: Open ai faces other lawsuits, some of them are pretty emotive.

613
00:32:11,680 --> 00:32:13,960
Speaker 4: One of them we understand regarding a mass shooting in

614
00:32:14,000 --> 00:32:16,400
Speaker 4: British Columbia. Rachel, can you just talk us through what's

615
00:32:16,600 --> 00:32:18,160
Speaker 4: being focused on there and what it means?

616
00:32:19,200 --> 00:32:19,520
Speaker 9: Sure?

617
00:32:19,640 --> 00:32:23,280
Speaker 14: So this morning, seven lawsuits were filed against open AI

618
00:32:23,520 --> 00:32:27,440
Speaker 14: by families of victims of the tumbler Ridge mass shooting

619
00:32:27,760 --> 00:32:32,080
Speaker 14: in British Columbia. These are lawsuits filed by families on

620
00:32:32,120 --> 00:32:35,600
Speaker 14: behalf of children who were killed in the shooting in February,

621
00:32:35,960 --> 00:32:41,000
Speaker 14: and also an educator and one child who has so

622
00:32:41,120 --> 00:32:45,480
Speaker 14: far survived and is in ICU. What set stake here

623
00:32:45,800 --> 00:32:50,959
Speaker 14: is potentially open AI being considered responsible in some ways

624
00:32:51,320 --> 00:32:56,480
Speaker 14: for the shootings. Supposed the alleged killer was using CHATGPET

625
00:32:56,720 --> 00:33:00,680
Speaker 14: and the planning of the massacre and was kicked off

626
00:33:00,720 --> 00:33:03,280
Speaker 14: of CHGBT, but then got back on and the company

627
00:33:03,320 --> 00:33:05,600
Speaker 14: did not report it to authorities. So that's all a

628
00:33:05,640 --> 00:33:08,160
Speaker 14: part of these lawsuits that have just been filed.

629
00:33:09,120 --> 00:33:11,320
Speaker 2: Open AI issued us a statement for the story, which

630
00:33:11,320 --> 00:33:13,520
Speaker 2: you can read in Rachel's reporting. They have a zero

631
00:33:13,560 --> 00:33:16,400
Speaker 2: tolerance policy for using tools to assist in committing violence

632
00:33:16,680 --> 00:33:18,640
Speaker 2: and that they've already improved their safeguards.

633
00:33:18,640 --> 00:33:21,360
Speaker 3: I go read that and Rachel's reporting. Believe most Rachel Max,

634
00:33:21,480 --> 00:33:21,800
Speaker 3: thank you.

635
00:33:22,040 --> 00:33:22,200
Speaker 5: Now.

636
00:33:22,280 --> 00:33:25,760
Speaker 2: Sticking with open Ai, AWS announced a partnership with the

637
00:33:25,760 --> 00:33:29,400
Speaker 2: AI startup a day after it ended it's exclusivity deal

638
00:33:29,440 --> 00:33:33,520
Speaker 2: with Microsoft. Amazon also plans to sell AI powered productivity

639
00:33:33,560 --> 00:33:36,920
Speaker 2: software for the office. We caught up with AWSCO Mattgarman

640
00:33:37,160 --> 00:33:39,719
Speaker 2: ahead of Amazon's earnings coming out later today.

641
00:33:40,600 --> 00:33:43,120
Speaker 15: Well, we're quite excited about the partnership that we're announcing

642
00:33:43,160 --> 00:33:47,120
Speaker 15: with them today. So yes, So for a long time,

643
00:33:47,560 --> 00:33:50,360
Speaker 15: when we built Amazon Bedrock as a way for our

644
00:33:50,400 --> 00:33:54,680
Speaker 15: customers to access frontier models and access AI models, we've

645
00:33:54,720 --> 00:33:57,720
Speaker 15: always started with the position that we wanted to offer choice,

646
00:33:57,760 --> 00:34:00,320
Speaker 15: and we wanted to offer all of the best models

647
00:34:00,320 --> 00:34:03,240
Speaker 15: available out there. And today we're excited to be bringing

648
00:34:03,240 --> 00:34:04,920
Speaker 15: open Ai into Bedwalck.

649
00:34:05,640 --> 00:34:06,680
Speaker 3: It's I think it's.

650
00:34:06,840 --> 00:34:08,720
Speaker 15: It's something that our customers have asked for.

651
00:34:08,520 --> 00:34:09,439
Speaker 9: For a really long time.

652
00:34:10,120 --> 00:34:14,000
Speaker 2: And we're talking specifically about frontier models, not just open

653
00:34:14,000 --> 00:34:15,399
Speaker 2: weighted models, which was right.

654
00:34:15,320 --> 00:34:17,479
Speaker 15: We've had we've had open weight models for a while,

655
00:34:17,520 --> 00:34:19,960
Speaker 15: but yes, this is the frontier model. So starting in

656
00:34:20,000 --> 00:34:24,920
Speaker 15: preview today, we have open AI's model five point four

657
00:34:25,000 --> 00:34:26,719
Speaker 15: and five to five is coming in the next couple

658
00:34:26,760 --> 00:34:31,480
Speaker 15: of weeks. We're also collaborating on a new offering which

659
00:34:31,520 --> 00:34:34,279
Speaker 15: we call Managed Agents featuring open Ai, which is a

660
00:34:34,320 --> 00:34:37,799
Speaker 15: complete managed Asian capability, so customers can really easily make

661
00:34:37,880 --> 00:34:42,200
Speaker 15: stateful agents and build agentic applications together with Bedrock and

662
00:34:42,239 --> 00:34:44,840
Speaker 15: open Ai. And it's really just the start of a

663
00:34:44,880 --> 00:34:48,319
Speaker 15: long term partnership that we've established together. As the teams

664
00:34:48,360 --> 00:34:50,680
Speaker 15: have gotten together, we see opportunity for us to really

665
00:34:50,760 --> 00:34:54,400
Speaker 15: invent new capabilities for our customers to go and build

666
00:34:54,440 --> 00:34:59,080
Speaker 15: interesting applications together, and really excited about working together with

667
00:34:59,160 --> 00:35:03,760
Speaker 15: the open Ai team and unlocking more things that customers

668
00:35:03,800 --> 00:35:04,840
Speaker 15: can build on AWS.

669
00:35:04,920 --> 00:35:08,600
Speaker 2: We are in a strange situation where OpenAI models can

670
00:35:08,600 --> 00:35:13,399
Speaker 2: now run on AWS, but Microsoft will benefit financially because

671
00:35:13,760 --> 00:35:18,040
Speaker 2: the latest terms of their agreement they've ended exclusivity, but

672
00:35:18,400 --> 00:35:20,719
Speaker 2: OpenAI continues to make payments to Microsoft.

673
00:35:21,360 --> 00:35:22,560
Speaker 3: How do you think about that?

674
00:35:22,960 --> 00:35:28,200
Speaker 15: Oh, that's okay. Look, Microsoft has benefited from the growth

675
00:35:28,200 --> 00:35:31,160
Speaker 15: of AWS since the very early days. In fact, we've

676
00:35:31,200 --> 00:35:34,440
Speaker 15: supported Windows licenses as an example, I think since two

677
00:35:34,480 --> 00:35:36,600
Speaker 15: thousand and seven, two thousand and eight, I can't remember

678
00:35:36,640 --> 00:35:40,080
Speaker 15: the exact year, but so Microsoft has benefited. They build

679
00:35:40,120 --> 00:35:42,760
Speaker 15: great software, they have good partnerships, and they should benefit

680
00:35:42,760 --> 00:35:46,120
Speaker 15: from those, but customers really want to use those technology.

681
00:35:46,160 --> 00:35:48,880
Speaker 15: SQL server is a good example that runs great on AWS.

682
00:35:48,880 --> 00:35:50,960
Speaker 15: In fact, many of our customers tell us that sql

683
00:35:51,000 --> 00:35:53,480
Speaker 15: server runs better, way better on AWS than it does

684
00:35:53,480 --> 00:35:57,360
Speaker 15: on Azure. And so for those customers, running an ABS

685
00:35:57,440 --> 00:36:00,000
Speaker 15: is where they get the best reliability, the most security,

686
00:36:00,040 --> 00:36:01,320
Speaker 15: and the broadest set of features.

687
00:36:01,360 --> 00:36:02,439
Speaker 3: And so that's great.

688
00:36:02,480 --> 00:36:06,000
Speaker 15: And if Microsoft benefits because their software, or their partnerships

689
00:36:06,080 --> 00:36:09,240
Speaker 15: or their licenses are being used inside of ABS, that's great.

690
00:36:09,320 --> 00:36:12,600
Speaker 15: And in this case, we partner with Microsoft just like

691
00:36:12,640 --> 00:36:16,520
Speaker 15: we partner with Oracle and other providers that build software,

692
00:36:16,560 --> 00:36:19,480
Speaker 15: and we want to make all capabilities available on ABS

693
00:36:19,520 --> 00:36:20,200
Speaker 15: for people to build.

694
00:36:20,640 --> 00:36:23,080
Speaker 4: Well, the frenemies was a great interview, and that was

695
00:36:23,120 --> 00:36:27,080
Speaker 4: AWSCO Matt Garmon. Now coming up more earnings, we'll discuss

696
00:36:27,280 --> 00:36:29,240
Speaker 4: what to expect from Microsoft, Amazon Meta.

697
00:36:29,719 --> 00:36:30,120
Speaker 3: That's next.

698
00:36:30,160 --> 00:36:31,040
Speaker 4: That's a bloombag tech.

699
00:36:42,320 --> 00:36:45,359
Speaker 2: Let's get back to tech earnings. Investors in Amazon and

700
00:36:45,440 --> 00:36:49,600
Speaker 2: Microsoft expected to pay close attention to cloud capacity and

701
00:36:49,680 --> 00:36:53,600
Speaker 2: cloud growth. Bloomberg's Matt Day covers both companies. I don't know,

702
00:36:53,600 --> 00:36:56,120
Speaker 2: how are you going to do that? After the closing bell.

703
00:36:56,360 --> 00:36:58,840
Speaker 2: Let's start with Amazon, you and I spent time yesterday

704
00:36:58,840 --> 00:37:02,000
Speaker 2: with Matt Garm and the AIDS CEO. It is probably

705
00:37:02,080 --> 00:37:04,879
Speaker 2: AWS where there will be a lot of focus.

706
00:37:05,040 --> 00:37:05,920
Speaker 3: What are we bracing for?

707
00:37:07,320 --> 00:37:10,040
Speaker 16: So Amazon Web Services is going to accelerate a little

708
00:37:10,080 --> 00:37:12,879
Speaker 16: bit from the past quarter, looking like the fastest growth

709
00:37:12,920 --> 00:37:15,279
Speaker 16: rate in three years. Like the big question is going

710
00:37:15,280 --> 00:37:17,279
Speaker 16: to be when we start to see the fruits of

711
00:37:17,280 --> 00:37:19,480
Speaker 16: all these new partnerships they've struck with open Ai. As

712
00:37:19,480 --> 00:37:22,200
Speaker 16: you mentioned, they're growing business within Thropic. When does that

713
00:37:22,239 --> 00:37:24,000
Speaker 16: sort of materialize as cloud revenue is going to be

714
00:37:24,040 --> 00:37:25,680
Speaker 16: one of the big questions this afternoon.

715
00:37:26,120 --> 00:37:29,920
Speaker 4: People really felt that Amazon managed to get its ownership

716
00:37:29,920 --> 00:37:32,040
Speaker 4: of its supply chain in many ways, and particularly when

717
00:37:32,080 --> 00:37:33,839
Speaker 4: it comes to power. That's something that any Jess has

718
00:37:33,840 --> 00:37:35,160
Speaker 4: been speaking about for a long time.

719
00:37:35,400 --> 00:37:36,160
Speaker 3: When you looking at.

720
00:37:36,000 --> 00:37:38,759
Speaker 4: Microsoft, the fact that like what GitHub as pause Copilot's

721
00:37:38,760 --> 00:37:41,000
Speaker 4: sign ups, what does that reflect in terms of Microsoft's

722
00:37:41,000 --> 00:37:42,560
Speaker 4: capacity supply versus demand.

723
00:37:43,440 --> 00:37:45,239
Speaker 16: So Microsoft has been struggling for more than a year

724
00:37:45,239 --> 00:37:46,880
Speaker 16: and now to get enough stuff up and running to

725
00:37:46,880 --> 00:37:50,440
Speaker 16: power everything with its equipments to open Ai, its own software.

726
00:37:50,480 --> 00:37:53,000
Speaker 16: You know, it's subsidiary git Hub as you mentioned, So

727
00:37:53,040 --> 00:37:55,600
Speaker 16: they're just racing to put as much power and chips

728
00:37:55,600 --> 00:37:57,360
Speaker 16: and data centers up as they can right now to

729
00:37:57,440 --> 00:37:58,440
Speaker 16: kind of meet that demand.

730
00:37:58,760 --> 00:37:59,960
Speaker 9: They're still they're still growing.

731
00:37:59,760 --> 00:38:02,279
Speaker 16: In healthy clip cloud wise, but I mean it's certainly

732
00:38:02,360 --> 00:38:04,640
Speaker 16: been clear for several quarters now they could be doing more,

733
00:38:04,920 --> 00:38:07,239
Speaker 16: you know, if they'd had a better pipeline coming up.

734
00:38:07,600 --> 00:38:10,359
Speaker 4: What a share price dropped we saw after their last

735
00:38:10,400 --> 00:38:12,719
Speaker 4: quarter's earnings. We'll see if the thirty eight percent lives

736
00:38:12,800 --> 00:38:15,759
Speaker 4: up to expectations today. For as you and Matt Day,

737
00:38:15,960 --> 00:38:18,440
Speaker 4: thank you on all things Microsoft and Amazon. AI is

738
00:38:18,480 --> 00:38:20,880
Speaker 4: also like to be a focus when we get metas results.

739
00:38:21,160 --> 00:38:24,239
Speaker 4: Minnie Smiley, senior analysts covering social media Emacter has here

740
00:38:24,280 --> 00:38:26,760
Speaker 4: to talk us to AI and plus some other things.

741
00:38:26,840 --> 00:38:29,280
Speaker 4: There's a lot about the business model that's under scrutiny,

742
00:38:29,520 --> 00:38:31,760
Speaker 4: but AI capex is that going to be where everyone looks,

743
00:38:31,960 --> 00:38:32,399
Speaker 4: Oh yeah.

744
00:38:32,440 --> 00:38:34,120
Speaker 17: I mean, the funny thing about Men of these days

745
00:38:34,160 --> 00:38:36,560
Speaker 17: is that that top line revenue growth number is actually

746
00:38:36,600 --> 00:38:39,560
Speaker 17: like the least interesting thing about its earnings, right, I mean,

747
00:38:39,719 --> 00:38:42,520
Speaker 17: we expected to have growth once again. It's been posting

748
00:38:42,520 --> 00:38:45,400
Speaker 17: double digit gains for years now because of its investments

749
00:38:45,440 --> 00:38:48,120
Speaker 17: in AI that are helping it with better engagement better

750
00:38:48,160 --> 00:38:51,000
Speaker 17: advertiser targeting and stuff like that. But I think the

751
00:38:51,040 --> 00:38:53,520
Speaker 17: real number people are paying attention to these days is

752
00:38:53,560 --> 00:38:55,759
Speaker 17: that cappax number. We do know that Meta has been

753
00:38:55,760 --> 00:38:57,640
Speaker 17: spending exorbitant amounts of.

754
00:38:57,560 --> 00:38:58,480
Speaker 4: Money on AI.

755
00:38:59,480 --> 00:39:02,040
Speaker 17: I think that last we checked it was one hundred

756
00:39:02,080 --> 00:39:03,920
Speaker 17: and thirty five billion for the year was what they

757
00:39:03,920 --> 00:39:07,080
Speaker 17: were expecting at most. So that's the number that we

758
00:39:07,120 --> 00:39:09,880
Speaker 17: are seeing investors and onlookers really pay attention to and

759
00:39:10,680 --> 00:39:12,440
Speaker 17: really try to get a sense of if there are

760
00:39:12,520 --> 00:39:16,400
Speaker 17: going to be any changes or further comment on that spending.

761
00:39:16,960 --> 00:39:20,560
Speaker 4: Comment also on how it helps fuel the flywheel effect

762
00:39:20,600 --> 00:39:22,919
Speaker 4: to the business model, a business model that's been onto

763
00:39:22,960 --> 00:39:25,399
Speaker 4: some scrutiny in the courts. How do you think Mark

764
00:39:25,440 --> 00:39:27,800
Speaker 4: Zuckerberg will react to that, some of the court losses

765
00:39:27,800 --> 00:39:29,320
Speaker 4: that he's had in the United States.

766
00:39:29,560 --> 00:39:31,920
Speaker 17: Yeah, it's a great question. I think people will really

767
00:39:31,960 --> 00:39:34,000
Speaker 17: be hoping that they shed some sort of light on

768
00:39:34,040 --> 00:39:36,320
Speaker 17: not only their you know, their reactions to these lawsuits,

769
00:39:36,360 --> 00:39:38,799
Speaker 17: but sort of where they're going and how, you know,

770
00:39:38,800 --> 00:39:40,440
Speaker 17: how they're going to address them of this, because I

771
00:39:40,440 --> 00:39:42,880
Speaker 17: think the reality is that you know, with these lawsuits,

772
00:39:42,880 --> 00:39:45,279
Speaker 17: it's it's still too early to really say you know

773
00:39:45,640 --> 00:39:47,799
Speaker 17: how much Meta is ultimately going to have to pay,

774
00:39:47,800 --> 00:39:50,200
Speaker 17: you know, both both literally and figuratively. I think, you know,

775
00:39:50,200 --> 00:39:52,200
Speaker 17: we're still too early in the game, but there really

776
00:39:52,280 --> 00:39:54,520
Speaker 17: is this sense that like something's got to give it

777
00:39:54,600 --> 00:39:58,000
Speaker 17: some point. Right, We're seeing this groundswell of lawmakers and

778
00:39:58,040 --> 00:40:01,600
Speaker 17: parents and educators and and you know, all sorts of

779
00:40:01,600 --> 00:40:05,520
Speaker 17: people really trying to really trying to argue that these

780
00:40:05,600 --> 00:40:08,600
Speaker 17: these Meta and these other social platforms are dangerous for children.

781
00:40:09,040 --> 00:40:12,040
Speaker 17: The fact that you know, both both juries found metal

782
00:40:12,040 --> 00:40:14,319
Speaker 17: liable does not look good for them. And so I

783
00:40:14,360 --> 00:40:16,399
Speaker 17: think that you know, in the call today, it's going

784
00:40:16,440 --> 00:40:18,759
Speaker 17: to be, yeah, less about the numbers and more about

785
00:40:18,800 --> 00:40:21,200
Speaker 17: you know, how how are they kind of viewing this

786
00:40:21,280 --> 00:40:24,680
Speaker 17: sort of almost existential crisis to the business that that

787
00:40:24,760 --> 00:40:27,440
Speaker 17: could happen. I mean, it's hard to say when to

788
00:40:27,440 --> 00:40:31,000
Speaker 17: what extent it'll play out anytime soon, but you know, three, five,

789
00:40:31,080 --> 00:40:33,040
Speaker 17: ten years on the line, how are these issues going

790
00:40:33,080 --> 00:40:34,719
Speaker 17: to play out and ultimately affect how these what these

791
00:40:34,719 --> 00:40:35,440
Speaker 17: products look like?

792
00:40:36,520 --> 00:40:39,160
Speaker 2: Minda, there are two big news stories about Meta that happened,

793
00:40:39,200 --> 00:40:41,880
Speaker 2: either in the quarter they're about to report or more recently,

794
00:40:42,560 --> 00:40:45,960
Speaker 2: the release of newse Spark. There's a model, and then

795
00:40:46,160 --> 00:40:50,239
Speaker 2: the layoffs that Bloomberg reported last week, how do those

796
00:40:50,280 --> 00:40:53,760
Speaker 2: factor into this this bigger conversation about how much Meta

797
00:40:53,880 --> 00:40:57,320
Speaker 2: spends versus what they get as a result of that spending.

798
00:40:58,000 --> 00:41:00,480
Speaker 17: Yeah, it's a great question, I mean with news, I

799
00:41:00,520 --> 00:41:03,000
Speaker 17: think with the launch of their AI model, I think,

800
00:41:03,000 --> 00:41:06,080
Speaker 17: on the one hand, investors will be happy to kind

801
00:41:06,080 --> 00:41:08,000
Speaker 17: of see, you know, the fruits of their labor so

802
00:41:08,080 --> 00:41:10,000
Speaker 17: to speak. We saw last year they spent so much

803
00:41:10,080 --> 00:41:12,960
Speaker 17: money and time trying to you know, kind of relaunch

804
00:41:13,000 --> 00:41:15,480
Speaker 17: their AI business, and so of course having a new

805
00:41:15,560 --> 00:41:18,520
Speaker 17: spark finally be here, getting a sense of what, you know,

806
00:41:18,560 --> 00:41:21,200
Speaker 17: what it looks like is definitely going to be comforting

807
00:41:21,239 --> 00:41:24,120
Speaker 17: to some extent, But there are still so many questions around,

808
00:41:24,200 --> 00:41:26,319
Speaker 17: you know, how you know, how is it going to

809
00:41:26,360 --> 00:41:28,120
Speaker 17: make money? How is it going to compete with these

810
00:41:28,160 --> 00:41:31,600
Speaker 17: more established players. So while while it's something, I think

811
00:41:31,640 --> 00:41:33,880
Speaker 17: it still leaves a lot of room for questions certainly.

812
00:41:34,200 --> 00:41:36,279
Speaker 17: And then yeah, with the layoffs, I mean that that's

813
00:41:36,280 --> 00:41:38,360
Speaker 17: another great question. I think there's been a lot of

814
00:41:38,360 --> 00:41:40,640
Speaker 17: talk around, you know, to what extent, uh is this

815
00:41:40,719 --> 00:41:43,920
Speaker 17: AI watching? I also do wonder, you know, going back

816
00:41:43,920 --> 00:41:47,560
Speaker 17: to the regulatory conversation we had earlier. I mean, could

817
00:41:47,600 --> 00:41:51,399
Speaker 17: they perhaps be reorienting their business and trying to lay

818
00:41:51,400 --> 00:41:53,360
Speaker 17: off certain people on higher new ones to kind of

819
00:41:53,360 --> 00:41:55,799
Speaker 17: have to kind of really address some of these the

820
00:41:55,840 --> 00:41:58,600
Speaker 17: scrutiny and these regulatory and legal concerns that could become

821
00:41:58,800 --> 00:42:01,080
Speaker 17: a much bigger problem for them on the line.

822
00:42:01,200 --> 00:42:03,760
Speaker 2: You know, minda is so interesting. We're about four minutes

823
00:42:03,760 --> 00:42:06,719
Speaker 2: since this conversation. Neither none of the three of us

824
00:42:06,719 --> 00:42:09,400
Speaker 2: have brought up the word advertising right in the context.

825
00:42:09,520 --> 00:42:11,279
Speaker 3: Better Why Why not?

826
00:42:11,360 --> 00:42:13,080
Speaker 2: Because at the end of the day, every quarter it

827
00:42:13,120 --> 00:42:15,120
Speaker 2: still comes down to advertising.

828
00:42:15,080 --> 00:42:18,080
Speaker 17: Yeah, exactly, and that it is a good question. It

829
00:42:18,120 --> 00:42:20,160
Speaker 17: is while to think that Meta a company that makes

830
00:42:20,280 --> 00:42:23,120
Speaker 17: you know, most, if not almost all of its money

831
00:42:23,160 --> 00:42:25,759
Speaker 17: from advertising. You know that That's kind of why I

832
00:42:25,760 --> 00:42:29,000
Speaker 17: think investors have been really kind of on edge about

833
00:42:29,000 --> 00:42:30,799
Speaker 17: all of this CAPEX spending. It's sort of like, at

834
00:42:30,800 --> 00:42:33,760
Speaker 17: the end of the day, Meta is a social media business.

835
00:42:33,760 --> 00:42:36,440
Speaker 17: So when you compare it to these AI competitors like

836
00:42:36,480 --> 00:42:39,120
Speaker 17: open Ai, like Anthropic, even Google, I mean, it's just

837
00:42:39,400 --> 00:42:42,440
Speaker 17: it's it's fundamentally different, and that certainly gives it some advantage,

838
00:42:42,480 --> 00:42:44,879
Speaker 17: but it also brings about a lot of challenges. It's

839
00:42:44,920 --> 00:42:46,840
Speaker 17: just it really is a different beast.

840
00:42:47,239 --> 00:42:52,239
Speaker 4: Compare it to the competition YouTube, TikTok, where our eyeballs

841
00:42:52,239 --> 00:42:53,880
Speaker 4: are going at the moment. Yeah, how what are you

842
00:42:53,920 --> 00:42:54,760
Speaker 4: seeing from the data?

843
00:42:55,040 --> 00:42:57,000
Speaker 17: Yeah, I mean our data shows, you know, by by

844
00:42:57,000 --> 00:42:59,200
Speaker 17: many accounts, better is still you know, I mean it's

845
00:42:59,239 --> 00:43:01,120
Speaker 17: it's we can see it. And the revenue numbers right,

846
00:43:01,120 --> 00:43:02,839
Speaker 17: the fact that it's seeing double edit growth, it's still

847
00:43:02,960 --> 00:43:05,520
Speaker 17: It's platforms are still incredibly popular, and namely Instagram. I

848
00:43:05,520 --> 00:43:08,760
Speaker 17: mean Instagram actually by some accounts is more popular than TikTok,

849
00:43:08,760 --> 00:43:11,719
Speaker 17: at least here in the US, and so we are

850
00:43:11,719 --> 00:43:15,440
Speaker 17: seeing time spent there tick up among users. Facebook, I

851
00:43:15,440 --> 00:43:17,160
Speaker 17: think people kind of often kind of like, you know,

852
00:43:17,400 --> 00:43:19,200
Speaker 17: it's sort of an after that, but it's still a

853
00:43:19,239 --> 00:43:21,239
Speaker 17: massive platform that a lot of people use, and we

854
00:43:21,280 --> 00:43:24,120
Speaker 17: actually are seeing meta kind of reinvest in it a

855
00:43:24,160 --> 00:43:26,239
Speaker 17: little bit, try to make it more relevant again. There's

856
00:43:26,280 --> 00:43:28,600
Speaker 17: a big push right now to get more creators on Facebook.

857
00:43:28,800 --> 00:43:31,400
Speaker 17: Marketplace is still huge, so I mean, yeah, I mean,

858
00:43:31,480 --> 00:43:34,480
Speaker 17: of course TikTok and YouTube they are a huge platforms

859
00:43:34,480 --> 00:43:37,480
Speaker 17: that are doing very well. But like yeah, Instagram, Facebook, WhatsApp,

860
00:43:37,560 --> 00:43:39,280
Speaker 17: they're still quite popular.

861
00:43:40,120 --> 00:43:43,839
Speaker 2: MINDA smiley for me, Marketer, it's awesome, thank you very much,

862
00:43:43,880 --> 00:43:47,400
Speaker 2: looking ahead to crazy earnings afternoon.

863
00:43:47,600 --> 00:43:49,399
Speaker 3: That does it for this edition of Bloomberg Tech.

864
00:43:49,719 --> 00:43:51,920
Speaker 4: We're off to get a few coffees because we've got

865
00:43:51,920 --> 00:43:54,560
Speaker 4: a few hours ago. The excitement doesn't stop. Don't forget

866
00:43:54,600 --> 00:43:56,200
Speaker 4: to check how our podcast. You can find it on

867
00:43:56,239 --> 00:43:58,960
Speaker 4: the terminal as well as online on Apple, Spotify, and iHeart.

868
00:43:59,080 --> 00:44:01,600
Speaker 4: Tune in after the closing bell they can fast us

869
00:44:01,640 --> 00:44:02,399
Speaker 4: is Bloomberg Tech