WEBVTT - Tesla’s Europe Sales Plummet, IBM and ServiceNow Beat Expectations 0:00:02.759 --> 0:00:10.039 Bloomberg Audio Studios, podcasts, radio news from the heart of 0:00:10.080 --> 0:00:16.079 where innovation, money and power collide in Silicon Valley and beyond. 0:00:16.239 --> 0:00:20.480 This is Bloomberg Technology with Caroline Hyde. 0:00:20.079 --> 0:00:35.720 And Ed Ludlow live from New York and San Francisco. 0:00:35.840 --> 0:00:39.479 This is Bloomberg Technology coming up. Service now jumps as 0:00:39.520 --> 0:00:43.279 earnings results show resilience. Our conversation with the company's. 0:00:42.920 --> 0:00:46.880 CEO, plus Alphabet earnings looking to set the tone for 0:00:47.000 --> 0:00:50.400 megacat Tech later today, and Tesla's sales. 0:00:50.400 --> 0:00:53.400 They slump in Europe again as it's overtaken by VW 0:00:53.520 --> 0:00:55.960 as Europe's top ev seller. More on that this hour, 0:00:56.000 --> 0:00:58.280 But first we check in on the market and it 0:00:58.480 --> 0:01:01.360 is hope that we might get some sort of reprieve 0:01:01.440 --> 0:01:03.760 from the Federal Reserve. Maybe rates could move as soon 0:01:03.800 --> 0:01:06.480 as June. So being hinted at by some key people, 0:01:06.560 --> 0:01:09.800 the Cleveland president, for example, we're at one point eight percent. 0:01:09.880 --> 0:01:12.200 Big Tech manages to rally again. This is a third 0:01:12.240 --> 0:01:14.240 straight day of games on the Nastaq one hundred. We've 0:01:14.240 --> 0:01:17.800 added a trillion dollars in market capitalization to that benchmark 0:01:17.840 --> 0:01:20.200 in those three days. But I'm looking at bitcoin once again. 0:01:20.280 --> 0:01:22.959 The disconnect happening. In terms of stocks, we move in 0:01:22.959 --> 0:01:25.480 a different direction. Bitcoin maybe able a profit taking as 0:01:25.520 --> 0:01:27.760 we hit ninety three thousand en what have you got? 0:01:28.520 --> 0:01:31.320 Yeah, it's the companies that have reported earnings already. I 0:01:31.360 --> 0:01:33.720 think a lot of people were surprised by the strength 0:01:33.760 --> 0:01:37.760 of Texas Instruments resilient demand. These are the analog chips 0:01:37.760 --> 0:01:40.759 that go into everything, more basic chips, and they seem 0:01:40.800 --> 0:01:42.720 to do well. Later in the Albluem magazine, King will 0:01:42.720 --> 0:01:45.520 break it down for us. Then there's IBM and Service Now, 0:01:45.560 --> 0:01:48.000 two CEOs that you spoke to, and we'll hear from 0:01:48.320 --> 0:01:52.720 Service now resilience of demand, winning government contracts. By contrast, 0:01:52.840 --> 0:01:57.360 IBM losing government contracts, strong profit numbers, but people are 0:01:57.360 --> 0:02:00.760 worried about how they're interpreting the economy going forward. Again, 0:02:00.800 --> 0:02:03.640 we'll hear from both those CEOs and your conversations. Then 0:02:03.640 --> 0:02:06.720 there's what's to come alphabet parent of Google is after 0:02:06.760 --> 0:02:10.280 the bell and at the same time there's the news 0:02:10.320 --> 0:02:13.440 flow out of the doj Antitrust Remedies trial pushing higher 0:02:13.440 --> 0:02:16.919 at one point six percent. But this evening alphabet sets 0:02:16.960 --> 0:02:19.160 the tone, as we just said, for megacaps to come, 0:02:19.400 --> 0:02:20.959 and we have a lot of questions about the mag 0:02:21.000 --> 0:02:21.680 seven we do. 0:02:21.720 --> 0:02:24.760 We're anticipating what results of twelve percent increase in revenue, 0:02:24.800 --> 0:02:27.680 but the tone is going to really dictate big tech earnings. 0:02:27.720 --> 0:02:31.160 More broadly, You've got so many risks, said rising taris 0:02:31.200 --> 0:02:34.560 anti trustee that you just reference AI uncertainty. Raand Vastellac 0:02:34.560 --> 0:02:36.400 has been writing about all of it in the stock 0:02:36.639 --> 0:02:39.880 It's already been slammed so far this year. How anxious 0:02:39.880 --> 0:02:40.680 are investors? 0:02:41.960 --> 0:02:43.640 Hey, thanks for having me, I say. There is so 0:02:43.800 --> 0:02:46.880 much uncertainty surrounding Alphabet, a lot more than even some 0:02:46.880 --> 0:02:49.760 of the other MAGS seven names. It's true that Alphabet 0:02:49.840 --> 0:02:53.359 has less direct exposure to tear us, but there is 0:02:53.400 --> 0:02:56.680 still a lot of concern about the regulatory picture, about 0:02:56.720 --> 0:03:00.160 the risk of competition within AI. All this stuff has 0:03:00.160 --> 0:03:03.120 been really impacting the stop this year. That has some 0:03:03.160 --> 0:03:05.400 people saying that it looks like an attractive bargain here, 0:03:05.520 --> 0:03:07.440 But at the same time, the number of sort of 0:03:07.720 --> 0:03:10.720 existential concerns. Is there going to be a breakup, Is 0:03:10.720 --> 0:03:13.239 it going to lose its really dominant position with its 0:03:13.240 --> 0:03:16.520 biggest market with his Internet search. All these questions really 0:03:16.520 --> 0:03:19.160 have people wondering, how are they going to fare this quarter. 0:03:19.400 --> 0:03:21.680 What are they going to say about the economic backdrop 0:03:21.840 --> 0:03:24.160 and outlook? It's really going to be meaningful for I 0:03:24.160 --> 0:03:25.799 think the broader big tech. 0:03:25.600 --> 0:03:29.200 Space Boombos, Ryan Fastelica, thank you very much. Let's turn 0:03:29.200 --> 0:03:32.680 to IBM. The company beat first quarter expectations with fourteen 0:03:32.720 --> 0:03:36.400 point five billion dollars in revenue, boosted by strong software sales, 0:03:36.640 --> 0:03:39.400 but shares falling today is the company warned of delayed 0:03:39.440 --> 0:03:44.600 contracts due to economic uncertainty. IBM CEO Aarvin Krishna spoke 0:03:44.640 --> 0:03:47.880 to Caroline and said, quote, it's a dynamic environment where 0:03:47.880 --> 0:03:50.040 things are changing. We want to stay focused on the 0:03:50.080 --> 0:03:52.440 business and there's still a lot of business to be had. 0:03:52.520 --> 0:03:56.440 People are going to remain invested in tech. Ana rag Rana, 0:03:56.480 --> 0:03:58.880 a Bloomberg Intelligence joins us with his analysis, and I 0:03:58.880 --> 0:04:02.400 think about big blue right shift to software and consultancy. 0:04:02.840 --> 0:04:05.800 There's what they said and then there's weather. What they 0:04:05.800 --> 0:04:09.760 said is reflected in the forecast. Does IBM really understand 0:04:09.800 --> 0:04:11.320 how the economy is changing right now? 0:04:11.320 --> 0:04:11.920 In a rag. 0:04:13.280 --> 0:04:15.520 See to be very frank, I was surprised that the 0:04:15.600 --> 0:04:17.800 stocks down because you know, if you look at it, 0:04:17.839 --> 0:04:24.440 their consulting business is extremely susceptible to downgrades or deceleration. 0:04:24.920 --> 0:04:27.480 And it was okay, I mean, and they held up guidance, 0:04:27.800 --> 0:04:30.200 But it seems to me that maybe going into the quarter, 0:04:30.680 --> 0:04:35.160 investors were looking for maybe better commentary around software spending. 0:04:35.560 --> 0:04:38.599 Software did decelerate, which is what I mean, at least. 0:04:38.400 --> 0:04:39.240 I was expecting. 0:04:39.680 --> 0:04:41.840 But one of the comments I think that got me 0:04:41.960 --> 0:04:45.680 my attention was that the company's guidance does not take 0:04:45.760 --> 0:04:51.560 into account any material deterioration in economic climate or spending climate. 0:04:51.760 --> 0:04:54.200 And I think that's probably what's causing a little bit 0:04:54.279 --> 0:04:57.680 of hiccup because you know, we all know that if 0:04:57.760 --> 0:05:00.960 the tariff stocks don't, you know, hold true, and some 0:05:01.000 --> 0:05:04.080 of these spendings will will hit really hardbreak that has 0:05:04.120 --> 0:05:07.320 an impact on second half growth, not just for IBM, 0:05:07.360 --> 0:05:10.080 but the entire services and the software sector. 0:05:10.880 --> 0:05:14.120 Anna Agrana, Bloomberg Intelligence, the deep dive on IBM. We 0:05:14.200 --> 0:05:16.520 thank you. Let's go broader with earnings and the tech 0:05:16.560 --> 0:05:19.920 market volatility. More broadly, Anna Rathman's with US Seedbiz Investment 0:05:19.960 --> 0:05:23.479 Advisory Services, Global Market Structures previously and joining us as 0:05:23.600 --> 0:05:26.800 an investment strategist. Anna, I'm really interested as to what 0:05:26.880 --> 0:05:31.200 we glean from say Arvin over at IBM, he's saying, look, 0:05:31.240 --> 0:05:34.839 he puts a low probability on negative global GDP, and 0:05:34.920 --> 0:05:37.760 he's trying to say his business is resilient to any 0:05:37.880 --> 0:05:42.080 macro headwinds here more broadly, but he's also telling us, look, 0:05:42.120 --> 0:05:46.000 I'm worried about the implication of us the sentiment against 0:05:46.080 --> 0:05:50.080 American businesses. How are you hearing that during this earning season. 0:05:51.279 --> 0:05:52.919 Yeah, I mean, I think there is a lot of 0:05:52.960 --> 0:05:57.360 uncertainty still. I mean the terriff, the tariff talk is 0:05:57.400 --> 0:06:00.920 actually causing a lot more damage in terms of reallylationships. 0:06:00.960 --> 0:06:03.560 And I think that's going to be the longer term uncertainty. 0:06:03.760 --> 0:06:06.080 Is even if we arrive at some kind of a 0:06:06.120 --> 0:06:10.240 tariff situation where everyone agrees, what happens to all of 0:06:10.279 --> 0:06:12.760 those negative feelings in terms of being able to trust 0:06:12.800 --> 0:06:15.440 each other and to be able to do business together. 0:06:15.760 --> 0:06:18.120 I think this is going to be a longer term damage. 0:06:18.160 --> 0:06:21.640 To be honest with you, You're damned if you do 0:06:21.800 --> 0:06:23.359 and danned if you don't. If you think about what 0:06:23.360 --> 0:06:27.039 Anaag was just saying about IBM, his thesis is that 0:06:27.120 --> 0:06:31.480 they are not taking into account a deteriorating economic environment. 0:06:32.120 --> 0:06:34.279 But say they had cut guidance. I mean, then what 0:06:34.320 --> 0:06:36.400 would you do. I mean, what is it that you 0:06:36.440 --> 0:06:39.039 think the investor wants to hear from the company right now? 0:06:39.240 --> 0:06:42.280 A cut or adjustment to guidance, or just hold until 0:06:42.279 --> 0:06:43.160 you've got more information. 0:06:43.960 --> 0:06:47.960 Yeah, I'm not sure if you can give good guidance 0:06:48.000 --> 0:06:50.760 at this point, because you know, the tariffs. 0:06:50.800 --> 0:06:52.720 I mean, that's one thing. It's unilateral. 0:06:52.839 --> 0:06:55.680 We're talking about it at like a thirty thousand foot level. 0:06:56.000 --> 0:06:59.000 How it actually trickles down to actual supply chains and 0:06:59.080 --> 0:07:03.440 businesses and what choices management teams make in the face 0:07:03.480 --> 0:07:05.240 of this headwind. 0:07:05.640 --> 0:07:06.680 That's the unknown. 0:07:07.120 --> 0:07:12.560 So in terms of negative GDP, maybe perhaps there might 0:07:12.600 --> 0:07:14.280 be other alliances that are being made. 0:07:14.320 --> 0:07:17.440 We just don't know. But in terms of guidance, it's 0:07:17.520 --> 0:07:18.880 almost difficult to know. 0:07:19.800 --> 0:07:21.680 And even if they were to give guidance, I think 0:07:21.680 --> 0:07:23.760 we have to take with a huge grain of salt. 0:07:23.880 --> 0:07:27.920 So right now, I think investors, I think the best 0:07:27.920 --> 0:07:30.080 bet is to just hold and watch. 0:07:31.840 --> 0:07:35.400 One interesting angle out of Texas Instruments earnings was the 0:07:35.440 --> 0:07:38.880 idea that they had a good first three months of 0:07:38.920 --> 0:07:42.080 the year, but they said that was not necessarily reflective 0:07:42.080 --> 0:07:45.520 of people front running tariffs. How do you interpret that 0:07:45.600 --> 0:07:48.600 we had a lot of soft data from PC shipments, 0:07:48.600 --> 0:07:51.800 for example, smartphone shipments that very much told us in 0:07:51.840 --> 0:07:55.360 the world of technology, companies were front running tariffs in 0:07:55.400 --> 0:07:56.480 the first three months of the year. 0:07:57.960 --> 0:08:02.000 Yeah, I mean, I think companies that that consumers did that, 0:08:02.920 --> 0:08:05.760 and so really we don't have that much information because 0:08:05.800 --> 0:08:09.640 Liberation Day wasn't even a month ago, right, So you know, 0:08:10.160 --> 0:08:13.120 time this to the FED speek this morning about how 0:08:13.120 --> 0:08:15.840 we may have some economic numbers by June to be 0:08:15.880 --> 0:08:16.840 able to do something. 0:08:16.960 --> 0:08:18.080 I think that's too early. 0:08:18.480 --> 0:08:20.760 I think there's a lot of distortion in the data 0:08:21.360 --> 0:08:24.120 in terms of front running as well as just holding 0:08:24.160 --> 0:08:27.520 and waiting and watching with baited breath. I don't think 0:08:27.560 --> 0:08:30.560 there's going to be enough data for either investors or 0:08:30.800 --> 0:08:33.600 policy makers to be able to do anything definitively. 0:08:34.480 --> 0:08:38.440 So, Anna, if you're an investor and you haven't sold 0:08:38.480 --> 0:08:42.920 out during prior to any of this turbulence, do you 0:08:43.120 --> 0:08:45.480 just stay the course? Do you remain long the names 0:08:45.679 --> 0:08:48.320 that you've been committed to prior to this, and just 0:08:48.360 --> 0:08:50.320 hold steady until we come out the other side of 0:08:50.320 --> 0:08:53.960 what is a very much self induced period of instability. 0:08:54.920 --> 0:08:58.920 Yeah, I think that the self induced is right. I 0:08:58.960 --> 0:09:03.600 think US management can't make any real decisions at the 0:09:03.640 --> 0:09:07.160 moment or give guidance. I think it's difficult for investors 0:09:07.200 --> 0:09:09.200 to say either sell or buy. 0:09:10.160 --> 0:09:12.640 I think there it is very much a wait and see. 0:09:12.880 --> 0:09:15.640 Now if you're a long term investor, if your short term, 0:09:15.720 --> 0:09:18.160 I mean, the choices are to just sit and wait. 0:09:18.360 --> 0:09:21.240 You're long term investor, I don't think any of the 0:09:21.280 --> 0:09:22.560 propositions that. 0:09:22.440 --> 0:09:25.120 We have around AI, around tech and. 0:09:25.120 --> 0:09:29.640 Tech dominance is changing for you. So tech is still quality. 0:09:30.160 --> 0:09:31.800 They've got very good balance sheets. 0:09:32.080 --> 0:09:34.600 Tech is still utility in terms of the fact that 0:09:34.880 --> 0:09:37.760 modern life just doesn't work without tech. So if you're 0:09:37.760 --> 0:09:40.360 a long term investor, taking the course is not a 0:09:40.400 --> 0:09:41.240 bad idea either. 0:09:41.800 --> 0:09:44.520 Which corner of the technology market is going to come 0:09:44.679 --> 0:09:47.240 hurtling out of whatever happens next? Anna give me one 0:09:47.240 --> 0:09:49.040 specific area you're most excited about. 0:09:50.240 --> 0:09:53.959 You know, hardware has taken a lot of hit because 0:09:54.120 --> 0:09:57.800 of not only terrorists, but because of the strained relationship 0:09:57.800 --> 0:10:01.959 with China. But I think hardware is is actually maybe 0:10:02.000 --> 0:10:06.400 over sold and maybe are still a good bed. You're 0:10:06.400 --> 0:10:09.680 going to need hardware to develop software that's not going away, 0:10:10.120 --> 0:10:13.640 So I don't think there's anything bad to say necessarily 0:10:13.640 --> 0:10:17.600 for the long term for hardware, I would say maybe 0:10:17.640 --> 0:10:20.440 the bad news wouldn't hit hardware as much as it 0:10:20.480 --> 0:10:23.080 may software, given that it has sold off so much. 0:10:23.880 --> 0:10:26.040 You're going to need hardware to develop software. As the 0:10:26.040 --> 0:10:28.640 line that CEOs all over this planet are telling themselves 0:10:28.640 --> 0:10:31.199 every day at the moment, and are AFTEN consulting local 0:10:31.240 --> 0:10:32.000 market strategists. 0:10:32.040 --> 0:10:32.800 Thank you very much. 0:10:40.160 --> 0:10:44.200 Service now shares surging best state since twenty thirteen after 0:10:44.280 --> 0:10:47.679 earnings showed that the software demand looks pretty resilient despite 0:10:47.679 --> 0:10:50.480 the economic threat of tarists and the government's cost cutting efforts. 0:10:50.559 --> 0:10:52.800 I spoke with the CEO a little McDermott about it's 0:10:52.800 --> 0:10:53.720 pretty rosy outlook. 0:10:54.000 --> 0:10:58.760 Why we're so well positioned for this moment is companies today. 0:10:59.160 --> 0:11:02.400 You know, let's take auto industry as an example. You know, 0:11:02.559 --> 0:11:06.160 tariffs are on the table and that industry is affected. 0:11:06.679 --> 0:11:10.440 So these companies have to think about the marketplace very, 0:11:10.480 --> 0:11:13.320 very differently. They have to reorient their supply chains in 0:11:13.360 --> 0:11:16.440 real time, and only AI can do that. And you say, well, 0:11:16.480 --> 0:11:19.120 why do I have to do that? There's thirty thousand 0:11:19.160 --> 0:11:22.679 parts that go into manufacturing a single vehicle. They may 0:11:22.720 --> 0:11:25.480 not be able to pass on the ten thousand dollars 0:11:25.480 --> 0:11:29.199 increase to the consumer. So companies like Service Now can 0:11:29.240 --> 0:11:32.200 get them to tier two and three suppliers, sign up 0:11:32.240 --> 0:11:35.880 new suppliers in real time, and position these companies to win. 0:11:36.400 --> 0:11:39.000 And this is true in every industry. It could be insurance, 0:11:39.040 --> 0:11:42.560 it could be pharma, it could be retail manufacturing. It's 0:11:42.640 --> 0:11:46.360 all in the focus of Service Now to help these 0:11:46.360 --> 0:11:47.240 companies innovate. 0:11:47.600 --> 0:11:52.160 Let's go from private companies to the public sector. And 0:11:52.240 --> 0:11:54.800 I know that you've won a federal contract, but many 0:11:54.880 --> 0:11:57.280 had a lot of anxiety about what DOSEE meant for you. 0:11:57.280 --> 0:11:59.880 You said, those loves you, but why would those love 0:11:59.880 --> 0:12:00.679 you at this moment. 0:12:01.400 --> 0:12:05.800 Well, we're laser focused on modernizing government and elevating how 0:12:05.800 --> 0:12:09.240 it serves the American people in the US. And what's 0:12:09.280 --> 0:12:13.080 really interesting about DOZE it has formed a standard that 0:12:13.200 --> 0:12:17.360 other governments around the world are following. So our public 0:12:17.400 --> 0:12:21.560 sector business was up thirty percent year on year. We 0:12:21.679 --> 0:12:25.600 had six new public sector logos, including one large US 0:12:25.640 --> 0:12:29.680 federal agency. We have eleven federal deals greater than a million, 0:12:29.720 --> 0:12:32.280 and two of them were greater than five million. And 0:12:32.360 --> 0:12:36.280 this is net new software sales. So This is kind 0:12:36.280 --> 0:12:40.640 of a big moment because we are the only software 0:12:40.679 --> 0:12:45.040 platform I'm personally aware of that can take out billions 0:12:45.080 --> 0:12:48.319 in cost in government around the world, and certainly the 0:12:48.480 --> 0:12:52.360 United States is looking at that very closely, and we're excited. 0:12:52.480 --> 0:12:55.000 I mean, have you spoken to Elon about the work 0:12:55.000 --> 0:12:57.280 that he's doing. How did you make sure that you 0:12:57.440 --> 0:12:59.800 were protected in this moment to be able to bring 0:12:59.840 --> 0:13:01.520 the transformation, bring the efficiency. 0:13:02.120 --> 0:13:05.240 Well, you have to remember the agencies are run by 0:13:05.559 --> 0:13:10.640 amazing public servants and great leaders, and DOEGE is doing 0:13:10.840 --> 0:13:15.280 the right thing. They obviously want to make good for 0:13:15.440 --> 0:13:18.960 the American people, so the tax payers get their benefits. 0:13:19.400 --> 0:13:22.719 Our platform is front and center and helping them do that. 0:13:22.800 --> 0:13:25.960 You know, there's systems like COBOL systems in there and 0:13:26.040 --> 0:13:30.240 government entities since nineteen fifty nine, and then the twentieth 0:13:30.240 --> 0:13:36.280 century architectures where all of these legacy systems were departmentally organized, 0:13:36.720 --> 0:13:41.400 and then there was Maverick buying over decades of different administrations. 0:13:41.520 --> 0:13:45.520 We can come in there and consolidate all of these 0:13:45.600 --> 0:13:49.800 spends onto the Service Now platform and replace hundreds of systems. 0:13:50.320 --> 0:13:51.719 And who wouldn't want to do that? 0:13:52.480 --> 0:13:55.280 Service Now CEO Bill McDermott. Let's dig in more. Brody 0:13:55.360 --> 0:13:57.640 Ford is with us, who's been busy covering all of 0:13:57.679 --> 0:14:01.559 these earnings. Brody, we were all surprised by the resilience 0:14:01.960 --> 0:14:04.640 versus the public sector. But more broadly, they're just showing 0:14:04.640 --> 0:14:07.040 current remaining performance obligations are really strong. 0:14:08.520 --> 0:14:11.000 Exactly so yet meet right, it's been a kind of 0:14:11.080 --> 0:14:14.000 funky moment for the economy. Everyone's wondered if you're a 0:14:14.040 --> 0:14:17.280 software vendor, you're not impacted by tariffs, what does this 0:14:17.440 --> 0:14:20.480 mean for you? And what Service Now has shown us 0:14:20.600 --> 0:14:24.800 is maybe not a whole lot. The results were very solid. 0:14:24.840 --> 0:14:27.600 I mean, the stock was down like twenty some percent 0:14:27.840 --> 0:14:31.400 headed in through the results, and so expectations were quite low, 0:14:31.840 --> 0:14:34.280 but they did surpass that and they were able to 0:14:34.360 --> 0:14:37.280 show that, at least for the time being, not a 0:14:37.280 --> 0:14:39.720 whole lot of impacts from all the economic kind of 0:14:39.960 --> 0:14:42.040 chaos and fear we've been seeing out there. 0:14:42.560 --> 0:14:43.960 Right, what he. 0:14:44.040 --> 0:14:48.240 Had to say, Bill McDermott showed confidence. But actually we 0:14:48.320 --> 0:14:51.400 probably should focus on the full year guidance because the 0:14:51.400 --> 0:14:56.640 full year guidance definitely reflects the political uncertainty and perhaps 0:14:56.640 --> 0:14:57.920 in caution Brady. 0:14:59.000 --> 0:15:03.040 Correct, Yeah, factor in the currency it was just the 0:15:03.080 --> 0:15:07.280 slightest cut from their previous guidance in that environment. That's 0:15:07.320 --> 0:15:11.280 pretty good. They say in their commentary that the guidance 0:15:11.360 --> 0:15:15.760 reflected some caution that you know, they even though the 0:15:15.800 --> 0:15:19.160 trends were good, that they gave a conservative guidance because 0:15:19.200 --> 0:15:21.800 it allowed them to essentially, if things go a little 0:15:21.840 --> 0:15:24.040 wrong later in the year, they won't have to cut again, 0:15:24.760 --> 0:15:26.640 because yeah, it's still an open question. I mean, if 0:15:26.640 --> 0:15:29.320 we head into a true recession or if there's more 0:15:29.320 --> 0:15:33.479 aggressive federal cost cuts, Service now will not be immune. 0:15:33.600 --> 0:15:36.040 It was interesting Morgan Stanley's saying that they're de risking 0:15:36.120 --> 0:15:38.800 their forward guidance, but Brody, they also highlight how strong 0:15:38.800 --> 0:15:42.080 they've been in terms of generative AI. Are we back 0:15:42.120 --> 0:15:44.600 to talking about some of the efficiency that we've all 0:15:44.680 --> 0:15:47.560 been promised some of the productivity. 0:15:47.720 --> 0:15:50.680 Yes, every company right now is singing the song of 0:15:51.080 --> 0:15:54.760 our generative AI product is driving revenue. Not a ton 0:15:54.800 --> 0:15:58.440 of them are breaking out super specifically what that means. 0:15:58.480 --> 0:16:02.120 Service now has given some numbers, some guides, but I 0:16:02.240 --> 0:16:06.360 think still the generative AI uplift most analysts expect that 0:16:06.480 --> 0:16:09.120 to come next year, even the year after in a 0:16:09.200 --> 0:16:12.120 significant way, but still that's where the big growth bet 0:16:12.240 --> 0:16:14.720 is for all these companies. In service Now's case, it 0:16:14.840 --> 0:16:17.440 is a higher tier product that you would buy. You 0:16:17.480 --> 0:16:20.560 would uplift your license to be able to access the 0:16:20.600 --> 0:16:23.520 generative AI tools, and so certainly if you're a salesperson 0:16:23.560 --> 0:16:26.000 there that is priority number one right now. 0:16:26.400 --> 0:16:28.880 The most Brady Ford terrific reporting, Thank you very much. 0:16:29.120 --> 0:16:32.400 Coming up, Alphabet's cloud unit is expected to show growth 0:16:32.640 --> 0:16:35.080 off the back of the company's AI push. We'll discuss 0:16:35.280 --> 0:16:38.480 what's expected from the Google parents' earnings. This is what 0:16:38.520 --> 0:16:42.280 financial markets look like right now in the context of technology. 0:16:42.360 --> 0:16:44.920 So at the index level and as that one hundred, 0:16:44.960 --> 0:16:46.760 the vast majority of names are in the green. 0:16:46.800 --> 0:16:47.240 It is the. 0:16:47.200 --> 0:16:48.840 Megacaps that are pushing us higher. 0:16:48.960 --> 0:16:51.400 Though it's interesting that this is kind of broad based 0:16:51.440 --> 0:16:54.080 all corners of the tech market. You have software names, 0:16:54.120 --> 0:16:57.960 hardware names, social media names as well continuing to push higher. 0:16:58.040 --> 0:17:00.680 There is some reverberation of fear fe good. I would 0:17:00.720 --> 0:17:03.600 say from those names that we just covered. The earnings 0:17:03.640 --> 0:17:06.399 of Bitcoin is put off the gas a little bit 0:17:06.440 --> 0:17:10.240 in the moment, ninety hundred US dollars per token back. 0:17:10.359 --> 0:17:11.960 You know, we're four days into a week where we 0:17:12.000 --> 0:17:15.280 talked about bitcoin every day having some momentum, behaving like gold. 0:17:15.440 --> 0:17:17.280 There's a lot more to come in this hour. This 0:17:17.440 --> 0:17:38.320 is Bloombog technology. 0:17:33.520 --> 0:17:36.119 Google parent Alphabet. Well, it reports its earnings after the 0:17:36.119 --> 0:17:38.120 market close today. Let's get more and what to expect 0:17:38.119 --> 0:17:40.960 blooemeg Intelligence. As Man Deep singers here, there is a 0:17:41.000 --> 0:17:43.880 whole host of headaches for Alphabet right now, but revenue 0:17:43.920 --> 0:17:45.439 is still set to grow by twelve percent. 0:17:45.800 --> 0:17:49.520 Yeah, and search grew double digits last quarter, so I feel. 0:17:49.280 --> 0:17:50.520 The bar is high. 0:17:50.640 --> 0:17:52.480 And then I look at all the things that have 0:17:52.600 --> 0:17:55.600 transferred since the last time they're reported earnings. I feel 0:17:55.640 --> 0:17:58.800 on the margin it's gonna go down, and especially if 0:17:58.840 --> 0:18:02.320 they miss on search. I mean, you know, overall print, 0:18:02.359 --> 0:18:06.080 no matter how strong cloud is or YouTube is, it's 0:18:06.080 --> 0:18:09.440 not going to matter. So from a profitability perspective, it's 0:18:09.480 --> 0:18:12.720 all about search. And I can't imagine, you know, how 0:18:12.760 --> 0:18:15.840 they beat on the search revenue given all the stuff 0:18:15.880 --> 0:18:19.400 you have heard about t machine and advertisers pulling back 0:18:19.440 --> 0:18:22.440 even though they're ad pricing will be better than peers. 0:18:22.800 --> 0:18:25.080 But on the margin, I think I don't see them 0:18:25.080 --> 0:18:26.480 beating consensus numbers. 0:18:26.720 --> 0:18:27.840 You know what's interesting, Man, deep. 0:18:27.920 --> 0:18:31.159 I've spoken to several CEOs in the supply chain for 0:18:31.280 --> 0:18:34.520 Data Center right and they're so confident that cat TO 0:18:34.600 --> 0:18:37.960 expenditures will continue to rise on a multi year horizon. 0:18:38.520 --> 0:18:40.679 Google told us a number. 0:18:41.600 --> 0:18:47.040 How important is it or not that Google specifically sticks 0:18:47.080 --> 0:18:49.800 with that spending plan for the rest of the magnetic 0:18:49.840 --> 0:18:50.960 seven names that are to come. 0:18:51.720 --> 0:18:54.760 Absolutely, I think it's table stakes for someone like Google. 0:18:54.960 --> 0:18:57.720 And you know, they don't have a choice but to 0:18:57.800 --> 0:19:01.000 invest in their Gemini model because of the thread from 0:19:01.119 --> 0:19:04.640 CHATGPT and all the LM search vendors. So right now, 0:19:04.680 --> 0:19:07.840 what's insulating them is none of these guys have an 0:19:07.840 --> 0:19:11.800 AD platform. They're monetizing the engagement through subscriptions, but there 0:19:11.880 --> 0:19:15.160 is no doubt that they are taking volume of the searches, 0:19:15.200 --> 0:19:18.440 and so from that perspective, Google will see the impact 0:19:18.440 --> 0:19:21.440 in their volume. It's just if you're an online business, 0:19:21.640 --> 0:19:23.680 you have no way out but to spend your money 0:19:23.720 --> 0:19:26.240 on Google. And even in a recessionary environment, what we 0:19:26.280 --> 0:19:29.080 have seen is Google is the most insulated. That will 0:19:29.080 --> 0:19:30.960 remain the case when it comes to the ads spend, 0:19:31.000 --> 0:19:31.720 at least for now. 0:19:32.480 --> 0:19:34.879 At least for now at the moment, there's a whole 0:19:34.960 --> 0:19:37.560 host of anti trust issues, and I'm interested in just 0:19:37.680 --> 0:19:40.280 whether you think we'll hear a lot of analyst calls 0:19:40.320 --> 0:19:43.200 and requests to know more about that. How they preserve 0:19:43.240 --> 0:19:44.560 the business model in the face of it. 0:19:44.720 --> 0:19:47.480 Oh, absolutely, the Chrome one is huge. I mean, I 0:19:47.600 --> 0:19:49.960 think what they're going to do is with the Viz 0:19:49.960 --> 0:19:55.240 acquisition really deploy AI inside Chrome. So losing Chrome will 0:19:55.280 --> 0:19:58.879 be just catastrophic for Google. So from that perspective, that 0:19:58.960 --> 0:20:01.239 case is huge. I mean, they may have to do 0:20:01.280 --> 0:20:04.080 some remedies. They've already talked about keeping the cookies and 0:20:04.119 --> 0:20:07.200 all that, but at the end of the day, Chrome 0:20:07.359 --> 0:20:09.959 is how they have the distribution when it comes to 0:20:10.000 --> 0:20:12.840 their Gemini two point five model, which is just getting 0:20:12.840 --> 0:20:15.000 great review. So in the end, it comes down to 0:20:15.040 --> 0:20:18.360 having distribution, and Google has that with Chrome as well 0:20:18.359 --> 0:20:21.600 as the Android ecosystem, but Chrome is very important to 0:20:21.640 --> 0:20:24.560 cut it across the iOS and all the other devices. 0:20:25.000 --> 0:20:28.520 The Duck Duck Go CEO testified in that case and 0:20:28.600 --> 0:20:31.760 he put a fifty billion dollar or more value on Chrome, 0:20:32.080 --> 0:20:35.560 which I found fascinating. Same question I've asked you every 0:20:35.640 --> 0:20:39.240 year since I've lived in America. Does the stop reflect 0:20:39.280 --> 0:20:42.879 the antitrust risk that you continue to talk about and. 0:20:43.000 --> 0:20:45.840 Does I think right now Google is at the lowest 0:20:45.920 --> 0:20:49.320 valuation when it comes to all the max seven names 0:20:49.440 --> 0:20:53.080 in terms of multiples. So from that perspective, the chatchipt thread, 0:20:53.200 --> 0:20:57.359 the regulatory risks are reflected in the valuation. But like 0:20:57.400 --> 0:21:00.600 I said, you know, if something happens to that search revenue, 0:21:00.880 --> 0:21:04.280 then suddenly all the earning estimates are going to get 0:21:04.320 --> 0:21:07.959 revised lower. So from Google's perspective, you know, cloud is 0:21:07.960 --> 0:21:10.560 not how they make their money. It's search, and that's 0:21:10.600 --> 0:21:13.240 why it's all the more important to keep that intact. 0:21:13.320 --> 0:21:15.159 You know, when it comes to the regulatory risks that 0:21:15.200 --> 0:21:15.760 are out there. 0:21:16.400 --> 0:21:19.280 I bring it up because the DOJ is seeking divestment 0:21:19.640 --> 0:21:22.400 of Chrome, which would be a big thing. Bloomberg Intelligence 0:21:22.440 --> 0:21:24.040 is man deep saying terrific analysis. 0:21:24.080 --> 0:21:24.800