WEBVTT - Amazon Falls as Profit Outlook, Cloud Growth Spook Investors 0:00:02.720 --> 0:00:10.600 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.600 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:14.640 --> 0:00:18.560 Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 0:00:18.640 --> 0:00:21.880 Listen on demand wherever you get your podcasts, or watch 0:00:21.960 --> 0:00:23.280 us live on YouTube. 0:00:23.480 --> 0:00:26.880 I'm looking at Amazon stocks down seven point two percent today. 0:00:26.920 --> 0:00:29.319 I don't know anytime I see Amazon trade down like that, 0:00:29.440 --> 0:00:31.240 I'm like, boy, if I had a portfolio manager, you 0:00:31.280 --> 0:00:33.159 got to be thinking about this is a good time. 0:00:33.200 --> 0:00:36.720 It's flat ear to date, so certainly underperforming the marketplace here. 0:00:37.040 --> 0:00:38.519 They put out some numbers last night a little bit 0:00:38.520 --> 0:00:42.600 disappointing on their guidance, and some questions about the cloud 0:00:42.640 --> 0:00:44.000 and kind of the growth rates there and all that 0:00:44.080 --> 0:00:44.920 kind of stuff. 0:00:44.680 --> 0:00:45.240 Put them boil. 0:00:45.560 --> 0:00:48.080 She follows the company, she follows the stock. She's a 0:00:48.240 --> 0:00:51.400 senior US e commerce and retail analysts for Bloomberg Intelligence. 0:00:51.440 --> 0:00:54.120 Put on, what did you take away from the quarter 0:00:54.240 --> 0:00:54.639 last night? 0:00:55.800 --> 0:00:57.680 Yeah, thanks, Paul, So I think you know. The quarter 0:00:57.720 --> 0:01:00.480 had two mixed streets. The first found the reach side 0:01:00.480 --> 0:01:03.720 things were actually pretty well. Sales grew double digits on 0:01:03.760 --> 0:01:06.280 the retail front, and that was higher than we expected 0:01:06.680 --> 0:01:09.679 shows that value is driving shoppers to amaz about Amazon 0:01:09.720 --> 0:01:13.240 dot COM's retail platform, and prices aren't going up, so 0:01:13.280 --> 0:01:16.280 shoppers are still buying, at least on Amazon dot Com. 0:01:16.400 --> 0:01:19.679 The second side of the story is Amazon's AWS business, 0:01:19.920 --> 0:01:22.000 and I think that's where you're seeing the sell off 0:01:22.040 --> 0:01:25.560 come from. They were disappointing, plain and simple. We saw 0:01:25.600 --> 0:01:29.080 Microsoft and Google. They both outperformed when they reported, and 0:01:29.200 --> 0:01:32.200 Amazon was just in line on the sales side, but 0:01:32.400 --> 0:01:36.600 operating margins were much weaker thirty two percent. That's off 0:01:36.600 --> 0:01:39.959 of thirty nine plus percent in the last quarter. The 0:01:40.000 --> 0:01:42.360 guidance was also weak on the margin side, and I 0:01:42.400 --> 0:01:45.679 think that's really what's causing the stops slide today morning. 0:01:46.600 --> 0:01:50.640 Anyone who was watching Sharer's postmarket yesterday after their results 0:01:51.000 --> 0:01:54.400 watched them fall, you know so much. During that earnings call, 0:01:55.080 --> 0:01:57.720 during Andy Jase's comments, what did he say that was 0:01:57.720 --> 0:01:58.920 so concerning to investors. 0:02:00.080 --> 0:02:03.200 I think it was basically that it's a slow and 0:02:03.240 --> 0:02:07.000 steady climb from here. It's not overnight, right. Amazon is 0:02:07.240 --> 0:02:10.480 not getting the benefit of like the chat GBT that 0:02:10.560 --> 0:02:14.080 my soft is seeing. They are investing in enterprise clients. 0:02:14.160 --> 0:02:16.360 The B to B side of the cloud business, and 0:02:16.400 --> 0:02:19.880 that has plenty of growth ahead. But that growth isn't 0:02:19.880 --> 0:02:22.880 going to come overnight. It's going to come year by year. 0:02:23.080 --> 0:02:26.760 We're still very, very optimistic that Amazon has a long 0:02:26.840 --> 0:02:29.160 runway for growth here, both on the cloud and the 0:02:29.200 --> 0:02:32.400 retail side, and also advertising, which grew nicely at over 0:02:32.480 --> 0:02:36.200 twenty two percent. So the results to us, you know, 0:02:36.400 --> 0:02:41.120 suggest a small slow down, but we think Amazon's earnings 0:02:41.160 --> 0:02:44.000 will e've and flow, but the path forward is still 0:02:44.120 --> 0:02:44.960 up in our mind. 0:02:46.000 --> 0:02:48.280 It's August first, so I guess I have to ask 0:02:48.440 --> 0:02:51.960 this question. I hate to do it because I'm personally saying, hey, 0:02:51.960 --> 0:02:54.160 we're only halfway through summer here, but the reality is 0:02:54.919 --> 0:02:58.280 back to school spending. What's Amazon saying here about back 0:02:58.320 --> 0:02:59.239 to school spending here? 0:03:00.160 --> 0:03:02.240 So they're saying much yet, but back to school is 0:03:02.240 --> 0:03:05.240 clearly the second largest holiday shopping season of the year. 0:03:05.600 --> 0:03:08.520 We think, given Amazon's outperformance here to date on the 0:03:08.560 --> 0:03:11.400 retail side, they will continue to draw in back to 0:03:11.400 --> 0:03:15.600 school spending at this time. Consumers want value. They think 0:03:15.680 --> 0:03:18.720 prices are going up. Prices are going up to some extent, 0:03:18.760 --> 0:03:20.880 but they haven't gone up that much, which is why 0:03:20.880 --> 0:03:23.840 retails holding up. When you're looking for school supplies. You're 0:03:23.840 --> 0:03:26.240 going to Amazon, You're going to Walmart, You're going to 0:03:26.280 --> 0:03:27.840 where you can find value. 0:03:28.960 --> 0:03:31.360 How much of this reaction in Amazon has to do 0:03:31.440 --> 0:03:33.520 with the facts that it was just bad timing for them, 0:03:33.520 --> 0:03:36.520 that they're facing much tougher comparisons after some of the 0:03:36.560 --> 0:03:38.160 other megacaps reported results. 0:03:39.560 --> 0:03:42.640 Comparisons are going to remain tough on the cloud side 0:03:42.680 --> 0:03:44.880 for years to come, because you will continue to see 0:03:44.920 --> 0:03:47.600 growth in the double digit range. I think more of 0:03:47.640 --> 0:03:51.600 it has to do with just Amazon's results were not bad. 0:03:52.000 --> 0:03:54.960 They were pretty good. It's just say weren't as good 0:03:55.080 --> 0:03:58.600 as Microsoft and Google. And that does go back to 0:03:58.640 --> 0:04:01.040 what I said earlier. They own to get the benefit 0:04:01.080 --> 0:04:03.839 of the C two C side of cloud growth that 0:04:04.520 --> 0:04:06.960 those two competitors get. 0:04:08.000 --> 0:04:10.120 So on the retail side. 0:04:10.120 --> 0:04:12.320 Here with teriffs, we now have a clear picture of 0:04:12.400 --> 0:04:15.480 kind of how the TERFF situation might shake out. I 0:04:15.600 --> 0:04:17.920 got to feel like Amazon, I mean, nobody's got more, 0:04:18.360 --> 0:04:21.159 you know, buying power than Amazon, so I can't somebody 0:04:21.160 --> 0:04:22.800 tries to raise the prices on me, I'd be like, 0:04:23.160 --> 0:04:23.919 don't take a walk. 0:04:24.000 --> 0:04:25.479 I mean, what are they saying? 0:04:26.600 --> 0:04:29.560 Yeah, I think you know, clearly prices are going to 0:04:29.680 --> 0:04:33.520 rise slightly. Is Amazon more shielded than the rest of retail? 0:04:33.839 --> 0:04:37.440 I think absolutely. As to your point, Paul, seven hundred 0:04:37.480 --> 0:04:41.240 plus billion dollars in global GMB, forty percent of the 0:04:41.320 --> 0:04:45.000 business or less than forty percent is first part which 0:04:45.040 --> 0:04:47.520 is which means that's the inventory that they own, and 0:04:47.560 --> 0:04:51.400 that's the inventory where they have pricing control over still 0:04:51.560 --> 0:04:55.040 sizable and therefore they do have that buying power advantage. 0:04:55.080 --> 0:04:58.160 And they also have o their offsets. Right, Amazon has 0:04:58.360 --> 0:05:01.719 more than just retail in its house. It's got a WS, 0:05:01.760 --> 0:05:04.880 it's got advertising, which you are very very high profit margins. 0:05:05.120 --> 0:05:08.080 So could they eat some of that cost absolutely? Will 0:05:08.120 --> 0:05:10.880 they pass them along, yes, but not on the basics 0:05:10.960 --> 0:05:13.520 right retail, one on one, you don't raise the price 0:05:13.560 --> 0:05:15.960 of milk. You raise the price of something else. So 0:05:16.040 --> 0:05:19.840 the items that you draw you to the platform, they're 0:05:19.839 --> 0:05:21.680 not going to raise the price of materially there or 0:05:21.680 --> 0:05:24.760 we don't expect them to. And on the third party side, 0:05:24.839 --> 0:05:27.839 that's on Amazon's problem. They have over two hundred million sellers. 0:05:28.279 --> 0:05:30.720 You can go between the seller. I'm sure that there 0:05:30.720 --> 0:05:34.400 will be intense competition as prices may rise there for 0:05:34.560 --> 0:05:36.400 shoppers to have choices. 0:05:37.080 --> 0:05:39.839 We have more clarity on tariffs than we did before. 0:05:39.920 --> 0:05:42.560 But there's this idea that tariff policy is still in 0:05:42.600 --> 0:05:45.000 a flux in the final framework could change. How much 0:05:45.040 --> 0:05:48.320 do you think that will impact Amazon's decision making from 0:05:48.320 --> 0:05:49.400 this point? 0:05:50.240 --> 0:05:53.560 I think for Amazon, you know, tariffs right now the 0:05:53.600 --> 0:05:56.040 way we look at them as they're changing. China is 0:05:56.120 --> 0:05:58.680 still on a ninety day pause, right, so we don't 0:05:58.720 --> 0:06:01.000 know where things will end up in China, and that's 0:06:01.040 --> 0:06:03.920 a very very important country to watch for. So I'd 0:06:03.960 --> 0:06:06.880 say we're very much in fox Vietnam, the tariffs have 0:06:06.960 --> 0:06:09.520 gone up from the ten percent post to twenty percent. 0:06:09.839 --> 0:06:13.560 They're also going up in other Asian countries India speculated 0:06:13.640 --> 0:06:16.560 or said to be around twenty five percent. These are 0:06:16.600 --> 0:06:20.320 countries where the last round of tariffs, companies had moved 0:06:20.400 --> 0:06:23.960 out of China into many of these countries. Right, so 0:06:24.360 --> 0:06:26.520 while the teriff freight is still better, right, twenty percent 0:06:26.600 --> 0:06:28.560 is still better than the thirty percent pause, and who 0:06:28.640 --> 0:06:30.840 knows what it'll be among their two months from now. 0:06:30.880 --> 0:06:32.800 All right, for the thanks so much, Punem, thanks so much, 0:06:32.839 --> 0:06:33.320 appreciate it. 0:06:33.360 --> 0:06:36.480 She covers all the retail for Bloomberg Intelligence, including Amazon. 0:06:38.279 --> 0:06:41.960 You're listening to the Bloomberg Intelligence Podcast. Jetch us live 0:06:42.040 --> 0:06:45.159 weekdays at ten am Eastern on Apple, Cocklay and Android 0:06:45.160 --> 0:06:48.479 Auto with the Bloomberg Business App. Listen on demand wherever 0:06:48.520 --> 0:06:51.719 you get your podcasts, or watch us live on YouTube. 0:06:51.839 --> 0:06:54.640 Alexamanova from Bloomberg News on pulps when you were live 0:06:54.640 --> 0:06:56.760 here on our Bloomberg and Active Broker Studio streaming live 0:06:56.839 --> 0:07:00.520 on YouTube as well. All right, Applestock down one and 0:07:00.520 --> 0:07:02.920 a half percent today, down eighteen percent year to date. 0:07:03.080 --> 0:07:06.120 I thought their quarter last night was really good. The 0:07:06.240 --> 0:07:09.640 fastest quarterly revenue growth in more than three years. Revenue 0:07:09.680 --> 0:07:11.920 is of nine point six percent. People telling me this 0:07:11.960 --> 0:07:15.160 is a low, maybe mid single digit growth story. It 0:07:15.160 --> 0:07:17.120 looked pretty darn good to me. They said China was 0:07:17.160 --> 0:07:18.960 even pretty good. And for me, one of the biggest 0:07:18.960 --> 0:07:20.840 head wins for Apple story has always been how are 0:07:20.840 --> 0:07:22.920 you going to operate in China? So I thought it 0:07:23.000 --> 0:07:25.760 was a pretty solid, if not actually kind of really 0:07:25.800 --> 0:07:28.600 good quarter. Angelo Zeno he's the pro who'll give us 0:07:28.760 --> 0:07:30.480 the load down here. He's a senior vice president of 0:07:30.520 --> 0:07:34.120 Equitiani sid C fr A research Angela. What was your 0:07:34.120 --> 0:07:36.040 takeaway from the Apple print last night? 0:07:36.960 --> 0:07:39.200 Yeah, so thanks for having me, I think overall, to 0:07:39.240 --> 0:07:41.800 your point, the results were really good, better than I 0:07:41.840 --> 0:07:45.480 think we anticipated in anybody else out there. And again 0:07:45.480 --> 0:07:47.080 to your point, I mean, this was probably the I 0:07:47.120 --> 0:07:49.520 think the best growth rate we've seen since late calendar 0:07:49.600 --> 0:07:50.400 twenty twenty one. 0:07:51.040 --> 0:07:53.440 And again with China, the return to. 0:07:53.440 --> 0:07:56.400 Growth, the first quarterly growth rate that we saw in 0:07:56.440 --> 0:08:00.560 two years. All kind of positives here for Apple. And 0:08:00.600 --> 0:08:02.800 I think to me that the biggest takeaway or the 0:08:03.240 --> 0:08:06.480 biggest positive on the call was actually the services number. 0:08:06.520 --> 0:08:08.920 They grew thirteen percent year of a year. They actually 0:08:08.960 --> 0:08:12.200 didn't give guidance three months ago, you know, due to 0:08:12.240 --> 0:08:14.440 some fears whether it had been related to they got 0:08:14.480 --> 0:08:16.680 the Games case or what have you, and they actually 0:08:16.680 --> 0:08:20.720 provided guidance for the September quarter as far as services 0:08:20.760 --> 0:08:24.200 is concerned, also about thirteen percent are consistent with the 0:08:24.280 --> 0:08:26.960 June quarter. So the services, we think continues to be 0:08:27.000 --> 0:08:29.800 the key growth story and why we like it. But 0:08:29.920 --> 0:08:32.959 I will say this, as far as the guidance is concerned, 0:08:33.600 --> 0:08:36.079 and what they had to say forward looking in nature, 0:08:36.120 --> 0:08:40.000 they didn't really answer or kind of alleviate the concerns 0:08:40.040 --> 0:08:42.240 out there that some of the bears have, and you know, 0:08:42.280 --> 0:08:44.439 I'd say the biggest thing is really the fact that 0:08:44.480 --> 0:08:47.880 when they did provide guidance, it essentially assumes no changes 0:08:47.960 --> 0:08:48.959 to tariffs, and we. 0:08:48.880 --> 0:08:49.679 Think that's unlikely. 0:08:49.720 --> 0:08:51.959 We actually think there are going to be changes to tariffs, 0:08:52.000 --> 0:08:54.120 because you're going to get something from the two thirty 0:08:54.160 --> 0:08:57.280 two semi conductor investigation, likely in the next couple of weeks, 0:08:57.280 --> 0:08:59.040 and when you do see that, that is going to 0:08:59.080 --> 0:09:02.360 have an impact. We think on Apple, probably their decision 0:09:02.520 --> 0:09:04.440 on what they're going to do in terms of pricing 0:09:04.440 --> 0:09:05.440 in their margin strategy. 0:09:06.000 --> 0:09:09.160 Angelo is speaking of tariffs. How sustainable is that revenue 0:09:09.160 --> 0:09:11.000 growth number that we saw, How much of it is 0:09:11.040 --> 0:09:13.280 related to a tariff related pull in? 0:09:14.440 --> 0:09:16.599 I mean, for the June quarter, they said it was 0:09:16.640 --> 0:09:17.880 one out of their ten points. 0:09:17.960 --> 0:09:18.120 Right. 0:09:18.480 --> 0:09:20.520 Whether or not you want to believe that, you know, 0:09:21.160 --> 0:09:24.079 is up to you know, every individual out there. We 0:09:24.559 --> 0:09:26.800 expect We thought that, you know, when we originally saw 0:09:26.840 --> 0:09:28.520 the print, we would have, you know, bet on the 0:09:28.559 --> 0:09:31.400 fact that it probably would have been more than that. Again, 0:09:31.559 --> 0:09:35.079 for the September quarter, the guidance of you midt to 0:09:35.120 --> 0:09:37.439 high single digit growth where we were looking for about 0:09:37.440 --> 0:09:40.560 three percent growth. It just seems like the growth rates 0:09:40.600 --> 0:09:43.120 at least right now for the for these two quarters, 0:09:43.720 --> 0:09:46.640 you can call they obviously attributed to the fact that 0:09:46.679 --> 0:09:51.160 the iPhone sixteen cycle is just seeing maybe better upgrades 0:09:51.200 --> 0:09:53.520 than what we saw in prior cycles. But it's just 0:09:53.559 --> 0:09:56.520 hard to imagine that's all that's happening because you didn't 0:09:56.520 --> 0:09:58.439 necessarily see those type of growth rates right in the 0:09:58.480 --> 0:10:01.200 December quarter, in the March quarter when the cycle first started. 0:10:01.280 --> 0:10:03.400 So you know, it's. 0:10:03.240 --> 0:10:07.120 Probably a little bit more than what they're leading us 0:10:07.160 --> 0:10:10.880 out to believe. But you know, well, again, we'll get 0:10:10.880 --> 0:10:12.640 better clarity as we kind of go into the iPhone 0:10:12.679 --> 0:10:14.200 seventeen cycle and into December quarter. 0:10:14.640 --> 0:10:15.040 ANGELA. 0:10:15.080 --> 0:10:18.040 One of the headwinds for Apple, real or perceived, I'm 0:10:18.080 --> 0:10:20.800 not sure, is the belief that they don't really have 0:10:20.920 --> 0:10:26.360 a solid AI play AI angle to the story A. 0:10:26.480 --> 0:10:28.280 Do you believe it? Do you agree with that? And 0:10:28.600 --> 0:10:30.199 be what do you think they should be doing on 0:10:30.280 --> 0:10:30.640 that front? 0:10:31.400 --> 0:10:34.280 No, we believe it. You know, they don't have They're not. 0:10:34.840 --> 0:10:36.520 This is the problem right when you kind of look 0:10:36.559 --> 0:10:38.720 at some of these other stories across the tech space, 0:10:38.880 --> 0:10:41.760 there are much better stories as far as the as 0:10:41.840 --> 0:10:42.280 far as. 0:10:42.200 --> 0:10:43.280 Investing in AI. 0:10:43.400 --> 0:10:45.640 We know AI is going to be a huge disruptive 0:10:45.640 --> 0:10:48.360 trend here over the next decade and longer than that. 0:10:48.559 --> 0:10:52.200 But if you're not in this AI kind of ecosystem, 0:10:52.440 --> 0:10:54.960 and you know you're not playing a role in the 0:10:54.960 --> 0:10:58.080 whole AI space, you know you're missing out and investors 0:10:58.080 --> 0:10:59.320 are going to get frustrated with that. 0:10:59.360 --> 0:11:00.400 The biggest is with. 0:11:00.360 --> 0:11:03.800 Apple has been the fact that they haven't they haven't 0:11:03.880 --> 0:11:07.800 made good on their promise. You know, back in June 0:11:07.840 --> 0:11:10.480 of twenty twenty four at the Developers Conference when they 0:11:10.559 --> 0:11:12.840 essentially said by this year we were going to see 0:11:13.480 --> 0:11:17.280 you know AI or you know, Cirie integration across that 0:11:17.360 --> 0:11:19.240 app store, and we just haven't seen it yet. 0:11:19.280 --> 0:11:21.400 What we did like last night on the. 0:11:21.360 --> 0:11:24.560 Call was Tim Cook seemed like he was he remains 0:11:24.559 --> 0:11:26.440 committed that we are going to see at some point 0:11:26.480 --> 0:11:28.640 here over the next couple of quarters. We continue to 0:11:28.640 --> 0:11:30.240 say they've got to get this right. By the time 0:11:30.240 --> 0:11:32.640 we hit the Developers Conference in June of next year. 0:11:32.679 --> 0:11:35.240 That's the absolute latest that they can get this AI 0:11:35.480 --> 0:11:37.880 story right. We think they will get it right. They've 0:11:37.920 --> 0:11:39.280 got all the money in the world to kind of 0:11:39.280 --> 0:11:42.640 throw at it, and whether it be done internally via 0:11:42.679 --> 0:11:45.400 partnerships or some m and a strategy all which it 0:11:45.440 --> 0:11:48.360 seems like they were open to on the call last night. 0:11:48.880 --> 0:11:49.839 We think they'll get it right. 0:11:50.640 --> 0:11:54.000 Obviously a lot of investors want to hear what companies 0:11:54.000 --> 0:11:56.400 are doing on AI. But does Apple actually risk losing 0:11:56.480 --> 0:11:58.800 customers if they don't come up with an AI strategy 0:11:58.960 --> 0:12:01.600 or will they be okay with using each hot GPT 0:12:01.679 --> 0:12:02.520 app on their phones. 0:12:04.480 --> 0:12:05.400 That's a great question. 0:12:05.520 --> 0:12:07.880 You know, I don't know if they really risk losing 0:12:08.640 --> 0:12:10.640 you know, customers at this point in time. I do 0:12:10.720 --> 0:12:12.719 think it's going to have a huge impact on the 0:12:12.800 --> 0:12:16.920 upgrade cycle. If you see them get this AI story 0:12:17.000 --> 0:12:20.440 right and we see some really cool AI capabilities, integration 0:12:20.520 --> 0:12:23.600 across the app store, get these developers to really developing 0:12:23.720 --> 0:12:27.400 some you know, really great apps out there, you're going 0:12:27.480 --> 0:12:30.600 to see consumers really start to upgrade. And Apple's going 0:12:30.640 --> 0:12:34.960 to benefit from a monetization perspective on the hardware side, 0:12:34.960 --> 0:12:36.439 and we think they're also going to be able to 0:12:36.640 --> 0:12:40.200 charge some nice features from a services perspective as well. 0:12:40.240 --> 0:12:42.360 So that's how they can make money from an AI 0:12:42.920 --> 0:12:46.680 standpoint on both hardware and services. But maybe to your point, 0:12:47.040 --> 0:12:51.040 our consumers all of a sudden depart not necessarily. 0:12:51.160 --> 0:12:54.520 But listen, Samsung is a formidable threat out there. 0:12:55.200 --> 0:12:58.240 They've got you know, some decent people out there as well. 0:12:58.520 --> 0:13:01.719 You know, they've got some really good integration with with Alphabet. 0:13:02.040 --> 0:13:05.400 So you know, we'd rather see Apple get it right 0:13:05.440 --> 0:13:08.199 and that have to necessarily worry about that issue. 0:13:08.800 --> 0:13:10.040 Angel thirty seconds left. 0:13:10.920 --> 0:13:13.120 I kind of like the aqua higher kind of strategy 0:13:13.160 --> 0:13:15.920 that are seeing across the tech space where companies will 0:13:15.920 --> 0:13:18.000 buy a majority stake, not the whole thing so the 0:13:18.040 --> 0:13:19.400 regulators don't jump down their throat. 0:13:19.440 --> 0:13:21.360 Is that something Apple would considered, do you think? 0:13:22.520 --> 0:13:24.559 I mean, it doesn't seem like it's in their DNA 0:13:24.720 --> 0:13:26.440 right now. And when we kind of see you know, 0:13:26.520 --> 0:13:29.199 some of the moves that they've met as of late, 0:13:29.200 --> 0:13:32.600 they've actually been you know, they've actually been hurt by 0:13:32.640 --> 0:13:35.280 the Aqua higher strategy, right, just given some of the 0:13:35.400 --> 0:13:36.800 key departures that we've seen. 0:13:37.040 --> 0:13:38.520 But yeah, I mean, Apple's got. 0:13:38.360 --> 0:13:41.440 The They've got the ability to kind of benefit from 0:13:41.440 --> 0:13:44.280 that theme. My guess is again they're going to have 0:13:44.280 --> 0:13:47.080 to get this AI story right so they could use 0:13:47.080 --> 0:13:48.080 it towards their advantage. 0:13:48.080 --> 0:13:49.200 But I agree with you, I like the. 0:13:49.200 --> 0:13:52.160 Whole Aqua hier theme for the broader, you know, AI, 0:13:52.280 --> 0:13:54.600 space ecosystem and the tech sector. 0:13:54.640 --> 0:13:56.600 All right, angel I thank you so much. We appreciated that. 0:13:56.679 --> 0:13:58.760 Angel Is, you know, senior vice president equity analyst at 0:13:58.800 --> 0:14:01.120 CFRA Research. I mean, look, it's not like they don't 0:14:01.120 --> 0:14:03.680 have the money, folks, Apple Scott one hundred and thirty 0:14:03.920 --> 0:14:06.319 billion dollars of cash on the balance sheet. 0:14:06.320 --> 0:14:07.520 They can borrow whatever they want. 0:14:07.679 --> 0:14:09.800 They're gonna have free cash flow, you know, north of 0:14:09.800 --> 0:14:12.240 one hundred billion dollars over the next several years, one 0:14:12.280 --> 0:14:13.240 hundred and twenty billion dollars. 0:14:13.240 --> 0:14:15.520 So it's not like the of the cash to go 0:14:15.679 --> 0:14:17.520 all in on AI. 0:14:17.720 --> 0:14:19.760 The question is kind of what's their strategy, and that's 0:14:19.760 --> 0:14:22.160 still kind of up in the air for a lot 0:14:22.160 --> 0:14:24.440 of investors. I'm not sure we're gonna get much cloudy, 0:14:24.680 --> 0:14:27.040 but as angel is saying, that needs to come. 0:14:28.880 --> 0:14:32.560 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:14:32.640 --> 0:14:36.040 weekdays at ten am Eastern on Applecarplay and Android Auto 0:14:36.120 --> 0:14:39.200 with the Bloomberg Business App. Listen on demand wherever you 0:14:39.240 --> 0:14:42.240 get your podcasts, or watch us live on YouTube. 0:14:42.680 --> 0:14:45.160 All right, let's switch over to the energy biz. 0:14:45.160 --> 0:14:47.240 I'm just going to quote Wtech houd to oil because 0:14:47.280 --> 0:14:49.400 I watch Landman four season. I know all about the 0:14:49.400 --> 0:14:51.760 oil and gas businesses. Down at dollar eighty seven sixty 0:14:51.760 --> 0:14:56.360 seven dollars and thirty eight cents. Chevron, Exon it reported 0:14:56.400 --> 0:14:58.280 some numbers here today. Let's break it all down for 0:14:58.400 --> 0:15:01.080 the big oil companies. Vince piaz a senior equity and 0:15:01.080 --> 0:15:03.800 I'll see covers all the energy space for Bloomberg Intelligence. 0:15:03.840 --> 0:15:05.960 He has done that for decades on both the south 0:15:06.040 --> 0:15:06.600 side and. 0:15:06.640 --> 0:15:07.240 The buy side. 0:15:07.360 --> 0:15:10.200 Evince, what you what'd you see? What you learn from 0:15:10.520 --> 0:15:12.440 the Exons of the world, the Chevrons of the world. 0:15:13.120 --> 0:15:18.040 Hey, so today what we definitely picked up is, you know, 0:15:18.080 --> 0:15:24.400 the view that Exxon and Chevron are closely mirroring one another. 0:15:24.680 --> 0:15:29.320 So you know, Permian growth, Permian basin growth for both 0:15:29.400 --> 0:15:35.280 the Chevron and Exon was there. Chevron topped out at 0:15:35.600 --> 0:15:38.520 a million barrels a day h in the Permian. But 0:15:38.960 --> 0:15:42.080 you know, going forward that will likely sort of temper 0:15:42.200 --> 0:15:45.960 down a bit because of just you know, the indecision 0:15:46.560 --> 0:15:52.040 of around wt I and just the the energy environment 0:15:52.120 --> 0:15:55.120 in general. So we'll probably see some more free cat 0:15:55.120 --> 0:15:59.920 flow flowing out of their More importantly though, for Chevron, 0:16:00.080 --> 0:16:04.480 Paul the Hess deal closed. So now the hard part 0:16:04.600 --> 0:16:10.480 starts for Chevron to integrate this very large footprint after 0:16:10.960 --> 0:16:16.360 you know, almost two years of legal hassles with Exon. 0:16:17.040 --> 0:16:20.440 The good news here is that both parties are now 0:16:20.680 --> 0:16:28.360 partners in what is the most prolific offshore international asset 0:16:28.800 --> 0:16:32.800 that we've seen in decades. And so I think going forward, 0:16:33.120 --> 0:16:36.320 what you see here for both of these entities is 0:16:36.680 --> 0:16:40.160 the upstream side of the equation stinning more of a 0:16:40.240 --> 0:16:44.000 light on the upstream side because of not only developments 0:16:44.000 --> 0:16:49.400 that they've had offshore, but also here shorter cycle permium growth, 0:16:50.040 --> 0:16:56.040 which will likely provide tax flow going forward for both 0:16:56.040 --> 0:16:56.880 of these entities. 0:16:57.360 --> 0:16:59.320 Vince, one thing that stood out to me is, in 0:16:59.320 --> 0:17:01.840 addition to the off its surprise, Exon said it's keeping 0:17:01.880 --> 0:17:05.359 an eye out for more acquisitions after it's sixty billion 0:17:05.359 --> 0:17:08.199 dollars dollar takeover of Pioneer Natural Resources. What do you 0:17:08.240 --> 0:17:11.120 think that this activity will mean for the company. 0:17:12.320 --> 0:17:18.000 Well, look, they have been very proficient in picking up pieces, 0:17:18.640 --> 0:17:23.719 first the XTO several years ago, now Pioneer. This is 0:17:23.800 --> 0:17:28.439 not a play just for volume. It is strategic. The 0:17:28.520 --> 0:17:33.120 permium basin can still use some consolidation. There aren't very 0:17:33.160 --> 0:17:36.760 many pieces of size left. There are a lot of 0:17:36.840 --> 0:17:41.600 other smaller entities. So for Exon, in order to move 0:17:41.640 --> 0:17:45.359 that needle, it would need to make a a very 0:17:45.520 --> 0:17:49.920 sizable acquisition. They're still out there and they do have 0:17:50.000 --> 0:17:53.920 some scale. The issue here is this isn't just about volume. 0:17:54.119 --> 0:18:00.960 It's also about consolidating and expanding the resource play within 0:18:01.119 --> 0:18:03.800 the Permian and there is and there are a few 0:18:04.040 --> 0:18:07.240 of size in the region that would make sense. But 0:18:07.640 --> 0:18:10.280 we're not going to lead the witness and tell you 0:18:10.320 --> 0:18:12.560 what's coming up in the next couple of weeks for us. 0:18:12.960 --> 0:18:16.199 So, Vince, I think about that the Chevron deal, and 0:18:16.240 --> 0:18:18.000 I know you know from talking to you and reading 0:18:18.000 --> 0:18:20.960 your research. A big part of that attraction for Hess 0:18:21.000 --> 0:18:23.960 by being bought by Chevron was Hess had a stake 0:18:24.000 --> 0:18:27.680 in or a big property or find down a Gian 0:18:27.760 --> 0:18:28.879 to tell us about that, because that was. 0:18:28.840 --> 0:18:30.000 A sure real opportunity. 0:18:30.840 --> 0:18:34.600 Yeah, I think that is the crown jewel of this acquisition, 0:18:35.359 --> 0:18:39.040 and that's what the arbitration really was about. It was 0:18:39.080 --> 0:18:43.160 about Exxon's writer or first refusal to that particular asset. 0:18:43.720 --> 0:18:48.560 Of course, uh that decision went in favor of Chevron. No, 0:18:48.800 --> 0:18:54.520 Guyana is a very large asset the straybook block is 0:18:54.560 --> 0:18:59.280 a very large, prolific piece. There are more than a 0:18:59.400 --> 0:19:05.399 dozen developments that will be ongoing, and that asset base 0:19:05.920 --> 0:19:11.960 will provide decades of production growth that will facilitate the 0:19:12.520 --> 0:19:17.720 short run short cycle development, short cycle production here in 0:19:17.760 --> 0:19:22.600 the US in the permium basin for both Devron and Exon. 0:19:22.800 --> 0:19:29.720 So having two very large entities that understand these longer 0:19:29.840 --> 0:19:33.600 cycle large developments, I think is a positive. And it's 0:19:33.680 --> 0:19:36.919 also a positive that both have fairly deep pockets and 0:19:37.000 --> 0:19:39.800 good experience doing these types of things. 0:19:40.359 --> 0:19:42.399 Vince, thanks so much for joining us. Always appreciate getting 0:19:42.400 --> 0:19:44.439 a few minutes of your time, Vince Piazza. He is 0:19:44.520 --> 0:19:48.719 the go to voice Bloomberg Intelligence for all things energy, 0:19:48.840 --> 0:19:52.639 oil and gas for Bloomberg Intelligence and again on the 0:19:52.760 --> 0:19:55.600 Landman front. You got to watch it if you want 0:19:55.600 --> 0:19:57.560 to be an expert like I am now in oil 0:19:57.560 --> 0:19:58.040 and gas. 0:19:58.280 --> 0:20:00.280 I'm still learning a lot about oil and gas every 0:20:00.320 --> 0:20:01.320