WEBVTT - Tariffs Weigh on Amazon and Apple, Increasing US Energy for the AI Arms Race 0:00:02.520 --> 0:00:09.640 Bloomberg Audio Studios, podcasts, radio news from the heart of 0:00:09.720 --> 0:00:15.440 where innovation, money and power collide in Silicon Valley and beyond. 0:00:15.840 --> 0:00:42.720 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:34.680 --> 0:00:37.400 Live from New York. This is Bloomberg Technology. Coming up. 0:00:37.640 --> 0:00:40.519 Apple hit with analyst downgrades as tariff. 0:00:40.200 --> 0:00:41.519 And growth warriors they increase. 0:00:41.760 --> 0:00:44.360 Will break down the company's latest earnings plus roadblocks. 0:00:44.400 --> 0:00:47.600 Daily users jump twenty six percent mid efforts to bring 0:00:47.600 --> 0:00:50.279 in new players. We had the CEO later this. 0:00:50.320 --> 0:00:53.480 Hour and a conversation with the US Energy Secretary after 0:00:53.520 --> 0:00:55.840 one hundred days of Trump policies. 0:00:55.840 --> 0:00:59.320 But first we check in on these markets. Look, we've 0:00:59.360 --> 0:01:00.800 got enough of gains. 0:01:00.920 --> 0:01:02.800 We are bouncing back from our April cell off. We're 0:01:02.840 --> 0:01:06.040 up three point two percent over the last five training days. 0:01:06.160 --> 0:01:08.560 We add a cool almost five hundred billion dollars in 0:01:08.600 --> 0:01:12.080 terms of market cap to this key tech benchmark. And 0:01:12.240 --> 0:01:14.640 once again it's the second week of gains. We are 0:01:14.680 --> 0:01:17.360 seeing this risk on attitude return with the macro data, 0:01:17.360 --> 0:01:20.360 those jobs ratings overall ed, but also maybe a sign 0:01:20.360 --> 0:01:21.880 of thuring in China US relations. 0:01:21.880 --> 0:01:22.720 What have you got under the herd? 0:01:22.840 --> 0:01:24.920 Right in that upward pressure at the next level interesting 0:01:24.920 --> 0:01:27.520 because there's downward pressure in the biggest names and technology. 0:01:27.720 --> 0:01:30.920 Apple is off by almost four percent. Very simply, it 0:01:31.000 --> 0:01:33.800 is a tariff stories earnings. There was weakness in China 0:01:34.200 --> 0:01:37.440 in the quarter, gone outperformance on iPhone, but Tim Cook 0:01:37.480 --> 0:01:39.399 told us there is going to be a nine hundred 0:01:39.440 --> 0:01:42.680 million dollar impact from tariffs in the current period. What 0:01:42.720 --> 0:01:44.600 does that even mean in the context of what Apple 0:01:44.600 --> 0:01:47.560 does around the world. Amazon forecasting for the current period 0:01:47.840 --> 0:01:50.560 operating income that's billions of dollars below what the street 0:01:50.600 --> 0:01:53.840 for uncertainty in tariffs, It's a very clear story in 0:01:53.880 --> 0:01:55.000 both socks arounder pressure. 0:01:55.320 --> 0:01:56.960 They are and we're going to have so much great 0:01:56.960 --> 0:01:59.600 analysis on both individual names as a whole. We go 0:01:59.600 --> 0:02:02.440 to Blue It's round for Stellca and Look earnings. Thus 0:02:02.480 --> 0:02:05.720 far the big megacap four we had this week. Microsoft 0:02:05.720 --> 0:02:08.919 Meta managed to bounce through these trade headwinds, but Apple 0:02:09.000 --> 0:02:10.880 and Amazon, with tangible goods do not. 0:02:12.280 --> 0:02:14.680 Yeah, thanks for having me so, I'd say overall, this 0:02:14.720 --> 0:02:17.600 earning season has been pretty positive for big tech. At 0:02:17.680 --> 0:02:21.640 least it was until yesterday afternoon. Apple in particular, people 0:02:21.680 --> 0:02:25.360 were already worried how much is tariff going to impact them? 0:02:25.600 --> 0:02:27.560 What is this going to mean for their growth, which 0:02:27.639 --> 0:02:30.880 was already sort of stalled relative to other big tech companies. 0:02:31.080 --> 0:02:33.119 What is this going to mean for its multiple which 0:02:33.200 --> 0:02:36.119 was already elevated relative to other big tech companies. 0:02:36.320 --> 0:02:37.160 And it really I. 0:02:37.120 --> 0:02:39.640 Don't think this was exactly the worst case scenario, but 0:02:39.680 --> 0:02:42.600 certainly it was a disappointment, and it just underlines a 0:02:42.639 --> 0:02:45.520 lot of the concerns that people already had about the stock. 0:02:45.919 --> 0:02:48.359 Let's focus on Apple in the context of the stock. 0:02:48.440 --> 0:02:50.960 How has the cell side reacted? What do we see 0:02:50.960 --> 0:02:53.040 in terms of downgrades on the stock from the street. 0:02:53.760 --> 0:02:56.120 Well, we had at least two downgrades this morning. One 0:02:56.120 --> 0:02:57.959 of them is a cut to a cell rating, which 0:02:58.000 --> 0:03:00.920 is pretty rare for Apple. There's a lot of concern 0:03:00.960 --> 0:03:04.680 that maybe we haven't yet fully seen the impact of tariffs. 0:03:04.880 --> 0:03:06.880 Maybe this is going to be something that continues to 0:03:06.919 --> 0:03:09.119 build over the rest of the year. That was Jeffrey's 0:03:09.200 --> 0:03:12.040 downgrading the stock to an underperformed rating. We also had 0:03:12.160 --> 0:03:15.320 Rosenblatt which cut the stock to a neutral rating, warning 0:03:15.360 --> 0:03:17.480 just in general about you know, what is it going 0:03:17.520 --> 0:03:19.760 to take for a real inflection of growth? It says 0:03:19.800 --> 0:03:24.200 anai iPhone sort of supercycle upgrade is needed, and it 0:03:24.200 --> 0:03:26.920 says that it is becoming less likely as time goes. 0:03:26.760 --> 0:03:29.040 By the most Rhyan for Selica, thank you very much, 0:03:29.280 --> 0:03:31.360 stay with Apple earnings and bring in the Vila po 0:03:31.440 --> 0:03:35.280 power see a research director at IDC. I want to 0:03:35.280 --> 0:03:37.560 think about this in terms of all of the consumer 0:03:37.560 --> 0:03:41.680 electronics that Apple has built and moves around the world. 0:03:41.840 --> 0:03:44.520 If the company tells us that the impact of tariffs 0:03:44.800 --> 0:03:47.920 is nine hundred million dollars in the current period, what 0:03:48.000 --> 0:03:50.680 does that really mean? Is that significant? Is it a 0:03:50.720 --> 0:03:54.440 small hit? And how do you model for it? Yeah? 0:03:54.480 --> 0:03:56.520 Now that's a great question. Thanks for having me. I 0:03:56.560 --> 0:03:58.600 think you know, if you look in for Apple, that 0:03:58.720 --> 0:04:00.920 number of the grand scheme of things isn't much, right, 0:04:00.960 --> 0:04:04.040 It's still less than two percent or h of their 0:04:04.680 --> 0:04:07.840 of their revenue, right. But I think a bigger question 0:04:07.920 --> 0:04:10.520 will be how will because they could still push that 0:04:12.160 --> 0:04:16.240 in with other like their revenue from coming from other 0:04:16.320 --> 0:04:19.520 product lines and for profitability from other places. But I 0:04:19.560 --> 0:04:22.039 think the bigger question for will be what will Apple 0:04:22.080 --> 0:04:24.120 do with prices? And that's what a question that Tim 0:04:24.160 --> 0:04:29.480 Cook didn't address, right? Will they increase prices on their devices? 0:04:29.520 --> 0:04:32.920 And that's traditionally something Apple hasn't done historically. They've never 0:04:33.040 --> 0:04:37.320 raised prices on their products mid cycle. So I'm, you know, 0:04:37.520 --> 0:04:40.320 very curious and I think everyone's really looking to see 0:04:40.320 --> 0:04:43.480 how Apple does that. But the but the other challenge, 0:04:43.480 --> 0:04:46.640 you know, is how they are going to navigate with 0:04:46.800 --> 0:04:50.000 their supply chain. And we've already seen that, right Apple's 0:04:50.040 --> 0:04:55.400 already demonstrated incredible flexibility in moving their supply chain already 0:04:55.720 --> 0:04:59.200 in q On ramping it up significantly, and they confirmed 0:04:59.200 --> 0:05:01.760 that right. There were earlier last week about them wrapping 0:05:01.839 --> 0:05:05.080 it up very fast from moving from India, but Tim 0:05:05.080 --> 0:05:07.600 Cook just confirmed that they moved about half of their 0:05:08.839 --> 0:05:11.160 nebula of the West market from India. Y. 0:05:11.480 --> 0:05:13.240 Yeah, can I jump in because you make such a 0:05:13.240 --> 0:05:15.400 clear case in the supply chain and the way in 0:05:15.440 --> 0:05:16.640 which that is being navigated. 0:05:16.680 --> 0:05:19.560 But we're looking right now at the demand side. 0:05:19.600 --> 0:05:22.640 In China there was weakness once again despite some of 0:05:22.640 --> 0:05:25.719 those subsidies. How did Tim Cook manage to deflect what 0:05:25.800 --> 0:05:28.039 seems to be once again just a story they can't 0:05:28.040 --> 0:05:28.599 turn around? 0:05:30.120 --> 0:05:32.360 You know, China has been an area that they are 0:05:32.480 --> 0:05:35.440 you know, recently have been challenging. And that's what I'm saying. 0:05:35.520 --> 0:05:36.760 Before even the terrist story. 0:05:36.800 --> 0:05:42.159 They've been these This weakness in China has been something 0:05:42.160 --> 0:05:44.000 that they've been dealing with and they will continue to 0:05:44.040 --> 0:05:47.680 deal We were already you know, baking this in our forecast, 0:05:47.680 --> 0:05:51.040 but this year the challenge from Huawe continues to grow. 0:05:51.080 --> 0:05:54.599 But at the same time there they are continued to 0:05:54.600 --> 0:05:57.120 be the leader in China in terms of the premium segment. 0:05:57.120 --> 0:06:01.279 They still have seventy percent share. But the silver lining 0:06:01.320 --> 0:06:04.760 for Apple is still not maybe not be in China 0:06:04.800 --> 0:06:08.120 this year, but they're still going in emerging markets. They 0:06:08.240 --> 0:06:12.520 are probably going to increasingly have more of their models 0:06:13.240 --> 0:06:15.720 move over to their you know, in house modem, which 0:06:15.760 --> 0:06:17.599 will help their profitability. 0:06:17.839 --> 0:06:18.840 So there are still. 0:06:18.600 --> 0:06:22.400 Some silver lining in again as they scale their production 0:06:22.560 --> 0:06:25.200 in India, that will really help them deal with the 0:06:25.279 --> 0:06:28.240 teriff challenges as well. And hopefully once we hear it 0:06:28.279 --> 0:06:31.239 more you know in WWBC in terms of the announcements. 0:06:30.760 --> 0:06:33.479 With before we hear about it WWDC right like, because 0:06:33.520 --> 0:06:35.200 Tim Cook did not speak about a lot of this 0:06:35.200 --> 0:06:37.280 stuff on the call. You make a good point though. 0:06:37.800 --> 0:06:40.760 The other news headline is that Apple is going to 0:06:40.880 --> 0:06:45.000 source starting right now, apparently millions more chips from the 0:06:45.040 --> 0:06:49.039 TSMC fab in Arizona. How does that impact the cost 0:06:49.040 --> 0:06:51.680 of production of a handset and how do you model 0:06:51.760 --> 0:06:54.640 for it being taken out of their hands that they 0:06:54.640 --> 0:06:55.800 have to raise prices or not. 0:06:58.440 --> 0:06:59.520 You know, it's just it's. 0:06:59.400 --> 0:07:01.520 Just very you know, we don't have visibility in terms 0:07:01.560 --> 0:07:04.040 of exactly how many chips are going to come from where, 0:07:04.080 --> 0:07:06.640 but we do know that they are really trying. I mean, 0:07:06.839 --> 0:07:09.080 the thing is with Apple, right, they have been. 0:07:09.040 --> 0:07:11.080 So they're really good. 0:07:11.080 --> 0:07:15.680 And what their biggest strength is there how they navigate 0:07:15.720 --> 0:07:18.360 through all of these the way they negotiate with their 0:07:18.400 --> 0:07:20.640 supply chain, and they have a lot of strength right 0:07:20.720 --> 0:07:23.120 in terms of where they want to move things around. 0:07:23.160 --> 0:07:27.320 They are able to even with prices, with logistics and tipicos. 0:07:27.320 --> 0:07:29.760 Background is an operations guy, right, and on top of 0:07:29.800 --> 0:07:32.840 his strength in terms of geopolitics, he has strength and 0:07:33.080 --> 0:07:37.480 you know history with navigating and negotiating with both administrations. 0:07:37.480 --> 0:07:40.640 So I do have faith that he will be able 0:07:40.720 --> 0:07:43.440 to take you know, whether through the storm. It will 0:07:43.480 --> 0:07:45.600 just take some time, whether it's through the supply chain 0:07:45.680 --> 0:07:48.320 or whether he does it through internal you know, changing 0:07:49.040 --> 0:07:52.280 of going through more in house or changing the supply 0:07:52.400 --> 0:07:55.240 chain and manufacturing, whether it's through India or through to 0:07:55.360 --> 0:07:57.760 the US, but it just takes some time, and we 0:07:57.840 --> 0:08:00.120 do expect this to be a challenging year for Apple well, 0:08:00.440 --> 0:08:02.720 but in the long term I do see that you know, 0:08:02.760 --> 0:08:04.720 they will be able to come through it. 0:08:05.120 --> 0:08:07.160 Really, popol, it is always so great to speak with you, 0:08:07.360 --> 0:08:10.560 senior director at IDC. We shift from Apple to Amazon 0:08:10.600 --> 0:08:13.440 now shares as we see reacting to its own report, 0:08:13.480 --> 0:08:15.720 we're down about three tenths of a percent. The company 0:08:15.720 --> 0:08:18.160 did want of a tougher business climate, of course, amid 0:08:18.160 --> 0:08:21.440 global trade tensions. Let's get more brad ericson Internet analysts 0:08:21.440 --> 0:08:24.240 for RBC Capital Markets. Before I go to the AWS 0:08:24.240 --> 0:08:27.320 side of it, come to the geopolitics of it all. 0:08:27.680 --> 0:08:30.800 How much are we able to see Amazon survive and 0:08:30.880 --> 0:08:34.079 weather this at the moment by having brought in inventory 0:08:34.120 --> 0:08:36.920 but ultimately be able to change up their supply chain too. 0:08:38.880 --> 0:08:43.520 Yeah, so I think you know, they're definitely working the situation. 0:08:43.920 --> 0:08:46.960 They would acknowledge that it's very uncertain. We spoke with 0:08:47.000 --> 0:08:50.440 them last night and there was definitely that was the 0:08:50.480 --> 0:08:51.320 message on all of this. 0:08:51.760 --> 0:08:53.839 But I think the idea is is that you know, we. 0:08:53.760 --> 0:08:55.480 Think about it kind of the guns for the war 0:08:55.840 --> 0:08:57.640 picks and shovels type of dynamic. 0:08:57.679 --> 0:09:01.440 Here. Amazon has millions of sellers. There will absolutely be 0:09:01.520 --> 0:09:02.320 sellers that are. 0:09:02.200 --> 0:09:06.559 Impacted by this in terms of having supply chain exposure 0:09:06.559 --> 0:09:08.920 to China, but there are others that don't. And when 0:09:09.000 --> 0:09:12.160 you think about people you know, looking for deals trying 0:09:12.160 --> 0:09:14.840 to save money already, they're going to go to Amazon 0:09:14.920 --> 0:09:16.920 and they're still going to find sellers that are not 0:09:17.080 --> 0:09:21.360 exposed to those China supply chain headwins, and they're going 0:09:21.440 --> 0:09:23.040 to find decent prices and they're going to buy. 0:09:23.080 --> 0:09:24.440 So I think under almost. 0:09:24.080 --> 0:09:27.520 Any macro scenario, right, we're not saying we know the downside, 0:09:27.520 --> 0:09:30.640 but under any any scenario Amazon games. 0:09:30.440 --> 0:09:33.679 Share, I want to go to the fundamental basics of 0:09:33.679 --> 0:09:37.880 how Amazon's business works. Half of the audience watching GMOT technology, No, 0:09:37.960 --> 0:09:40.680 it is Amazon dot Com an e commerce business that's 0:09:40.679 --> 0:09:45.200 the vast volume of sales, but the vast majority of 0:09:45.280 --> 0:09:49.800 operating income is AWS cloud. So when Amazon tells us 0:09:49.800 --> 0:09:52.480 that be in the current period, operating income will be 0:09:52.520 --> 0:09:54.880 billions of dollars below what you guys on the street 0:09:54.880 --> 0:09:59.000 had forecast, is that singularly a tariff's issue on dot com? 0:09:59.120 --> 0:10:02.800 Or is it also reflecting softness in cloud spending. 0:10:05.400 --> 0:10:08.080 I don't think it's reflecting softness and cloud spending. 0:10:08.120 --> 0:10:10.920 In fact, I expect that to kind of continue. 0:10:11.120 --> 0:10:13.679 I think the issue is more just that well, one 0:10:13.720 --> 0:10:17.000 thing I would clarify is that, yes, the midpoint of 0:10:17.000 --> 0:10:20.920 the guidance was below the street, but typically Amazon hits 0:10:21.000 --> 0:10:22.880 or exceeds the high end of the guidance, and so 0:10:22.960 --> 0:10:24.760 I think really when you think about where the quarter 0:10:24.920 --> 0:10:27.240 likely ends up, it was probably closer to in line. 0:10:27.920 --> 0:10:33.240 I'm sure they're building in some risk around you, just 0:10:33.280 --> 0:10:35.360 the terror situation and the impact that that could have, 0:10:35.720 --> 0:10:38.160 But the ad business drives a huge portion of that 0:10:38.600 --> 0:10:42.160 that operating income as well, and that's still growing really 0:10:42.160 --> 0:10:42.520 well too. 0:10:42.559 --> 0:10:44.040 That grow eighteen percent in the quarter. 0:10:44.120 --> 0:10:46.280 So I think there's less sort of discounted in and 0:10:46.320 --> 0:10:48.320 there less concern in there than you might think. 0:10:48.600 --> 0:10:51.440 And they're still very focused on all the innovation, whether 0:10:51.480 --> 0:10:53.600 it be o ver aws, whether it be in space, 0:10:53.679 --> 0:10:55.520 whether it be on what they're doing in terms of 0:10:55.520 --> 0:10:59.120 getting your product too faster. All of that, though, takes costs, 0:10:59.240 --> 0:11:01.720 and I'm interested that meta signal. Look, we're sticking to, 0:11:01.920 --> 0:11:04.719 for example, our CAPEX and we're raising it because of 0:11:04.800 --> 0:11:07.280 infrastructure spends going to go up because of tarifs. Do 0:11:07.280 --> 0:11:09.439 you think that's going to affect the cost of doing 0:11:09.480 --> 0:11:11.160 business at AWS in any way? 0:11:11.160 --> 0:11:11.480 Brad? 0:11:13.440 --> 0:11:14.200 It could yeah. 0:11:14.240 --> 0:11:15.960 I mean I think the comment we made earlier in 0:11:15.960 --> 0:11:19.640 the week on Meta was that, you know, they called 0:11:19.679 --> 0:11:23.800 out equipment infrastructure, equipment and component costs are going up. Technically, 0:11:23.920 --> 0:11:26.360 what that means for the industry is that structurally, return 0:11:26.440 --> 0:11:29.439 on investment capital is lower today than it was ninety 0:11:29.480 --> 0:11:29.920 days ago. 0:11:30.040 --> 0:11:33.839 So sure, that's not great. I think in Amazon's case. 0:11:33.880 --> 0:11:36.560 You know, Meta probably came out a little bit even 0:11:36.640 --> 0:11:39.559 more unscathed from tariffs based on what we know at 0:11:39.559 --> 0:11:42.640 this point. So I think Amazon's probably having a little 0:11:42.679 --> 0:11:45.760 bit more measured caution. Ie they didn't take the Capex 0:11:45.840 --> 0:11:47.839 guide up, but I think they sound every bit is 0:11:47.920 --> 0:11:52.200 bullish on the cloud business and their growth they're going forward. 0:11:52.760 --> 0:11:55.280 What did Amazon do well in the quarta? 0:11:57.040 --> 0:12:00.000 What did they do well? They grew ads eighteen percent. 0:12:00.160 --> 0:12:02.200 They did not miss on ads, which they had been 0:12:03.120 --> 0:12:06.720 in prior quorders, so that was probably the best one 0:12:06.760 --> 0:12:07.760 of the standouts. 0:12:07.800 --> 0:12:09.080 Can I don't pen that, Brad. 0:12:09.160 --> 0:12:11.280 I'm really interested in the ads side because you said 0:12:11.320 --> 0:12:14.440 that now really clearly twice. How much of a headwind 0:12:14.520 --> 0:12:17.480 is that going forward if third party sellers become that 0:12:17.600 --> 0:12:19.960 little bit weaker, if we do see the knock on 0:12:20.000 --> 0:12:21.760 effects of tensions in trade. 0:12:21.559 --> 0:12:22.319 Yeah, for sure. 0:12:22.600 --> 0:12:26.199 So I go back, so ads basically have a one 0:12:26.240 --> 0:12:30.040 to one relationship with volume, right units essentially, And so 0:12:30.280 --> 0:12:32.600 back to what I said earlier, with that seller density, 0:12:33.120 --> 0:12:37.560 you might a seller might who has a China supply 0:12:37.640 --> 0:12:40.200 chain exposure, might lose some volume, but there's going to 0:12:40.200 --> 0:12:42.080 be another seller that's going to step in there and 0:12:42.120 --> 0:12:45.240 probably still move that unit. If they do, they're still 0:12:45.280 --> 0:12:47.400 going to be spending those AD dollars. So we think 0:12:47.440 --> 0:12:49.439 that actually can be more resilient here. 0:12:50.360 --> 0:12:53.160 Project Kaiper has got off to a rocky start. I 0:12:53.160 --> 0:12:55.840 think it's fair to say, do you even model that 0:12:56.000 --> 0:12:59.960 into your model for Amazon? Any meaningful contribution for space 0:13:00.360 --> 0:13:02.760 based internet business that takes on starlink? 0:13:04.080 --> 0:13:07.200 Yeah, it's hard, That's what I'll say. For Q two, 0:13:07.240 --> 0:13:10.120 you know, it's embedded in the guidance. They launched a 0:13:10.200 --> 0:13:12.520 rocket earlier in April, they're going to launch more in 0:13:12.600 --> 0:13:15.080 Q two, So clearly there is cost, and you know, 0:13:15.440 --> 0:13:17.720 I think we're thinking about maybe one hundred million on 0:13:17.800 --> 0:13:20.560 average per rocket that goes up. So that's kind of 0:13:20.360 --> 0:13:23.640 the magnitude we're talking about, and they've talked about kind 0:13:23.640 --> 0:13:26.360 of somewhere in the range of eighty rockets or maybe 0:13:26.480 --> 0:13:30.400 ten billion dollars of total outlay related to the Constellation 0:13:30.480 --> 0:13:34.280 project overall. So the good news is what they said 0:13:34.320 --> 0:13:36.640 last night was they are going to have commercial service 0:13:36.720 --> 0:13:38.199 up for that by the end of the year, so 0:13:38.200 --> 0:13:40.280 they're actually gonna be driving revenue. It's not just a 0:13:40.360 --> 0:13:42.600 cost headwind, which is nice as we think about twenty 0:13:42.600 --> 0:13:44.960 twenty six. But yeah, the math on it in our 0:13:45.000 --> 0:13:46.520 model very difficult at this point. 0:13:46.520 --> 0:13:50.240 I'd say pad Ericson obviously Capital Markets, thank you very much. 0:13:50.280 --> 0:13:53.319 Now coming up, ADP's Nella Richardson joins us on the 0:13:53.360 --> 0:13:57.280 efforts to address the widening skill gap in labor markets. 0:13:57.600 --> 0:14:01.960 This has been bo technology. 0:14:12.760 --> 0:14:16.280 The US labor market is stronger than perhaps expected for April, 0:14:16.320 --> 0:14:18.520 shrugging off those trade tensions, one hundred and seventy seven 0:14:18.520 --> 0:14:21.960 thousand jobs added, but there is still uncertainty, and it's 0:14:21.960 --> 0:14:24.120 about tariff impact. It's also perhaps about the longer time 0:14:24.120 --> 0:14:27.440 effects of advances in technology here to address well the 0:14:27.480 --> 0:14:30.360 skills gap in particular is Neila Richardson. 0:14:30.400 --> 0:14:32.320 She's the chief economist and the SG officer. 0:14:32.040 --> 0:14:35.239 At ADP, and you've done some fascinating research and ontology. 0:14:35.280 --> 0:14:38.200 You call it about perhaps what is facing the current 0:14:38.280 --> 0:14:40.520 labor market and the skills gap that is missing when 0:14:40.520 --> 0:14:42.320 it comes to tech. Is that in any way being 0:14:42.360 --> 0:14:44.320 reflected in jobs numbers right now. 0:14:44.640 --> 0:14:45.240 A little bit? 0:14:45.720 --> 0:14:48.840 But if we raise up our view, if we change 0:14:48.880 --> 0:14:51.680 your aperture to the big picture, the long term picture, 0:14:51.960 --> 0:14:55.400 what you see is an aging US workforce that's being 0:14:55.480 --> 0:15:01.119 complemented by an aging Chinese in an Asian aging euree workforce, 0:15:01.480 --> 0:15:04.440 and then you see all these nascent new technologies that 0:15:04.520 --> 0:15:08.600 companies have yet to fully embrace. And so as this 0:15:08.920 --> 0:15:11.600 plays out, there's going to be a gap between the 0:15:11.640 --> 0:15:15.840 tech and the skills, and until that chasm is closed, 0:15:16.840 --> 0:15:19.840 you're going to see a hit to productivity. So our 0:15:19.920 --> 0:15:23.240 focus is really aligning all the new jobs and the 0:15:23.240 --> 0:15:26.440 in demand jobs with the in demand skills so that 0:15:26.480 --> 0:15:30.000 we can bring the workforce along to all this technological 0:15:30.080 --> 0:15:32.120 change and all the promise. 0:15:31.720 --> 0:15:32.320 That it holds. 0:15:32.440 --> 0:15:36.280 The calculus for the tech industry is that the job's 0:15:36.320 --> 0:15:38.800 numbers and aggregate show that there isn't this impact from 0:15:38.920 --> 0:15:41.680 uncertainty in tariff's overall in that market? But if there 0:15:41.720 --> 0:15:43.920 is a skills gap. You look at some of the 0:15:43.920 --> 0:15:47.040 headlines in tech, metalaid off about one hundred people in 0:15:47.080 --> 0:15:50.280 reality labs. But I know that those companies are doing 0:15:50.320 --> 0:15:53.200 that in small trims because there are places they desperately 0:15:53.280 --> 0:15:55.680 need people that aren't really available. They've got to free 0:15:55.760 --> 0:15:59.360 up the salary, the stock and the head count. How 0:15:59.480 --> 0:16:01.480 much do you exp that to continue in this market? 0:16:01.600 --> 0:16:04.280 Make little trims but overall higher. 0:16:04.360 --> 0:16:07.880 You know, companies and tech companies in particular, made big 0:16:07.960 --> 0:16:11.680 bets throughout this pandemic recovery, and sometimes they've had to 0:16:11.720 --> 0:16:15.080 pull back on those bets and reshuffle their headcount. If 0:16:15.120 --> 0:16:18.080 you look at the April numbers that information tech sector, 0:16:18.120 --> 0:16:21.800 which has a lot of people and companies that create 0:16:22.000 --> 0:16:25.440 and publish software, it was flat in April. It was 0:16:25.640 --> 0:16:29.360 negative the month before and flat again the month before that. 0:16:29.680 --> 0:16:33.760 So there's this disconnect between the people and the tech 0:16:33.840 --> 0:16:36.520 where all these people with tech is the future. And 0:16:36.560 --> 0:16:39.200 I think what you're seeing is a couple things. First, 0:16:39.240 --> 0:16:43.360 that talent is being subsumed elsewhere, and also that talent 0:16:43.560 --> 0:16:46.200 is evolving, So at ADP. What we're trying to do 0:16:46.320 --> 0:16:49.360 is show where the talent is, how it's moving, maybe 0:16:49.400 --> 0:16:53.360 from industries that you would expect, like the tech sector 0:16:53.600 --> 0:16:58.400 to manufacturing, to healthcare, to these other industries where tech 0:16:58.480 --> 0:17:01.920 is becoming even more important than it has been historically. 0:17:02.000 --> 0:17:05.600 And how much are we starting to see headcount less 0:17:05.680 --> 0:17:09.640 necessary because of technological innovation AI. For example, this week, 0:17:09.680 --> 0:17:12.639 everyone's been talking about the Gio Lingo announcement. AI first 0:17:12.720 --> 0:17:15.760 means we're segno to contractors, We're not giving you headcount 0:17:16.000 --> 0:17:18.399 unless you can automate it and show that you can't 0:17:18.400 --> 0:17:20.080 get any more automation done. 0:17:20.320 --> 0:17:21.440 Is that starting to show through? 0:17:21.840 --> 0:17:22.080 You know? 0:17:22.440 --> 0:17:24.919 At the edges, I think there is some change in 0:17:25.000 --> 0:17:29.320 how companies are hiring knowing that they have this advanced technology. 0:17:29.359 --> 0:17:32.760 It's commonly said your job won't be replaced by tech, 0:17:32.840 --> 0:17:35.160 it will be replaced by someone. 0:17:34.800 --> 0:17:36.639 Who knows AI very well. 0:17:36.880 --> 0:17:39.120 I want to unpack that a little bit to show 0:17:39.160 --> 0:17:43.320 you what that means. There are skills associated to job titles. 0:17:43.320 --> 0:17:48.120 So at ADP we've identified one hundred thousand skills associated 0:17:48.160 --> 0:17:51.320 with nine thousand job titles. It doesn't mean that the 0:17:51.520 --> 0:17:54.040 jobs are changing. It means that the tasks and the 0:17:54.080 --> 0:17:57.720 skills required for those jobs are changing. So when you 0:17:57.760 --> 0:18:01.320 look at these company announcements, it's also stating that the 0:18:01.480 --> 0:18:03.879 jobs as they have been in the past, have you 0:18:04.080 --> 0:18:06.920 volved And what does it mean for a worker, Well, 0:18:06.920 --> 0:18:09.560 it means that you may have the same job, but 0:18:09.920 --> 0:18:13.680 what you do your skills required has changed, and companies 0:18:13.720 --> 0:18:16.600 are trying to figure that out, whether it is reducing 0:18:16.640 --> 0:18:20.760 headcount and rehiring the skills they need or and what 0:18:21.000 --> 0:18:24.320 here's where I think is really the opportunity training the 0:18:24.359 --> 0:18:26.400 current workforce to have those skills. 0:18:26.600 --> 0:18:37.320 Neila richardson the ADP, thank you very much, shares of 0:18:37.359 --> 0:18:40.560 Take two Interactive under pressure after the company announced its 0:18:40.640 --> 0:18:45.040 highly anticipated Grand Theft Auto six game is being delayed 0:18:45.160 --> 0:18:48.600 again until May of twenty twenty six bloombax. Jason Schreyer 0:18:49.000 --> 0:18:52.040 is here a Jason. For some people, this is like 0:18:52.200 --> 0:18:55.560 the worst possible news in their personal gaming lives they 0:18:55.560 --> 0:18:58.680 could have happened for Take two. The stockdown six percent? 0:18:59.160 --> 0:19:01.800 What are the details, what accounts for the delay? 0:19:03.080 --> 0:19:05.479 Ed is just going to be a sad Christmas for 0:19:05.520 --> 0:19:07.200 you not getting to play the new Grand. 0:19:07.040 --> 0:19:09.919 Theft Definitely and many others. 0:19:10.880 --> 0:19:13.480 Yeah, it's I don't think there's any sort of like 0:19:13.680 --> 0:19:17.080 crazy secret or alter your motive behind this. I've been 0:19:17.080 --> 0:19:19.400 hearing for a little while now people at Rockstar did 0:19:19.400 --> 0:19:22.480 not believe Fall twenty twenty five it was a real 0:19:22.640 --> 0:19:25.080 release window. There's just too much work left to do, 0:19:25.280 --> 0:19:27.800 not enough time to do it, and the company has 0:19:27.880 --> 0:19:31.040 really been trying pretty hard to avoid the kind of 0:19:31.080 --> 0:19:34.840 brutal overtime that they had traditionally put people through on 0:19:34.960 --> 0:19:37.040 their games. They've really been shaping up over the last 0:19:37.080 --> 0:19:40.879 few years, as Bloomberg has been reporting, So this was inevitable. 0:19:41.000 --> 0:19:43.320 I feel like we talked about this a little bit 0:19:43.359 --> 0:19:45.840 earlier in the year. We predicted on our game on 0:19:45.920 --> 0:19:48.439 Bloomberg newsletter that this was going to happen. To me, 0:19:48.480 --> 0:19:50.920 it's always felt more like a when than an if. 0:19:51.359 --> 0:19:53.919 Yeah, I'm straus Zelnik coming out saying we fully support 0:19:53.960 --> 0:19:57.359 Rockstar games, and you've got analysts coming out Jason saying 0:19:57.480 --> 0:20:00.280 that this doesn't wipe away the profitability. Up to fifty 0:20:00.280 --> 0:20:03.119 percent profit is what I think webbush have it down as, 0:20:03.240 --> 0:20:04.400 but you just push it back. 0:20:05.920 --> 0:20:08.800 It is bonkers to me that their stock is taking 0:20:08.800 --> 0:20:11.600 a hit this morning. This game is still going to 0:20:11.640 --> 0:20:13.600 be the biggest thing on the planet. It is still 0:20:13.640 --> 0:20:15.800 going to make a kajillion. 0:20:15.920 --> 0:20:17.480