WEBVTT - Earnings Roundup: Meta, Microsoft & Qualcomm

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>This is a breaking news update from Bloomberg.

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<v Speaker 1>Instant reaction and analysis from our three thousand journalists and

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<v Speaker 1>analysts around the world.

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<v Speaker 3>Big Tech earnings, Microsoft rallying three and a half percent

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<v Speaker 3>in the aftermarket.

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<v Speaker 2>You've got Meta under pressure.

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<v Speaker 3>Ed Ludlow is host of Bloomberg Tech on Bloomberg Television

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<v Speaker 3>eleven am, Wall Street Time Monday through Friday.

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<v Speaker 2>Ed, pick where you want to start.

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<v Speaker 4>True Start on Microsoft. I feel like it's probably the

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<v Speaker 4>most tangible, right, So everything is in the cloud growth

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<v Speaker 4>better than expectations. And you know, the math was really

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<v Speaker 4>simple going into this. They've just closed the book on

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<v Speaker 4>their fiscal financial year, and the question still remains when

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<v Speaker 4>we get to the call, what does Microsoft tell us

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<v Speaker 4>about the capital expenditure growth into next year? Because the

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<v Speaker 4>street sees CAPEX growing beyond fifty percent. Top line growth

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<v Speaker 4>on Azure is forty three percent, give or take XTAC.

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<v Speaker 4>All the street really wants to see is that pace

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<v Speaker 4>of growth being near to CAPEX growth. Right, It's a

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<v Speaker 4>really simple equation. But going back to alphabet, which is

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<v Speaker 4>highly analogous, there's so much commentary here from Microsoft about

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<v Speaker 4>traction with copilot, like more data points that are just easy,

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<v Speaker 4>tangible to understand about how Microsoft's AI efforts are going, right,

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<v Speaker 4>And then it's that's the stock reflecting that and after ours.

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<v Speaker 1>Is the thirty million paid seats a big deal for

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<v Speaker 1>three sixty five copilot for Microsoft?

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<v Speaker 4>Yes, because it's versus twenty million at the end of March.

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<v Speaker 4>Exactly what I'm pointing to the other one is, I

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<v Speaker 4>think you guys mentioned this, but like Nadella was talking

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<v Speaker 4>about Azure generating more than one hundred billion dollars in

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<v Speaker 4>annualized revenue. You know, remember Amazon went to that figure

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<v Speaker 4>very early, you know, in its in its kind of

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<v Speaker 4>like growth of AWS. Then what Amazon did they report

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<v Speaker 4>to but it was to say this is the AI

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<v Speaker 4>specific annualized revenues. So Microsoft's just saying more, you know,

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<v Speaker 4>giving newer data points which take us beyond the simple

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<v Speaker 4>are the top line numbers growing beyond the capex growth.

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<v Speaker 3>Which you kind of want to get right when a

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<v Speaker 3>company is spending and building and doing all of this.

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<v Speaker 3>That the more information, the more transparency, that's helpful big time.

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<v Speaker 5>Yeah.

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<v Speaker 4>I mean again, from the press release alone, Microsoft's not

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<v Speaker 4>saying anything about fiscal year twenty seven capex. Yeah, so

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<v Speaker 4>that there's this period of time where everyone's like, okay, reading,

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<v Speaker 4>digesting the statement and the release, and then on the

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<v Speaker 4>call everything could change. That is the jeopardy of big

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<v Speaker 4>tech earnings. And that's what's fun.

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<v Speaker 1>Well, let's do a little bit with meta platforms and

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<v Speaker 1>then we'll get back to some of these other names.

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<v Speaker 1>Here's a Meta shares a Meta down about six point

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<v Speaker 1>three percent. Let's go ahead and say six percent. Some

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<v Speaker 1>numbers here. Third quarter revenue sixty one to sixty four billion,

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<v Speaker 1>the estimus for sixty three point one seven billion. Second

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<v Speaker 1>quarter revenue came in above estimate. Second quarter EPs came

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<v Speaker 1>in ever so shy of estimates. What is the thing

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<v Speaker 1>that is moving the stock with Meta today?

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<v Speaker 4>It's so hard? I mean, revenues up twenty eight percent

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<v Speaker 4>ahead of expectations, right, ad impressions have improved, Pricing has improved.

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<v Speaker 4>Meta's core business. It's bread and butter is still advertising.

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<v Speaker 4>The story was how has AI made that better? More monetizable?

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<v Speaker 1>So revenue should be higher than estimates?

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<v Speaker 5>Right, it is?

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<v Speaker 4>It is ahead of vespers.

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<v Speaker 2>I think it's twenty right.

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<v Speaker 1>Sorry for the third the outlook, I'm sorry.

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<v Speaker 4>Yeah, for the outlook, right, Yeah, the one thing that

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<v Speaker 4>my brain is going to is that the operating margins

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<v Speaker 4>didn't just come in significantly below a consensus by about

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<v Speaker 4>four percentage points, but costs are up fifty five percent,

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<v Speaker 4>So the operating margin has fallen from forty three to

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<v Speaker 4>thirty one. Costs are higher, and free cash flow has

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<v Speaker 4>basically disappeared. Just im reading the statements.

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<v Speaker 1>And is that because they're investing so much in talent?

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<v Speaker 1>Is it because the tokens cost so much? Like this,

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<v Speaker 1>these companies are spending a ton of money. We looked

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<v Speaker 1>at last week what Alphabet said about going you know,

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<v Speaker 1>cash flow negative. Meta Platforms is feeling it. Meta is

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<v Speaker 1>feeling it when it comes to its earnings because it's

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<v Speaker 1>spending more money.

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<v Speaker 4>Maybe they're disclosing that there was a one time legal

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<v Speaker 4>charge of two point four billion dollars and then severance

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<v Speaker 4>costs super interesting one point two billion dollar charges. We

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<v Speaker 4>knew about the story right about the waves of Meta layoffs,

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<v Speaker 4>so that could excluding those, the underlying operating performance was

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<v Speaker 4>kind of much nearest expectations. Maybe they're a big factor,

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<v Speaker 4>but also goes the idea that the free cash flow

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<v Speaker 4>is basically gone which is such a common story across

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<v Speaker 4>the mag seven.

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<v Speaker 3>Right right, And I want to just throw one other

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<v Speaker 3>headline across the Bloomberg Meta saying some youth related trials

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<v Speaker 3>may result in material loss like we have done here

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<v Speaker 3>are Olivia Carvel, and I believe others on the team

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<v Speaker 3>have done a lot about social media and the impact

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<v Speaker 3>on youth, and we know Meta has certainly been one

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<v Speaker 3>of the targets, so just interesting to get some of

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<v Speaker 3>that clarity again. Just a quick headline Meta boosting the

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<v Speaker 3>low end of its annual capital spending outlook. And I'm

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<v Speaker 3>looking at the live blog too, and I think at

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<v Speaker 3>this is something that you were.

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<v Speaker 2>Going to and this is our Lindawan, our tech editor.

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<v Speaker 3>One thing traders might be reacting to second quarter operating

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<v Speaker 3>margin thirty one percent versus forty three percent a year earlier.

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<v Speaker 3>The companies expecting that total expenses of one hundred and

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<v Speaker 3>sixty five billion one hundred and sixty nine billion, raising

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<v Speaker 3>the low end from one hundred and sixty two billion previously.

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<v Speaker 3>I want to bring into the conversation to our man

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<v Speaker 3>deep seeing Bloomberg Intelligence Global ahead of Technology Research making

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<v Speaker 3>his way from TV into our radio studio we're talking

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<v Speaker 3>about Meta, what investors don't like it.

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<v Speaker 5>I mean, look, there wasn't much of an upside when

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<v Speaker 5>it comes to the top line both this quarter and

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<v Speaker 5>the guide, and when it comes to Capex, even though

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<v Speaker 5>they didn't raise capex. The one line that caught my

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<v Speaker 5>attention was that first line from Mark Zuckerberg that he

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<v Speaker 5>expects things to improve across enterprises. And that's new because

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<v Speaker 5>all of Meta's generated revenue is generated from the consumer side.

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<v Speaker 5>So the fact that he has that in the first

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<v Speaker 5>line shows that they are leaning towards.

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<v Speaker 2>Enterprise usage, the cloud builder, cloud.

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<v Speaker 5>Built API usage by enterprises, and that's what they are

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<v Speaker 5>betting on when it comes to this kind.

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<v Speaker 1>I mean silly question, but does Meta actually have an

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<v Speaker 1>LM that can be licensed by some of these enterprises

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<v Speaker 1>in a way that would be different than an enterprise

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<v Speaker 1>using a platform from Microsoft or from open Ai or

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<v Speaker 1>from Anthropic.

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<v Speaker 5>So it's getting more competitive when it comes to royal

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<v Speaker 5>LM usage. And the reason I say that is because

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<v Speaker 5>of Kimmy K three and all these open source models

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<v Speaker 5>that have really taken off and are being used for

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<v Speaker 5>use cases besides the frontier where Anthropic is being used.

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<v Speaker 5>So I think if Meta has to compete with open source,

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<v Speaker 5>it's going to be interesting how they position themselves, whether

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<v Speaker 5>it's in terms of lower token pricing, or they have

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<v Speaker 5>another strategy because they're building a business from scratch and

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<v Speaker 5>it's not easy. They're late to that cloud game. They

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<v Speaker 5>are late to that API game. So how they go

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<v Speaker 5>about it. Who those anchor customers are going to be

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<v Speaker 5>that's a million dollar question. Who are they going to

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<v Speaker 5>partner with in terms of that enterprise usage. Is it

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<v Speaker 5>going to be Microsoft or Anthropic? We don't know that,

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<v Speaker 5>well Ed, Come on back in here. What do you

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<v Speaker 5>think you're going through all of these releases right now?

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<v Speaker 5>You point out that Mark Zuckerberg what mandep was referring

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<v Speaker 5>to Mark Zuckerberg writing quote, AI is accelerating our core

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<v Speaker 5>business today, powering our next generation of products, and opening

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<v Speaker 5>the door to entirely new enterprise opportunities.

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<v Speaker 1>What are those opportunities?

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<v Speaker 2>Yeah?

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<v Speaker 4>So Bloomberg's reported that Meta has explored a literal cloud

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<v Speaker 4>computing business. Charlie called Meta a hyperscaler. It operates data

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<v Speaker 4>centers at Hyperscale for its own business, for its internal workloads.

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<v Speaker 4>That's very different to renting out compute capacity to third parties,

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<v Speaker 4>but Bloomberg's reported metas looking at that more recently. Kurt

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<v Speaker 4>Wagner got on the phone with Mark Zuckerberg, right and

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<v Speaker 4>he said, yeah, you know, that is something an idea

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<v Speaker 4>of something we might do. That quote around enterprise opportunities

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<v Speaker 4>is pretty much the sort of clearest example we've had,

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<v Speaker 4>and I think going into this, i'd wager that for

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<v Speaker 4>the call, that is something that analysts will focus questions on.

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<v Speaker 4>It's not about it's not about ROI on the AI investment.

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<v Speaker 4>It's about ROI on the infrastructure they're building. How can

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<v Speaker 4>you basically make new revenue streams and more money on

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<v Speaker 4>all the infrastructure you've built? And so interesting. I think

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<v Speaker 4>Mandib's very smart to get to that so quick. And interesting,

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<v Speaker 4>by the way, because how many quarters on the show

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<v Speaker 4>do we say, well, here's the quote from the CEO

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<v Speaker 4>at the top of the reason, and we kind of

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<v Speaker 4>move on, and how much work is this one doing?

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<v Speaker 4>I find that fascinating.

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<v Speaker 3>I want to ask both of you because here we

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<v Speaker 3>have Meta under pressure. You've got Microsoft, though rallying in

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<v Speaker 3>the aftermarket, not up as much as it was earlier,

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<v Speaker 3>but still up about one point four percent.

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<v Speaker 2>Mindev let me bring you back in here.

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<v Speaker 3>What does a better tell on the AI spend the

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<v Speaker 3>AI narrative, like, is it Microsoft in terms of the

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<v Speaker 3>enthusiasm and the expected momentum to continue?

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<v Speaker 5>I mean, just look at the margin degradation for Meta

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<v Speaker 5>here they went from forty three percent to thirty one

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<v Speaker 5>percent operating margin.

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<v Speaker 2>Massive drop.

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<v Speaker 5>It is a massive and that's where a Microsoft with

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<v Speaker 5>its cloud business is able to cushion, you know, some

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<v Speaker 5>of the headwinds it is facing from all these l

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<v Speaker 5>lamps and still do very well in terms of the

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<v Speaker 5>holding up the margin side of the equation.

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<v Speaker 1>Far from capex, where's that money going? Why are margins

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<v Speaker 1>under pressure?

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<v Speaker 5>I mean in the case so with all these companies, now,

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<v Speaker 5>once you raise your capex, you have to show the

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<v Speaker 5>capex in the depreciation line, so your cost.

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<v Speaker 2>Of revenue will keep going up.

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<v Speaker 5>So in the case of Meta, it's not as if

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<v Speaker 5>they're hiring a lot more people. They did hire a

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<v Speaker 5>lot of people and paid millions of dollars, But I

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<v Speaker 5>don't think that.

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<v Speaker 1>You don't think that's what it is.

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<v Speaker 5>No, it's that cost of revenue line going up because

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<v Speaker 5>now those depreciation expenses wouldkick.

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<v Speaker 2>In, so it's just capex.

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<v Speaker 5>You think it will be capeck.

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<v Speaker 1>But can't they make up for that with the investments

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<v Speaker 1>that they've made in making advertising more targeted and getting

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<v Speaker 1>us to click or at least getting marketers in front

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<v Speaker 1>of eyeballs and even more efficient.

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<v Speaker 5>What the ad pricing growth was it was around fourteen percent,

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<v Speaker 5>and you.

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<v Speaker 1>Know that's pretty solid.

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<v Speaker 5>That's been the case for the last few quarters. So

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<v Speaker 5>the problem now they have is all those levers, which

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<v Speaker 5>once there to protect the margins, are not good enough

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<v Speaker 5>when your capex is growing up like this and you

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<v Speaker 5>know your cost of revenue will keep growing. So that's

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<v Speaker 5>that's a hard part in managing margins here for Meta.

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<v Speaker 3>So Microsoft's like, sorry, Mata, but we're having a pretty

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<v Speaker 3>good day. Microsoft share is still up in the aftermarket. So,

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<v Speaker 3>Ed Ludlow, you've been going through and reading more from

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<v Speaker 3>the company.

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<v Speaker 2>What's jumping out at you?

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<v Speaker 4>Well, going into this, I think we knew that it

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<v Speaker 4>was the case. Maybe man Deep can clear it up.

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<v Speaker 4>I think there is some kind of accounting or disclosure

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<v Speaker 4>change for Microsoft where the CAPEX number and they're accounting

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<v Speaker 4>for leases specifically makes the CAPEX number look smaller. But

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<v Speaker 4>again like We're in this period now where the call

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<v Speaker 4>comes very important because we know what the Azure growth

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<v Speaker 4>number is for the quarter gone and the period this

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<v Speaker 4>closed the door on the financial year twenty six, financial

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<v Speaker 4>year twenty seven starts. And you know, the very simple

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<v Speaker 4>math is, in an environment where everyone thinks CAPEX goes up,

0:11:58.720 --> 0:12:01.920
<v Speaker 4>what is the percentage growth in CAPEX that is foreseen

0:12:02.360 --> 0:12:05.080
<v Speaker 4>relative to the growth in Azure. And that's why they're

0:12:05.080 --> 0:12:07.200
<v Speaker 4>putting so much emphasis on all these other metrics, the

0:12:07.360 --> 0:12:11.200
<v Speaker 4>like maybe non financial nature to get some evidence that

0:12:11.200 --> 0:12:13.040
<v Speaker 4>their AI investments are getting traction.

0:12:15.640 --> 0:12:18.000
<v Speaker 2>What I don't know.

0:12:18.080 --> 0:12:19.520
<v Speaker 1>I mean, I think, go go ahead.

0:12:19.520 --> 0:12:22.240
<v Speaker 5>I mean, the one thing I had in mind before

0:12:22.240 --> 0:12:24.960
<v Speaker 5>coming into earnings is if a company doesn't raise their

0:12:25.040 --> 0:12:28.480
<v Speaker 5>capex in an environment where memory prices are up twenty

0:12:28.600 --> 0:12:31.559
<v Speaker 5>thirty percent, to me, they are cutting back somewhere else.

0:12:32.040 --> 0:12:35.600
<v Speaker 5>And that would be my interpretation for META is because

0:12:35.640 --> 0:12:38.960
<v Speaker 5>they didn't raise capex, they certainly are offsetting it with

0:12:39.080 --> 0:12:40.520
<v Speaker 5>something else. We just don't know what.

0:12:41.840 --> 0:12:42.920
<v Speaker 1>So where are they doing that?

0:12:43.559 --> 0:12:46.080
<v Speaker 5>I mean, they don't want to raise capex because the

0:12:46.120 --> 0:12:48.680
<v Speaker 5>stock would have been down even more. Yeah, they raised

0:12:48.679 --> 0:12:50.800
<v Speaker 5>the capex, so they didn't have a choice. I mean

0:12:50.800 --> 0:12:54.040
<v Speaker 5>they're being forced to be disciplined here in terms of

0:12:54.080 --> 0:12:57.720
<v Speaker 5>CAPEX because the market doesn't have a tolerance for higher

0:12:57.760 --> 0:13:01.960
<v Speaker 5>metas capex for this year and possibly for twenty twenty seven.

0:13:02.080 --> 0:13:04.960
<v Speaker 1>Some context to the word discipline now, Carol, discipline for

0:13:05.120 --> 0:13:08.120
<v Speaker 1>Meta platforms means one hundredion to one hundred and forty

0:13:08.160 --> 0:13:11.080
<v Speaker 1>five billion dollars in CAPEX this year.

0:13:11.200 --> 0:13:13.360
<v Speaker 3>Well Ed, come on back in here though, for Meta

0:13:13.640 --> 0:13:16.800
<v Speaker 3>moving into cloud though this business and maybe we'll get

0:13:16.840 --> 0:13:19.640
<v Speaker 3>more on the call about their intentions and their plans.

0:13:19.679 --> 0:13:21.720
<v Speaker 2>I mean, is it still the right move for Meta?

0:13:24.280 --> 0:13:27.120
<v Speaker 4>I mean, I feel like, just going off past action

0:13:27.160 --> 0:13:28.839
<v Speaker 4>and precedent that we're going to get to the call.

0:13:29.200 --> 0:13:30.679
<v Speaker 4>And you know, like the way I think about it is,

0:13:30.679 --> 0:13:33.520
<v Speaker 4>if you're listening or watching BusinessWeek right now, you're asking

0:13:33.559 --> 0:13:36.160
<v Speaker 4>yourself what's still to come. We've gone through the numbers,

0:13:36.160 --> 0:13:39.920
<v Speaker 4>we've gone through the headlines. Everyone with Meta knows about

0:13:39.960 --> 0:13:43.800
<v Speaker 4>Mark Zuckerberg, Susan Lee. The CFO is very important and

0:13:43.840 --> 0:13:47.520
<v Speaker 4>often does the heavy lifting of communicating the financial strategy.

0:13:47.679 --> 0:13:49.400
<v Speaker 4>And I'll just see a world in which we get

0:13:49.440 --> 0:13:53.400
<v Speaker 4>to the call and she's like, yeah, here's our commentary

0:13:53.400 --> 0:13:56.480
<v Speaker 4>on CAPEX I've Mandya's point is so important because it's

0:13:56.520 --> 0:14:00.559
<v Speaker 4>not new, and I mean that with massive respect. The

0:14:00.600 --> 0:14:03.040
<v Speaker 4>capex doesn't just go up because you need to spend

0:14:03.040 --> 0:14:05.720
<v Speaker 4>more to build more to meet demand. Capex can also

0:14:05.800 --> 0:14:08.680
<v Speaker 4>go up because the cost of building those things is higher.

0:14:09.160 --> 0:14:12.440
<v Speaker 4>You know, you have labor and construction inflation, materials inflation.

0:14:12.960 --> 0:14:17.720
<v Speaker 4>Memory is a massive macro factor. You know. IBM basically

0:14:17.760 --> 0:14:21.600
<v Speaker 4>tried to blame ten days ago the lack of spending

0:14:21.760 --> 0:14:27.160
<v Speaker 4>on their technology mainframes, in particular because their customers faced

0:14:27.360 --> 0:14:31.400
<v Speaker 4>higher capex largely relating to higher memory prices. So you know,

0:14:31.960 --> 0:14:34.440
<v Speaker 4>all of these factors are common to all of these

0:14:34.600 --> 0:14:37.880
<v Speaker 4>capital expenditure deployers who want to build AI infrastructure.

0:14:38.280 --> 0:14:42.200
<v Speaker 3>All right, So we're tracking Meta and Microsoft here in

0:14:42.240 --> 0:14:46.000
<v Speaker 3>the after hours. Microsoft up about two percent, a little

0:14:46.040 --> 0:14:46.560
<v Speaker 3>bit more.

0:14:46.400 --> 0:14:48.640
<v Speaker 2>So just following earnings.

0:14:48.680 --> 0:14:50.280
<v Speaker 3>If I go on over to Meta, it is still

0:14:50.280 --> 0:14:53.360
<v Speaker 3>down about five point six percent. Let's just also throw

0:14:53.400 --> 0:14:56.800
<v Speaker 3>into the mix. We've got Qualcom. That one also came

0:14:56.840 --> 0:14:59.280
<v Speaker 3>out with its results, and the stock right now in

0:14:59.320 --> 0:15:01.360
<v Speaker 3>the aftermark as they bring it up on my Bloomberg

0:15:01.400 --> 0:15:02.960
<v Speaker 3>it is down about three point five percent.

0:15:02.960 --> 0:15:03.880
<v Speaker 2>And then we have Armholding.

0:15:03.960 --> 0:15:05.200
<v Speaker 1>We have arm Holding says, well, I want to go

0:15:05.240 --> 0:15:07.880
<v Speaker 1>to Qualcom real quick to Ed because Ed is interviewing

0:15:07.960 --> 0:15:11.480
<v Speaker 1>Christiano Amman tomorrow on Bloomberg Tech. Be sure to tune

0:15:11.480 --> 0:15:14.800
<v Speaker 1>in for that. The CEO of Qualcom ed the company

0:15:14.840 --> 0:15:16.960
<v Speaker 1>give a week forecast for the current quarter. It's cited

0:15:16.960 --> 0:15:20.240
<v Speaker 1>component shortages and rising costs. That's not a new story,

0:15:20.400 --> 0:15:22.280
<v Speaker 1>but by any means, I mean, you've known this about.

0:15:22.120 --> 0:15:24.960
<v Speaker 4>So it's not new. I would say. In the smartphone market,

0:15:25.000 --> 0:15:27.840
<v Speaker 4>it seems worse for Qualcomm than we thought. You know,

0:15:27.920 --> 0:15:32.080
<v Speaker 4>they are the main processor makeup for smartphones. They are

0:15:32.080 --> 0:15:34.880
<v Speaker 4>getting hit on all sides because of m market demand,

0:15:35.000 --> 0:15:39.400
<v Speaker 4>being hit by memory for example. They've tried to diversify

0:15:39.400 --> 0:15:42.360
<v Speaker 4>the business away from that reliance on smartphone, but within

0:15:42.440 --> 0:15:44.960
<v Speaker 4>smartphone they're also kind of it seems like losing business

0:15:44.960 --> 0:15:48.960
<v Speaker 4>from Apple faster than was modeled for. And then like

0:15:49.400 --> 0:15:56.840
<v Speaker 4>they are super super entrenched or exposed to Android in China, right,

0:15:56.880 --> 0:15:59.720
<v Speaker 4>and so like in aggregate all of the forecasts for

0:15:59.760 --> 0:16:03.120
<v Speaker 4>that that handset market, they aren't. They want Rosie to

0:16:03.120 --> 0:16:05.680
<v Speaker 4>begin with the thing that I will ask Christiano is

0:16:05.760 --> 0:16:08.920
<v Speaker 4>for him to give me his latest assessment of the

0:16:08.920 --> 0:16:12.160
<v Speaker 4>smartphone market. For this year and whether it is better

0:16:12.320 --> 0:16:15.000
<v Speaker 4>or worse than he had told me last quarter. So simple,

0:16:15.280 --> 0:16:18.360
<v Speaker 4>but it is possible that the things deteriorate, you know,

0:16:18.480 --> 0:16:21.560
<v Speaker 4>quarters a quarter, and reading in King's report on the

0:16:21.560 --> 0:16:23.160
<v Speaker 4>earnings that that seems to be the case.

0:16:23.640 --> 0:16:26.160
<v Speaker 3>Hey, So Quaal come down about four point three percent

0:16:26.200 --> 0:16:28.520
<v Speaker 3>here in the aftermarket, ARM holdings just down by eight

0:16:28.600 --> 0:16:30.960
<v Speaker 3>tents of a person. ARM delivering a sales forecast of

0:16:31.000 --> 0:16:33.720
<v Speaker 3>about one point thirty eight billion in the fiscal second quarter,

0:16:35.000 --> 0:16:37.480
<v Speaker 3>and we did see the stock under some pressure here,

0:16:38.000 --> 0:16:40.480
<v Speaker 3>Mandy've come on back in anything in terms of ARM

0:16:40.640 --> 0:16:43.160
<v Speaker 3>or Qualcom, that's that's a note for you.

0:16:43.640 --> 0:16:47.280
<v Speaker 5>I mean just exposures. I think Armed, because of the

0:16:47.600 --> 0:16:51.040
<v Speaker 5>data center exposure, continues to do better, even though ARM

0:16:51.160 --> 0:16:55.400
<v Speaker 5>does have smartphone exposure. But because their data center exposure

0:16:55.920 --> 0:16:59.680
<v Speaker 5>has been much higher in the past few quarters, they

0:16:59.720 --> 0:17:03.800
<v Speaker 5>seem to be beating numbers, whereas in the case of Qualcomm,

0:17:04.080 --> 0:17:06.560
<v Speaker 5>I mean they are talking about a twenty twenty nine

0:17:06.640 --> 0:17:11.440
<v Speaker 5>guide and how the business would be more diversified by then.

0:17:11.840 --> 0:17:14.960
<v Speaker 5>But in the near term this business is declining. The

0:17:15.000 --> 0:17:18.159
<v Speaker 5>handset business is still under pressure. Yeah, because of the

0:17:18.200 --> 0:17:21.200
<v Speaker 5>consumer smartphone and the memory pricing.

0:17:20.920 --> 0:17:24.080
<v Speaker 3>Impact all right through on ARM noting royalties from those

0:17:24.119 --> 0:17:27.400
<v Speaker 3>products data centers specifically more than doubling from a year earlier,

0:17:27.440 --> 0:17:30.320
<v Speaker 3>and the appetite our new chip lineup is greater than anticipated.

0:17:30.359 --> 0:17:33.320
<v Speaker 3>This is coming from the company's CEO Armholdings