WEBVTT - Meta Seizes Its Moment to Spend Aggressively in the AI Race 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 --> 0:00:21.920 Listen on demand wherever you get your podcasts, or watch 0:00:21.960 --> 0:00:23.120 us live on YouTube. 0:00:23.840 --> 0:00:25.120 Norma, Linda, Paul Sweeney. 0:00:25.160 --> 0:00:27.320 We're live here in on our Bloomberg Interactive Broker's studio. 0:00:27.360 --> 0:00:29.080 We're streaming live on YouTube as well as to check 0:00:29.160 --> 0:00:32.400 us out there as John's just reporting met a big, 0:00:32.440 --> 0:00:36.080 big earnings numbers last night after the close, stock up 0:00:36.080 --> 0:00:38.680 eleven and a half percent here today, all time high, 0:00:38.760 --> 0:00:40.599 fifty two week high, whatever you want to look at it. 0:00:40.800 --> 0:00:43.680 We're on a two trillion dollar market cap watch here 0:00:43.720 --> 0:00:46.400 one point ninety five trillion as we speak. Let's check 0:00:46.440 --> 0:00:50.520 in with Kurt Wagner, tech reporter for Bloomberg News. He's 0:00:50.520 --> 0:00:52.640 in Denver callout and he's worked out this scam. I 0:00:52.640 --> 0:00:54.200 have no idea how he did it, but it's a 0:00:54.200 --> 0:00:57.040 good gig for Kurt. Kurt talked to us about Meta here. 0:00:57.560 --> 0:01:00.440 Some people feel like, you know, it might be a 0:01:00.480 --> 0:01:03.160 little late to the AI party. 0:01:03.200 --> 0:01:04.959 I don't think that, and I. 0:01:04.959 --> 0:01:07.759 Don't know Zuckerberg was talking pretty guestly about the spending there. 0:01:08.319 --> 0:01:09.640 What'd you take away. 0:01:10.560 --> 0:01:12.360 I don't think they're late at all. I don't think 0:01:12.400 --> 0:01:15.560 that they have offered some of the same products that 0:01:15.640 --> 0:01:18.600 some of their rivals like open Ai and a topic 0:01:18.720 --> 0:01:22.560 have at Google. So they have been building AI models 0:01:22.600 --> 0:01:24.240 for you know, basically a decade. 0:01:24.520 --> 0:01:26.279 They mostly kept them in house. 0:01:27.040 --> 0:01:29.000 They use them, you know, in this case, they've been 0:01:29.040 --> 0:01:31.200 talking a lot about how they're using them to improve 0:01:31.280 --> 0:01:35.640 their own ad targeting and their own content recommendations. And 0:01:35.720 --> 0:01:39.520 so while they're not out selling access to their models 0:01:39.520 --> 0:01:41.480 and the way that rivals are, they're still building them. 0:01:41.920 --> 0:01:44.920 And you know, clearly the street's very happy with what's 0:01:44.920 --> 0:01:47.800 happening here, which is that their ads business, which is 0:01:47.840 --> 0:01:52.160 powered by Instagram and Facebook, is just a cash printing 0:01:52.200 --> 0:01:54.600 machine and they are taking all the profits from that 0:01:54.720 --> 0:01:58.000 and they're you know, funneling them into AI. And yesterday 0:01:58.040 --> 0:01:59.960 we saw that the ads business is doing better than 0:02:00.120 --> 0:02:03.480 expected and they're spending even more on AI, and that 0:02:03.640 --> 0:02:06.280 is a combination that people seem very happy with right now. 0:02:06.640 --> 0:02:08.840 Well, Kurt, even if there are people saying that Meta 0:02:08.880 --> 0:02:10.560 is late to the AI party, if you look at 0:02:10.760 --> 0:02:12.840 shares year to date, and you compare it against the 0:02:12.880 --> 0:02:14.640 others in the mag seven we are seeing it as 0:02:14.639 --> 0:02:17.480 the best performing stock, the second best performing stock, right 0:02:17.520 --> 0:02:20.200 behind Nvidio. What do you think is really propelled it 0:02:20.280 --> 0:02:21.959 forward to that magnitude here? 0:02:23.639 --> 0:02:26.200 Well, I think there's a couple of things. One, there's 0:02:26.240 --> 0:02:28.600 the Mark Zuckerberg factor of this. You can love him, 0:02:28.639 --> 0:02:31.520 you can hate him, but Mark Zuckerberg has a pretty 0:02:31.560 --> 0:02:36.600 strong history of you know, quite frankly, reaching the largest 0:02:36.639 --> 0:02:41.000 audience with his products. That is something he's done repeatedly 0:02:41.240 --> 0:02:44.000 throughout Meta's history, and he has sole control of this company. 0:02:44.040 --> 0:02:46.040 So if you are a believer in him, you are 0:02:46.040 --> 0:02:47.839 a believer in Meta right now. And I think that's 0:02:47.880 --> 0:02:50.160 one factor. And then I think the other is you 0:02:50.160 --> 0:02:52.400 know that reach matters a lot when you're talking about 0:02:52.440 --> 0:02:56.320 AI because when you build in this case, Meta AI 0:02:56.480 --> 0:02:58.880 is the name of their chatbot. They have put it 0:02:58.960 --> 0:03:02.920 into Facebook, Instagram, WhatsApp. It already has a billion monthly 0:03:03.080 --> 0:03:06.639 users simply because they have that existing audience. So where 0:03:06.639 --> 0:03:08.760 a lot of companies are building these AI products and 0:03:08.800 --> 0:03:11.640 then trying to find the audience for them, Meta already 0:03:11.639 --> 0:03:14.600 has the audience. So when they figure this out when 0:03:14.600 --> 0:03:17.720 they know if they're ray Ban Glasses, for example, take 0:03:17.760 --> 0:03:20.040 off in the way that they hope they will. They 0:03:20.080 --> 0:03:23.760 have the built in online audience already for these tools, 0:03:23.760 --> 0:03:25.120 and I think that that's something that a lot of 0:03:25.120 --> 0:03:27.040 people are optimistic about. 0:03:27.440 --> 0:03:28.959 Kert. You mentioned WhatsApp wall. 0:03:29.000 --> 0:03:30.680 I think I was covered in stock when they bought 0:03:30.680 --> 0:03:34.800 WhatsApp seven eight years ago. Are they finally starting to 0:03:34.880 --> 0:03:35.920 monetize whatsappen? 0:03:36.080 --> 0:03:36.880 So how are they doing it? 0:03:38.400 --> 0:03:40.760 They are starting to monetize what's up? They announced in 0:03:40.840 --> 0:03:43.240 June that they're going to start running ads and WhatsApp 0:03:43.280 --> 0:03:46.800 for the first time. If you're a history buff in 0:03:46.880 --> 0:03:50.120 terms of following Facebook history, you'll know that that's been 0:03:50.160 --> 0:03:51.840 a long time coming and there's been a lot of 0:03:51.920 --> 0:03:54.360 bumps and bruises along the way and get in there. 0:03:54.720 --> 0:03:57.480 But I will say the CFO, Susan Lee, she did 0:03:57.520 --> 0:04:00.120 warn yesterday in the earnings call that even though they 0:04:00.160 --> 0:04:02.480 are putting ads into WhatsApp, this is a long road. 0:04:02.520 --> 0:04:06.520 It is not going to be a material impact for 0:04:06.600 --> 0:04:09.320 the business in terms of revenue or ad impressions for 0:04:09.360 --> 0:04:11.560 the next few years. They're going to start slow. I 0:04:11.560 --> 0:04:13.200 think that makes sense for a couple of reasons, the 0:04:13.240 --> 0:04:15.600 first being that WhatsApp is popular in a lot of 0:04:15.640 --> 0:04:20.440 regions that aren't necessarily lucrative in terms of advertising. You know, India, Brazil, 0:04:20.760 --> 0:04:24.280 places like that. And then a second you're kind of 0:04:24.520 --> 0:04:28.200 trying to convince advertisers to shift budget perhaps from more 0:04:28.600 --> 0:04:31.400 lucrative things like Instagram or Facebook, and so I think 0:04:31.400 --> 0:04:33.760 it's going to be slow for people to maybe move 0:04:33.800 --> 0:04:36.720 over their money towards WhatsApp. But again, fast forward a 0:04:36.720 --> 0:04:39.440 few years from now, I think there is obviously potential here. 0:04:39.600 --> 0:04:43.080 That app has multiple billions of users globally. 0:04:44.200 --> 0:04:46.479 Kurt, It's hard to be a bear here on this stock. 0:04:46.480 --> 0:04:49.440 I'm looking at Wall Street ratings right now, seventy four 0:04:49.480 --> 0:04:52.640 people have a buy. We have five holds on the 0:04:52.680 --> 0:04:55.680 stock and then one cell and that's coming from BNP Paaraba. 0:04:55.720 --> 0:04:57.240 But if you really had to dig in and see 0:04:57.279 --> 0:04:59.600 what the overhas could potentially be here for this company, 0:04:59.640 --> 0:05:01.560 what would you stay or some areas that investors are 0:05:01.600 --> 0:05:04.160 looking to see a bit more of a push forward. 0:05:05.320 --> 0:05:07.680 Well, I do think the spending is a lot and 0:05:07.800 --> 0:05:11.520 so while the ads business continues to chug along, people 0:05:11.600 --> 0:05:14.000 are going to say, Okay, that's fine. If there is 0:05:14.040 --> 0:05:17.080 a stumble in this ads business, you know, heading into 0:05:17.720 --> 0:05:20.680 the holiday quarter or something like that. Suddenly people might 0:05:20.720 --> 0:05:22.960 start wondering why are they spending so much if the 0:05:22.960 --> 0:05:24.200 ads business isn't delivering. 0:05:24.240 --> 0:05:24.960 So that's one. 0:05:25.160 --> 0:05:28.520 The other is their reality labs division, that's the Quest 0:05:29.360 --> 0:05:33.239 VR headsets, things like that. That is a loss leader. 0:05:33.240 --> 0:05:37.279 I believe four point five billion dollars in losses just 0:05:37.360 --> 0:05:39.880 last quarter alone. They also mentioned on the call that 0:05:39.960 --> 0:05:43.120 Quest sales were down year over years, so that's a 0:05:43.160 --> 0:05:44.800 concern I would imagine for some people. 0:05:45.040 --> 0:05:47.039 Kurt, thank you for reporting. Appreciated. 0:05:47.120 --> 0:05:50.440 Kurt Wagner, Tech reporter, Bloomberg News in Denver, Colorado. I'm 0:05:50.480 --> 0:05:52.839 never driving I seventy again, up to the downs again. 0:05:53.120 --> 0:05:54.799 I made that value or so good. 0:05:56.279 --> 0:05:59.880 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:06:00.080 --> 0:06:03.440 weekdays at ten am Eastern on Applecarplay and Android Auto 0:06:03.560 --> 0:06:06.599 with the Bloomberg Business App. Listen on demand wherever you 0:06:06.640 --> 0:06:09.640 get your podcasts, or watch us live on YouTube. 0:06:10.360 --> 0:06:13.440 All right, let's stuck a little bit healthcare here, Eli Lilly. 0:06:13.720 --> 0:06:17.280 I mean, it's always about, like the OBCD drugs, who's 0:06:17.320 --> 0:06:20.000 the winner, who's the loser, How big is the market. 0:06:19.760 --> 0:06:21.280 App but there's a lot more to talk about. I 0:06:21.320 --> 0:06:23.400 don't know Damian Guardet. He joins us here. He's a 0:06:23.440 --> 0:06:24.160 healthcare reporter. 0:06:25.720 --> 0:06:29.320 Eli Lily, the blockbuster diabetes drug Monjaro fell short of 0:06:29.440 --> 0:06:32.200 expectations that it would do a better job by preventing 0:06:32.200 --> 0:06:34.640 heart attacks and strokes than its older medicine, Trullicity. 0:06:35.240 --> 0:06:37.680 Is that a promiming Dabian It depends on how you 0:06:37.720 --> 0:06:39.520 look at it, but it does underline I think what 0:06:39.600 --> 0:06:42.320 you mentioned that the bar is so high for these medicines, 0:06:42.360 --> 0:06:43.880 both commercially and clinically. 0:06:43.920 --> 0:06:45.000 So what we learned today. 0:06:45.279 --> 0:06:48.880 Lily ran a study comparing Manjaro, the newer GLP one 0:06:48.920 --> 0:06:52.159 combination medicine, against its older GLP one called Trullicity, to 0:06:52.240 --> 0:06:54.880 determine whether it worked as well in preventing heart attacks 0:06:54.880 --> 0:06:57.880 and strokes. And the good news is the study met 0:06:57.920 --> 0:07:01.080 its goal. It proved non inferiority as a scientific term, 0:07:01.080 --> 0:07:02.800 which is to say it did just about as well 0:07:02.800 --> 0:07:05.279 as the older drug. The bad news, through the lens 0:07:05.279 --> 0:07:07.119 I think of a lot of investors, is it didn't 0:07:07.120 --> 0:07:10.240 prove to be superior, which was kind of the if 0:07:10.280 --> 0:07:12.560 not expectation, then kind of hoped for outcoming. 0:07:13.280 --> 0:07:15.680 So what's the biggest business here for Eli Lilly, I mean, 0:07:15.800 --> 0:07:18.360 is Manjarro one of their front running drugs that we're 0:07:18.360 --> 0:07:19.119 talking about here. 0:07:19.440 --> 0:07:21.760 It is so Monjarro is it's a little triggy because 0:07:21.760 --> 0:07:24.440 it's the same basic medicine, but when it's used for 0:07:24.480 --> 0:07:27.760 diabetes they call the drug Manjarro, and when it's used 0:07:27.800 --> 0:07:29.920 for obesity they call it zep bound. But it's the 0:07:29.960 --> 0:07:34.200 same scientific molecule underneath at all. And that combined is 0:07:34.240 --> 0:07:36.720 by far Lily's biggest growth driver, and. 0:07:36.640 --> 0:07:38.480 It's a medicine that is in demand. 0:07:38.520 --> 0:07:41.840 It was until relatively recently in shortage officially, and it 0:07:41.880 --> 0:07:45.360 is definitely paving the path to Lily becoming the most 0:07:45.440 --> 0:07:50.240 valuable drug company in the world. And it's also outpacing 0:07:50.400 --> 0:07:53.559 Novo Nordisk, the Danish company that really invented this market 0:07:53.560 --> 0:07:56.480 that's also had a lot of unfortunate news in recent years. 0:07:56.520 --> 0:07:59.239 Lily is lapping the competition there and is on pace, 0:07:59.480 --> 0:08:01.600 it's assumed to kind of dominate this market at least 0:08:01.600 --> 0:08:02.720 in the near termal So, some imoking. 0:08:02.520 --> 0:08:05.080 At the PGeo function in the bloomber terminal, it kind 0:08:05.080 --> 0:08:06.680 of breaks out kind of where the revenue comes from 0:08:06.680 --> 0:08:09.960 either by you know, business line or by geography. Cardio 0:08:10.080 --> 0:08:12.680 metabolic health, that's their biggest revenue line. 0:08:12.720 --> 0:08:15.080 Is that the obesity stuff. Yeah, that's inclusive of obesity 0:08:15.120 --> 0:08:15.400 and DiPT. 0:08:15.840 --> 0:08:17.920 I mean look at this, let's go twenty twenty one, 0:08:18.400 --> 0:08:19.880 that at thirteen billion of revenue. 0:08:19.920 --> 0:08:21.400 Okay, good business. 0:08:21.840 --> 0:08:26.920 Twenty twenty four it had about thirty billion business expected 0:08:26.960 --> 0:08:30.720 to be forty three billion this year, fifty two billion 0:08:30.920 --> 0:08:31.480 next year. 0:08:31.960 --> 0:08:35.280 Holy cow, that is out of control growth. No wonder 0:08:35.280 --> 0:08:36.640 they're so valuable. 0:08:36.920 --> 0:08:39.280 Well exactly, and it's I mean, that's what we've demonstrated, 0:08:39.320 --> 0:08:42.440 what Lily has demonstrated in sales just with the products 0:08:42.480 --> 0:08:43.839 that it has on the market. But I think when 0:08:43.880 --> 0:08:46.240 you look at the company's valuation, what's being priced in 0:08:46.880 --> 0:08:49.920 is assumed to come oral golp one, So they would 0:08:49.920 --> 0:08:52.440 have asks what we're talking about that could win approval 0:08:52.679 --> 0:08:55.400 next year at the earliest, and that is likely to 0:08:55.600 --> 0:08:58.360 both be a massive commercial product for obvious reasons, but 0:08:58.440 --> 0:09:01.960 really like democratize this therapeutic category because these are all 0:09:01.960 --> 0:09:04.280 injectable medicines that we're talking I am as. 0:09:04.200 --> 0:09:07.240 The injector of this medicine on another person, which I enjoy. 0:09:07.400 --> 0:09:09.200 I get a cocktail out, we make a little party 0:09:09.200 --> 0:09:12.959 of it. But the oral thing that's going to open 0:09:13.040 --> 0:09:15.120 up the market like crazy, I would think there's probably 0:09:15.160 --> 0:09:16.679 a lot of people that don't want to don't. 0:09:16.520 --> 0:09:18.400 Enjoy doing the shots. I mean, a lot of people 0:09:18.440 --> 0:09:19.240 don't like needles. 0:09:19.360 --> 0:09:22.600 Yeah, and it's also going to probably diversify it. So 0:09:23.120 --> 0:09:26.840 a lot of the focus on these medicines is what percentage. 0:09:26.360 --> 0:09:27.360 Of weight loss do they drive? 0:09:27.400 --> 0:09:29.400 It could get it up to twenty five percent, for example, 0:09:29.400 --> 0:09:31.480 but for a lot of people they don't need to 0:09:31.480 --> 0:09:33.480 lose twenty five percent of their body weight. The pill 0:09:33.520 --> 0:09:37.040 seems to have a lower percentage body weight change. But 0:09:37.200 --> 0:09:40.640 the assumption is that there's a huge demand for that, 0:09:40.720 --> 0:09:43.520 and that when there's a multitude of these medicines, the 0:09:43.600 --> 0:09:46.280 heavy duty ones versus the lighter ones, then you could 0:09:46.280 --> 0:09:48.000 really meet a lot of the demand that people need. 0:09:48.840 --> 0:09:50.560 How about all the other stuff in the world, Like, 0:09:50.679 --> 0:09:55.199 I don't know, cancer, dementia, Where's where are they in that? 0:09:55.480 --> 0:09:57.800 Yeah, we're Lily in that type of thing. 0:09:57.880 --> 0:10:00.120 Well it Lily particularly does have an approved medicine and 0:10:00.200 --> 0:10:03.720 for Alzheimer's disease and a lot of drugs for cancer 0:10:03.760 --> 0:10:06.559 mostly in the pipeline that's been a major investment of THEIRS. 0:10:06.720 --> 0:10:09.680 But one thing that's notable about the golp ones, not 0:10:09.720 --> 0:10:12.440 to pull it back there, is that we've seen that 0:10:12.480 --> 0:10:14.640 in the long term, as this study demonstrates, it reduces 0:10:14.640 --> 0:10:16.960 the risk of heart attack and stroke. But likewise, there 0:10:16.960 --> 0:10:20.200 are observational studies tying it to reduce risk of Alzheimer's 0:10:20.200 --> 0:10:23.840 and of cancer, which follows reason in that these drugs 0:10:23.880 --> 0:10:27.000 basically make you eat less and in many cases drink less, 0:10:27.120 --> 0:10:29.600 smoke fewer cigarettes. These are things that we know our 0:10:29.679 --> 0:10:32.040 behavioral changes that prevent cancer, heart. 0:10:31.880 --> 0:10:32.560 Attack, and stroke. 0:10:33.000 --> 0:10:34.440 I think it's funny that these things came out at 0:10:34.480 --> 0:10:36.439 the same time as gummies came out, just saying. 0:10:37.880 --> 0:10:39.920 Well, I mean I think that there's there's well maybe 0:10:39.960 --> 0:10:42.040 there's a correlation there right, just need to find it. 0:10:42.800 --> 0:10:46.719 But I mean, when we think about this company, how 0:10:46.760 --> 0:10:48.920 are they in comparison to competitors right now? I mean, 0:10:48.920 --> 0:10:50.240 this is a massive company here. 0:10:50.679 --> 0:10:54.600 Yeah, Lily, I think HAS this is a long term, 0:10:54.840 --> 0:10:58.120 dating back about a century investment in diabetes research that 0:10:58.160 --> 0:11:00.800 Lily Has and the GLP one medicin grew out of. 0:11:01.160 --> 0:11:03.360 They began as diabetes streatments before they were discovered to 0:11:03.360 --> 0:11:06.600 have such profound effects on obesity. So I think Lily 0:11:06.600 --> 0:11:09.079 would say this is them carrying on the tradition, and 0:11:09.120 --> 0:11:12.400 their market cap and all of these kind of superlatives 0:11:12.400 --> 0:11:14.400 we can fix to them are just the markers of 0:11:14.440 --> 0:11:16.360 a success that they set in motion in years past. 0:11:16.640 --> 0:11:20.560 I would say other major American drug makers look at 0:11:20.600 --> 0:11:25.160 them with some envy and perhaps occasionally resentment, because they 0:11:25.160 --> 0:11:27.840 and Novo Nordisk are the leaders in GLP WAN Pfizer, 0:11:28.600 --> 0:11:30.160 Johnson and Johnson, Bristol, Myers. 0:11:29.960 --> 0:11:30.520 Squib Merk. 0:11:30.640 --> 0:11:33.560 All of the heavyweights of this sector missed out on 0:11:33.640 --> 0:11:35.760 that first wave of BCD drugs that have really driven 0:11:36.320 --> 0:11:37.400 the success of the industry in. 0:11:37.400 --> 0:11:38.880 Recent Here and I'll tell you this is how you 0:11:38.920 --> 0:11:40.439 see it, nor you ask that question kind of where 0:11:40.480 --> 0:11:42.360 do you see the difference here? How about valuation on 0:11:42.360 --> 0:11:45.720 twenty twenty five estimates. This is on the BQ function, folks, 0:11:45.800 --> 0:11:48.920 And this comp sheet is curated by Bloomberg Intelligence, so 0:11:48.960 --> 0:11:51.000 you know it's right. It's the right comps and the 0:11:51.080 --> 0:11:53.760 right numbers. That's what the bi folks do. Four on 0:11:53.800 --> 0:11:56.400 twenty twenty five numbers. ELI Lilly Stock is trading at 0:11:56.400 --> 0:11:59.520 thirty four times earnings, the rest of the peer group 0:11:59.760 --> 0:12:03.640 fifteen times, so more than twice the valuation Wall Street 0:12:03.679 --> 0:12:06.640 is giving to Eli Lilly versus the other big cap 0:12:07.480 --> 0:12:10.040 names like you know, Johnson and Johnson at ev Murk. 0:12:10.120 --> 0:12:13.040 So just extraordinary there, Damian, thanks so much for joining us. 0:12:13.040 --> 0:12:14.200 Really appreciate the reporting there. 0:12:14.240 --> 0:12:17.480 Damien Gardeve, healthcare reporter our Bloomberg News, joining us live 0:12:17.520 --> 0:12:20.520 here in our Bloomberg Interactive Broker studio. 0:12:21.400 --> 0:12:25.120 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:12:25.200 --> 0:12:28.559 weekdays at ten am Eastern on Applecarplay and Android Auto 0:12:28.679 --> 0:12:31.760 with the Bloomberg Business App. Listen on demand wherever you 0:12:31.800 --> 0:12:35.680 get your podcasts, or watch us live on YouTube paulcom. 0:12:35.720 --> 0:12:38.200 The company reported earnings a little bit disappointing. The stock 0:12:38.320 --> 0:12:41.120 is down five point eight percent today, down two and 0:12:41.200 --> 0:12:43.520 a half percent for the year. Let's break down what 0:12:43.640 --> 0:12:46.200 happened in that quarter with an expert. Con John Savanni 0:12:46.280 --> 0:12:49.640 joins the CEIs of Senior analysts cover semiconductors for Bloomberg 0:12:49.679 --> 0:12:53.719 Intelligency joins us via zoom from San Francisco, Coujohn, you 0:12:53.880 --> 0:12:55.400 to do this stuff for a living. You see all 0:12:55.440 --> 0:12:59.080 these companies break down the Qualcom earnings. 0:12:59.080 --> 0:13:00.080 What did you see? 0:13:00.360 --> 0:13:03.880 Yeah, there was nothing hugely wrong with these results. In fact, 0:13:03.960 --> 0:13:06.720 there were a few positives, namely the beat on the 0:13:06.760 --> 0:13:10.640 IoT due to better smart glass chip sales to Metti 0:13:10.720 --> 0:13:13.480 and others. Auto is still continuing to be on track 0:13:13.679 --> 0:13:18.480 despite the automotive end market seeing weakness. The handset guide 0:13:18.520 --> 0:13:21.080 for next quarter which is for to come in in 0:13:21.200 --> 0:13:25.360 line which to typical seasonality, which is actually surprisingly positive 0:13:25.520 --> 0:13:28.720 despite given that they're going to have significant Apple share 0:13:28.800 --> 0:13:32.640 law starting next quarter. That means that the gains they're 0:13:32.679 --> 0:13:36.200 gaining in Android and Android continues to get better for 0:13:36.320 --> 0:13:39.520 them for their chip sales. But all of this goodness 0:13:39.600 --> 0:13:42.760 is still sort of near term or one time. The 0:13:42.840 --> 0:13:48.120 big questions in investors' mind don't disappear from these this goodness. Unfortunately, 0:13:48.679 --> 0:13:50.800 you know, there is going to be that big Apple 0:13:50.880 --> 0:13:54.520 loss this year, this calendary and the next calendar year 0:13:54.559 --> 0:13:56.680 that is going to weigh on their top line revenue, 0:13:56.880 --> 0:14:00.880 and there is no offset to completely offset loss, so 0:14:01.040 --> 0:14:04.600 that's going to stay. The diversification efforts in IoT and 0:14:04.679 --> 0:14:09.000 Auto and the PC and the XR, etc. Is moving 0:14:09.040 --> 0:14:12.240 on track, but it's not sexy enough or new enough 0:14:12.320 --> 0:14:15.439 for in the near term to get investors excited about 0:14:15.440 --> 0:14:15.800 this name. 0:14:16.240 --> 0:14:17.959 And that's what I'm seeing the rest of the street 0:14:18.000 --> 0:14:19.720 saying as well. I mean, the CEO just said in 0:14:19.760 --> 0:14:22.240 the interview with Ed Ludlow that they see content in 0:14:22.280 --> 0:14:26.600 the automotive space accelerating here. But then we see the 0:14:26.600 --> 0:14:28.800 print that we just are analyzing right now in the 0:14:28.800 --> 0:14:31.600 street is saying that weakness in the handset and automotive 0:14:31.880 --> 0:14:35.120 chip sales sector, that all coming in weaker has really 0:14:35.200 --> 0:14:37.800 kind of put a damper here for investors. How much 0:14:37.840 --> 0:14:39.480 runway do you think that the company has here? 0:14:40.080 --> 0:14:43.680 I mean, you know, they've been pitching this diversification story 0:14:43.720 --> 0:14:47.040 for a while now. They have to give them credit. 0:14:47.120 --> 0:14:50.480 They have made meaningful progress in a lot of these avenues. 0:14:51.480 --> 0:14:54.600 The automotive and IoT still looks to be on track 0:14:54.720 --> 0:14:57.720 to get to that twenty two billion dollars target that 0:14:57.760 --> 0:15:00.960 they've promised. You know, once you get there, it will 0:15:00.960 --> 0:15:03.560 be enough to offset all the Apple losses. It's just 0:15:03.840 --> 0:15:06.200 it's just moving very slowly, which is good. It is 0:15:06.240 --> 0:15:09.120 still moving consistently, but slowly. And in the times that 0:15:09.160 --> 0:15:11.320 we are in right now, and an investor in Semi 0:15:11.440 --> 0:15:14.560 has the optionality to look at all the fast growing 0:15:14.640 --> 0:15:17.360 AI names where most of the spending is coming. It's 0:15:17.400 --> 0:15:21.320 just very hard to get people excited very quickly about 0:15:21.480 --> 0:15:23.760 still investing in a company which is still primarily to 0:15:23.880 --> 0:15:25.280 dat driven by handset revenues. 0:15:25.400 --> 0:15:27.520 Ku John, what is what is Qualcomm? And maybe some 0:15:27.520 --> 0:15:29.320 of your other chip names, What are they saying about 0:15:29.320 --> 0:15:30.720 tariffs about thirty seconds? 0:15:32.240 --> 0:15:34.920 Well, most of the companies in our coverage are not 0:15:35.520 --> 0:15:40.040 calling out tariff impact directly. You know there some companies 0:15:40.120 --> 0:15:43.760 have you know, decided to take a step forward and 0:15:43.800 --> 0:15:46.560 call some kind of pollons. We heard from Christiana where 0:15:46.600 --> 0:15:49.280 and Qualcom is saying this, haven't seen no pollons. It's 0:15:49.360 --> 0:15:53.120 very hard to DeLine it because you know, initially from 0:15:53.240 --> 0:15:56.360 our channel checks, we believe they're where some pols pullions 0:15:56.360 --> 0:15:59.520 because of tariff fears. But as the discussions and the 0:15:59.520 --> 0:16:01.560 news have sort of died down, the risk for that 0:16:01.600 --> 0:16:04.640 has reduced, so the consumers which we are initiating politics 0:16:04.760 --> 0:16:07.080 might have normalized. So we're not seeing a lot of 0:16:07.120 --> 0:16:10.520 impact on the semi space for the most part from tariffs, 0:16:10.600 --> 0:16:13.360 except for this movement between two Q and three Q demand. 0:16:13.720 --> 0:16:15.760 Good John, thanks so much for joining Uskunjohn, So, honey, 0:16:15.840 --> 0:16:18.000 he's a senior and I's covering of semiconductors for Bloomberg 0:16:18.040 --> 0:16:19.760 Intelligence based out there in San Francisco. 0:16:21.560 --> 0:16:25.240 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:16:25.320 --> 0:16:28.720 weekdays at ten am Eastern on Applecarplay and Android Auto 0:16:28.800 --> 0:16:31.880 with the Bloomberg Business app, Listen on demand wherever you 0:16:31.920 --> 0:16:34.880 get your podcasts, or watch us live on YouTube. 0:16:35.280 --> 0:16:37.640 Comcast reported results here. 0:16:39.080 --> 0:16:41.880 I guess they lost fewer subscribers, and that's kind of 0:16:41.920 --> 0:16:43.960 a net wind that stocks up one point six percent 0:16:44.000 --> 0:16:47.440 for the day, down twelve percent for the year. It 0:16:47.520 --> 0:16:49.800 just feels like there's a lot of headwinds for this industry, 0:16:49.840 --> 0:16:53.440 the cable TV slash broadband industry. Keitha Ranganath, and she 0:16:53.520 --> 0:16:56.320 covers all the media stuff for Bloomberg Intelligence. 0:16:56.520 --> 0:16:56.800 Keitha. 0:16:56.880 --> 0:16:59.760 What you see from Comcast numbers today? 0:17:00.880 --> 0:17:03.400 Yeah, thanks so much, Paul. So, what happened really was 0:17:03.520 --> 0:17:05.919 last week we had Charter, which is the second largest 0:17:05.960 --> 0:17:10.080 cable or the second largest broadband operator reporting. They reported 0:17:10.280 --> 0:17:13.480 broadband subscriber numbers that were extremely weak. Losses were much 0:17:13.560 --> 0:17:16.520 higher than what you know the investment community was expecting. 0:17:17.000 --> 0:17:21.160 That triggered a thirty percent lunge in Charter stock price 0:17:21.440 --> 0:17:24.399 and generally spooked Comcast investors as well. So there was 0:17:24.440 --> 0:17:26.680 a lot of kind of panic and nervousness coming into 0:17:26.720 --> 0:17:30.440 today's report. And Comcasts did lose subscribers. They in fact 0:17:30.480 --> 0:17:32.840 lost the most number of subscribers that they ever have 0:17:33.040 --> 0:17:36.040 lost in their broadband business. But it was still better 0:17:36.200 --> 0:17:38.040 than what the street was fearing, and that's why we're 0:17:38.040 --> 0:17:39.640 seeing a little bit of what you know, you can 0:17:39.680 --> 0:17:42.040 call a relief rally here for Comcast. 0:17:42.600 --> 0:17:43.080 Absolutely. 0:17:43.119 --> 0:17:45.760 I mean, what is the broader market looking like right now? 0:17:45.760 --> 0:17:48.040 I mean, you've compared it against Charter, But how are 0:17:48.040 --> 0:17:49.480 we thinking about broadband right now? 0:17:50.600 --> 0:17:53.280 Yeah, So broadband really has been, you know, at least 0:17:53.280 --> 0:17:55.919 over the past few years, NARA has been completely dominated 0:17:55.920 --> 0:17:59.080 by the cable industry. So just you know, even up 0:17:59.119 --> 0:18:02.040 to two or three years ago, cable had almost a 0:18:02.119 --> 0:18:06.560 sixty seven percent share of the you know, home broadband 0:18:06.760 --> 0:18:10.280 what we call the fixed broadband market. But with the telecoms, 0:18:10.320 --> 0:18:12.960 so with AT and T, Verizon and T Mobile coming 0:18:13.000 --> 0:18:16.679 in and becoming extremely aggressive in terms of two of 0:18:16.720 --> 0:18:19.800 their product offerings, so one which they call fixed wireless, 0:18:19.800 --> 0:18:22.200 which is basically you know, also called five G home 0:18:22.280 --> 0:18:26.199 Internet and the other being fiber, and with both of 0:18:26.240 --> 0:18:29.320 those on the fixed wireless really from a pricing perspective, 0:18:29.320 --> 0:18:31.760 because they're only charging about fifty dollars or so a month, 0:18:31.840 --> 0:18:33.960 so they're really competing with cable on the low end. 0:18:34.440 --> 0:18:36.520 And then if you want a superior product a cable 0:18:36.560 --> 0:18:38.560 in terms of both upload and download speeds, you go 0:18:38.600 --> 0:18:41.880 for fiber. So they're really attacking cable from both ends. 0:18:41.880 --> 0:18:44.959 And that's where we're seeing kind of this intense competition 0:18:45.560 --> 0:18:48.159 for the cable operators like a Charter Don Comcast that 0:18:48.240 --> 0:18:51.440 have been losing subscribers and losing subscribers really at a 0:18:51.920 --> 0:18:55.840 pretty you know, alarming pace. The problem is that they're 0:18:55.880 --> 0:18:58.439 going to continue to lose subscribers, and that's you know, 0:18:58.480 --> 0:19:00.800 that's kind of how we're framing it for the cable 0:19:00.800 --> 0:19:01.680