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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple Corplay and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: I'm looking at Cisco Systems stock here. Remember, folks, Cisco's

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Speaker 2: it's almost a five hundred. It's called a four hundred

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Speaker 2: and sixty five billion dollar market cap stock. It's up

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Speaker 2: fifteen percent today, the most since twenty eleven. Stock's a

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Speaker 2: fifty two percent year to date, up ninety one percent

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Speaker 2: on a trailing twelve month basis. This is just ripping.

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Speaker 2: And for those of us back in the day, this

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Speaker 2: was the stock in the nineties, this was the one

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Speaker 2: to own big time. It's been finding its way ever since.

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Speaker 2: And I think you've kind of found little AI love

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Speaker 2: here today. Ryan Vestellica joins us here equities reporter for

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Speaker 2: Bloomberg News. Ryan, I know Cisco reported some numbers. Wow,

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Speaker 2: what did they say?

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Speaker 3: Hey?

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Speaker 4: Thanks for having me. Yeah, pretty blowout report across the

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Speaker 4: board last night. Very strong growth, very strong forecast, and

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Speaker 4: the company also as some job cuts as it is

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Speaker 4: focusing even more on artificial intelligence. So it really seems

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Speaker 4: like there's a growing consensus that Cisco is now a

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Speaker 4: real part of the AI in the structure trade. It's

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Speaker 4: a real part of that firmament, and it does seem

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Speaker 4: like people are really gloming onto the idea that this

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Speaker 4: is going to be a company that's going to be

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Speaker 4: showing very strong demand trends. Really for a while, I have.

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Speaker 5: To say, I feel like there's a trend happening of

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Speaker 5: layoffs being announced very close to really high earnings. What

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Speaker 5: is going on here? Is this part of a growth plan?

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Speaker 5: Is this Are we back to the days of Jack

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Speaker 5: Welch or what do you think?

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Speaker 4: It does seem like this is really part of their

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Speaker 4: prioritizing AI right now. They are making a lot of

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Speaker 4: investments into this. Doesn't really seem like they are talking

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Speaker 4: about AI is replacing these workers or anything like that.

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Speaker 4: It doesn't seem like that's really the focus here. Does

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Speaker 4: seem like more they are seeing so much demand from

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Speaker 4: Hyperscalar customers from the data center build out, so they

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Speaker 4: are really transitioning as much of the company as they

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Speaker 4: can to focus on the opportunity that they see there.

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Speaker 2: So are there is this a story of new products?

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Speaker 2: Are they repositioning existing products to meet you some of

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Speaker 2: this demand that may be coming from the AI build out?

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Speaker 2: How are they achieving this pivot here?

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Speaker 4: Well, there is a growing appreciation that a lot of

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Speaker 4: Cisco's products, We're talking networking components, optical products, all of

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Speaker 4: these are really a critical part of building out these

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Speaker 4: data centers and having them be optimized for AI related workloads.

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Speaker 4: We've seen a lot of these kinds of companies really

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Speaker 4: skyrocketing this year, including in the optical space, So companies

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Speaker 4: like Lumentum, Coherent Corning, the specialized glass company, all of

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Speaker 4: these types of components which have historically been on maybe

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Speaker 4: the sleepier side of the tech trade, not nearly as

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Speaker 4: exciting as you know, higher growth areas all of a

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Speaker 4: sudd and these are all really catching a bid as

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Speaker 4: It does seem like we're at the stage of the

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Speaker 4: AI buildout where these kinds of components are really in demand.

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Speaker 4: It started with processing chips, now it's moving on to

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Speaker 4: networking chips and other kinds of components like that.

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Speaker 5: Yeah, it does seem like there's a lot of excitement

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Speaker 5: around infrastructure for data centers. Why is there so much

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Speaker 5: excitement over that aspect of it as opposed to kind

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Speaker 5: of AI breakthroughs and innovations.

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Speaker 4: Well, right now we are really seeing infrastructure being where

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Speaker 4: we are seeing the most clear cut demand and really

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Speaker 4: the strongest growth. So if you're looking for AI pure

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Speaker 4: plays right now, this is really the best place to

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Speaker 4: look for that kind of thing. All of the hyperscalers,

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Speaker 4: which is companies like Microsoft and Amazon and Alphabet and Meta,

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Speaker 4: when they reported a couple of weeks ago, they all

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Speaker 4: really doubled down on their really aggressive AI related spending plans,

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Speaker 4: and that is really translating almost directly into revenue at

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Speaker 4: the companies that are involved with building out the data centers.

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Speaker 4: So you have all these huge cloud computing companies and

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Speaker 4: all the equipment that is needed to actually run those.

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Speaker 4: So we've seen it in servers, in chips, in memory,

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Speaker 4: in storage, and in all these different sort of optical

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Speaker 4: and networking components, very sort of technical and specialized products,

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Speaker 4: but ones that are really coming more and more critical

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Speaker 4: to this stage of the buildouts.

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Speaker 2: So I'm just looking at the historical financials line of Cisco.

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Speaker 2: It's been kind of a last four or five years

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Speaker 2: kind of mid single digit revenue growth store mid to

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Speaker 2: mid to high single digit revenue growth. I guess the

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Speaker 2: street's kind of rerating the top line growth outlook for

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Speaker 2: the company. What's the company saying about their revenue outlook?

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Speaker 4: Well, it does seem like they are very much encouraging

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Speaker 4: the idea that they are going to be a real

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Speaker 4: significant winner within artificial intelligence, that the demand they're seeing

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Speaker 4: isn't just going to be a blip, that as we

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Speaker 4: see the AI infrastructure build out over the coming quarters

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Speaker 4: and maybe even years, that they will continue to benefit.

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Speaker 4: So we are looking at a higher rate of forward

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Speaker 4: growth them that I think investors have gotten used to

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Speaker 4: in the past. I mean, this has been even a

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Speaker 4: few years ago, considered a pretty sleepy legacy company, slower growth,

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Speaker 4: lower multiple, pays a dividend, not exciting the way it was,

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Speaker 4: and you know the dot com era, when it was,

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Speaker 4: like you said, the most exciting company out there starting

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Speaker 4: getting some of that momentum Again.

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Speaker 5: Did it pivot at some point? Was it in the

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Speaker 5: right place at the right time, or was there a

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Speaker 5: decision that it made that kind of put it on

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Speaker 5: the path to see this kind of growth.

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Speaker 4: I think that their you know, long term focus has

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Speaker 4: been in sort of these networking products and things that

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Speaker 4: were just not quite in focus in the pre AI era.

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Speaker 4: Does seem like they are just sort of in the

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Speaker 4: right place at the right time and they are able

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Speaker 4: to pivot to focus on this in a more direct way.

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Speaker 4: But I know they've made some acquisitions with optical companies.

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Speaker 4: They've certainly been making a greater push to focus on AI,

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Speaker 4: and it does seem like that is paying off for them.

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Speaker 6: Stay with us more from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: You got Stacey vax Smith sitting in for Scarlett fou

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Speaker 2: On Paul Sweeney. You're live here in our Bloomberg Interactive

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Speaker 2: Brokers studio, streaming live on YouTube. All right, your technology aunels,

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Speaker 2: you follow technology companies, So where do you go?

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Speaker 3: Poland?

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Speaker 2: Dan Ives, globalhead of technology research at Wedbush Securities, finds

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Speaker 2: himself in Poland. I'm not even gonna ask uh Dan

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Speaker 2: what I want to get to is seeming like half

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Speaker 2: of the leadership of Silicon Valley is with President Trump

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Speaker 2: in Beijing as we speak. What do you make of it?

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Speaker 3: I mean, look, it's a pivotal moment for AI and

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Speaker 3: tech because it's about being able for vidious other chips

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Speaker 3: into China, but also just more of an opening, you

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Speaker 3: know in China, which is important for Tesla, it's important

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Speaker 3: for Apple, it's for chip makers, and look, this is

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Speaker 3: this is a moment in time where it's important when

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Speaker 3: they come back from that trip, and it's been a

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Speaker 3: huge step forward, and I think it's gonna be another

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Speaker 3: leg up in this market. You're seeing it from the

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Speaker 3: godfather of AI and video today.

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Speaker 5: We've been talking this morning about how important AI and

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Speaker 5: tech are to the economy right now. They are hugely fundamental.

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Speaker 5: How important is this summit for tech and AI in

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Speaker 5: the US right now?

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Speaker 3: I think it's it's it's really like a grand opening

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Speaker 3: to what could be in next chapter of AI because

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Speaker 3: when you think about the one black cloud over the

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Speaker 3: AI trade has really been China, raw material chips in

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Speaker 3: the China from nvideo. You know, when you start to

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Speaker 3: clear this path and this passes and you get the

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Speaker 3: green light. I think it's another leg up and what

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Speaker 3: that means is more data center build out, more chip

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Speaker 3: more and again for the first time in thirty years,

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Speaker 3: US is ahead of China when it comes to tech

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Speaker 3: and that's very important in terms of the global market.

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Speaker 3: Is more and more you're going to earn US tech

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Speaker 3: stops Dan.

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Speaker 2: I guess this trip highlights once again kind of the

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Speaker 2: change in power that we saw in Apple with Tim

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Speaker 2: Cook giving up the CEO post but retaining the chairman post.

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Speaker 2: And I think, as you've told us before, part of

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Speaker 2: his responsibility is managing the relationship with China. Just gives

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Speaker 2: a summary of kind of how that stands right now.

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Speaker 3: Look, if Cook has been tem percent politician, ninety percent CEO,

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Speaker 3: you know I'm there probably ninety politician, right. I mean,

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Speaker 3: that's a huge part of his value because he has

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Speaker 3: the years within DC from Trump to others' and that's

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Speaker 3: so important for Apple. It's and navigates the political Landskip

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Speaker 3: and China, Bok Twente, China's heart and one that twenty

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Speaker 3: percent eye from as well as you know where the

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Speaker 3: massive amount of production appen is with tariffs and everything else,

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Speaker 3: It's not coincidilla that Coke is on Air Force one.

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Speaker 5: Are there any specific deals or announcements that might come

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Speaker 5: out of the summit or is it more of a

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Speaker 5: general breaking of bread.

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Speaker 3: I think it's more than a breaking of bread. I

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Speaker 3: think it's about the official green light for in video

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Speaker 3: cell chips in the China with no caveats. And I

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Speaker 3: think Jensen he's the biggest poker chip there, because that's

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Speaker 3: really what China wants. I think when you see an

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Speaker 3: opening of China for businesses, I think this is really

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Speaker 3: about robotics because right now China's weeding and robotics the

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Speaker 3: big area obviously test getting into in terms of optimists

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Speaker 3: and humanoid robots, and it's very important that you have

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Speaker 3: an opening of that market for us to compete, rather

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Speaker 3: than just China winning in that market.

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Speaker 2: Dan, it's become, I guess increasingly clear of the last

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Speaker 2: four or five six years that there's a technology cold

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Speaker 2: war between China and let's call it just the West.

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Speaker 2: Is there any way to change that and make it

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Speaker 2: less difficult for both sides? How do you see that

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Speaker 2: playing out?

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Speaker 3: Look? I think all of the problem is is that

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Speaker 3: it's a two horse race, right I mean, Europe know

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Speaker 3: where I am today. I mean they continue to be

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Speaker 3: stuck in regulatory data privacy and really know where when

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Speaker 3: it comes to AI. But then you look in Middle

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Speaker 3: East India, they're trying to be obviously you know, the

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Speaker 3: number three players. But that's also why like US needs

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Speaker 3: China Chinese US when it comes to the tree. You know,

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Speaker 3: it's an arms race that's going to play out, and

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Speaker 3: you're going to kind of see a splitting of these

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Speaker 3: two powerhouses when they go after other markets. But it's

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Speaker 3: a true fourth Industrial Revolution that's playing out, and US

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Speaker 3: and China both know no one wants to mess that

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Speaker 3: up relative to we continue to believe third inning top

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Speaker 3: of the third one out in this non inning bullmarket.

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Speaker 2: Hey Dan, you know better than anybody. And plus you're

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Speaker 2: in Europe as we speak. Other than SAP and maybe

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Speaker 2: one or two other companies, there is almost no technology

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Speaker 2: in Europe. They've missed the last fifty years. Are they

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Speaker 2: going to miss AI as well?

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Speaker 3: Look, that's I mean, I just heard this IMPAC conference

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Speaker 3: and born you have pel from all around the world speak.

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Speaker 3: I mean, that's that's a big topic because you know,

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Speaker 3: in terms of big brother privacy, worries about you know,

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Speaker 3: what we've seen and from a technology respective, it's taken

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Speaker 3: Europe many years behind where everyone else is. And I

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Speaker 3: think there's a huge battle going on between innovators entrepreneurs

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Speaker 3: because otherwise, if they don't use in privacy and some

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Speaker 3: of the regulatory you know, Europe's gonna miss out in

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Speaker 3: US and you'll see a lot of entrepreneurs and innovators

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Speaker 3: moved to Middle e US. You'reine obviously other markets, but look,

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Speaker 3: I believe about betting on a country that's going to

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Speaker 3: break out of this, it's probably pulling. I think they're

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Speaker 3: the one that's kind of showing the most kind of

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Speaker 3: maybe vision when it comes to AI.

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Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app, Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: All right, Stacey Vannox Smith sitting in for Scarla Fuapaulsoony

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Speaker 2: live here in our Bloomberg Interactive Brokers Studio, streaming live

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Speaker 2: on YouTube as well. Given the turmoil coming out of

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Speaker 2: the Middle East. A lot of folks are, a lot

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Speaker 2: of companies are wondering kind of how that's impact their business.

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Speaker 2: One of those industries is generally a kind of the

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Speaker 2: travel business organ and people change their travel habits given

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Speaker 2: what's going on out there in the world. And our

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Speaker 2: good friends of Bloomberg Intelligence, they survey folks out there

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Speaker 2: in the marketplace toy figure out what they're doing and

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Speaker 2: how that may impact hotels, cruise lines, all that type

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Speaker 2: of stuff. Airlines, that type of thing. Jony Lori, senior

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Speaker 2: credit analysts for Bloomberg Intelligence Joints.

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Speaker 3: Is here.

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Speaker 2: Jody, what's your latest survey tell you about, maybe as

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Speaker 2: we kind of head into this summer travel season, how

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Speaker 2: people are thinking about how they might travel, where they

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Speaker 2: might travel, how's that looking.

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Speaker 6: So I don't think you'll be surprised to hear this, Paul,

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Speaker 6: but we are seeing some of the effects of the

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Speaker 6: around war. The energy prices enter our survey data. So,

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Speaker 6: for example, personal safety is a concern among about two

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Speaker 6: thirds of survey participants, and that's the highest level since

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Speaker 6: we started running this survey in December of twenty three,

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Speaker 6: So that's not so surprising. What is surprising is how

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Speaker 6: resilient the consumer has been, at least in terms of

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Speaker 6: increasing budgets, in terms of planning to increase budgets, and

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Speaker 6: in terms of still traveling. Despite the backdrop that said,

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Speaker 6: we are seeing a little bit of a bias towards

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Speaker 6: domestic international which, again, I think given the climate, given

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Speaker 6: the Trump administration's stance on immigration, and all the sort

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Speaker 6: of components of that, the geopolitical risk, it's not so

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Speaker 6: surprising to us what we're seeing, but it's very evident

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Speaker 6: in the data.

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Speaker 5: I mean, obviously we're coming up on the big travel

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Speaker 5: season in the US summer. How do you expect that

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Speaker 5: to start impacting all of the businesses that rely on

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Speaker 5: the travel industry. I mean, if people are going domestic,

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Speaker 5: that could be positive news, but also gas prices are

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Speaker 5: way up.

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Speaker 6: Sure Stacy, So I think we're seeing still that people,

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Speaker 6: despite knowing that inflation is a big factor, they're still

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Speaker 6: planning on increasing their budgets. And so I do wonder

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Speaker 6: at what point we start seeing a shift in terms

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Speaker 6: of how people travel. One of the things that came

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Speaker 6: out of the survey is if costs succeed budgets, they're

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Speaker 6: willing to cut back on accommodations, so going for not

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Speaker 6: as luxury accommodations, but they aren't willing to sacrifice activities

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Speaker 6: and experiences. But what we are seeing though, even so,

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Speaker 6: is that things like outdoors and national parks are high

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Speaker 6: up on the list in terms of where people are traveling,

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Speaker 6: as well as beach vacations. Now, even marrying that into

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Speaker 6: the conversation, we are seeing that Mexico and the Caribbean

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Speaker 6: have decreased in terms of where people are traveling for

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Speaker 6: the second half of the year versus what we saw

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Speaker 6: in November. So we are you know, there is sort

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Speaker 6: of a give and take in this scenario. Are people

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Speaker 6: going to the Jersey Shore over the Caribbean? I'm not sure. No,

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Speaker 6: it's come to Yore, Atlantic City finally getting the boom

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Speaker 6: exactly exactly.

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Speaker 2: The World Cup, Jody, There's been some reporting that the

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Speaker 2: World Cup is a little underwhelming from the hotel perspective here,

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Speaker 2: maybe Airbnb as well. What a you're hearing from the

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Speaker 2: companies you cover about the World Cup?

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Speaker 6: Yeah, so it depends on the company you're talking about.

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Speaker 6: So some of the companies, from the gaming companies to

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Speaker 6: the hotels are commenting that they are seeing a little

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Speaker 6: bit of an uptick in some of their markets. And

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Speaker 6: what's so interesting about the way that the World Cup

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Speaker 6: is run is just how North America it is. Right,

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Speaker 6: You're talking Vancouver, You're talking La You're talking New York

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Speaker 6: and Philadelphia, you're talking Mexico. I mean, there's so many

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Speaker 6: areas in which the World Cup is going to be

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Speaker 6: penetrating the North American landscape. But I'm curious to see

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Speaker 6: how much of that is going to equate in terms

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Speaker 6: of travel budgets and people going places for it. You

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Speaker 6: are seeing, I mean, you know, just anecdotally, I am

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Speaker 6: starting to see locally some of the promotions happening at

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Speaker 6: restaurants and at different sort of attractions as we lead

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Speaker 6: into the World Cup. I'm not sure what that's going

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Speaker 6: to equate in terms of actual dollars spent by people

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Speaker 6: as they sort of go to the matches and celebrate it.

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Speaker 6: But we do have some survey data that it is mixed.

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Speaker 6: You know, we have some people who are prioritizing sporting

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Speaker 6: events over vacation, but by and large, we aren't necessarily

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Speaker 6: seeing that that's the top priority for how people are

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Speaker 6: going to spend their vacations for the second half of

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Speaker 6: the year.

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Speaker 5: So you mentioned that people are kind of switching to

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Speaker 5: domestic overall. How is international travel looking right now? Is

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Speaker 5: are we seeing it decrease a little bit? Is that

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Speaker 5: maybe part of why there's a little bit of softness

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Speaker 5: around the World Cup bookings?

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Speaker 2: Correct?

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Speaker 6: Is it's so stacy. I mean, I think, I think

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Speaker 6: more so than you know the World Cup bookings per se.

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Speaker 6: I think it's just we're seeing a decline in terms

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Speaker 6: of travel internationally. Overall. We're seeing fewer people planning on

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Speaker 6: three or more vacations or two or more vacations internationally

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Speaker 6: than we did in November. So that's a big, big

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Speaker 6: sort of cutback, right. And then we're also seeing that

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Speaker 6: the key places that were you know, attractive spots going

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Speaker 6: into this year, including Canada, including Italy, including Portugal, Japan,

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Speaker 6: all of them, Dubai of course, you know, all of

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Speaker 6: them are sort of seeing a little bit of a

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Speaker 6: decline from November in terms of locations that people are

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Speaker 6: planning on traveling to. Now, what is surprising is the

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Speaker 6: UK actually bumped up in terms of priority of where

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Speaker 6: people are planning on traveling next year. I don't know

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Speaker 6: if that has to do anything with you know, USA

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Speaker 6: two fifty, so people feel celebratory and want to shore

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Speaker 6: independence for two hundred and fifty years.

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Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

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