Speaker 1: Bloomberg Audio Studios, podcasts, radio News.
Speaker 2: The Stock Movers report, your roundup of companies making moves
Speaker 2: in the stock market, harnessing the power of Bloomberg Data.
Speaker 1: Let's take a look now, add some stocks to watch
Speaker 1: in the week ahead. I'm Nathan Hager, joined by Bloomberg
Speaker 1: Intelligence Global Head of Tech Research, Man Deep saying, because
Speaker 1: it really is all about tech this week, I think
Speaker 1: we're hearing from what five of the mag seven when
Speaker 1: it comes to earnings, and a lot of them are
Speaker 1: just this Wednesday, right, Man Deep.
Speaker 3: They are. And look, I think what Tesla has shown
Speaker 3: us is, you know, capex increases are still a big
Speaker 3: focus in terms of what these companies are doing around
Speaker 3: the AI infrastructure build out, and so that's a common
Speaker 3: thread across all of them. Yeah.
Speaker 1: Absolutely, Well let's start off with one of the biggest names.
Speaker 1: Micro Soft is one of them that's reporting on Wednesday.
Speaker 1: We just heard this past week that they're offering voluntary
Speaker 1: buyouts to a bunch of their workforce. What does that
Speaker 1: tell you about what we could get when it comes
Speaker 1: to the earnings.
Speaker 3: Look, I think with Microsoft, clearly the stock has been
Speaker 3: under pressure because of their open AI partnership and you
Speaker 3: know just the way it's evolving. And when it comes
Speaker 3: to the top line growth, I think what investors are
Speaker 3: waiting for is what kind of lift they are going
Speaker 3: to see in their Azure segment from all these AI workloads.
Speaker 3: I mean last quarter Google had that ten percentage point
Speaker 3: gap where Google grew forty eight percent and Microsoft's was
Speaker 3: thirty eight percent growth. So Microsoft really needs that lift
Speaker 3: in that Azure growth line and that's where I think
Speaker 3: investors will be comparing them against the likes of Amazons
Speaker 3: and Google Cloud, and to me, that's what they need
Speaker 3: to show that they can deliver on that Azure growth numbers.
Speaker 1: Are you expecting that we're going to hear much more
Speaker 1: from Microsoft about their CAPEX plans after what we heard
Speaker 1: from Tesla. I mean, they were a big part of
Speaker 1: that six hundred and fifty billion dollar number we heard
Speaker 1: from the hyperscalers just a few months ago.
Speaker 3: Yeah, I wouldn't be surprised if that number is revised upward.
Speaker 3: Now it won't be a big revision, but clearly, as
Speaker 3: things stand, everyone seems to be compute constrained. That's what
Speaker 3: we have heard from Anthropic and these leading labs and Microsoft.
Speaker 3: If they are able to show that sequential acceleration and
Speaker 3: Azure growth, that could be the justification to raise their capex,
Speaker 3: but otherwise I think the stock may react negatively if
Speaker 3: they end up raising their capex.
Speaker 1: Also Wednesday, we're going to hear from Google parent Alphabet.
Speaker 1: They're a big part of this KAPEC story as well,
Speaker 1: and they just came out with a new generation TPU chip.
Speaker 1: Where is Google Cloud in the AI race?
Speaker 3: Mandy, Yeah, Google Cloud clearly has seen an acceleration, and
Speaker 3: so I expect, you know, this quarter to be the
Speaker 3: growth and Google Cloud to be closer to fifty percent.
Speaker 3: And look, they've just launched two new chips TPUs, one
Speaker 3: for training, the other one for inferencing, and they signed
Speaker 3: that big deal three point five gigaboard deal with Anthropic
Speaker 3: and Broadcom. So from that perspective, there is a lot
Speaker 3: of momentum they have with their chips and cloud, and
Speaker 3: their margins in the cloud business also seem to be expanding.
Speaker 3: The only thing which I'm not sure about is their
Speaker 3: search business, because there are puts and takes. I mean,
Speaker 3: clearly there is some search volume pressure because these chat pots,
Speaker 3: whether it's Open AI or Tropic Cloud they are taking
Speaker 3: some volume of search queries away from Google. At the
Speaker 3: same time, they don't really have an AD's kind of
Speaker 3: surface to their queries. So from that perspective, Google should
Speaker 3: be insulated. But I would be curious to see how
Speaker 3: they end up doing in their core search business in
Speaker 3: terms of the top line growth.
Speaker 1: And I keep seeing Google Gemini try to sneak into
Speaker 1: my search results as well. Where do they factor in
Speaker 1: when it comes to some of the other chatbots.
Speaker 3: Yeah, so Gemini will not show you any ads. It's
Speaker 3: purely subscription driven. Although Gemini is what's powering their AI
Speaker 3: overviews and that's where Google could show a lot more
Speaker 3: engagement with their searches and so in turn that could
Speaker 3: translate into better ADS growth. But clearly Gemini is the
Speaker 3: model that's powering all of their llms across the family
Speaker 3: of apps, whether it's YouTube or or any other surface
Speaker 3: they have. So from that perspective, you know, Gemini standalone
Speaker 3: contribution may not be that much, but clearly it's influencing
Speaker 3: all the family of apps that Google has.
Speaker 1: And also Wednesday we get earnings from meta platforms they're
Speaker 1: guiding for what thirty percent revenue growth? Is that right?
Speaker 3: It's phenomenal that upward revisions we have seen on Meta,
Speaker 3: partly because they have used their compute capacity for their
Speaker 3: ad recommendation systems. So the expectation is that ad pricing
Speaker 3: will probably be very strong for someone like Meta, which
Speaker 3: is able to target the ads much better than anyone
Speaker 3: else in that digital ad ecosystem, and that's what's driving
Speaker 3: the expectation for thirty percent growth. But look, they've raised
Speaker 3: their capex, they've talked about how they're releasing a new
Speaker 3: model and that will help improve the ad targeting and
Speaker 3: engagement further. So high expectations, but they seem to be
Speaker 3: doing quite well in terms of that top line growth
Speaker 3: in digital ads compared to everyone else.
Speaker 1: And where do they stack up? Do you think when
Speaker 1: it comes to the digital ad environment compared to a
Speaker 1: player like Google.
Speaker 3: I mean Google's ad sales, the core search ad sales
Speaker 3: will grow fifteen percent, or that's the expectations. Meta is
Speaker 3: expected to grow almost two times that thirty percent. So
Speaker 3: clearly the social ads seem to be working. And the
Speaker 3: rational for that is, you know, there isn't much LLM
Speaker 3: competition when it comes to social media. In fact, open
Speaker 3: ai has shut down as Sora apps. So when you
Speaker 3: think about you know, AI generated content around social media,
Speaker 3: there isn't much to talk about, whereas in search there
Speaker 3: is a lot more competition from lms, and that's why
Speaker 3: the top line growth expectations for Google Search are much
Speaker 3: lower than a meta, which is expected to grow thirty
Speaker 3: percent top line.
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