WEBVTT - Deep Dive: Big Tech Cloud & AI Bets

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news, The.

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<v Speaker 2>Stock Movers podcast, your roundup of companies making moves in

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<v Speaker 2>the stock market harnessing the power of Bloomberg Data.

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<v Speaker 3>Let's take a look at the stocks on the move today,

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<v Speaker 3>Ampass when alongside Isabelle Leeam were joined by our old

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<v Speaker 3>friend Anna Ragrana, senior tech anast to Bloomberg Intelligence, Honor.

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<v Speaker 3>A lot of news is going to be coming our

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<v Speaker 3>way from your tech space. I'm going to start with Microsoft.

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<v Speaker 3>Can you give us a summary of UPDATEA. What's happening

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<v Speaker 3>with this software cyber breach here? Doesn't seem to be

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<v Speaker 3>impacting the stock that much? What's Microsoft saying? If anything?

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<v Speaker 4>I think the news is out and frankly, you know,

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<v Speaker 4>apart from the one big breach last year where Crowdstride

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<v Speaker 4>really got heard, these breaches typically don't have that big

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<v Speaker 4>on an impact on the stock, frankly because you know,

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<v Speaker 4>it's a small portion of the one particular application, and

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<v Speaker 4>you know, I think the news story is far bigger

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<v Speaker 4>than what it has an impact on the stock. In fact,

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<v Speaker 4>if anything, people will be more inclined to buy Microsoft

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<v Speaker 4>security products to protect themselves down the road. They would

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<v Speaker 4>be more inclined to move more workloads to the cloud

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<v Speaker 4>to make sure that the you know, the online version

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<v Speaker 4>of the software was not impacted. So if you know,

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<v Speaker 4>it just sells by itself, some of the security products

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<v Speaker 4>and these beaches obviously not a good headline for the company,

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<v Speaker 4>but you know, these things do happen quite a bit.

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<v Speaker 1>How is the cloud business looking like these days? I

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<v Speaker 1>feel like it's one of the main drivers of growth

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<v Speaker 1>through many companies, from Amazon to Microsoft as we're talking

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<v Speaker 1>about to most of the big tech giants. Is it

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<v Speaker 1>competition becoming more fierce than is there a leader emerging

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<v Speaker 1>in this space?

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<v Speaker 4>See, the leader was always Aws, but frankly speaking, over

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<v Speaker 4>the last two years, Microsoft has really narrowed the gap

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<v Speaker 4>because of its open Ai relationship. They're the only company

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<v Speaker 4>who's really seeing the biggest benefit of you know, all

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<v Speaker 4>the searchers we're doing in chat GPT because open Ai

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<v Speaker 4>runs primarily on Microsoft's cloud network. So when they report

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<v Speaker 4>next week, we are expecting a big number coming out

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<v Speaker 4>of that AI contribution. So Microsoft, I think, is the

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<v Speaker 4>bigger benefitiary right now amongst all the bigger vendors.

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<v Speaker 3>You know, it's interesting, is it worth investors ranking kind

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<v Speaker 3>of who are the big cloud players? Who are the

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<v Speaker 3>big AI players? Is it worth it or is it

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<v Speaker 3>better just to say, you know, AI is going to

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<v Speaker 3>kind of be all over the tech stack and then

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<v Speaker 3>I just got to be long tech. How do you

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<v Speaker 3>think about really getting quality exposure to that theme.

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<v Speaker 4>Yeah, when you look at cloud, I think all of

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<v Speaker 4>the top four vendors will flourish and flourish well when

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<v Speaker 4>that would be Aws, Microsoft, Google and then Oracle after that,

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<v Speaker 4>so all four will make a lot of money. Then

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<v Speaker 4>you want to dissect each one of them. Within this group,

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<v Speaker 4>Microsoft is the one that's seeing the current derect benefit

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<v Speaker 4>and that's because of opening. The other two whether it's

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<v Speaker 4>Amazon or Google will start to see more and more

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<v Speaker 4>revenue flow in because of the applications people are building

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<v Speaker 4>on their cloud platform. And then lastly on the Oracle side,

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<v Speaker 4>they are benefiting in another part of cloud, which is

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<v Speaker 4>more on the infrastructure side where they're getting a lot

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<v Speaker 4>of money or you know, future funding from open Ai

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<v Speaker 4>to create their data centers to help train the bottle.

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<v Speaker 4>So each one is slightly different, but I would say

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<v Speaker 4>as as you mentioned, the total basket you know should

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<v Speaker 4>do well over time.

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<v Speaker 1>You cover tech and next week is a big week

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<v Speaker 1>for those companies and beyond tech. Bmots are expected to

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<v Speaker 1>deliver nearly fifteen percent of profit growth and robust demand

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<v Speaker 1>for AI, and that's compared to the virtually no growth

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<v Speaker 1>for the rest of the four hundred and nine or

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<v Speaker 1>three stocks. Are you watching anything and a specific company

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<v Speaker 1>you're excited about and you mentioned you're looking at cloud,

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<v Speaker 1>But is there anything else that is factoring in your outlook?

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<v Speaker 4>So there can be two elements of it. One is

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<v Speaker 4>the cloud, the AI side of spending, and the non

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<v Speaker 4>AI side of spending what we saw from SAP and

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<v Speaker 4>infoss and then you know taught all a couple of

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<v Speaker 4>weeks ago, so that the non AI tech spending is

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<v Speaker 4>under pressure. People are not spending as much because they

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<v Speaker 4>are not sure how the tariff related uncertainty is just

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<v Speaker 4>playing out, so they're seeing a delay in closing, closing

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<v Speaker 4>of deals and everything around it. But on the AI side,

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<v Speaker 4>we anticipate strong results from Microsoft, for example, So that's

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<v Speaker 4>there the two dichotomy over there between the two vendors.

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<v Speaker 4>The third thing that we are watching is actually what

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<v Speaker 4>happens on the margin side of things because a lot

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<v Speaker 4>of these companies are investing very heavily in AI. Because

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<v Speaker 4>of that, their margins are going to get squeezed. And

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<v Speaker 4>for that, what we think is going to happen is

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<v Speaker 4>they're going to take reduction in force, either through not

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<v Speaker 4>hiding at the same pace that they have been or

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<v Speaker 4>basically laying off a portion of their workforce in order

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<v Speaker 4>to counter some of that pressure. So those are the

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<v Speaker 4>three themes that we are most interested in right now.

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<v Speaker 3>An Agrana absolutely, thank you appreciate an Orana Tech Analysts

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<v Speaker 3>Bloomberg Intelligence an Agrana mandep seing. Those are our two

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<v Speaker 3>senior tech analysts. They manage our global technology research effort.

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<v Speaker 3>For Bloomberg Intelligence, we have close to I think twenty

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<v Speaker 3>analysts covering technology on a global basis, a lot based

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<v Speaker 3>in Asia, based in the US, and based in Europe.

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<v Speaker 3>And that's the way you have to cover at Folks.

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<v Speaker 3>Tech is an all encompasing sector. It's the biggest part

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<v Speaker 3>of the SMP five hundred and you have to the

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<v Speaker 3>complete coverage, and we do on.

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<v Speaker 2>A global basis.

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<v Speaker 3>I think the best tech research on the street with

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<v Speaker 3>the best data helping them to inform their research.

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<v Speaker 2>The Stockmovers podcast from Bloomberg Radio. Check back with us

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