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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive

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Speaker 1: from coast to coast with Caroline Hide in New York

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Speaker 1: and ever Low in Sent Francisco.

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Speaker 2: This is Bloomberg Tech coming up, Qualcom and arm out

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Speaker 2: with their earnings. Will break them down with the two CEOs,

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Speaker 2: Christiano Amon and Rene haass.

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Speaker 3: Plas Alphabet's capex mic drop record spending plans hit the

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Speaker 3: stock despite strong earnings.

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Speaker 2: And Bitcoin falls below seventy thousand US dollars for the

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Speaker 2: first time since late twenty twenty four. Will break down

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Speaker 2: the negative momentum impacting crypto.

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Speaker 3: Markets and that negative momentum is affecting markets more broadly.

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Speaker 3: At the moment, check out the nasak off by one

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Speaker 3: point four percent. We are training the lowest since November.

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Speaker 3: Right now at the moment ed we are seeing pain

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Speaker 3: across the board. And that's why we've got to go

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Speaker 3: to our Bloombost Cross Asset reporter to say we can

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Speaker 3: dig into all of these moves across asset classes with

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Speaker 3: Alexander Zamaneva, who's with us now, I don't know where

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Speaker 3: to look at the moment, everything is in the red.

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Speaker 4: It has been a really ugly week, Caroline. We have

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Speaker 4: obviously seen corrections in tech over the last three years

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Speaker 4: since the launch of chat GPT, but nothing has rivaled

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Speaker 4: the sheer magnitude of this sell off that we're seeing

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Speaker 4: in the sector across various assets, hitting both stock and

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Speaker 4: credit market. Software stocks, of course, have been at the

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Speaker 4: forefront of this. They are down about fifteen percent this

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Speaker 4: week and twenty nine percent from their all time highs

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Speaker 4: in September. It's also important to note that this selloff

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Speaker 4: has triggered a number of extreme levels. From a technical perspective.

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Speaker 4: The share of software stocks at over sold levels eclipsed

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Speaker 4: seventy percent yesterday. That is an all time high. In

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Speaker 4: the broader tech sector that shares about forty five percent,

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Speaker 4: also a record and another barometer of how painful it

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Speaker 4: has been. The I Shares Expanded Tech Software ETV that

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Speaker 4: is ticker IGV compared to the S and P five

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Speaker 4: hundred is the most over sold that it has ever been,

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Speaker 4: and of course that risk off sentiment is spreading today.

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Speaker 4: What we've seen so far is that it has really

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Speaker 4: been focused on tech, so up until today, it's really

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Speaker 4: been a rotation out of tech and in two other

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Speaker 4: pockets of the market, and now we're really seeing the

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Speaker 4: sell off broad and out. Looking at the S and

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Speaker 4: P five hundred, it is down one point two percent

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Speaker 4: right now. The Dow Jones Industrial Average, which up until

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Speaker 4: today has been kind of shielded from this, is now

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Speaker 4: down one point two percent. Also, the SNP equal weight yesterday,

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Speaker 4: for example, was up zero point nine percent even as

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Speaker 4: the broader market sold off. It is down again today,

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Speaker 4: So really risk off across the board. And we have

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Speaker 4: to talk of course about Bitcoin. It fell below sixty

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Speaker 4: eight thousand today, which is the lowest since November twenty

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Speaker 4: twenty four, down about forty five percent from it's October high.

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Speaker 4: Also big news today that crypto exchange Gemini plans to

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Speaker 4: cut about twenty five percent of its workforce, so really

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Speaker 4: seeing the pain of that.

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Speaker 2: Bloomberg's Alexandre just Semonova with the macro picture at the

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Speaker 2: index level, this is what matters when it comes to

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Speaker 2: technology earnings.

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Speaker 5: Caroline called it the mic drop moment.

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Speaker 2: Alphabet parent of Google with a Capex forecast for the

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Speaker 2: fiscal year of one hundred and eighty five billion dollars.

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Speaker 2: The street had forecast just shy of one hundred and

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Speaker 2: twenty billion dollars. That's a bit of a delta. The

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Speaker 2: stockdown almost five percent, on track for its biggest drop

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Speaker 2: since May of last year, a big number to digest earnings.

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Speaker 2: Also in the chip sector, Qualcomm down almost eight percent.

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Speaker 2: It gave a forecast for the current period eleven billion

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Speaker 2: dollars in sales at the top end. How much better

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Speaker 2: would that have been were it not for the impact

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Speaker 2: of what's happening in memory chips right now?

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Speaker 5: In the memory market, ARMED.

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Speaker 2: Similarly, but actually it is up five percentage points and

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Speaker 2: it's accelerated throughout the session. Sales and fiscal fourth quarter

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Speaker 2: will be about one point four to seven billion dollars,

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Speaker 2: just ahead of consensus. How are they managing what's happening

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Speaker 2: in the memory shortage and when is they going to

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Speaker 2: transition from the handset story to the data center story.

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Speaker 2: Let's talk through it. ARM CEO Rene Husk joins us. Now, Rene,

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Speaker 2: good morning, thank you for joining us. That there is

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Speaker 2: a lot going on. Let's get the sort of handset,

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Speaker 2: smartphone and memory situation out of the way. If that's okay,

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Speaker 2: You know clearly this is impacting outlook for the smartphone

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Speaker 2: market across this calendar year.

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Speaker 5: How do you think it showed.

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Speaker 2: Up in the earnings that you posted and would it

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Speaker 2: have been slightly better if the situation were different?

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Speaker 6: Yeah, good morning, Good morning, ed. So, first off, the

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Speaker 6: quarter was amazing for us. We had not only record revenue,

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Speaker 6: but record royalties one point two to four billion in revenue,

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Speaker 6: nearly seven hundred and forty million dollars in royalties, and

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Speaker 6: if you just stack that up, that's twenty seven percent

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Speaker 6: year on year. Our data center business is exploding. We

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Speaker 6: were up one hundred percent year on year, probably north

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Speaker 6: of one hundred percent year on year. So to your question, no,

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Speaker 6: the memory situation isn't really impacting arms so directly. And

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Speaker 6: you might ask, well why is that? Well, Number one,

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Speaker 6: we are a spread across a lot of different businesses.

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Speaker 6: As I said, the data center business is increasingly growing

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Speaker 6: for us, and we think in a few years it'll

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Speaker 6: be our largest business.

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Speaker 7: Secondly, our products are used across the.

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Speaker 6: Board, so we tend to see in memory shortages is

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Speaker 6: the bottom end of the stack starts to get impacted,

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Speaker 6: and that's actually lower royalty rates for us.

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Speaker 7: So as a result, we don't get impacted very much.

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Speaker 6: So no, short answer is no impact this quarter, and

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Speaker 6: we raised our guidance for the next quarter because, as

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Speaker 6: I said, we're just not seeing that kind of impact,

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Speaker 6: but I'm not denying that it's there. But for the

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Speaker 6: ARMED business, the impact is quite minimal.

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Speaker 5: Renee, thank you for that.

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Speaker 2: Data center royalty revenue grown one hundred percent year on year,

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Speaker 2: As you outlined, I get the same question for you

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Speaker 2: from everyone's sell side through the buyside, which has give

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Speaker 2: me a specific year.

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Speaker 5: Market on the calendar.

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Speaker 2: When ARM goes from being handset to data center and

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Speaker 2: it accounts for more of your business, is that selection

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Speaker 2: points clear on your calendar?

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Speaker 6: At least it's very clear, And that's why in the

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Speaker 6: earnings call, I said in a few years. As you know,

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Speaker 6: we don't typically provide forward guidance on an annual basis,

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Speaker 6: but we have a line of a site that says

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Speaker 6: we see it coming and it's probably coming sooner than

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Speaker 6: we had thought. And the reason for that is the

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Speaker 6: data center growth. But if you click below that, why

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Speaker 6: is data center growing so rapidly, it is the a

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Speaker 6: presence of ARM CPUs in the data center. We're now

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Speaker 6: over fifty percent market share with the hyperscalers. Secondly, the

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Speaker 6: CPUs that are being used are using more arm CPUs

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Speaker 6: inside the chip one hundred and ninety two cores for

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Speaker 6: example inside a graviton chip going from ninety six VERA

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Speaker 6: and video VERA going from seventy two cores on grace

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Speaker 6: now to eighty eight. So what does that mean. That

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Speaker 6: means more cores, means more royalties and high growth rate. Well,

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Speaker 6: why are there more cores? When you think about agentic

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Speaker 6: AI and everything associated with agents moving workloads across systems,

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Speaker 6: managing workflows, et cetera, et cetera. That's the kind of

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Speaker 6: work only CPUs can do. So to your question, while

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Speaker 6: we're not giving a date, we can see it and

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Speaker 6: it's coming sooner than we had thought, even probably six

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Speaker 6: to nine months ago.

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Speaker 3: And probably on the back of when you look at

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Speaker 3: an alphabet increasing its capital expenditure by another well potentially

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Speaker 3: one hundred and eighty five billion dollars renee. Is the

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Speaker 3: AI bubble this worry about AI infrastructure build out a

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Speaker 3: thing of the past to you, or there are still

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Speaker 3: somewhat bottleneck issues that you're concerned about.

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Speaker 6: Yeah, so it's a great observation, Caroline, and yes, there's

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Speaker 6: huge growth in Google's capex not all of that one

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Speaker 6: hundred and eighty billion dollars as coming does of course,

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Speaker 6: but what does that say. We continue to see investments

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Speaker 6: in the data center, whether it's what Meta had announced

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Speaker 6: or Microsoft announced and now Google Alphabet that exceed what

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Speaker 6: people had originally thought was even possible even a couple

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Speaker 6: of years ago. If you go back to when we

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Speaker 6: announced the Stargate initiative in January of twenty twenty four,

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Speaker 6: five hundred billion dollars over a number of years, people

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Speaker 6: looked at those numbers and said, how is that even possible?

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Speaker 6: Now eighteen months later, it looks quite quite credible. So

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Speaker 6: bottom line is we are seeing such an investment because

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Speaker 6: the AI opportunity, the way I like to think about it,

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Speaker 6: is kind of the final frontier relative technology. When you

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Speaker 6: think about what could be on beyond AI, it's really

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Speaker 6: hard to imagine. So also the fact that AI has

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Speaker 6: really had very little penetration, let's say, into large enterprise

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Speaker 6: or into our health systems or things around drug discovery.

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Speaker 7: So there's a long, long runway.

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Speaker 6: I think people are a little nervous about it as

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Speaker 6: decidedly so because we've not seen it before, right we've

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Speaker 6: not seen the order of magnitude we're talking about, so

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Speaker 6: it's somewhat natural for you to look at it and say, well,

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Speaker 6: gravity's got to hit it sometime. But then if you're

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Speaker 6: a little intellectually look at it and say, my gosh,

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Speaker 6: is AI going to be something that will change and

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Speaker 6: trainansform how everything is done well? Of course, and then

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Speaker 6: there's going to be an investment to support that. And

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Speaker 6: that's what we're saying, investment.

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Speaker 3: To support that. We don't mention stargate. That immediately makes

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Speaker 3: me think of Massa. And you were clear on the

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Speaker 3: call yesterday that you've spoken to him. You don't think

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Speaker 3: Soft bangk is in any way going to sell down

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Speaker 3: at stake in ARM. But how much is that an

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Speaker 3: overhang in the longer term and how much actually do

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Speaker 3: you want to see more free float of your stock?

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Speaker 6: Well, I have one very large shareholder who I talked

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Speaker 6: to quite frequently who loves ARM and he's very long

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Speaker 6: on ARM. So he has no intention to sell at all.

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Speaker 6: And I shouldn't even say anytime soon. I don't know

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Speaker 6: when that would be. Quite frankly, we do talk about it.

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Speaker 6: He said he's got no interest in selling how that

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Speaker 6: impacts the float and etc. You know, that's not something

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Speaker 6: candidly I spend a whole lot of bandwidth thinking about.

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Speaker 6: But he's very, very long on ARM because he sees

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Speaker 6: the enormous opportunity that we have. And if you think

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Speaker 6: about what we've done since we've gone public, Carol, and

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Speaker 6: in the Flaw of twenty twenty three, we told the

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Speaker 6: world we'd be growing at twenty five percent year on

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Speaker 6: year for two three years, and people didn't believe it

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Speaker 6: was possible. Here we are now a couple of years later,

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Speaker 6: and we're beyond what we told investors during our roadshow,

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Speaker 6: and things are even stronger than they were at their time.

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Speaker 7: So as a result, he sees it.

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Speaker 6: He sees probably more of the data than anyone does,

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Speaker 6: and that's why he's not selling RAN now.

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Speaker 5: I want to go back to CPU.

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Speaker 2: January twenty sixth, Bloomberg speaks to Nvidia CEO Jensen Wang,

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Speaker 2: and he speaks for the first time about selling to

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Speaker 2: the market via CPU as a standalone. And that seems

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Speaker 2: critically important because if you think about the pipeline for

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Speaker 2: Blackwell and Rubin, right, those are GPUs coded in on

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Speaker 2: based architecture and those building they don't want to sort

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Speaker 2: of have to cross pollinate x eighty six based platforms

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Speaker 2: with their ARM based GPUs. It seemed to be really substantive.

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Speaker 2: You explain how much of a boost that was for

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Speaker 2: ARM and whether this idea that the VIA CPU goes

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Speaker 2: into the market as a standalone product changes the trajectory

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Speaker 2: at all, because at the same time a video talks

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Speaker 2: up about how much content it owns proportionally in the

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Speaker 2: overall system.

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Speaker 6: Just take it and run with it, please, Yeah, you know, so,

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Speaker 6: first off, thrilled to see Jensen say that they're a

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Speaker 6: great partner and Vera is a great product.

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Speaker 7: And as I mentioned earlier, VERA has gone from.

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Speaker 6: Has gone now eighty eight CPUs inside it CPU cores

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Speaker 6: from seventy two. So why is that a really good

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Speaker 6: thing for us going forward? Well, primarily because when you

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Speaker 6: think about the data centers and how they're evolving to

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Speaker 6: from what is general purpose compute moving to AI compute

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Speaker 6: a mix of training and inference, and those inference workloads

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Speaker 6: are urgentic. That's right down the center of the plate

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Speaker 6: for what the CPU not only is good at, but

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Speaker 6: can only do, can only do. So what that means

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Speaker 6: is inside the data center. You're going to start to

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Speaker 6: see movement towards a homogeneous type of structure where people

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Speaker 6: would love to have the ARM stack running almost everything.

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Speaker 6: It's just easier from a maintenance standpoint, it's easier from

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Speaker 6: an upgrade standpoint, it's easier from a cost standpoint. So

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Speaker 6: and also the flexibility it can affords you can build

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Speaker 6: a tremendously efficient custom system based on ARM. The Vera

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Speaker 6: Reuben platform AD compared to Grace Blackwell uses six x

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Speaker 6: the number of CPUs and that's when you look at

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Speaker 6: the storage, the DPU, the offload. That's a huge increase.

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Speaker 6: So yes, selling loose veras that's a great thing. We're

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Speaker 6: super happy to see that.

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Speaker 3: Briefly, Renee, you have such a bird side perspective because

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Speaker 3: you're working with Nvidia, but also you're working with open Ai.

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Speaker 3: It was reported potentially was looking with you at your

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Speaker 3: technology to be working with its own custom ship with Broadcom.

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Speaker 3: You've got Meta looking at custom chips you of course,

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Speaker 3: how do you see this evolving?

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Speaker 7: Yeah, I have a lucky job.

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Speaker 6: I get to work with just about everybody in the

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Speaker 6: industry across the planet, whether it's in the fab foundry area,

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Speaker 6: whether it is a chip company, whether it's an OEM,

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Speaker 6: whether it's a software provider. We work and talk to

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Speaker 6: everyone because ARM is just so pervasive. The common theme

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Speaker 6: we see is continued investment in AI, and not just

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Speaker 6: at the data center. It's trying to figure out how

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Speaker 6: do you run those AI workloads everywhere?

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Speaker 7: How do you run them in wearables, how.

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Speaker 6: Do you continue to make them more efficient in a

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Speaker 6: smartphone or a PC, or in physical AI, whether it's

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Speaker 6: autonomous driving and or robotics. So we're involved in all

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Speaker 6: the conversations and the common theme is heavy, heavy investment.

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Speaker 6: And one of the challenges that we see in the

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Speaker 6: chip world around this is, as you know, it takes

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Speaker 6: a couple of years to build a chip, the IP

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Speaker 6: that we developed that goes into the chips a couple

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Speaker 6: maybe a couple of years in before it. Trying to

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Speaker 6: predict what the architectures look like four years after the

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Speaker 6: chip has been designed where the AI models are going

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Speaker 6: is really very tricky. That lends itself also though, very

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Speaker 6: well to ARM because we are programmable, we are flexible,

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Speaker 6: and we are low power, meaning that wherever the chips

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Speaker 6: drop no pun intended, we should be in a very

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Speaker 6: good position to be able to drive those workloads.

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Speaker 3: I'm cia n A has with the broader perspective. We

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Speaker 3: thank you for it. Now coming up, we got more

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Speaker 3: earnings to talk about. Alphabet's results. Expectations for Amazon just

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Speaker 3: coming thick and fast, folks.

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Speaker 8: As a bitty bag tech.

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Speaker 3: Record spending by cloud providers, Well, it's raining on the parade.

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Speaker 8: Of big tech earnings.

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Speaker 3: Following Alphabet's results last night, Let's talk it through with

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Speaker 3: Ioko Yoshioka, who say with Wealth Enhancement Group. Ioko, it

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Speaker 3: looked at one point after the announcement yesterday that we

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Speaker 3: were going the way of Meta that even though Capex

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Speaker 3: was going up, we were celebrating the AI rewards and

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Speaker 3: the revenue boost, and then we went more the way

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Speaker 3: of Microsoft and we were worrying about the said to

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Speaker 3: the Kapex are you selling on this?

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Speaker 9: No, Caroline, We're not selling on this. You know, these

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Speaker 9: companies are still high quality companies and they're still growing

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Speaker 9: very quickly. I think it's just an adjustment from a

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Speaker 9: valuation standpoint in terms of what are these companies worth

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Speaker 9: over the long term, how much longer are they going

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Speaker 9: to be spending at these levels, because the issue for

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Speaker 9: investors is really just the sort of collapse in free

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Speaker 9: cash flow that we, you know, have been just grown

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Speaker 9: accustomed to. These these companies used to return so much

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Speaker 9: of that free cash flow to shareholders and now it's

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Speaker 9: being spent for investment for good reason, and over the

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Speaker 9: long term this should.

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Speaker 5: Help them grow.

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Speaker 9: However, it just means that the investor kind of gets

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Speaker 9: put to the to the side for a little bit.

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Speaker 3: Are you worried in any way about the free cash

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Speaker 3: flow the alphabet is perhaps taking a hit on because

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Speaker 3: from what we could understand from the numbers, in fact,

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Speaker 3: the becoming ever more efficient. The marginison is being supported

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Speaker 3: because they're to be integrated. They're able to cash in

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Speaker 3: on growing cloud and focus on compute much more than

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Speaker 3: rivals per se.

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Speaker 9: Absolutely, I mean with you know, the cloud business growing

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Speaker 9: forty eight percent, well beyond what investors were expecting at

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Speaker 9: around thirty percent. If that continues, the investment that they're

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Speaker 9: doing is justified, and I think investors will eventually reward

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Speaker 9: them for that. It's just in the meantime. Meantime just

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Speaker 9: recalibrating really what you want to pay. And the momentum

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Speaker 9: had been so strong for Alphabet going into earnings that

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Speaker 9: there's just a little bit of a you know, take

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Speaker 9: profit attitude going on in marketing.

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Speaker 2: Right, Okay, let's bring back the capital expended. Just chart,

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Speaker 2: wait for some TV magic. It's going to appear any second.

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Speaker 2: And then you look at that and you go, my goodness,

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Speaker 2: you know it is Caro called it mic drop moment.

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Speaker 5: It is shocking.

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Speaker 2: But what you said a moment ago, Google Cloud growing

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Speaker 2: at forty eight percent, Like the whole Microsoft anxiety was

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Speaker 2: that Azure was off by a percentage point? Why is

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Speaker 2: Alphabet not getting the credit for the Google Cloud growth?

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Speaker 2: And everyone's just staring at that chart.

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Speaker 5: It's a great question.

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Speaker 9: I mean, you know, Microsoft missed by zero point four percent.

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Speaker 9: You know they posted thirty nine percent instead of thirty

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Speaker 9: nine point four, and you know, yet Google really sort

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Speaker 9: of blew it out of the water. And you know,

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Speaker 9: I really feel like it's that focus on that CAPAC

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Speaker 9: spend in twenty twenty six more so than anything else.

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Speaker 9: It's great that we're seeing that growth on the cloud

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Speaker 9: for both Microsoft and for Alphabet, but really it's that

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Speaker 9: spend in order to get those growth numbers, I think

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Speaker 9: is what is giving investors a little pause.

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Speaker 5: Amazon's down four percent.

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Speaker 2: How much is that just anxiety about what they will

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Speaker 2: won't need to say tonight?

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Speaker 8: Absolutely?

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Speaker 9: I think I'll lot of it has to do with

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Speaker 9: the anxiety about what they'll say tonight and how much

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Speaker 9: investors might be off or the street might be off.

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Speaker 9: In terms of the estimate for twenty twenty six CAPEX

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Speaker 9: for Amazon, I think investors are anticipating about one hundred

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Speaker 9: and twenty five billion in spend, which is up twenty

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Speaker 9: two percent or so from twenty twenty five. And so

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Speaker 9: we'll have to see if Amazon decides to spend a

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Speaker 9: little bit more.

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Speaker 2: Yoka Yoshoka, Wealth Enhancement Group, really good summary of what's

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Speaker 2: going on in the mag seven.

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Speaker 5: Thank you so much for coming up.

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Speaker 2: AI tools keep coming for the enterprise software market, But

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Speaker 2: will they be the existential threat that investors fit?

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Speaker 5: We've got more on that next. This is been Big Tech.

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Speaker 3: And it's introducing a new platform to help companies deploy

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Speaker 3: AI agents more easily and pave the way for broader

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Speaker 3: adoption among corporate customers. The new product called Frontier, and

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Speaker 3: iizations to build and manage those AI tools so that

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Speaker 3: each agent has appropriate guardrails and data access ed.

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Speaker 8: What have you got?

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Speaker 2: Speaking of the enterprise shakeup caused by AI anthropics, legal

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Speaker 2: plug in, for its clawed cowork, may not be as

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Speaker 2: devastating a blow to legal solutions providers as according to

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Speaker 2: research from John Davies at Bloomberg Intelligence, who joins us

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Speaker 2: now at John as someone that's suffered through years of

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Speaker 2: law school and was born to two attorneys.

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Speaker 5: I enjoyed reading it.

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Speaker 2: Your conclusion is that Claude Legal is insufficiently expert to

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Speaker 2: mount a challenge. Just dig a bit deeper into your thesis.

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Speaker 10: Absolutely, and hello.

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Speaker 11: I think the key thing is that all these generic

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Speaker 11: tools don't have access to the vast googles of data

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Speaker 11: which the very specialized tools which the established companies have

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Speaker 11: access to, which it built up really over many decades,

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Speaker 11: even centuries. In some cases, they're not easily replicable sets

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Speaker 11: of data. It's a lot of shoe leather involved. You've

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Speaker 11: got to visit vast numbers of courthouses, and it's not

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Speaker 11: simply a question of digitizing the information.

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Speaker 10: You've also got to put it in context.

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Speaker 11: So the companies we're talking about here are West Law

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Speaker 11: and Lexus and Nexus each employ many hundreds of legal

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Speaker 11: professionals and have done for a very long time, and

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Speaker 11: all that information is caught up inside their products. And

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Speaker 11: that's the thing which I think the generic tools won't

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Speaker 11: have access to don't have access to, and therefore they're

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Speaker 11: more likely to make mistakes, to hallucinate and to lead

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Speaker 11: people astray. And you can't really work this stuff out

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Speaker 11: from first principles because sometimes the law defies logic.

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Speaker 10: It's not really like a science problem.

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Speaker 5: Here defies logic.

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Speaker 8: It's interesting John that in many ways.

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Speaker 3: Look Claude Cowork had said that in a statement, they said, look,

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Speaker 3: you still need a human in the loop. We're not

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Speaker 3: suggesting this to just run wildly free. And particularly we

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Speaker 3: had an investor on yesterday, Ude Charuvu who's from Harding Loafner,

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Speaker 3: who is saying the thing with the Lexus and Nexus though,

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Speaker 3: is that it is a point solution, it's not a

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Speaker 3: platform solution. And that's why people have the anxiety that

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Speaker 3: might be knocked out in such a way. What more

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Speaker 3: could we see from these AI developments that might give

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Speaker 3: you pause about Alexus, Nexus or whoever's being competed against.

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Speaker 11: I think if they, if they do somehow manage to

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Speaker 11: gain access to the data, and clearly, you know, while

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Speaker 11: it's expensive to replicate, these companies have a vast amount

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Speaker 11: of money, so that could be could be one angle,

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Speaker 11: and I guess I guess the other one is if

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Speaker 11: in some way it's a bit like proving a negative

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Speaker 11: but if they can somehow prove that they're no longer hallucinating,

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Speaker 11: then and they can they can point to where they

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Speaker 11: don't have the knowledge and say, okay, beyond this point

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Speaker 11: you need as a lawyer to go and do the

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Speaker 11: work yourself. But here is the kind of basic tool

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Speaker 11: set that could become quite a useful product which could

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Speaker 11: be sold, perhaps at a much lower cost than the

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Speaker 11: number of providers have at the moment. But it really

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Speaker 11: seems like quite a stretch, and there's an enormous amount

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Speaker 11: of experience built into the use of the existing products

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Speaker 11: people have been using in the decades, much.

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Speaker 10: Like they have various tools in financial markets.

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Speaker 3: And your notes point out they've also been enthusiastic adoptors

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Speaker 3: of AI themselves, so have been major innovating too. John Davies,

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Speaker 3: Bloomberg Intelligence is a great note. Thanks for bringing it

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Speaker 3: to us. Meanwhile, coming up, put it all about crypto

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Speaker 3: increasingly under pressure. We'll break down what's behind these moves. Next,

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Speaker 3: this is Bloomberg Tech.

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Speaker 5: Welcome back to Bloomberg Tech.

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Speaker 2: In the last thirty minutes or so, actually markets have

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Speaker 2: come off session lows and as that one hundred is

439
00:22:49,440 --> 00:22:52,440
Speaker 2: down nine tenths of a percent, had been down about

440
00:22:52,480 --> 00:22:54,920
Speaker 2: one point eight percent and trading at its lowest level

441
00:22:54,960 --> 00:22:57,560
Speaker 2: since November. We'll keep an eye out on the Bloomberg terminal.

442
00:22:57,600 --> 00:22:59,600
Speaker 2: I'm not really sure what the news flow is. Maybe

443
00:22:59,600 --> 00:23:02,440
Speaker 2: this is just to kind of market sentiment thing that's

444
00:23:02,480 --> 00:23:05,800
Speaker 2: going on. Earnings though, of course, are a big factor

445
00:23:05,800 --> 00:23:08,320
Speaker 2: in it. We talked about Alphabet, which itself is on

446
00:23:08,359 --> 00:23:10,760
Speaker 2: track for its worst day since May. After the bell,

447
00:23:10,800 --> 00:23:13,879
Speaker 2: we get Amazon, and Amazon's down four percent. Right, you

448
00:23:13,920 --> 00:23:16,720
Speaker 2: don't usually see a name that's going to report earnings

449
00:23:16,760 --> 00:23:21,320
Speaker 2: after the bell decline with that conviction, usually you're treading water.

450
00:23:21,720 --> 00:23:24,959
Speaker 2: But because Alphabet, the parent of Google, posted such a

451
00:23:25,240 --> 00:23:29,000
Speaker 2: monster capital expenditures forecast for this year one hundred and

452
00:23:29,040 --> 00:23:31,880
Speaker 2: eighty five billion dollars, maybe there's some read through their cara.

453
00:23:31,960 --> 00:23:34,920
Speaker 2: Maybe the market's like, oh wow, what's Amazon going to say?

454
00:23:34,960 --> 00:23:37,520
Speaker 2: Like what do we thinks coming here? And of course

455
00:23:37,560 --> 00:23:38,159
Speaker 2: we're bracing.

456
00:23:38,480 --> 00:23:42,120
Speaker 3: Yeah, we're bracing. Meanwhile, well, if you're bracing for crypto

457
00:23:42,440 --> 00:23:44,880
Speaker 3: to be falling further, you got that delivered. We're off

458
00:23:44,880 --> 00:23:48,639
Speaker 3: by six percent today, we're below the important seventy thousand

459
00:23:48,680 --> 00:23:51,639
Speaker 3: dollars level, and that negative momentum is just accelerating across

460
00:23:51,640 --> 00:23:52,840
Speaker 3: cryptocurrency is written large.

461
00:23:52,880 --> 00:23:54,320
Speaker 8: Look, it's driven maybe.

462
00:23:54,040 --> 00:23:57,400
Speaker 3: In part by vanishing marginal demand amid this week's volatility

463
00:23:57,440 --> 00:24:00,719
Speaker 3: in other areas tech equities, precious metals. The most cryptove

464
00:24:00,800 --> 00:24:05,280
Speaker 3: reporter Ioshan joins us, Now we are is this people

465
00:24:05,400 --> 00:24:08,000
Speaker 3: selling crypto to cover losses elsewhere?

466
00:24:08,440 --> 00:24:10,199
Speaker 8: Is it more fundamental than that?

467
00:24:11,119 --> 00:24:14,440
Speaker 12: Right now, it feels like there's some more fundamental issues

468
00:24:14,480 --> 00:24:17,240
Speaker 12: within the cryptoal industry style based on what I'm talking

469
00:24:17,480 --> 00:24:19,840
Speaker 12: like everyone I'm talking to in the crypto industry, there's

470
00:24:19,920 --> 00:24:23,800
Speaker 12: a crisis face right, Like you know digital digital currencies

471
00:24:23,880 --> 00:24:26,840
Speaker 12: like promise of like we build this like internet like

472
00:24:26,960 --> 00:24:30,400
Speaker 12: Internet money, and that's kind of disappearing because like when

473
00:24:30,440 --> 00:24:33,080
Speaker 12: prices are going down of assi class that's supposed to

474
00:24:33,560 --> 00:24:36,000
Speaker 12: be going up, that's like really hard to sell the moment.

475
00:24:36,080 --> 00:24:37,119
Speaker 8: It's a store of value.

476
00:24:37,119 --> 00:24:38,760
Speaker 5: It yes, losing faith.

477
00:24:38,720 --> 00:24:41,680
Speaker 12: Yeah, not just not just bicoin as a digital goal.

478
00:24:41,880 --> 00:24:46,200
Speaker 12: Also other cryptocurrencies, right, like you see like Etherian Solana.

479
00:24:46,280 --> 00:24:49,080
Speaker 12: All these blockchains and crypto are supposed to sort of

480
00:24:49,080 --> 00:24:52,119
Speaker 12: build like rebuild a Wall Street and rebuild fintech and

481
00:24:52,240 --> 00:24:55,160
Speaker 12: Neil Bank and whatsoever. But that's not really happen right now.

482
00:24:55,200 --> 00:24:58,160
Speaker 12: Even if they're happening, as we're seeing some adoption from

483
00:24:58,200 --> 00:25:02,119
Speaker 12: Wall Street for example, right we start institutes are getting

484
00:25:02,119 --> 00:25:05,119
Speaker 12: into the space, but that's also not affecting prices. I

485
00:25:05,119 --> 00:25:07,439
Speaker 12: think that's a bigger puzzle for the industry to resolve

486
00:25:07,480 --> 00:25:08,000
Speaker 12: at the moment.

487
00:25:08,760 --> 00:25:12,520
Speaker 2: I think you wrote a really excellent summary using data

488
00:25:12,560 --> 00:25:15,840
Speaker 2: in the chart that actually, for all the hype around bitcoin,

489
00:25:15,880 --> 00:25:19,120
Speaker 2: if you compare to other asset classes, it has lagged,

490
00:25:19,400 --> 00:25:21,720
Speaker 2: not just in the short term but on a longer

491
00:25:21,800 --> 00:25:22,520
Speaker 2: term basis.

492
00:25:22,560 --> 00:25:23,960
Speaker 5: Just explain the reporting.

493
00:25:25,400 --> 00:25:28,200
Speaker 12: I think the issue is that, like you know, Bitcoin

494
00:25:28,240 --> 00:25:32,000
Speaker 12: is supposed to be like the digital gold, but what's

495
00:25:32,040 --> 00:25:34,879
Speaker 12: happening again, as I just mentioned to Caroline, that is like,

496
00:25:35,119 --> 00:25:36,920
Speaker 12: you know, we have this digital gold that's price is

497
00:25:36,960 --> 00:25:39,440
Speaker 12: supposed to go up, but we are seeing that gold

498
00:25:39,480 --> 00:25:42,159
Speaker 12: and solar prices are going up, but meanwhile Bitcoin is selling.

499
00:25:42,640 --> 00:25:45,199
Speaker 12: That's the issue of crypto right, like you don't have

500
00:25:45,600 --> 00:25:49,520
Speaker 12: a fundamental happening right now. That's like proving what like

501
00:25:49,560 --> 00:25:52,040
Speaker 12: all the bitcoin fans are trying to sell to the

502
00:25:52,119 --> 00:25:53,200
Speaker 12: market at the moment.

503
00:25:53,600 --> 00:25:55,480
Speaker 5: Right the most motion, thank you very much.

504
00:25:55,520 --> 00:25:59,720
Speaker 2: Another source of pain right now software debt, and just

505
00:25:59,760 --> 00:26:03,080
Speaker 2: for weeks, nearly eighteen billion dollars in loans has been

506
00:26:03,119 --> 00:26:07,240
Speaker 2: pushed into distressed territory, the highest level since October twenty

507
00:26:07,280 --> 00:26:10,520
Speaker 2: twenty two. For more, Bloomberg Americans finance edits a Sally

508
00:26:10,560 --> 00:26:14,080
Speaker 2: Bakeworld joins a Sally. There's enough anxiety and concern in

509
00:26:14,119 --> 00:26:17,160
Speaker 2: the market right now as software before we even started

510
00:26:17,480 --> 00:26:20,240
Speaker 2: writing about the debt pile. But it's the smart thing

511
00:26:20,320 --> 00:26:23,280
Speaker 2: to do explain what's at issue here, right and in

512
00:26:23,359 --> 00:26:25,800
Speaker 2: that kind of milestone that I just read out.

513
00:26:26,160 --> 00:26:29,560
Speaker 13: So I think the big question here for debt investors,

514
00:26:29,560 --> 00:26:31,600
Speaker 13: for the market more broadly, is how much of this

515
00:26:31,720 --> 00:26:36,520
Speaker 13: sell off in loans that are tied to software is justified. Now,

516
00:26:36,640 --> 00:26:38,399
Speaker 13: that's the big question that we can get to. But

517
00:26:38,440 --> 00:26:41,720
Speaker 13: in the meantime, it is providing a lot of potential

518
00:26:41,720 --> 00:26:45,200
Speaker 13: opportunities for investors who are scaring the market looking for

519
00:26:45,280 --> 00:26:48,520
Speaker 13: companies that are sort of good software loans I that

520
00:26:48,600 --> 00:26:52,760
Speaker 13: can withstand and maybe even benefit from AI, versus those

521
00:26:52,800 --> 00:26:55,400
Speaker 13: that are likely to be made obsolete or have their

522
00:26:55,440 --> 00:26:57,760
Speaker 13: revenue severely stressed by AI.

523
00:26:58,160 --> 00:26:59,359
Speaker 8: So that's sort of the big question.

524
00:26:59,400 --> 00:27:02,280
Speaker 13: And what is interesting is the sort of spirited defense

525
00:27:02,680 --> 00:27:05,480
Speaker 13: that some of the loan buying community, some of the

526
00:27:05,480 --> 00:27:08,919
Speaker 13: biggest loan buyers, have come out with. Aries said some

527
00:27:08,960 --> 00:27:11,639
Speaker 13: interesting things on its earnings call that you know, there

528
00:27:11,640 --> 00:27:14,040
Speaker 13: are different kinds of kinds of companies and a lot

529
00:27:14,080 --> 00:27:17,000
Speaker 13: of them will benefit from AI, and that AI cannot

530
00:27:17,080 --> 00:27:22,679
Speaker 13: actually replicate replicate a database, It cannot replicate proprietary data,

531
00:27:22,840 --> 00:27:26,840
Speaker 13: and so if you build a software portfolio around elements

532
00:27:26,920 --> 00:27:30,119
Speaker 13: like that, you can actually build a portfolio that's resistant

533
00:27:30,240 --> 00:27:32,720
Speaker 13: to AI and actually will benefit from it.

534
00:27:33,200 --> 00:27:36,960
Speaker 3: In fact, Mike Arraghetti join previous earlier shows. Today the

535
00:27:37,040 --> 00:27:39,880
Speaker 3: CEO of ARES talking about people are not really understanding

536
00:27:39,920 --> 00:27:42,880
Speaker 3: how senior and safe a lot of these loans are

537
00:27:42,960 --> 00:27:45,000
Speaker 3: as well. Is this a case of sort of throwing

538
00:27:45,000 --> 00:27:46,719
Speaker 3: the baby out with the bath water, or when are

539
00:27:46,760 --> 00:27:50,040
Speaker 3: we starting to potentially see people getting more nuanced on

540
00:27:50,080 --> 00:27:54,679
Speaker 3: which loans are exposed, which software names aren't adopting AI

541
00:27:54,680 --> 00:27:55,880
Speaker 3: fast enough sally.

542
00:27:55,800 --> 00:27:59,800
Speaker 13: Companies like aries like blue Al, They've all and tom O, Bravo,

543
00:28:00,119 --> 00:28:03,440
Speaker 13: who you know who buy in the space or borrow

544
00:28:03,480 --> 00:28:06,320
Speaker 13: heavily to fund in this space. They're probably all going

545
00:28:06,320 --> 00:28:08,880
Speaker 13: through all of their portfolios right now to look at this.

546
00:28:10,000 --> 00:28:12,240
Speaker 13: You know that there are AI companies, there are software

547
00:28:12,240 --> 00:28:15,160
Speaker 13: companies out there that generate billions of dollars of revenue,

548
00:28:15,160 --> 00:28:19,400
Speaker 13: and they're actually showing earnings that are accelerating, not declining,

549
00:28:19,760 --> 00:28:22,240
Speaker 13: So you know, they're using words sort of like it's

550
00:28:22,280 --> 00:28:24,720
Speaker 13: not monolithic. You don't just have this sort of very

551
00:28:24,880 --> 00:28:27,560
Speaker 13: binary situation, and you do have to look at the

552
00:28:27,640 --> 00:28:29,840
Speaker 13: nuances of some of the companies there. But there's some

553
00:28:29,880 --> 00:28:33,360
Speaker 13: really interesting dynamics going on in the loan market. For example,

554
00:28:33,560 --> 00:28:37,320
Speaker 13: clos collateralized loan obligations. They're big buyers of these loans

555
00:28:37,440 --> 00:28:40,000
Speaker 13: and they're only they have limits on what they can hold,

556
00:28:40,080 --> 00:28:42,640
Speaker 13: so they may become sort of fource sellers of loans

557
00:28:42,680 --> 00:28:46,040
Speaker 13: that do slip into distress set territory based on this

558
00:28:46,120 --> 00:28:48,080
Speaker 13: sell off, and again that could pose a lot of

559
00:28:48,080 --> 00:28:51,400
Speaker 13: buying opportunities which investors have to look through and sort

560
00:28:51,400 --> 00:28:54,120
Speaker 13: of sort out the good from the bad as.

561
00:28:53,960 --> 00:28:57,520
Speaker 3: It were, So interesting how John Z's however, Apollos sort

562
00:28:57,560 --> 00:29:00,560
Speaker 3: of talked about questioning if the real risk is if

563
00:29:00,600 --> 00:29:03,000
Speaker 3: software is dead, and they'd cut their exposure by half.

564
00:29:03,000 --> 00:29:05,000
Speaker 3: In twenty twenty five, we'll see how this continues to

565
00:29:05,040 --> 00:29:07,520
Speaker 3: ripple through the market. Sally Beekwell with the cross asset

566
00:29:07,840 --> 00:29:12,600
Speaker 3: AI read across. Let's talk about now SpaceX holding meetings

567
00:29:12,600 --> 00:29:15,520
Speaker 3: with banks from outside the US for its IPO, including

568
00:29:15,560 --> 00:29:18,120
Speaker 3: from Europe and other regions, and that's what According to sources,

569
00:29:18,400 --> 00:29:21,480
Speaker 3: the meetings took place before SpaceX announced that it would

570
00:29:21,480 --> 00:29:24,600
Speaker 3: acquire Xai, but the combined company is still expected to

571
00:29:24,640 --> 00:29:25,960
Speaker 3: hold the IPO later this year.

572
00:29:26,080 --> 00:29:27,960
Speaker 5: Ed Okay, coming up.

573
00:29:28,120 --> 00:29:32,640
Speaker 2: Snap Paid subscribers rise, but the company sees a dip

574
00:29:32,880 --> 00:29:36,160
Speaker 2: in daily active users, particularly in America. The more in

575
00:29:36,200 --> 00:29:40,720
Speaker 2: those numbers. Next down nine percent. This is Bloomberg Tech.

576
00:29:51,560 --> 00:29:51,720
Speaker 7: Time.

577
00:29:51,800 --> 00:29:54,240
Speaker 2: Now for talking tech. Let's go through some more of

578
00:29:54,280 --> 00:29:57,480
Speaker 2: the earnings. First up, Sony reporting a twenty two percent

579
00:29:57,560 --> 00:30:00,920
Speaker 2: rise in profit over the holiday quarter, and it said

580
00:30:00,960 --> 00:30:05,000
Speaker 2: it secured sufficient memory supply for its key PlayStation five

581
00:30:05,080 --> 00:30:05,880
Speaker 2: business this year.

582
00:30:05,880 --> 00:30:07,960
Speaker 5: The company did caution, however.

583
00:30:08,000 --> 00:30:11,640
Speaker 2: The profitability of the wider games and networking division worsened

584
00:30:12,000 --> 00:30:14,680
Speaker 2: due to rising hardware costs, plus a video partner on

585
00:30:14,800 --> 00:30:17,840
Speaker 2: Hi saw revenue time thirty five point five percent in

586
00:30:17,960 --> 00:30:20,880
Speaker 2: January to the equivalent of twenty three billion US dollars.

587
00:30:20,880 --> 00:30:23,200
Speaker 2: The tai One based company is one of the key

588
00:30:23,240 --> 00:30:26,560
Speaker 2: players in the AI hardware industry and is benefiting from

589
00:30:26,560 --> 00:30:29,400
Speaker 2: the billions being spent on the gear needed to train

590
00:30:29,600 --> 00:30:32,760
Speaker 2: and operate the models. And shares of Peloton a down

591
00:30:32,920 --> 00:30:36,200
Speaker 2: after the fitness company provided a weaker than expected revenue.

592
00:30:35,840 --> 00:30:37,840
Speaker 5: Forecast for the fiscal third quarter.

593
00:30:38,400 --> 00:30:41,840
Speaker 2: Investors have been hoping the release of AI powered treadmills, bikes,

594
00:30:41,840 --> 00:30:45,120
Speaker 2: and other new products would put some muscle into Peloton's

595
00:30:45,160 --> 00:30:46,000
Speaker 2: turnaround efforts.

596
00:30:46,040 --> 00:30:48,080
Speaker 5: Like that character pardon your puns.

597
00:30:48,160 --> 00:30:50,920
Speaker 3: Meanwhile, let's continue this theme of earnings and those that

598
00:30:50,920 --> 00:30:52,920
Speaker 3: are falling on the back of it. Snap down more

599
00:30:52,960 --> 00:30:55,400
Speaker 3: than eight percent amid a drop in daily active users

600
00:30:55,400 --> 00:30:57,240
Speaker 3: here in the United States. Still, the company actually posted

601
00:30:57,280 --> 00:31:00,320
Speaker 3: better than expected holiday quarter sales and actually paid subscrires.

602
00:31:00,360 --> 00:31:02,680
Speaker 3: We're rising twenty four million, So let's break it down.

603
00:31:03,040 --> 00:31:07,000
Speaker 3: Mitter Smiley Emake to senior analysts with us, it's many

604
00:31:07,080 --> 00:31:10,680
Speaker 3: pronged conversation we can have about Snap, But first and

605
00:31:10,720 --> 00:31:14,280
Speaker 3: foremost why are we seeing a decline in users in

606
00:31:14,320 --> 00:31:15,240
Speaker 3: the United States.

607
00:31:15,640 --> 00:31:16,880
Speaker 8: Yeah, it's a great question.

608
00:31:16,960 --> 00:31:19,920
Speaker 14: I mean, I think Snapchat definitely has kind of a

609
00:31:19,960 --> 00:31:23,160
Speaker 14: stickiness problem. I feel like we see people often age

610
00:31:23,160 --> 00:31:25,080
Speaker 14: out of it as they grow older, and then we're

611
00:31:25,080 --> 00:31:28,120
Speaker 14: also seeing reports that younger people are not adopting it.

612
00:31:28,160 --> 00:31:30,120
Speaker 14: You know, I'm talking jen now for really young people

613
00:31:30,200 --> 00:31:32,560
Speaker 14: aren't adopting it at the same rate that gen z

614
00:31:32,720 --> 00:31:33,280
Speaker 14: might have.

615
00:31:33,240 --> 00:31:34,840
Speaker 8: So they're kind of in this tough spot.

616
00:31:34,920 --> 00:31:36,800
Speaker 14: It's interesting we see a lot of the other social

617
00:31:36,800 --> 00:31:40,280
Speaker 14: platforms like Facebook, for instance, they're really trying to court

618
00:31:40,320 --> 00:31:42,720
Speaker 14: young users, and I feel like Snapchat in some ways

619
00:31:42,760 --> 00:31:45,000
Speaker 14: has the opposite issue, where it sort of has a

620
00:31:45,000 --> 00:31:47,480
Speaker 14: hold on this specific generation of young people, but when

621
00:31:47,480 --> 00:31:49,640
Speaker 14: you go above and below that, it is struggling a

622
00:31:49,640 --> 00:31:51,120
Speaker 14: bit more and I think that is why we're seeing

623
00:31:51,160 --> 00:31:51,960
Speaker 14: some of those falls.

624
00:31:52,080 --> 00:31:54,000
Speaker 3: And interestingly, you go back to November when we had

625
00:31:54,000 --> 00:31:57,400
Speaker 3: the previous earnings numbers and the shares skyrocketed, not just

626
00:31:57,440 --> 00:31:59,120
Speaker 3: a back of numbers, but on the back of a

627
00:31:59,160 --> 00:32:01,080
Speaker 3: deal they were meant to be had four hundred million

628
00:32:01,160 --> 00:32:04,680
Speaker 3: dollars in Mikestro cash and Acty with Perplexity, a partnership

629
00:32:04,680 --> 00:32:05,080
Speaker 3: to AI.

630
00:32:06,000 --> 00:32:06,680
Speaker 8: Any news on.

631
00:32:06,720 --> 00:32:09,040
Speaker 14: That, Yeah, I think everyone was kind of hoping this

632
00:32:09,080 --> 00:32:11,120
Speaker 14: earnings call, which shed a bit more late on this

633
00:32:11,240 --> 00:32:14,000
Speaker 14: deal and what's going on there. Of course, they ended

634
00:32:14,080 --> 00:32:16,120
Speaker 14: up saying that it's been delayed. They didn't provide a

635
00:32:16,200 --> 00:32:18,840
Speaker 14: ton of detail. And it's interesting because when the deal

636
00:32:18,880 --> 00:32:21,520
Speaker 14: was first announced, it was certainly welcomed by investors. I

637
00:32:21,520 --> 00:32:23,440
Speaker 14: think they were excited to kind of see a new

638
00:32:23,480 --> 00:32:26,160
Speaker 14: revenue stream for Snapchat and also just see how snap

639
00:32:26,200 --> 00:32:28,680
Speaker 14: is kind of looking into how it wants to compete

640
00:32:28,720 --> 00:32:31,440
Speaker 14: in the broader AI race, and so to see not

641
00:32:31,480 --> 00:32:35,440
Speaker 14: really any updates there is concerning and it also just

642
00:32:35,520 --> 00:32:37,680
Speaker 14: raises a lot of questions people already had around, you know,

643
00:32:37,800 --> 00:32:40,040
Speaker 14: sort of why Perplexity in the first place, Why was

644
00:32:40,040 --> 00:32:42,240
Speaker 14: the deal only for one year, How is it going

645
00:32:42,240 --> 00:32:44,200
Speaker 14: to fit into you know, how is Perplexity going to

646
00:32:44,200 --> 00:32:46,560
Speaker 14: fit into Snapchat's broader interface and whatnot.

647
00:32:46,680 --> 00:32:50,360
Speaker 8: So more questions and answers at this point. For sure, I'm.

648
00:32:50,240 --> 00:32:54,640
Speaker 2: Trying to understand where Snap fits in the world. It's

649
00:32:54,640 --> 00:32:57,120
Speaker 2: the first time he uses decline since twenty eighteen. I

650
00:32:57,120 --> 00:33:00,200
Speaker 2: haven't been on Snap for a very long time, and

651
00:33:00,320 --> 00:33:03,480
Speaker 2: twenty eighteen I certainly wasn't that.

652
00:33:03,520 --> 00:33:05,120
Speaker 5: Sounds like a worrying signal.

653
00:33:05,520 --> 00:33:08,080
Speaker 2: Right, you know, you're talking about the different revenue streams,

654
00:33:08,120 --> 00:33:10,440
Speaker 2: But at the end of the day, what is snap

655
00:33:10,640 --> 00:33:13,800
Speaker 2: and what does the shrinking user base suggest to you

656
00:33:13,880 --> 00:33:14,880
Speaker 2: MINDA Yeah.

657
00:33:14,680 --> 00:33:16,360
Speaker 14: I mean I think it's a fair question, and I

658
00:33:16,360 --> 00:33:19,320
Speaker 14: think that partly explains why we are seeing the shrinking

659
00:33:19,360 --> 00:33:21,560
Speaker 14: user base. I think a lot of users just aren't

660
00:33:21,600 --> 00:33:23,960
Speaker 14: seeing the value in it that they used to, especially

661
00:33:24,000 --> 00:33:27,960
Speaker 14: as we see Instagram, TikTok now YouTube really really gains

662
00:33:28,000 --> 00:33:30,840
Speaker 14: team and just really take a chip away a time spent.

663
00:33:31,000 --> 00:33:33,200
Speaker 8: That's something we see in our own forecast at E Marketer.

664
00:33:33,240 --> 00:33:35,640
Speaker 14: I mean, we are seeing time spent on Snapchat decline

665
00:33:35,680 --> 00:33:38,760
Speaker 14: year over year, at least in the US, and we're seeing.

666
00:33:38,480 --> 00:33:40,240
Speaker 8: Them try to, you know, try to fix that. Really.

667
00:33:40,240 --> 00:33:43,080
Speaker 14: That's why they're investing in things like games, and we're

668
00:33:43,080 --> 00:33:45,240
Speaker 14: seeing they introduced other features last year that are really

669
00:33:45,240 --> 00:33:47,680
Speaker 14: just meant to get people keep people on the app longer.

670
00:33:47,720 --> 00:33:49,040
Speaker 8: But it is tricky, you know.

671
00:33:49,080 --> 00:33:51,840
Speaker 14: Snapchat is really distinct and the social media landscape, which

672
00:33:52,160 --> 00:33:53,920
Speaker 14: in some ways I think has worked to its advantage,

673
00:33:53,960 --> 00:33:57,000
Speaker 14: but also has heard it because it really kind of

674
00:33:57,040 --> 00:33:59,200
Speaker 14: seems to struggle to keep up with the broader trends

675
00:33:59,280 --> 00:34:00,959
Speaker 14: unfolding in the broader landscape.

676
00:34:01,080 --> 00:34:04,040
Speaker 2: You know, it's easy to try and compare and contrast

677
00:34:04,120 --> 00:34:07,640
Speaker 2: with Meta, right, particularly in the glasses context. You know,

678
00:34:07,800 --> 00:34:11,000
Speaker 2: Meta has a generative AI tool, Meta AI and the

679
00:34:11,040 --> 00:34:14,719
Speaker 2: glasses have been the surprise package, the modus operandi by

680
00:34:14,719 --> 00:34:19,000
Speaker 2: which people interface with that with that AI tool. Can

681
00:34:19,000 --> 00:34:21,719
Speaker 2: you see the same story as snap with the glasses

682
00:34:21,960 --> 00:34:23,719
Speaker 2: and what the point of them will be ultimately?

683
00:34:24,320 --> 00:34:27,680
Speaker 14: Yeah, I think, you know, personally, I'm pretty I'm pretty

684
00:34:27,760 --> 00:34:29,520
Speaker 14: much a skeptic when it comes to the smart glasses

685
00:34:29,560 --> 00:34:32,000
Speaker 14: space in general. I just think it's you know, it

686
00:34:32,120 --> 00:34:35,000
Speaker 14: still remains really niche, and I think there's still a

687
00:34:35,000 --> 00:34:37,719
Speaker 14: lot of uncertainty around to what extent it will ever

688
00:34:37,840 --> 00:34:40,399
Speaker 14: hit mass adoption. And I think, but you know, even

689
00:34:40,440 --> 00:34:42,680
Speaker 14: say it does take off, people do end up wanting

690
00:34:42,719 --> 00:34:45,719
Speaker 14: these glasses. Snapchat is still in a tough position. I mean,

691
00:34:45,760 --> 00:34:47,759
Speaker 14: it is competing with pretty much all the all the

692
00:34:47,800 --> 00:34:50,160
Speaker 14: major tech giants who are investing in this space, who

693
00:34:50,200 --> 00:34:52,319
Speaker 14: are pouring tons of resources in this space. They all

694
00:34:52,400 --> 00:34:55,080
Speaker 14: have a lot more money than Snapchat. So yeah, it's

695
00:34:55,080 --> 00:34:57,359
Speaker 14: interesting to see them. Bet on it. It makes sense

696
00:34:57,360 --> 00:35:00,719
Speaker 14: with their history of augmented reality and whatnot, but I

697
00:35:01,080 --> 00:35:04,520
Speaker 14: think they're in a tough position going forward in that space.

698
00:35:05,520 --> 00:35:08,279
Speaker 2: Minder Smiley a v marketer, Thank you very much. Now

699
00:35:08,320 --> 00:35:12,600
Speaker 2: coming up, we speak with Qualcomm CEO Christiano Amon. That

700
00:35:12,719 --> 00:35:22,040
Speaker 2: conversation's next. This is Bloomberg Tech. Let's focus in on

701
00:35:22,080 --> 00:35:24,799
Speaker 2: Qualcom shares right now down about eight percent, on track

702
00:35:24,800 --> 00:35:27,280
Speaker 2: for their biggest drop since last summer. At one point

703
00:35:27,280 --> 00:35:30,399
Speaker 2: in the session, we were down eleven percent, on track

704
00:35:30,400 --> 00:35:32,800
Speaker 2: for the biggest drop since March of twenty twenty. The

705
00:35:32,840 --> 00:35:38,600
Speaker 2: world's largest maker of smartphone processors issued a lackluster revenue forecast,

706
00:35:38,719 --> 00:35:44,120
Speaker 2: raising some concerns that memory supply constraints could push prices higher,

707
00:35:44,360 --> 00:35:47,759
Speaker 2: which in turn with weigh on the handset demand. Joining

708
00:35:47,800 --> 00:35:52,759
Speaker 2: us to discuss is Christiana Ammon quil Comco. Christiano A

709
00:35:52,840 --> 00:35:55,239
Speaker 2: good morning. Thank you for becoming a morning bow Tech.

710
00:35:55,680 --> 00:35:58,600
Speaker 2: That I give you that what's happening in memory is

711
00:35:58,600 --> 00:36:02,080
Speaker 2: completely outside of your control, right, but the forecast of

712
00:36:02,120 --> 00:36:04,920
Speaker 2: the current period of sales up to eleven billion dollars,

713
00:36:05,320 --> 00:36:07,560
Speaker 2: I suppose one way of looking at it is how

714
00:36:07,640 --> 00:36:11,160
Speaker 2: much better would that have been were the market not

715
00:36:11,360 --> 00:36:15,440
Speaker 2: so constrained by the supply of memory right now, but

716
00:36:15,520 --> 00:36:19,160
Speaker 2: also the pricing pressure that that supply deficit puts in place.

717
00:36:20,239 --> 00:36:23,400
Speaker 15: Yeah, look, it's a very interesting situation. You know, in

718
00:36:23,600 --> 00:36:27,400
Speaker 15: one hand, I'm incredibly happy with the business, like everything

719
00:36:27,520 --> 00:36:31,560
Speaker 15: is going well. Demand, the strong macroeconomic indicators are good.

720
00:36:31,800 --> 00:36:35,120
Speaker 15: Demand for HANC it is strong. We have seen we

721
00:36:35,200 --> 00:36:37,359
Speaker 15: had like a record quarter in Q one. We saw

722
00:36:37,440 --> 00:36:42,440
Speaker 15: all of our customers reporting sell true data better than expectations.

723
00:36:42,800 --> 00:36:47,560
Speaker 15: But then the industry is now defined by the availability

724
00:36:47,600 --> 00:36:50,560
Speaker 15: the memory that is is going to be available for

725
00:36:50,600 --> 00:36:55,960
Speaker 15: consumer electronics, and it creates, you know, a sudden change

726
00:36:56,160 --> 00:37:00,399
Speaker 15: in how OEMs look at their build plan and they say, look,

727
00:37:00,440 --> 00:37:03,200
Speaker 15: I have to size the size of the market not

728
00:37:03,400 --> 00:37:06,319
Speaker 15: based on demand, but the memory that I can get

729
00:37:06,360 --> 00:37:09,000
Speaker 15: for consumer electronics. And that one makes it like this

730
00:37:09,160 --> 00:37:13,960
Speaker 15: unique period there's a go ahead.

731
00:37:14,000 --> 00:37:14,560
Speaker 5: Let me drop it.

732
00:37:14,640 --> 00:37:17,640
Speaker 2: But you know, within that market there are some specific

733
00:37:18,160 --> 00:37:21,680
Speaker 2: interesting case studies. Right the premium segment is good, like

734
00:37:21,920 --> 00:37:26,000
Speaker 2: from a demand side, particularly in China. So usually like

735
00:37:26,120 --> 00:37:29,600
Speaker 2: in any hardware environment where your supply constrained but demand

736
00:37:29,640 --> 00:37:33,400
Speaker 2: is high, like that's a good thing. And increasingly, like

737
00:37:33,480 --> 00:37:35,920
Speaker 2: think about the content in the phone that you provide.

738
00:37:36,440 --> 00:37:40,040
Speaker 2: How can you kind of navigate this to your advantage?

739
00:37:40,760 --> 00:37:43,000
Speaker 16: Yes, and that's a great observation.

740
00:37:43,080 --> 00:37:45,520
Speaker 15: That's why I think there's a lot of I think

741
00:37:45,600 --> 00:37:50,120
Speaker 15: a lot of unnecessary I think speculation. Right now, here's

742
00:37:50,160 --> 00:37:53,680
Speaker 15: what's going to happen. We saw this with Covid. OEM

743
00:37:53,760 --> 00:37:55,000
Speaker 15: is the first thing they're going to do. They're going

744
00:37:55,040 --> 00:37:58,359
Speaker 15: to prioritize premium and high tier, you know, because those

745
00:37:58,400 --> 00:38:00,000
Speaker 15: are more resilient I think.

746
00:37:59,840 --> 00:38:00,920
Speaker 16: To price increases.

747
00:38:01,440 --> 00:38:04,520
Speaker 15: They are we are going to see probably adjustment in

748
00:38:04,640 --> 00:38:08,560
Speaker 15: prices on hences and because you know demand it's strong,

749
00:38:09,200 --> 00:38:12,080
Speaker 15: it is very likely that the premium and the high

750
00:38:12,120 --> 00:38:15,160
Speaker 15: tier is going to be less impacted than the mass

751
00:38:15,200 --> 00:38:18,080
Speaker 15: tier on phones. And we have seen that the premi

752
00:38:18,160 --> 00:38:22,800
Speaker 15: teer continue to expand regardless, regardless over the several years,

753
00:38:23,160 --> 00:38:27,239
Speaker 15: the premi teer is expanding, and we're more concentrated on

754
00:38:27,280 --> 00:38:28,319
Speaker 15: the premium and the high tier.

755
00:38:28,440 --> 00:38:31,280
Speaker 16: So your your theory is one hundred percent correct.

756
00:38:32,040 --> 00:38:37,400
Speaker 15: All that happened is OEM's had thinking about a particular

757
00:38:37,480 --> 00:38:41,280
Speaker 15: size of the year that got resized by the memory availability.

758
00:38:41,400 --> 00:38:43,399
Speaker 15: They're adjusting their build plans and we're going to see

759
00:38:43,440 --> 00:38:44,759
Speaker 15: how this is going to play out in the next

760
00:38:44,760 --> 00:38:47,799
Speaker 15: few quarters. That's that's really the story. The good thing

761
00:38:48,120 --> 00:38:49,120
Speaker 15: is demand as high.

762
00:38:50,200 --> 00:38:53,720
Speaker 3: So the second quarter chip sales guidance was what worried people,

763
00:38:53,719 --> 00:38:56,279
Speaker 3: But third quarter, fourth quarter, it's going to play out

764
00:38:56,280 --> 00:38:57,239
Speaker 3: over that time frame.

765
00:38:57,280 --> 00:39:02,440
Speaker 15: Do you think it's one thing that I carefully worded.

766
00:39:02,600 --> 00:39:06,320
Speaker 15: I think during our earnings call, I said the memory

767
00:39:06,320 --> 00:39:10,160
Speaker 15: availability in pricing will be the defining factor for the

768
00:39:10,200 --> 00:39:13,280
Speaker 15: size of the hands and market. And we talk about

769
00:39:13,320 --> 00:39:15,640
Speaker 15: the size of hands and market because we have visibility

770
00:39:15,719 --> 00:39:19,200
Speaker 15: whole market because of our licensing business. But now we're

771
00:39:19,200 --> 00:39:21,880
Speaker 15: going to see how this play out. And I'm a

772
00:39:21,880 --> 00:39:25,919
Speaker 15: little hesitant to make a very definitive prediction on how

773
00:39:26,000 --> 00:39:27,560
Speaker 15: this is going to play out in Q three and Q.

774
00:39:27,600 --> 00:39:30,520
Speaker 16: Four, But the pandemic was a good proxy.

775
00:39:30,560 --> 00:39:32,560
Speaker 15: When we have something like that and we have a

776
00:39:32,560 --> 00:39:36,600
Speaker 15: semiconductor shortage, we saw the PREMI teer has been more resilient,

777
00:39:36,800 --> 00:39:39,759
Speaker 15: and you know, we're going to be working with our

778
00:39:39,800 --> 00:39:43,799
Speaker 15: customers as they move the roadmap to kind of those

779
00:39:43,840 --> 00:39:44,719
Speaker 15: type of devices.

780
00:39:44,920 --> 00:39:47,920
Speaker 3: And now you control the controllables, and those controllables have

781
00:39:47,960 --> 00:39:51,640
Speaker 3: been diversification in many ways. This speaks to why you've

782
00:39:51,680 --> 00:39:54,200
Speaker 3: been focusing in on new areas of growth, whether it

783
00:39:54,239 --> 00:39:56,360
Speaker 3: be autos or we connected devices, whether it be the

784
00:39:56,360 --> 00:39:59,400
Speaker 3: future of robotics, whether of course of BAI Christiana, how

785
00:39:59,480 --> 00:40:01,759
Speaker 3: much can you accelerate that to make up for the

786
00:40:01,800 --> 00:40:02,720
Speaker 3: handset issues.

787
00:40:03,560 --> 00:40:07,640
Speaker 15: Look, we we you know, it's not hopefully it's not

788
00:40:07,760 --> 00:40:11,279
Speaker 15: lost on people that we had another record in automotive.

789
00:40:11,360 --> 00:40:15,160
Speaker 15: We had actually a record in the company in Q one,

790
00:40:15,800 --> 00:40:19,799
Speaker 15: and not only we continue to be satisfied with the

791
00:40:19,880 --> 00:40:23,000
Speaker 15: direction the company is going on diversification, we had a

792
00:40:23,080 --> 00:40:25,400
Speaker 15: new things like robotics, for example, we had a record

793
00:40:25,440 --> 00:40:28,200
Speaker 15: in automotive. A couple of things that happen in the

794
00:40:28,280 --> 00:40:31,960
Speaker 15: quarter that are very very important. One is we announce

795
00:40:32,400 --> 00:40:36,200
Speaker 15: a broad partnership of Volkswagen Group across all the brands

796
00:40:37,640 --> 00:40:41,160
Speaker 15: to build you know, the Snapdragon digital chassis for Volkswagen.

797
00:40:41,560 --> 00:40:43,680
Speaker 15: We saw the launch of the Raw four or one

798
00:40:43,680 --> 00:40:46,200
Speaker 15: of the top selling cars in the world for digital cockpit,

799
00:40:46,880 --> 00:40:51,799
Speaker 15: and IoT is growing. We we enter robotics in a

800
00:40:51,840 --> 00:40:54,879
Speaker 15: short period of time with some major customers, so we're

801
00:40:54,880 --> 00:40:58,600
Speaker 15: excited about that. The fundamentals of the company are actually incredible,

802
00:40:58,960 --> 00:41:01,400
Speaker 15: and we just navigate to another phone cycle.

803
00:41:02,520 --> 00:41:07,680
Speaker 2: Christiano second consecutive quarter where automotive is above a billion dollars.

804
00:41:07,760 --> 00:41:11,200
Speaker 2: And I remember over years us discussing what was a

805
00:41:11,239 --> 00:41:17,040
Speaker 2: backlog in automotive. Right, apply that story and that experience

806
00:41:17,120 --> 00:41:20,360
Speaker 2: to your hopes in data center. You know, you've told

807
00:41:20,400 --> 00:41:22,360
Speaker 2: us when this will happen and who it will happen

808
00:41:22,400 --> 00:41:25,520
Speaker 2: with first, But how do you see that translating from

809
00:41:25,560 --> 00:41:29,360
Speaker 2: your order backlog to revenue growth and hitting milestones like

810
00:41:29,400 --> 00:41:30,440
Speaker 2: a billion dollar quarter.

811
00:41:31,480 --> 00:41:33,279
Speaker 16: Yes, we we.

812
00:41:34,800 --> 00:41:38,759
Speaker 15: We restated the data center will start showing up in

813
00:41:38,800 --> 00:41:44,520
Speaker 15: fiscal twenty seven. We have been talking for a while

814
00:41:44,840 --> 00:41:47,799
Speaker 15: that the data center is going to change. It's going

815
00:41:47,840 --> 00:41:50,800
Speaker 15: to go from the current focus on training into inference.

816
00:41:51,360 --> 00:41:54,279
Speaker 15: We have been saying, I think before what's popular, that

817
00:41:54,400 --> 00:41:57,480
Speaker 15: a different architecture will be required. I think the post

818
00:41:57,560 --> 00:42:01,560
Speaker 15: GPU architecture interesting. That the Grock development is kind of

819
00:42:01,640 --> 00:42:06,080
Speaker 15: validating that, and we're getting a lot of good feedback.

820
00:42:06,239 --> 00:42:09,839
Speaker 15: We have a new architecture, including for memory. We don't

821
00:42:09,880 --> 00:42:14,680
Speaker 15: need HBM, which is causing all of this memory situation,

822
00:42:15,320 --> 00:42:20,280
Speaker 15: and it's we have been very encouraged by the traction

823
00:42:20,480 --> 00:42:24,960
Speaker 15: we're getting. So it's going to be material in twenty seven,

824
00:42:25,040 --> 00:42:27,080
Speaker 15: and you know, we're going to provide a lot of

825
00:42:27,080 --> 00:42:28,959
Speaker 15: details in ourcoming investor event.

826
00:42:30,200 --> 00:42:35,160
Speaker 3: Just broadly, how are you thinking about the actual consumer

827
00:42:35,280 --> 00:42:36,600
Speaker 3: right now as well, Christiana?

828
00:42:37,080 --> 00:42:41,799
Speaker 15: Just briefly, yes, so phone is a great proxy for

829
00:42:41,840 --> 00:42:49,480
Speaker 15: consumer microeconomic indicators are strong. Consumer demand very strong. And

830
00:42:50,120 --> 00:42:52,600
Speaker 15: one of the things I said in the earnings called

831
00:42:52,760 --> 00:42:55,319
Speaker 15: sell true data on phones, and we have visibility because

832
00:42:55,320 --> 00:42:58,160
Speaker 15: of our licensing business exceeded all expectations.

833
00:42:58,239 --> 00:42:59,680
Speaker 16: Phones are getting off the shelf.

834
00:43:00,000 --> 00:43:02,880
Speaker 15: Well, it's not a demand issue, it's just a memory

835
00:43:02,880 --> 00:43:03,920
Speaker 15: supply issue.

836
00:43:04,320 --> 00:43:07,520
Speaker 3: We'll come Seo, Cristiano Aman, We so appreciate you joining

837
00:43:07,560 --> 00:43:09,240
Speaker 3: on this day after the earnings.

838
00:43:09,560 --> 00:43:10,120
Speaker 8: Stay well.

839
00:43:10,120 --> 00:43:13,399
Speaker 3: Meanwhile, that does it for another extraordinary edition at Bloomberg Tech.

840
00:43:13,760 --> 00:43:17,600
Speaker 3: There is so much market volatility for earnings coming think

841
00:43:17,600 --> 00:43:19,200
Speaker 3: and fast. We've got Amazon for tomorrow ed.

842
00:43:19,920 --> 00:43:22,360
Speaker 2: Yeah, so Alphabet has the mic drop of one hundred

843
00:43:22,400 --> 00:43:25,440
Speaker 2: and eighty five billion dollar CAPEX forecast. Is Amazon judged

844
00:43:25,480 --> 00:43:29,440
Speaker 2: by the same metric and they communicate that differently. Recap

845
00:43:29,480 --> 00:43:32,440
Speaker 2: those conversations on podcasts, two important CEO interviews.

846
00:43:32,600 --> 00:43:33,279
Speaker 5: A lot going on.

847
00:43:33,320 --> 00:43:36,320
Speaker 2: You know where to find it online, Apple, Spotify, iHeart

848
00:43:36,520 --> 00:43:39,640
Speaker 2: and of course on all the Bloomberg platforms from San

849
00:43:39,680 --> 00:43:40,959
Speaker 2: Francisco and New York.

850
00:43:41,360 --> 00:43:42,359
Speaker 5: This is Bloomberg Tech