WEBVTT - Week Ahead: Oracle, Adobe, Kohl's

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

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<v Speaker 2>Stock Movers Report, 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 1>Let's take a look now at some stocks making news

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<v Speaker 1>in the week ahead. I'm Nathan Hager, joined by Bloomberg

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<v Speaker 1>Equities reporter Matthew Griffin on another week where we're going

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<v Speaker 1>to see some pretty big names reporting earnings starting on Tuesday,

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<v Speaker 1>when we'll be in the cloud with Oracle. Could we

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<v Speaker 1>see a benefit for Oracle from the AI spending boom?

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<v Speaker 3>Matthew, Well, Nathan, I think that is the question that

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<v Speaker 3>is going to be front and center of investors' minds

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<v Speaker 3>because the huge outlays on AI from Oracle have been

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<v Speaker 3>greeted enthusiastically on Wall Street in the past and have

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<v Speaker 3>been punished on Wall Street. I mean, you just look

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<v Speaker 3>at what the stock did in twenty twenty four, up

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<v Speaker 3>sixty one percent, a twenty percent boost last year. All

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<v Speaker 3>of this AI spending, their move to position themselves as

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<v Speaker 3>an AI cloud provider made Oracle a darling on Wall Street.

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<v Speaker 3>But after that you have had questions arise about what

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<v Speaker 3>the return is going to be on this spending. The

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<v Speaker 3>stocks now down about fifty percent from its September record high,

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<v Speaker 3>and you actually saw the shares plunge in December after

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<v Speaker 3>the company raised its spending on data centers. So they're

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<v Speaker 3>reporting in a moment where this is really a question.

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<v Speaker 1>And the reporting in a moment where we've just heard

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<v Speaker 1>in the last few days that Oracles has plans to

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<v Speaker 1>cut thousands of jobs just ahead of this earnings report.

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<v Speaker 1>What more do investors want to see from Larry Ellison's company?

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<v Speaker 3>Matthew, Yes, I think they're going to be looking again

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<v Speaker 3>at this cost benefit payoff. I mean, you have analysts

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<v Speaker 3>looking for revenue growth here they see just under sixteen

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<v Speaker 3>billion dollars of revenue versus fourteen billion in the year

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<v Speaker 3>ago quarter. And I think that's also at the heart

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<v Speaker 3>and center of whether these tens of billions of dollars

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<v Speaker 3>of capital expenditure are going to pay off on the

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<v Speaker 3>top and ultimately the bottom line. You see that in

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<v Speaker 3>the reports of some of the Magnificent seven companies this quarter,

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<v Speaker 3>where again it's the question not just of are you

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<v Speaker 3>spending are you an AI player, but are you generating

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<v Speaker 3>revenue to fund those expenditures. The job cuts are actually

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<v Speaker 3>aimed at freeing up money to pay for capital expenditures

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<v Speaker 3>for the AI boom. That's what people familiar with the

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<v Speaker 3>matter have told us. So again, I think investors are

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<v Speaker 3>going to be looking for both sides of the ledger there.

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<v Speaker 1>Now we're going to hear another side of the AI story.

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<v Speaker 1>I think probably on Thursday when Adobe reports. I got

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<v Speaker 1>to think this is one of those stocks that's been

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<v Speaker 1>caught up in the question about whether software companies are

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<v Speaker 1>going to be hit by the AI disruption.

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<v Speaker 3>Yes, Nathan, Adobe shares have tumbled actually during what investors,

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<v Speaker 3>the analysts have started to call these SaaS apocalypse, this

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<v Speaker 3>giant selloff in software stocks. Adobe's shares again, you think

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<v Speaker 3>about this happening in you know, the last couple of months,

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<v Speaker 3>but these concerns have really been swirling for a while.

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<v Speaker 3>Adobe down about twenty percent year to date, but actually

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<v Speaker 3>got a really lukewarm reception on Wall Street back in December,

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<v Speaker 3>even though they had a pretty upbeat forecast, because you

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<v Speaker 3>already had people questioning do the numbers matter now if

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<v Speaker 3>what you do can be replicated by cheap AI tools,

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<v Speaker 3>So the commentary on that may be as important. You know,

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<v Speaker 3>whether the company sees itself as shielded as any actual

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<v Speaker 3>number there were.

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<v Speaker 1>And has there been a question as well about whether

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<v Speaker 1>the AI tools that Adobe says it has are going

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<v Speaker 1>to have their own payoff. It's been kind of dealing

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<v Speaker 1>with that struggle as well, hasn't it.

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<v Speaker 3>Yes, absolutely so. I was looking at what analysts were saying,

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<v Speaker 3>and what Piper Sandler says is investors are going to

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<v Speaker 3>be honing in on metrics related to how much money

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<v Speaker 3>the company is making from AI. Now they do see

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<v Speaker 3>that the stock may be de risked here. The company

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<v Speaker 3>has given guidance, you know, taking a step back again,

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<v Speaker 3>the shares have slid, and so they actually see that

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<v Speaker 3>there could be some upside here if AI adoption is

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<v Speaker 3>better than expected. But yes, I think you're absolutely right.

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<v Speaker 3>That's a key question for investors.

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<v Speaker 1>And along with those marquee names in the tech space,

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<v Speaker 1>we're going to hear from a big name in retail

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<v Speaker 1>when Cole's opens its books. I guess the question here

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<v Speaker 1>is how's the consumer doing?

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<v Speaker 3>Yes, absolutely, Cole's is the latest big consumer name. They

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<v Speaker 3>are estimated to report next week. And you know, the

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<v Speaker 3>question of the health of the American consumer is really

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<v Speaker 3>another thing. This front and center for investors' minds, as

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<v Speaker 3>if they didn't have enough to think about. You know,

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<v Speaker 3>you think about us unexpectedly shedding jobs. You've had this

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<v Speaker 3>idea that consumers are trading down, but actually Coals so

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<v Speaker 3>far has held up against this backdrop. They raised their

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<v Speaker 3>full year outlook in November because consumers had shown that

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<v Speaker 3>they were willing to spend on brands that they really wanted.

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<v Speaker 3>And so again, so far, Cole's has been a relative

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<v Speaker 3>winner here. But I don't think investors see that as

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<v Speaker 3>a guarantee, and they're going to be looking closely at

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<v Speaker 3>consumer behavior and I think again at the commentary from

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<v Speaker 3>executives about whether the consumer's under pressure, what that looks like.

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<v Speaker 2>Stockmover's report from Bloomberg Radio. Check back with us throughout

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