WEBVTT - Snapchat, Amazon, and Pinterest Earnings 0:00:01.639 --> 0:00:06.920 From Marhart where Innovation, Money and power Collie in Silicon Valley, NBN. 0:00:07.280 --> 0:00:11.320 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:25.160 --> 0:00:27.639 I'm Caroline Hyde at Bloomberg's World headquarters in New York 0:00:27.920 --> 0:00:29.440 and I'm Ed Lodlow in San Francisco. 0:00:29.560 --> 0:00:32.040 Big Friday. This is Bloomberg Technology. 0:00:32.320 --> 0:00:35.200 It is big coming up full coverage of all those 0:00:35.280 --> 0:00:37.800 tech earnings from Snapchat to Amazon to Pinterest. 0:00:37.840 --> 0:00:40.839 We have got you covered and sticking with earnings, I'm 0:00:40.840 --> 0:00:43.840 going to bring you my interview with Intel CEO Pat Gelsinger, 0:00:44.000 --> 0:00:47.400 the company projecting a return to free cash flow, plus. 0:00:47.040 --> 0:00:49.479 How AI is going to impact hiring and managing in 0:00:49.520 --> 0:00:53.800 the workplace. We'll discuss the CEO of Lettice, Jack Altman. 0:00:54.280 --> 0:00:57.160 But first from those privately VC back companies to the 0:00:57.160 --> 0:01:00.480 public markets, where we're a little bit more cautious. Some 0:01:00.520 --> 0:01:03.040 of the big eco data that we got, the drops 0:01:03.080 --> 0:01:05.160 on the inflation reads ahead of the FED next week, 0:01:05.440 --> 0:01:07.920 and look, inflation is still brisk here in the United States. 0:01:07.959 --> 0:01:10.479 It's still brisk over in Europe, but maybe trading down 0:01:10.480 --> 0:01:12.160 a little bit. We've seen the NASLAG still managing to 0:01:12.160 --> 0:01:14.200 punch up three tens percent even though Amazon is that 0:01:14.280 --> 0:01:17.200 drag two year yield though we're seeing two basis points lower. 0:01:17.200 --> 0:01:19.960 In fact, we're seeing a buying into US bonds day 0:01:20.120 --> 0:01:22.399 and mid risker version. Perhaps that's around the banking sector. 0:01:22.440 --> 0:01:24.640 All eyes on First Republic. I'm looking at MSCI or 0:01:24.680 --> 0:01:27.440 Country World innext up about half a percentage point. Europe 0:01:27.440 --> 0:01:29.960 managed to just push on through towards the end of trading. 0:01:30.120 --> 0:01:31.520 Let's slick it on and look at what's happening in 0:01:31.520 --> 0:01:33.479 the great big world of crypto, because we are seeing 0:01:33.600 --> 0:01:36.520 don ogcoin having a good set of five days. We're 0:01:36.600 --> 0:01:38.840 up six percent, We're back at near that thirty thousand level. 0:01:38.840 --> 0:01:41.160 There's been a lot of volatility along the way for bitcoin, 0:01:41.400 --> 0:01:43.560 but edit does feel as though that's still some sort 0:01:43.600 --> 0:01:44.680 of safe harbor on the day. 0:01:45.440 --> 0:01:47.440 Yeah, I'm still really focused on earning season. Take a 0:01:47.440 --> 0:01:49.120 look at Intel. We kind of paired some of our 0:01:49.160 --> 0:01:51.800 earlier games. A tough first quarter, to be honest to 0:01:51.840 --> 0:01:54.080 trough on the top and bottom line, but the outlook 0:01:54.120 --> 0:01:55.840 for the second half of this year a bit more 0:01:55.920 --> 0:01:58.280 rosy and analyst really buying into that. We will hear 0:01:58.280 --> 0:02:01.240 from the CEO Pat Gelsinger later in the show about 0:02:01.240 --> 0:02:03.680 what the green shoots are that are giving the market 0:02:03.720 --> 0:02:06.360 confidence elsewhere. Social media a really big theme of this 0:02:06.400 --> 0:02:09.480 earning season. Snap usually reports earlier. It's a little bit 0:02:09.560 --> 0:02:13.000 later this quarter, but basically it's first ever revenue decline, 0:02:13.040 --> 0:02:14.840 and you can see how that's weighing on the shares. 0:02:14.960 --> 0:02:18.079 Biggest dropping around six months. Pinterest another one where it's 0:02:18.200 --> 0:02:21.080 kind of failing to gain traction, particularly in the US 0:02:21.120 --> 0:02:23.840 on the user growth perspective, and in this world of AI, 0:02:24.000 --> 0:02:27.119 we're worried about visibility. How is this relevant anymore? We'll 0:02:27.120 --> 0:02:29.240 dig into that. And then Amazon down four percent. This 0:02:29.320 --> 0:02:32.359 is all about the cloud. Sequentially into April from the 0:02:32.400 --> 0:02:35.720 first quarter, AWS top line growth slowing by around five 0:02:35.800 --> 0:02:38.679 hundred basis points. This has been the cash cow for Amazon, 0:02:38.919 --> 0:02:41.399 but it hasn't come to the rescue this quarter actually 0:02:41.600 --> 0:02:43.959 cost discipline on the top and bottom line beating the 0:02:44.000 --> 0:02:46.240 course of gone. The strength of the e commerce business 0:02:46.440 --> 0:02:49.160 definitely there that the cloud a little more worrying, Caroline. 0:02:49.360 --> 0:02:50.920 Yeah, and as you say, that has been such an 0:02:50.960 --> 0:02:53.880 important growth driver. Let's talk about it even more. Now 0:02:53.919 --> 0:02:56.400 we've got pack to you, president and co founder and 0:02:56.400 --> 0:02:58.440 of course someone who used to work over at Amazon. 0:02:58.480 --> 0:03:01.799 Melissa Verdick. You were previously of Cool, spending a decade 0:03:01.800 --> 0:03:04.000 at the company. You helped launch the CpG, the health 0:03:04.000 --> 0:03:07.200 beauty retail business. You understand the ad product, but focus 0:03:07.240 --> 0:03:09.840 on the cloud for a minute, in particular, how warring 0:03:09.919 --> 0:03:12.440 is this cash cow is thoughting to slow out in 0:03:12.480 --> 0:03:13.120 terms of growth. 0:03:13.919 --> 0:03:15.840 Yeah, there's well, there's a couple of things for sall 0:03:15.919 --> 0:03:19.040 things for having me glad to be back, but you know, 0:03:19.120 --> 0:03:24.280 sixteen percent growth in AWS still not anything to sneeze about. 0:03:24.360 --> 0:03:27.160 But there's a couple of worrying things. I think One 0:03:27.200 --> 0:03:30.120 is AWS has been the leader. They had forty percent 0:03:30.160 --> 0:03:31.000 growth a year ago. 0:03:31.480 --> 0:03:32.240 Now it's slowing. 0:03:32.280 --> 0:03:35.480 Their competitors are catching up. So Azure and Google Cloud 0:03:35.880 --> 0:03:39.000 both grew faster. Another thing that I think there are 0:03:39.000 --> 0:03:41.040 two other things that are a little bit concerning. One 0:03:41.080 --> 0:03:44.440 is it is impacted by macroeconomics. Amazon talked about how 0:03:44.680 --> 0:03:47.360 customers of all sizes are looking to optimize their cost 0:03:47.360 --> 0:03:50.720 savings and that is where we're seeing some slowing growth. 0:03:50.760 --> 0:03:53.640 And then lastly is on the AI front. So one 0:03:53.680 --> 0:03:57.440 of the things you know, Chat GBT OpenAI launch, they're 0:03:57.480 --> 0:04:01.840 the market leader in Microsoft Azure has a direct integration 0:04:01.960 --> 0:04:05.120 with them. Yes, so that's going to be one challenge 0:04:05.120 --> 0:04:09.080 for them. Amazon did announce Bedrock and their solution for 0:04:10.120 --> 0:04:13.200 Microsoft's Copilot called co Whisper. So I think the question 0:04:13.280 --> 0:04:15.320 is going to be how much adoption can they get 0:04:15.360 --> 0:04:18.680 of their integrations with ADBs given the fact that Chatter 0:04:19.160 --> 0:04:20.040 is leader. 0:04:20.960 --> 0:04:23.719 You know, they're offering something broad right, foundational models for 0:04:23.760 --> 0:04:26.680 those that want to use third party or Titan within Bedrock. 0:04:27.000 --> 0:04:29.080 One thing that really caught my eye the impact of 0:04:29.200 --> 0:04:31.680 machine learning on advertising. To take a look at this 0:04:31.760 --> 0:04:34.679 chart that shows ad growth across the advertising based companies, 0:04:34.720 --> 0:04:37.560 and actually Amazon comes top of the pile. Milist a 0:04:37.560 --> 0:04:40.000 real bright spot. What's your read into that? 0:04:40.960 --> 0:04:41.760 Yeah, definitely. 0:04:41.760 --> 0:04:44.479 I mean my company pack You sits on top of 0:04:44.480 --> 0:04:47.200 the Amazon's APIs for ads, and it's been a great 0:04:47.240 --> 0:04:51.440 business for us. Advertising is highly profitable. Actually, this week 0:04:51.839 --> 0:04:55.560 we looked at earnings across Meta, Google, Snap and Amazon 0:04:56.320 --> 0:04:59.880 was way better than twenty three percent growth, whereas you 0:05:00.320 --> 0:05:03.000 did not do as well. There's an interesting new partnership 0:05:03.040 --> 0:05:06.920 that Amazon announced Whiches with Pinterest. Pinterest has been struggling 0:05:06.960 --> 0:05:09.680 a little bit. They want to monetize their pins, and 0:05:09.760 --> 0:05:12.160 so this is kind of a win for Amazon, this 0:05:12.200 --> 0:05:15.040 new partnership that will drive traffic to them. And then 0:05:15.080 --> 0:05:17.000 one of the other bright spots with the Amazon is 0:05:17.000 --> 0:05:19.919 that they have lots of injury. You know, they continue 0:05:19.920 --> 0:05:22.799 to add more placements. They're pushing more towards upper funnel 0:05:22.880 --> 0:05:26.040 and streaming TV. There's a big opportunity around non indemic 0:05:26.200 --> 0:05:30.240 So even you know, cars that don't sell products on Amazon, 0:05:30.320 --> 0:05:34.120 you can leverage Amazon's audience. So there's just there's a 0:05:34.160 --> 0:05:36.760 lot of opportunity. Amazon has great space to grow in 0:05:36.760 --> 0:05:37.839 the advertising business. 0:05:38.560 --> 0:05:40.280 All right, Melissa Bird, I could pack for you, Thank 0:05:40.360 --> 0:05:42.080 you so much. The other name we're tracking them, course, 0:05:42.080 --> 0:05:44.680 Snap shares set for the worst day in six months 0:05:44.720 --> 0:05:48.040 after posting its first ever revenue decline. Joining us now 0:05:48.240 --> 0:05:51.680 is Jasmine Mburg Insider Intelligence Principle analysts. There was a 0:05:51.720 --> 0:05:56.320 phrase that jumped out, continued disruption in demand in advertising. 0:05:56.839 --> 0:05:57.440 What is that? 0:05:58.839 --> 0:06:01.960 Well, I think over all, looking at Snap's revenue decline, 0:06:02.000 --> 0:06:05.760 what we see is that it has really deep challenges within. 0:06:05.520 --> 0:06:06.359 Its ad business. 0:06:06.640 --> 0:06:08.960 So yes, there was a disruption and demand in the 0:06:09.000 --> 0:06:12.920 sense that it is revamping its ad platform. It is 0:06:13.120 --> 0:06:16.440 unifying its ad formats to make them easier for users, 0:06:16.480 --> 0:06:19.640 it's investing in machine learning, and all of this, of 0:06:19.680 --> 0:06:23.880 course is to provide more ROI for advertisers, and Snap 0:06:23.960 --> 0:06:26.520 is right, you know, these things take time to ramp 0:06:26.600 --> 0:06:30.159 up and really you know, impact its bottom line. But 0:06:30.279 --> 0:06:33.040 for me, you know, this issue really runs deeper, and 0:06:33.080 --> 0:06:35.800 that's that Snap is a much smaller player than say 0:06:35.839 --> 0:06:38.919 Facebook or Instagram. And we saw Meta come in, you know, 0:06:39.000 --> 0:06:41.880 with a three percent revenue growth in Q one, and 0:06:42.160 --> 0:06:45.760 you know, Snapchat also isn't a textbook ad supported platform 0:06:45.800 --> 0:06:47.440 the way that those two players are. 0:06:47.680 --> 0:06:49.560 It's been very clear about this itself. 0:06:49.600 --> 0:06:52.880 It is a messaging app and its users primarily use 0:06:52.920 --> 0:06:56.719 it for visual messaging, and messaging apps are notoriously difficult 0:06:56.760 --> 0:06:57.719 to monetize. 0:06:58.080 --> 0:07:01.080 Three hundred and eighty three million users daily is nothing 0:07:01.080 --> 0:07:04.200 to be sniffed out, though overalled, How do they end 0:07:04.279 --> 0:07:08.240 up trying to set themselves apart from not being well 0:07:08.279 --> 0:07:11.960 and also RAN, but a different RAN, offering something different, 0:07:12.000 --> 0:07:13.800 particularly when it comes to VRAR. 0:07:14.960 --> 0:07:16.920 Yeah, and that's something that Snap has been trying to 0:07:16.960 --> 0:07:20.080 do from the very beginning. You know, they position themselves 0:07:19.840 --> 0:07:24.120 as the as as a gen Z platform, calling it 0:07:24.160 --> 0:07:25.280 the Snapchat generation. 0:07:25.360 --> 0:07:25.960 And it's true. 0:07:25.960 --> 0:07:28.800 It really does have a stronghold on gen Z. Where 0:07:28.800 --> 0:07:32.480 it has struggled is being able to attract audiences outside 0:07:32.520 --> 0:07:35.920 of gen Z, older audiences in particular, and a lot 0:07:35.920 --> 0:07:39.239 of the things that they're doing, particularly around AR, really 0:07:39.280 --> 0:07:43.080 do appeal to its audience. I would say that, you know, 0:07:43.680 --> 0:07:48.840 convincing advertisers that AR in advertising is valuable, especially in 0:07:49.080 --> 0:07:52.600 this economic environment, has been difficult. But it's also working 0:07:52.640 --> 0:07:56.679 towards bringing AR off platform. It has a new RS 0:07:57.000 --> 0:08:01.320 which is its Augmented Reality Enterprise Service division, where it's 0:08:01.360 --> 0:08:07.360 incorporating it's AR technology into brand apps and websites, as 0:08:07.400 --> 0:08:10.560 well as bringing some of that technology eventually in store. 0:08:10.920 --> 0:08:12.480 So this of course is you know, part of it 0:08:12.560 --> 0:08:17.200 diversifying its revenue streams and being able to monetize AR 0:08:17.320 --> 0:08:19.400 outside of its core Snapchat platform. 0:08:19.480 --> 0:08:22.120 All about the monetization Jasmine Great hasent time with the 0:08:22.240 --> 0:08:25.520 jasmin Enberg of insider intelligence from Snap to Pinterest. Let's 0:08:25.520 --> 0:08:27.760 have a look at how those shares perform, because we 0:08:27.800 --> 0:08:29.560 know that it's under pressure. We know that it's more 0:08:29.600 --> 0:08:32.120 perhaps about the lack of cost cutting going on to 0:08:32.200 --> 0:08:35.640 that particular business right now. Tom Forte, DA Davidson's senior 0:08:35.679 --> 0:08:37.440 research analyst who has a neutral rating on the stock. 0:08:37.480 --> 0:08:40.240 I understand, and you're sticking with a twenty two dollar 0:08:40.280 --> 0:08:42.280 price target even though we're still seeing sort of the 0:08:42.840 --> 0:08:44.880 pain trade that is the restructuring going on. 0:08:45.920 --> 0:08:48.160 Sure, so I think I lowered my price target by 0:08:48.160 --> 0:08:48.960 a dollar. 0:08:48.760 --> 0:08:52.400 To twenty two, and I think the good news is 0:08:52.440 --> 0:08:56.480 that pinterest has made strides and engagement. They found an 0:08:56.600 --> 0:09:02.640 interesting way to solve their monetization in e commerce by 0:09:02.640 --> 0:09:05.679 partnering with Amazon. The bad news, and what I think 0:09:05.760 --> 0:09:07.880 is weighing on the shares in addition to year of 0:09:07.920 --> 0:09:12.840 comments on cost pressure, is that their sales expectations for 0:09:12.920 --> 0:09:15.520 the June quarter suggests. 0:09:15.080 --> 0:09:16.320 They were lower than expected. 0:09:16.679 --> 0:09:19.000 So the digital ad market, when you look at Snapchat, 0:09:19.280 --> 0:09:21.600 when you look at pinterest, it's still challenging out there. 0:09:22.400 --> 0:09:22.800 Hey Tom. 0:09:22.800 --> 0:09:25.319 When we look at pinterest, when you think video and 0:09:25.400 --> 0:09:28.560 the emphasis from its pays, then you think about artificial intelligence. 0:09:28.559 --> 0:09:30.920 There seems to be a narrative in the market that 0:09:31.000 --> 0:09:33.839 pinterest is at risk of being left behind. Do you 0:09:33.880 --> 0:09:34.720 share that concern? 0:09:36.280 --> 0:09:38.560 I do not to the extent that if you say 0:09:38.600 --> 0:09:44.040 that Pinterest's functionality is as a visual social network an 0:09:44.040 --> 0:09:46.960 excellent place to view for example, kitchens if you're thinking 0:09:46.960 --> 0:09:50.000 about doing a kitchen remodel, or a parel if you're 0:09:50.040 --> 0:09:54.440 thinking about buying new clothes. I do think that they 0:09:54.679 --> 0:09:58.880 leverage artificial intelligence to the extent that they use artificial 0:09:58.880 --> 0:10:01.559 intelligence to find more things that you might be interested 0:10:01.559 --> 0:10:02.679 in based. 0:10:02.400 --> 0:10:04.720 On what you've looked at so far. So I'm not 0:10:04.760 --> 0:10:06.559 overly concerned about it being left behind. 0:10:06.679 --> 0:10:11.559 No what therefore can Pinterest run home to the investor 0:10:11.559 --> 0:10:14.800 base right now? About how close it is to actual 0:10:14.880 --> 0:10:19.160 people making investment purchase decisions. How can they continue to 0:10:19.880 --> 0:10:22.280 ultimately be a need to have for many of these 0:10:22.280 --> 0:10:24.200 companies looking to advertise a little bit closer. 0:10:25.240 --> 0:10:29.400 So here's where Amazon comes in from an advertising standpoint. 0:10:29.600 --> 0:10:31.439 So to the extent that they're going to work. 0:10:31.240 --> 0:10:35.400 With Amazon to improve their advertising and e commerce make 0:10:35.440 --> 0:10:39.000 it easier for consumers to find things on Pinterest, to 0:10:39.120 --> 0:10:42.480 find ads on Pinterest, to click on those ads and 0:10:42.520 --> 0:10:45.760 buy them with Amazon. I think that's going to help 0:10:45.840 --> 0:10:49.080 Pinterest over the next twelve to eighteen months. And the 0:10:49.200 --> 0:10:54.079 challenge for everyone not named meta platforms is monetization. Pinterest 0:10:54.160 --> 0:10:56.400 has a large global user based for under ninety three 0:10:56.400 --> 0:10:59.520 million monthly active users, but they need to improve their 0:10:59.559 --> 0:11:02.839 MATIZI and I think over time that ad advertising effort 0:11:02.880 --> 0:11:04.400 with Amazon can help. 0:11:04.559 --> 0:11:16.160 It's on forte DA Davidson, thank you so much. Intel 0:11:16.200 --> 0:11:19.360 shares pushing higher after chipmaker projected a return to free 0:11:19.400 --> 0:11:21.280 cash flow in the second half of the year, with 0:11:21.320 --> 0:11:24.040 analysts saying the worst now may be over for the company. 0:11:24.040 --> 0:11:27.040 Moments ago, I sat down with Intel CEO Patal Singer. 0:11:27.080 --> 0:11:27.520 Have listen. 0:11:28.120 --> 0:11:30.120 You know, the second half in our industry is typically 0:11:30.160 --> 0:11:32.400 stronger than the first half, and we expect that to 0:11:32.400 --> 0:11:34.880 be the case your second You know, a lot of 0:11:35.160 --> 0:11:38.320 inventory adjustments are occurring in the first half of the year, 0:11:38.640 --> 0:11:43.000 and particularly we see those finished in the client the 0:11:43.080 --> 0:11:46.839 PC industry, but we're also seeing progress through our networking 0:11:46.920 --> 0:11:49.920 and data center and cloud business as well, so improving 0:11:50.040 --> 0:11:53.800 inventory position, and you know that's very typical of the industry. 0:11:53.840 --> 0:11:56.360 You go through a sharp decline, you have inventory, a 0:11:56.400 --> 0:11:59.240 lot of fixed costs, and then you gradually work through that. 0:11:59.360 --> 0:12:01.640 So we see that as the second factor. But the 0:12:01.679 --> 0:12:05.199 third one is an improving product position that improves our 0:12:05.200 --> 0:12:08.400 market share overall, and that I think in particular you're 0:12:08.400 --> 0:12:11.559 our data center business in particular, we're seeing Q one 0:12:11.600 --> 0:12:14.960 as a turning point where a stronger product line the 0:12:15.040 --> 0:12:17.160 market is looking at you know what we're saying for 0:12:17.240 --> 0:12:20.240 our process and product and saying, boy, that's a little 0:12:20.280 --> 0:12:22.600 bit better than we were expecting. So seeing some of 0:12:22.640 --> 0:12:25.640 those positive green shoots, and maybe finally, you know, at 0:12:25.720 --> 0:12:28.720 least parts of the world, China clearly is showing some 0:12:28.840 --> 0:12:32.840 economic strength as well, so hopefully some economic green shoots 0:12:32.880 --> 0:12:34.160 in the second half as well. 0:12:34.600 --> 0:12:36.800 The turning point idea is really interesting. There's a number 0:12:36.800 --> 0:12:40.720 of analysts that say Intel has hit its troth essentially 0:12:40.720 --> 0:12:44.120 when they look at margins and top line growth. Is 0:12:44.200 --> 0:12:46.520 Intel in its trough coming out of its trough? 0:12:46.559 --> 0:12:49.560 To your mind, well, you know, we guided Q two 0:12:49.960 --> 0:12:52.240 better than Q one, and we expect second half to 0:12:52.240 --> 0:12:54.920 be stronger than that. So clearly from a top line 0:12:55.120 --> 0:12:58.440 growth perspective, but also from a margin perspective, you know, 0:12:58.520 --> 0:13:01.680 we expect that we're so margins in Q two, but 0:13:01.800 --> 0:13:04.400 improving as we go through the years. We get out 0:13:04.440 --> 0:13:07.440 of the thirties and back into comfortably into the forties 0:13:07.440 --> 0:13:10.240 as we go through the year. So an improving position 0:13:10.320 --> 0:13:13.040 on margins and an improving position then on the bottom 0:13:13.080 --> 0:13:15.640 line as we go through the year. So clearly, you know, 0:13:15.679 --> 0:13:18.200 we're seeing that momentum, but I'd also say there's a 0:13:18.200 --> 0:13:22.760 lot of turbulence macroeconomic uncertainty, so it also requires a 0:13:22.800 --> 0:13:26.440 lot of execution and financial discipline, which we demonstrated in 0:13:26.520 --> 0:13:29.240 Q one. So overall, I think the company is doing 0:13:29.280 --> 0:13:31.800 what I've asked them to do, to be very thoughtful 0:13:31.800 --> 0:13:36.559 with how we spend, but execute, execute, execute, product process, 0:13:36.679 --> 0:13:39.800 new areas like foundry, all of those gaining momentum as 0:13:39.800 --> 0:13:40.560 we go through the year. 0:13:42.480 --> 0:13:45.320 Intel CEO Pat Gelsinger there, Caroline. 0:13:44.960 --> 0:13:48.360 Really fascinating conversation overall, and the focus on chips, which 0:13:48.400 --> 0:13:50.200 of course we know have been a bit of a laggot. 0:13:50.240 --> 0:13:52.160 Over the course of the week, we've got to dig 0:13:52.200 --> 0:13:54.440 in a little bit more about Intel's earnings and the 0:13:54.480 --> 0:13:58.080 chip sector more broadly, bringing Bloomberg Intelligences, man needs sing 0:13:58.760 --> 0:14:01.240 what do you make of some studying? Is the worst 0:14:01.240 --> 0:14:04.480 behind us? To that extent, I think it. 0:14:04.440 --> 0:14:07.000 Was interesting that they said that the PC market is 0:14:07.040 --> 0:14:09.840 stabilizing and they call for two hundred and seventy million 0:14:10.000 --> 0:14:11.040 units for the year. 0:14:11.559 --> 0:14:14.880 My sense is, you know, the inventory. 0:14:14.440 --> 0:14:18.080 Situation is still not clear in terms of you know, 0:14:18.200 --> 0:14:22.080 the channel inventory clearing they sounded a lot more optimistic, 0:14:22.240 --> 0:14:24.560 So you have to take the word because Intel is 0:14:24.560 --> 0:14:27.640 the largest player. And look, on the client side, they 0:14:27.640 --> 0:14:31.080 have less of competitive issues than on the data center side, 0:14:31.120 --> 0:14:34.640 where we know the demand is high for high performance 0:14:34.680 --> 0:14:39.360 computing chips. We've seen expectations for Nvidia. So clearly Intel 0:14:39.480 --> 0:14:42.800 has more secular headbinds to deal with on the data 0:14:42.800 --> 0:14:45.760 center side. The client side will be cyclical, whether it 0:14:45.840 --> 0:14:48.440 comes back in the second half or it takes two 0:14:48.560 --> 0:14:49.480 or three more quarters. 0:14:49.800 --> 0:14:50.680 I think we. 0:14:50.840 --> 0:14:52.280 Still have to figure that part out. 0:14:53.160 --> 0:14:55.680 Yeah, I think he said he was confident the inventory 0:14:56.240 --> 0:14:58.720 would be corrected, it would be completed, though he didn't 0:14:58.760 --> 0:15:01.840 say when you know, relatively. Pat's trying to sell this 0:15:01.920 --> 0:15:04.920 story right, mandate that Intel can return to being a 0:15:04.960 --> 0:15:08.280 technological leader. Do you see evidence that he is managing 0:15:08.280 --> 0:15:11.280 that process well while also sort of catching up on 0:15:11.320 --> 0:15:12.960 the day to day of running a chip company. 0:15:13.480 --> 0:15:16.600 I mean, look, turn around stories in tech are tough, 0:15:16.800 --> 0:15:20.400 and look, he has a very tough hand in this quorder. 0:15:20.480 --> 0:15:25.240 Intel actually had negative nine billion dollars in free cash flow, 0:15:25.320 --> 0:15:27.200 so that just goes to show what he is dealing 0:15:27.280 --> 0:15:31.640 with in terms of, you know, the fab aspect of 0:15:31.680 --> 0:15:35.960 it catching up to TSMC and really kind of dealing 0:15:35.960 --> 0:15:38.800 with the data center headminds that I alluded to before. 0:15:39.280 --> 0:15:42.920 A lot I think depends on the government and the 0:15:43.080 --> 0:15:47.120 Chips Act, because that's where things can be supported, you know, 0:15:47.200 --> 0:15:50.560 in terms of driving more onshore manufacturing of chips, and 0:15:51.000 --> 0:15:53.920 that's where the free cash flow headminds can be eased, 0:15:53.960 --> 0:15:56.840 and you know, it can be more kind of dealt 0:15:56.960 --> 0:15:59.600 with down the line as opposed to, you know, convincing 0:15:59.640 --> 0:16:02.720 investor that Intel won't keep losing money for the next 0:16:02.720 --> 0:16:03.520 two three years. 0:16:03.680 --> 0:16:07.000 Caroline, as you can imagine, I couldn't resist the temptation, 0:16:07.200 --> 0:16:10.840 and I asked, we asked a question about artificial intelligence. 0:16:11.400 --> 0:16:14.360 Yeah, and it seems as though that's got to be 0:16:14.400 --> 0:16:17.040 an area they focus on. I mean, Amandie your point 0:16:17.240 --> 0:16:21.000 that we're looking at Amazon developing chips to help with 0:16:21.040 --> 0:16:24.600 that sort of capacity that computer needed with generative AI. 0:16:24.840 --> 0:16:26.920 Is this something that Intel just has to be a 0:16:26.960 --> 0:16:29.000 part of and are they a significant part of it? 0:16:30.120 --> 0:16:33.960 And that's the challenge, right, So the hyperscalers all want 0:16:34.000 --> 0:16:36.320 to do their own chips. I mean, Google is doing 0:16:36.360 --> 0:16:40.560 their own TPUs, Amazon the Graviton, and Microsoft has I 0:16:40.560 --> 0:16:42.720 think There'll been rumors that they're doing their own chips. 0:16:42.720 --> 0:16:45.720 So that's the challenge for somebody like Intel, which is 0:16:45.760 --> 0:16:48.720 the leading market share leader when it comes to you know, 0:16:48.800 --> 0:16:52.360 the data center chips, and now they are partnering with ARM. 0:16:52.440 --> 0:16:55.320 I mean, we know Intel is eighty six, and so 0:16:55.520 --> 0:16:58.560 it's not very clear whether they have that you know 0:16:58.680 --> 0:17:03.560 technology parac with PSMC now to really get more enterprises 0:17:03.680 --> 0:17:07.879 at least in terms of joining you know, the AI 0:17:08.040 --> 0:17:10.640 side of things. And in Vidia at the same time 0:17:10.800 --> 0:17:12.240 is running away with that market. 0:17:12.320 --> 0:17:13.240 AMD is doing well. 0:17:13.320 --> 0:17:16.719 So clearly a lot of competitive pressure and there aren't 0:17:16.880 --> 0:17:20.600 enough foll points in terms of you know, uh manufacturing 0:17:20.640 --> 0:17:24.320 coming back. That's where the government supports is key and yeah, 0:17:24.400 --> 0:17:26.800 they have to start showing that in bad manufacturing. 0:17:27.160 --> 0:17:30.439 So take us there the bait you laid in. What 0:17:30.520 --> 0:17:31.800 did he say in terms of AI? 0:17:32.760 --> 0:17:35.080 So Mandy's flat was really interesting because he was pretty 0:17:35.119 --> 0:17:39.240 committed to competing with Nvidia those high of higher endgpus 0:17:39.359 --> 0:17:42.280 for the deep learning part. But really where Intel's looking 0:17:42.320 --> 0:17:45.000 man Deepa's inference right, they have a range of CPU 0:17:45.040 --> 0:17:47.439 and GPU products that they think can compete there. Just 0:17:47.480 --> 0:17:50.000 so what you said about the chips ACT. Pat seems 0:17:50.040 --> 0:17:53.400 confident that those dollars flow through this year. How crucial 0:17:53.440 --> 0:17:55.359 is it to then to get that public sector money 0:17:55.440 --> 0:17:57.560 to drive that vision that Pat has. 0:17:57.920 --> 0:18:01.280 Yeah, look, I think that is key because the more 0:18:01.359 --> 0:18:04.840 these tabs are underutilized, it's going to. 0:18:04.359 --> 0:18:05.800 Be a drag on the gross margin. 0:18:05.840 --> 0:18:09.080 And we've seen that fifteen percentage points in gross margin 0:18:09.119 --> 0:18:11.840 compression in the last two three quarters. Guess what. The 0:18:11.880 --> 0:18:15.600 more lower utilization for these fabs, it's going to continue 0:18:15.600 --> 0:18:18.879 to pressure THATAB. So if he gets that funding and 0:18:19.080 --> 0:18:21.840 if he gets something tangible from the Chips ACT, I 0:18:21.840 --> 0:18:23.720 think that will certainly is that pressure. 0:18:24.040 --> 0:18:26.000 And also the inference market. 0:18:25.840 --> 0:18:28.760 Is sort of running away from them because Apple does 0:18:28.800 --> 0:18:32.120 its own chips for its PCs and max. That's where 0:18:32.160 --> 0:18:35.400 a lot of infrints will also happen. So Intel really 0:18:35.520 --> 0:18:37.640 wants to make sure that you know the x eighty 0:18:37.680 --> 0:18:40.879 six ecosystem, the Windows ecosystem stays with them on the 0:18:40.960 --> 0:18:41.800 client side. 0:18:42.400 --> 0:18:45.359 Always great to have some time with you of Freebag Intelligence. 0:18:45.560 --> 0:18:47.240 The one and only man leaps saying, one of the 0:18:47.240 --> 0:18:50.600 busiest people in this building. Mean while coming up, we've 0:18:50.600 --> 0:18:53.000 got to talk about that bitcoin scam, a Moonland, a 0:18:53.080 --> 0:18:55.199 craft so much more, but it all coming up and 0:18:55.240 --> 0:18:57.600 talking tech that's next, and this is Blomberg. 0:19:15.560 --> 0:19:18.200 Time for talking tech. A US jarge ordered a South 0:19:18.200 --> 0:19:21.520 African executive to pay more than three point four billion 0:19:21.560 --> 0:19:25.760 dollars in restitution and fines for a fraud scheme involving bitcoin, 0:19:25.800 --> 0:19:29.080 which impacted more than twenty three thousand people in the US. 0:19:29.160 --> 0:19:32.560 This is the highest ever civil monetary penalty in any 0:19:32.640 --> 0:19:36.680 CFTC case. Ice Faces Moonlander crash is now wiped out 0:19:36.720 --> 0:19:39.720 about six hundred million dollars, almost half of the Tokyo 0:19:39.760 --> 0:19:43.960 based startups value of shares slumping for a third straight session, 0:19:44.280 --> 0:19:47.600 and Sony casting doubt on its PlayStation momentum. The company 0:19:47.840 --> 0:19:50.840 offered a pretty conservative profit outlook after warning about the 0:19:50.880 --> 0:19:54.720 impact of the global consumer spending slump on its electronics 0:19:54.840 --> 0:19:58.399 and entertainment business. And finally, Baine Capital has built a 0:19:58.440 --> 0:20:02.040 stake in Software Ag, raising the prospect of a takeover 0:20:02.119 --> 0:20:05.159 battle for the German company that, according to sources, the 0:20:05.240 --> 0:20:08.120 firms areying a potential merger with its own portfolio firm, 0:20:08.560 --> 0:20:09.720 Rocket Software. 0:20:17.640 --> 0:20:20.600 Welcome back to Bloomerg Technology. I'm Paralyine Hyde in New York. 0:20:20.920 --> 0:20:23.680 And Amed Lovelow in San Francisco. It's the final trading day, 0:20:23.720 --> 0:20:26.399 Caroline of April, so I thought I get some scores 0:20:26.400 --> 0:20:28.200 on the doors in terms of where we're at. Now's 0:20:28.200 --> 0:20:30.040 that one hundred out performance, right, We're up four and 0:20:30.080 --> 0:20:33.159 a half percent relative to sort of other specific areas 0:20:33.160 --> 0:20:36.879 of the technology space, the Philadelphia Semiconductor Index being one 0:20:36.960 --> 0:20:39.159