WEBVTT - Nasdaq 100 Plunges and Intel Falls Most in 40 Years 0:00:01.240 --> 0:00:05.080 We're from Mahard. We're Innovation, Money and Power Collie in 0:00:05.200 --> 0:00:06.680 Silicon Vallet NBN. 0:00:07.040 --> 0:00:11.559 This is Bloomberg Technology with Caroline Hyde and Ed Lovelove. 0:00:25.480 --> 0:00:28.440 Live from New York. This is Bloomberg Technology coming up. 0:00:28.480 --> 0:00:32.440 The NASDAQ one hundred plunges into correction territory as the 0:00:32.520 --> 0:00:35.920 rotation from big tech continues. Plus, we break down the 0:00:35.920 --> 0:00:40.519 results from tech heavyweights Amazon and Apple, and Intel shares 0:00:40.800 --> 0:00:44.519 falling by the most since nineteen eighty two as the 0:00:44.560 --> 0:00:49.400 company offers a grim forecast and slashes thousands of jobs. 0:00:50.000 --> 0:00:53.479 The picture in financial markets is severe this Friday. The 0:00:53.479 --> 0:00:56.880 focus is the technology sector. This is the NASA one hundred. 0:00:57.160 --> 0:00:59.080 Over the course of the week, we are on track 0:00:59.320 --> 0:01:02.120 for our eight week of declines, matching the run that 0:01:02.160 --> 0:01:04.720 we saw in April of this year. We have entered 0:01:04.760 --> 0:01:08.520 a technical correction on the NASDAQ one hundred. In the moment, 0:01:08.800 --> 0:01:11.560 about eighteen names on that index in the red, fewer 0:01:11.600 --> 0:01:14.559 than twenty in the green. The story is about three 0:01:14.640 --> 0:01:17.120 names in particular. Let's bring them up. We're going to 0:01:17.120 --> 0:01:19.760 go into the earning story with Amazon and Apple with 0:01:19.800 --> 0:01:22.960 our reporters, and later a detailed look at Intel. Yes, 0:01:23.040 --> 0:01:26.279 that is a twenty eight percent decline about fifteen thousand 0:01:26.360 --> 0:01:29.360 jobs will go reduction in CAPEX and op X. They 0:01:29.400 --> 0:01:32.440 basically have admitted that they were slow to respond to 0:01:32.480 --> 0:01:35.120 their reality that their market's not going well. From a 0:01:35.120 --> 0:01:38.440 top line perspective, we are going to get deeply into Apple, 0:01:38.440 --> 0:01:40.600 which is kind of a bright spot, and let's turn 0:01:40.640 --> 0:01:41.120 to that stock. 0:01:41.160 --> 0:01:41.319 Now. 0:01:41.319 --> 0:01:44.399 We're seeing a return to revenue for the quarter, but 0:01:44.920 --> 0:01:48.520 Apple not offering much in terms of clues about an 0:01:48.560 --> 0:01:52.640 upgrade cycle. When it comes to the iPhone sixteen. Bloomberg's 0:01:52.640 --> 0:01:55.320 Mark German is standing by and you and I manning 0:01:55.360 --> 0:01:58.360 the blog last night, a lot of emphasis on Apple 0:01:58.480 --> 0:02:02.880 Intelligence being a driver iPhone sixteen in the future. I 0:02:02.880 --> 0:02:04.240 think you and I have some doubts about that. 0:02:04.360 --> 0:02:04.520 Right. 0:02:06.240 --> 0:02:10.200 Apple knows that artificial intelligence, Apple Intelligence, because they call 0:02:10.280 --> 0:02:13.720 their sweet AI services are the buzzwords that gets Wall 0:02:13.720 --> 0:02:16.960 Street going right. For the past several quarters, Apple, even 0:02:17.000 --> 0:02:20.040 before announcing it i'd been teasing its new AI futures 0:02:20.040 --> 0:02:23.280 because it knew the market, knew Wall Street analysts were 0:02:23.320 --> 0:02:26.120 wanting this, it knew some consumers were wanting this, and 0:02:26.120 --> 0:02:28.400 so they focused a great deal of the call yesterday. 0:02:28.639 --> 0:02:30.360 Tim Cook in particular as well. 0:02:30.280 --> 0:02:33.760 As basically every analyst who ask the question talking about 0:02:33.800 --> 0:02:37.440 Apple intelligence. In my view, I think that Apple Intelligence, 0:02:37.480 --> 0:02:40.360 at least this year is still very nascent, and I 0:02:40.360 --> 0:02:43.960 don't believe it will or quite frankly, should drive iPhone 0:02:44.040 --> 0:02:46.760 upgrades this September. I think that's more of a next 0:02:46.800 --> 0:02:50.640 September and iPhone seventeen cycle thing, once all the features 0:02:50.680 --> 0:02:53.360 are available and we're a year out from that release, 0:02:53.600 --> 0:02:55.640 when more people are looking to upgrade. 0:02:55.880 --> 0:02:58.760 Grade to China was a focus where there was a 0:02:58.840 --> 0:03:02.320 six percent decline in sales, but Apple told us about 0:03:02.360 --> 0:03:05.480 the impact of FX and on a constant currency basis, 0:03:05.639 --> 0:03:08.760 it would have been a three percent decline. See pass 0:03:08.840 --> 0:03:11.560 that mod What were the products stories for Apple in China. 0:03:13.000 --> 0:03:15.000 Well, first of all, there was a time when Apple 0:03:15.080 --> 0:03:17.200 was drawing at such a big rate that they didn't 0:03:17.280 --> 0:03:21.560 need to get into FX, currency headwinds or anything like that. 0:03:21.600 --> 0:03:24.000 They didn't have to contextualize. 0:03:23.160 --> 0:03:26.120 These numbers to explain that they're better than they actually 0:03:26.120 --> 0:03:26.920 look on paper. 0:03:27.000 --> 0:03:27.839 But that's one thing. 0:03:28.120 --> 0:03:29.560 But the other thing to note is. 0:03:29.520 --> 0:03:31.919 That they're doing better in China in the second half 0:03:31.960 --> 0:03:34.080 of the year so far than they were doing in 0:03:34.120 --> 0:03:35.840 the first half of the year according to them, So 0:03:35.920 --> 0:03:38.240 you're seeing a bit of an acceleration for them, and 0:03:38.240 --> 0:03:40.720 that is coming out a particularly good time given that 0:03:40.800 --> 0:03:43.480 this iPhone upgrade cycle is approaching at the tail end 0:03:43.480 --> 0:03:45.720 of this quarter, so they're going into that with a 0:03:45.720 --> 0:03:49.280 bit of momentum and that's certainly positive news for them. 0:03:49.400 --> 0:03:51.320 So it's not all bad. I mean, if you look 0:03:51.360 --> 0:03:53.800 at the quarter in general and you look at the 0:03:53.800 --> 0:03:56.920 stock market today, it's clear why Apple's in the grain 0:03:57.000 --> 0:03:59.480 and almost everyone else in the Nasdaq. 0:03:59.160 --> 0:04:00.080 One hundred is in the rey. 0:04:00.560 --> 0:04:03.960 They beat Wall Street expectations, they grew revenue five percent, 0:04:04.360 --> 0:04:08.000 they returned to revenue growth after declining last quarter, and 0:04:08.280 --> 0:04:11.520 they beat on analysts forecasts for each of their major 0:04:11.560 --> 0:04:14.880 product categories plus services. So overall, pretty good day for 0:04:14.880 --> 0:04:15.360 the company. 0:04:15.560 --> 0:04:19.359 Bloomberg's Mark Gumman, Chief correspondent, Thank you. Amazon has told 0:04:19.400 --> 0:04:22.400 investors that profits will need to take a back seat 0:04:22.640 --> 0:04:26.320 in favor of heavy spending on artificial intelligence. His CEO 0:04:26.400 --> 0:04:30.800 Andy Jase on his bullish view for the new technology. 0:04:31.279 --> 0:04:33.760 It remained very bullish on the medium too long term 0:04:33.800 --> 0:04:37.080 impact AI and every business we know and can imagine. 0:04:37.520 --> 0:04:40.120 The progress may not be one straight line for companies. 0:04:40.600 --> 0:04:43.680 Genera AI especially is quite iterative, and companies have to 0:04:43.680 --> 0:04:47.000 build muscle around the best way to solve actual customer problems. 0:04:48.400 --> 0:04:51.720 But Wall Street did not like that. Shares down more 0:04:51.760 --> 0:04:54.600 than eleven percent in today's trading session, on track for 0:04:54.640 --> 0:04:57.880 the biggest drop since April of twenty twenty two, wiping 0:04:57.920 --> 0:05:00.720 out about two hundred billion dollars. In mar Let's get 0:05:00.720 --> 0:05:04.640 analysis with Bloomberg intelligence analyst Punham Goyle, you and I 0:05:04.720 --> 0:05:06.960 were talking in real time after the numbers dropped, right, 0:05:07.000 --> 0:05:09.760 and I said, where's the capex number? We did get one. 0:05:10.160 --> 0:05:12.680 Your reaction to it, yeah, you know. 0:05:12.640 --> 0:05:15.120 It's higher than we had expected. So they did thirty 0:05:15.120 --> 0:05:17.640 point five billion dollars in the first half. They expect 0:05:17.680 --> 0:05:21.520 two eh to be higher. We didn't expect them to continue. 0:05:21.080 --> 0:05:21.880 To invest more. 0:05:21.920 --> 0:05:24.120 So it is a bit of a shocker. But that said, 0:05:24.160 --> 0:05:26.479 if you think about Amazon for the longer term, the 0:05:26.560 --> 0:05:29.839 investments will pay off. The cloud business at one hundred 0:05:29.880 --> 0:05:32.640 billion dollars runway going to two hundred billion dollars by 0:05:32.680 --> 0:05:35.800 our estimate, it's going to need the investments, and also 0:05:35.800 --> 0:05:36.839 for Amazon. 0:05:36.440 --> 0:05:38.240 To play catch up on general to AI. 0:05:38.120 --> 0:05:40.520 Right, they're lagging some of the other peers, so you 0:05:40.640 --> 0:05:43.920 need to see them step up a little bit at least. 0:05:44.120 --> 0:05:45.960 We didn't expect it to be in two h but 0:05:46.839 --> 0:05:49.120 nonetheless it's coming and we do think you'll position a 0:05:49.200 --> 0:05:50.320 better for the longer term. 0:05:50.480 --> 0:05:53.599 I still focus on the AWS top line number. Nineteen 0:05:53.680 --> 0:05:57.560 percent was better than expectations, and like forget the financials. 0:05:57.640 --> 0:06:00.200 On this program, we hear a lot about how great 0:06:00.279 --> 0:06:04.960 Bedrock is, about the utilization of the platform for many 0:06:05.000 --> 0:06:08.040 different things in the world of llm's and generative AI. 0:06:08.440 --> 0:06:10.680 Why was that not a convincing enough number. 0:06:11.640 --> 0:06:14.719 Well, we had expected mid to high teen so about 0:06:14.720 --> 0:06:18.200 seventeen percent going into it. And while nineteen percent was 0:06:18.240 --> 0:06:21.480 a good number, undoubtedly the thirty five percent plus profit 0:06:21.520 --> 0:06:24.560 margin was also great. I think the focus just shifted 0:06:24.640 --> 0:06:27.240 all on the guidance and that's where the miss was. 0:06:27.279 --> 0:06:30.039 So I wouldn't discount that two Q wasn't good. I 0:06:30.040 --> 0:06:34.120 think two Q was very good on AWS, especially. 0:06:34.279 --> 0:06:37.240 My control room and producers are showing index level. Would 0:06:37.240 --> 0:06:39.440 point out that there is a lot of red in 0:06:39.440 --> 0:06:42.359 the market's Punham and Amazon is a big factor in that. 0:06:42.360 --> 0:06:46.200 Bloomberg's Punham Goyle fantastic analysis. Let's keep a conversation going 0:06:46.240 --> 0:06:49.640 with Helena Wang, research analysts at Philip Securities, and I 0:06:49.640 --> 0:06:54.440 think let's start with Amazon. There's a micro focus on AWS, 0:06:54.640 --> 0:06:56.960 how much money is being put into investment, and then 0:06:57.000 --> 0:07:00.120 how much money's coming out in the AI story. What 0:07:00.160 --> 0:07:03.960 did you make of it, Helena. 0:07:02.680 --> 0:07:04.400 Well, I think the hot topic of the last few 0:07:04.440 --> 0:07:08.200 week has been the huge CAPPAC span, whether it's justifiable. 0:07:08.680 --> 0:07:11.680 I mean, Amazon has guided exceptional increase in CAPAC since 0:07:11.680 --> 0:07:14.240 the last quarter. In the first half of twenty pointy four, 0:07:14.560 --> 0:07:17.880 their CAPPACK was thirty point five billion. They're guiding even 0:07:17.960 --> 0:07:19.840 higher a month of the second half of the year. 0:07:20.440 --> 0:07:23.080 Just to put in comparison, their CAPPACK so the entire 0:07:23.120 --> 0:07:26.120 year last year was only forty point eight billion, So 0:07:26.160 --> 0:07:28.320 that is definitely a very significant increase. 0:07:28.800 --> 0:07:30.239 So, like all the other big. 0:07:30.080 --> 0:07:33.800 Tech companies, they're selling their story of strong AI growth, 0:07:34.320 --> 0:07:36.720 very confident in their AI game. They would like to 0:07:36.800 --> 0:07:40.000 have more capacity than they already have today, and they're 0:07:40.000 --> 0:07:43.480 claiming that they're seeing strong signals of high future demand. 0:07:44.080 --> 0:07:46.480 I guess also, if you're in the AI race, it's 0:07:46.520 --> 0:07:49.760 almost impossible for you to stop investing in AI because 0:07:49.800 --> 0:07:52.440 in the short period you would be obsolete with no 0:07:52.600 --> 0:07:56.480 means to catch up but two investors. It really requires 0:07:56.520 --> 0:07:59.840 a lot of impatience. Everyone is telling the things, so 0:08:01.440 --> 0:08:04.160 it's hard to see whether in the short term whose 0:08:04.240 --> 0:08:04.960 investment will. 0:08:04.840 --> 0:08:08.640 Pay off in the Laura Helena just focused on AWS. 0:08:08.680 --> 0:08:13.440 We've hardly discussed the retail business or even advertising. Did 0:08:13.480 --> 0:08:16.200 you see anything in those segments of the business that 0:08:16.560 --> 0:08:17.160 interested you? 0:08:19.480 --> 0:08:22.720 For AWS, it has been accelerating nicely and nineteen percent 0:08:22.720 --> 0:08:26.320 of your year. So what we especially like about AWS 0:08:26.440 --> 0:08:29.200 is there a high operating margin compared to retails. 0:08:29.360 --> 0:08:31.080 Because AWS operating. 0:08:30.720 --> 0:08:33.600 Margin is thirty six percent compared to retails, which is 0:08:33.600 --> 0:08:37.160 only single Did you so AWS right now only contribute 0:08:37.200 --> 0:08:40.000 to eighteen percent of the total revenue, So we do 0:08:40.080 --> 0:08:42.920 believe was AWS scaling up so fast it is going 0:08:42.960 --> 0:08:45.800 to take up a bigger portion of the entire revenue. 0:08:46.080 --> 0:08:48.320 So we see the real kicker for Amazon in the 0:08:48.320 --> 0:08:51.319 future would be the margin expansion brought by AWS. 0:08:51.520 --> 0:08:54.240 Let's talk about Apple. You know, I look at the numbers. 0:08:54.280 --> 0:08:58.559 It was basically a beat across the board apart from China. 0:08:58.720 --> 0:09:00.840 How much embasis do you put on China number? 0:09:02.600 --> 0:09:05.880 Well, I would see Apple is saying they still see 0:09:05.920 --> 0:09:08.560 it already as an improvement compared to the first half 0:09:08.600 --> 0:09:10.400 of the year, but the numbers. 0:09:10.040 --> 0:09:11.079 Are definitely not great. 0:09:11.559 --> 0:09:13.360 Usually when a particular market. 0:09:13.080 --> 0:09:15.960 Is not doing well, Apple will specifically point out it's 0:09:16.000 --> 0:09:19.120 not really the iPhone but actually the other product category 0:09:19.240 --> 0:09:22.240 that drag the sales. But they have not commanded like 0:09:22.320 --> 0:09:25.480 that for this particular time, so we can take it 0:09:25.640 --> 0:09:28.880 that Apple is actually iPhone is actually part of the reason, 0:09:29.280 --> 0:09:32.040 or in fact one major reason for the decline. So 0:09:32.200 --> 0:09:35.440 domestic competition from local brand is still playing a big part. 0:09:35.880 --> 0:09:38.920 Apple was giving a huge discount in order to fight 0:09:38.960 --> 0:09:42.319 the competition. That will also be called the factor that hurts. 0:09:42.040 --> 0:09:45.319 Therenny Tim Cook and Lukeimi Street got a lot of 0:09:45.440 --> 0:09:51.199 questions about how Apple intelligence will impact an upgrade cycle 0:09:51.840 --> 0:09:57.120 in October, probably when when the sixteen generation comes. Have 0:09:57.240 --> 0:09:58.320 you done the math on that. 0:09:59.760 --> 0:10:00.720 Yeah, I did so. 0:10:00.840 --> 0:10:04.200 iPhone sales still remain pretty muted. They're down one percent 0:10:04.240 --> 0:10:07.599 year of the year for the splatter, so if you 0:10:07.800 --> 0:10:10.480 actually do the mass, they're guiding for five percent. 0:10:10.600 --> 0:10:11.880 Grocery in the next fluorter. 0:10:12.240 --> 0:10:16.120 So factor in service sector which is continually growing double digit, 0:10:16.400 --> 0:10:18.920 an iPad which grew pretty well also double digit in 0:10:18.960 --> 0:10:22.680 this quarter, so we're probably not gonna give so much 0:10:22.720 --> 0:10:25.319 in the next floyer. In terms of iPhone, it's probably 0:10:25.400 --> 0:10:29.199 going to remain flat or actually perform more poorly. So 0:10:29.240 --> 0:10:32.480 we're thinking that Apple intelligence boosts for the product cycle 0:10:32.800 --> 0:10:35.400 that everyone's been waiting for. It's probably unlikely to be 0:10:35.400 --> 0:10:37.720 seen in twenty twenty four. It's more of a twenty 0:10:37.720 --> 0:10:38.520 twenty five story. 0:10:39.120 --> 0:10:41.400 If the question is if you have an iPhone fifteen 0:10:41.480 --> 0:10:45.240 or fifteen pro Promax, now do you get the iPhone sixteen? 0:10:45.360 --> 0:10:47.960 I think there's a lot more discussed around that. Helena Wang, 0:10:48.160 --> 0:10:50.960 research analyst at Philip Securities, Thank you so much for 0:10:51.040 --> 0:10:53.000 your time. Now, coming up on the show, we're going 0:10:53.080 --> 0:10:56.560 to be joined by Bernstein Research analyst Stacey Raskon to 0:10:56.559 --> 0:11:00.600 break down Intel's earnings. An Intel story that's next. This 0:11:00.640 --> 0:11:13.040 is Bloomberg Technology. Intel shares suffering their biggest drop in 0:11:13.080 --> 0:11:16.360 more than forty years, this after the company gave a 0:11:16.440 --> 0:11:19.559 grim growth forecast and laid out plans to slash around 0:11:19.559 --> 0:11:23.280 fifteen thousand jobs, signaling that the chip maker is ill 0:11:23.280 --> 0:11:26.880 equipped to compete in the AI era. I want to 0:11:26.880 --> 0:11:30.560 bring in Stacey Rascon's senior analyst at Bernstein Research, leading 0:11:30.559 --> 0:11:34.720 semiconductor coverage. I ask you where you'd like to start, Stacy, 0:11:34.880 --> 0:11:38.079 which of the many things announced and the sort of 0:11:38.120 --> 0:11:41.080 guidance given is the most important factor here? 0:11:42.120 --> 0:11:43.320 Yeah? So so lok so. 0:11:43.360 --> 0:11:46.800 I mean the quarter itself, revenues were actually not too bad. 0:11:46.840 --> 0:11:49.720 It was the gross margins that really killed them, and 0:11:49.800 --> 0:11:51.560 the guidance was clearly awful. 0:11:51.640 --> 0:11:54.880 Revenues were bad. 0:11:55.160 --> 0:11:57.480 I mean, they did a hockey stick in the back 0:11:57.480 --> 0:11:59.600 half from last quarter. Clearly the backup is not playing 0:11:59.640 --> 0:12:02.640 out the way they thought. Gross margins are are falling 0:12:02.679 --> 0:12:06.320 into the abyss as their uh, they get higher costs 0:12:06.360 --> 0:12:08.679 on their chips. 0:12:09.520 --> 0:12:11.440 You know, clearly they're in a tough spot. 0:12:11.480 --> 0:12:15.120 I mean they announced a number of actions to try 0:12:15.160 --> 0:12:18.040 to like salvage, you know, to stop the ship from sinking. 0:12:18.080 --> 0:12:21.400 They're cutting CAPEX, they're cutting off X. They actually finally 0:12:21.440 --> 0:12:23.880 suspended their dividend. You know, they had they had cut 0:12:23.880 --> 0:12:25.160 that by two thirds a year a year and a 0:12:25.160 --> 0:12:28.640 half ago, so they finally suspended it. And they're doubling 0:12:28.679 --> 0:12:32.080 down on bringing in partners that will co. 0:12:32.000 --> 0:12:33.680 Invest on manufacturing capacity. 0:12:33.760 --> 0:12:36.960 They sold recently, they sold half their fab in Arizona, 0:12:36.960 --> 0:12:40.240 they're building to Brookfield and they just sold half of 0:12:40.280 --> 0:12:43.240 their fab in Ireland Fab forty, fab thirty four to 0:12:43.320 --> 0:12:45.800 Apollo for eleven billion dollars and they got that cash flowing. 0:12:45.880 --> 0:12:46.800 Now I'm on the right. 0:12:46.920 --> 0:12:51.160 Look, this is why I've used the phrase worst earnings 0:12:51.200 --> 0:12:53.280 from Intel in my career a number of times over 0:12:53.280 --> 0:12:55.920 the last year and a half two years, and this. 0:12:55.840 --> 0:12:58.880 One probably takes it. This time, probably the worst I've seen. 0:12:59.000 --> 0:13:02.000 Yeah, as you you know, Stacey had the opportunity to 0:13:02.040 --> 0:13:06.839 speak to Intel's CFO Daves Insider when the numbers hit 0:13:07.120 --> 0:13:10.720 and we got into missed opportunity. I guess this is 0:13:10.760 --> 0:13:13.920 what he said about the data center business, and I'm 0:13:13.920 --> 0:13:16.320 trying to understand what he meant, but he basically is 0:13:16.360 --> 0:13:20.040 saying they were over exposed in CPU, and I guess 0:13:20.080 --> 0:13:23.640 therefore by extension under exposed in GPU. We all know 0:13:23.800 --> 0:13:26.200 the story. Anyone that lives or works in the world 0:13:26.200 --> 0:13:29.160 of technology knows that all of the investment is going 0:13:29.240 --> 0:13:34.240 to high performance GPU or AI accelerators. Intel has one GALDI. 0:13:35.040 --> 0:13:37.120 So explain what Dave meant there, please? 0:13:37.440 --> 0:13:38.680 Yeah, yeah, you bet so. 0:13:38.679 --> 0:13:41.199 So they have been clearly over indexed, I mean almost 0:13:41.360 --> 0:13:44.640 entirely indexed to CPOs, and there's a few things going 0:13:44.679 --> 0:13:46.480 even within CPOs. By the way, you know, they've been 0:13:46.520 --> 0:13:50.040 losing a tremendous amount of share to their smaller competitor, 0:13:50.320 --> 0:13:51.280 so that's not been good. 0:13:51.320 --> 0:13:53.800 And then over the last like you know, as the 0:13:53.840 --> 0:13:57.800 AI boom has happened, we've had a share of a 0:13:57.880 --> 0:14:02.040 shift in the spending patterns away from CPU who's toward GPS. 0:14:01.640 --> 0:14:03.520 And other types of accelerats. And by the way, there's 0:14:03.559 --> 0:14:05.520 a broader question there. You could argue is that a 0:14:05.559 --> 0:14:08.760 cyclical trend or is that a structural trend? You're like, 0:14:08.840 --> 0:14:11.960 in five years, is the data center CPU TAM bigger 0:14:12.040 --> 0:14:14.679 or smaller than it is today? And like you can 0:14:14.840 --> 0:14:17.400 legitimately argue that it's smaller. So I mean that that's 0:14:17.440 --> 0:14:20.080 that's the issue. And the problem with Intel on that 0:14:20.080 --> 0:14:22.680 one is they don't really have that much of an 0:14:22.720 --> 0:14:24.520 AI or an accelerator play. 0:14:24.640 --> 0:14:27.640 Like they have a product that's called Gouty. They said that. 0:14:27.560 --> 0:14:29.640 They're going to sell five hundred million dollars worth of 0:14:29.680 --> 0:14:33.280 it's called Gouty three this year. I mean, it's it's 0:14:33.320 --> 0:14:35.800 it's effectively a rounding error, right, I mean, you know, 0:14:35.800 --> 0:14:37.320 a MD said they're going to do four and a 0:14:37.360 --> 0:14:39.720 half billion in data center revenues, and I think people 0:14:39.720 --> 0:14:41.440 think they're going to do more than that in Nvidia, 0:14:42.000 --> 0:14:43.680 you know, data center they might be one hundred billion 0:14:43.760 --> 0:14:46.360 dollars this year, and the five hundred million doesn't make 0:14:46.400 --> 0:14:49.760 up anywhere near you know, like the the air pocket 0:14:49.800 --> 0:14:52.200 that's happened both as they've lost share in CPUs and 0:14:52.360 --> 0:14:55.680 as that spending has shifted, so that that's that's kind 0:14:55.680 --> 0:14:57.560 of the problem and and freaking gouty at this point, 0:14:57.600 --> 0:14:59.800 is is baked like that that product is shipping like 0:15:00.200 --> 0:15:03.320 very clear the general demand for a relative everything else 0:15:03.440 --> 0:15:05.400 is very very minimal, Like it's just not enough to 0:15:05.720 --> 0:15:06.080 close that. 0:15:06.560 --> 0:15:09.800 So they don't really have much of an AI story unfortunately. 0:15:09.360 --> 0:15:13.160 On Stacey just real quick on cyclical end markets for 0:15:13.200 --> 0:15:16.240 them and non cyclical. I mean, the way that the 0:15:16.280 --> 0:15:18.800 CFO put it to me is that they just hadn't 0:15:18.840 --> 0:15:21.720 responded to the realities of their revenue, hence that the 0:15:21.760 --> 0:15:26.160 reduction opex capex and the head counts. But they did 0:15:26.200 --> 0:15:28.400 seem to be some glimmers of hope that coming into 0:15:28.400 --> 0:15:30.600 the current period and the rest of this calendar year, 0:15:30.600 --> 0:15:32.360 there are improvements in those markets. 0:15:33.640 --> 0:15:34.400 Yeah, yes and no. 0:15:34.600 --> 0:15:38.320 So I think PCs in general are better than they were. 0:15:38.960 --> 0:15:39.880 Remember, though, they don't. 0:15:39.760 --> 0:15:43.080 Sell PCs, they sell CPUs, right, And they talked about 0:15:43.160 --> 0:15:45.880 that there's inventory that's digesting in the backup, which is 0:15:46.480 --> 0:15:48.680 helping to impair it's impairing some of the revenue. 0:15:48.680 --> 0:15:50.600 Now, this is something that I've been worried about. 0:15:50.840 --> 0:15:55.080 We track the CPU channel pretty religiously, and you get 0:15:55.120 --> 0:15:57.520 over shipment, you get under ship and I've been concerned 0:15:57.560 --> 0:15:58.760 that at least in Q four and Q one, I 0:15:58.800 --> 0:16:01.720 think there was a fairly significant amount of overshipment of 0:16:01.760 --> 0:16:04.120 CPUs relative to PCs, and I think they're paying for 0:16:04.160 --> 0:16:07.240 that now. So you have some cyclical downside there, I think. 0:16:07.280 --> 0:16:09.920 On the data center server side, you know, there's been 0:16:09.960 --> 0:16:13.160 some green shoots that hopefully demand is getting better again 0:16:13.200 --> 0:16:16.320 off of some awful years, but again people now having 0:16:16.360 --> 0:16:19.120 like recession worries and everything else, and again they're still 0:16:19.160 --> 0:16:22.720 losing share. The data center galuty lift isn't really enough. 0:16:22.920 --> 0:16:25.160 And then some of their other businesses. You know, they 0:16:25.240 --> 0:16:29.880 have an FPGA business called Altra, and all the FPGA 0:16:29.960 --> 0:16:32.000 companies that's the same thing. They're working off a ton 0:16:32.000 --> 0:16:34.360 of inventory and that's not really getting better. Yet they 0:16:34.400 --> 0:16:37.000 still consolidate Mobile Eye, they own most of that. Compani's 0:16:37.000 --> 0:16:40.280 own Mobile Eye reported yesterday morning. We don't cover Mobile Eye, 0:16:40.320 --> 0:16:43.680 but just factually they slash their guidance for the rest 0:16:43.720 --> 0:16:45.600 of the year and so a bunch of revenue had 0:16:45.600 --> 0:16:48.080 to come up from there. It's just not great, and 0:16:48.120 --> 0:16:49.960 part of it, I think is their own doing. Last quarter, 0:16:50.040 --> 0:16:52.560 they'd sort of suggested we'd be seeing above seasonal growth 0:16:52.600 --> 0:16:55.680 in the back half, and it's clearly clearly not having 0:16:55.680 --> 0:16:56.200 the macros. 0:16:56.200 --> 0:16:57.080 The macro is getting worse. 0:16:57.120 --> 0:16:59.280 And then on the cost side again, they've got some 0:16:59.320 --> 0:17:02.240 incremental cost headwinds that are pretty severe that are that 0:17:02.280 --> 0:17:05.560 are impacting gross margins and cash and earnings and everything else. 0:17:05.640 --> 0:17:09.520 So Stacey resk On, senior analysts at Burnsteam Research, whether 0:17:09.640 --> 0:17:12.000 or not that is and will be the worst intel 0:17:12.000 --> 0:17:13.880 print of your career. I think you break up under 0:17:13.880 --> 0:17:18.040 this down okay, very quick. We have ten seconds. 0:17:17.160 --> 0:17:21.040 Ten seconds the silver lining, the cash that they're saving 0:17:21.080 --> 0:17:24.680 from the cost cuts and the dividend you know, suspension, 0:17:25.200 --> 0:17:26.720 and the cap X cuts, and then all of the 0:17:26.760 --> 0:17:29.720 money they're bringing in they'll live. 0:17:29.960 --> 0:17:31.240 I don't know what kind of a life that will be. 0:17:31.280 --> 0:17:34.080 They'll live. That's that's probably forty billion dollars of incremental 0:17:34.119 --> 0:17:35.840 cash over the next couple of years. 0:17:35.880 --> 0:17:38.399 So they'll live. But what is what kind of a 0:17:38.440 --> 0:17:39.639 life that's going to be? I think that is the 0:17:39.720 --> 0:17:40.160 question that. 0:17:40.080 --> 0:17:43.800 We're all okay with. Stacey Resk on Burnstein Research terrific. 0:17:44.080 --> 0:17:54.280 Thank you very much. There are some positive earnings prints 0:17:54.359 --> 0:17:58.200 talk about cloud communications company Twilio reporting earnings after closing 0:17:58.200 --> 0:18:01.480 bell Thursday. CEO because much Shipshander joins us for more 0:18:01.480 --> 0:18:05.320 from San Francisco. A big focus on growth. Growth that's 0:18:05.320 --> 0:18:07.560 coming in the second half. Growth that is kind of 0:18:07.600 --> 0:18:10.159 evidence now. But this is the first time you and 0:18:10.160 --> 0:18:12.679 I have been able to speak since you've been CEO, 0:18:12.760 --> 0:18:15.520 So what have you done to change that growth trajectory? 0:18:16.920 --> 0:18:19.399 Yeah, thanks for having me. I would say, you know, 0:18:19.480 --> 0:18:22.520 we're just like running the company with a lot more discipline, 0:18:23.400 --> 0:18:25.800 a lot more operating rigor, and as it relates to 0:18:25.840 --> 0:18:28.560 growth in particular, I think we've been very focused on 0:18:28.640 --> 0:18:31.960 some of the innovation bets that we've been making, and 0:18:32.119 --> 0:18:35.480 I think, perhaps most encouragingly, we're starting to see some 0:18:35.600 --> 0:18:41.040 real signs that this combination of communications which we're the 0:18:41.119 --> 0:18:44.560 leader in contextual data, which we're also the leader in 0:18:44.800 --> 0:18:50.560 plus AI. That that combination to drive really personalized experiences 0:18:50.600 --> 0:18:54.520 for consumers visa VI the customers we support is starting 0:18:54.520 --> 0:18:55.280 to get some traction. 0:18:56.160 --> 0:18:58.880 There's been a lot of emphasis well on sort of reorganization. 0:18:59.080 --> 0:19:01.840 What does the company Twilio look like now under the 0:19:01.920 --> 0:19:03.600 changes you've made, Kozma. 0:19:04.520 --> 0:19:08.520 Look, I think the company organization is in pretty good shape. Actually, 0:19:08.520 --> 0:19:10.760 like about a year or so ago, we took steps 0:19:10.840 --> 0:19:14.320 to you know, kind of get our cost base in shape. 0:19:14.320 --> 0:19:16.480 But on the on the flip side, we also wanted 0:19:16.480 --> 0:19:19.399 to be really focused in the areas in which we 0:19:19.440 --> 0:19:22.400 wanted to grow, and so we have a communications business 0:19:22.400 --> 0:19:24.800 that we established at that time as kind of a 0:19:24.800 --> 0:19:27.439 proper business unit. We did the same thing with our 0:19:27.480 --> 0:19:31.480 segment business, establishing that with a proper business unit, they've 0:19:31.480 --> 0:19:33.600 got kind of an aligned set of metrics. And I 0:19:33.640 --> 0:19:36.359 think the benefit of that is is that it also 0:19:36.600 --> 0:19:39.760 allows for a certain level of disclosure that investors were 0:19:39.760 --> 0:19:41.240 also asking for KOSM. 0:19:41.520 --> 0:19:43.520 It is important to note that that where we are 0:19:43.560 --> 0:19:47.040 today is in part the result of activist investor interest 0:19:47.080 --> 0:19:49.760 in the company. You know, you seem to have responded 0:19:49.800 --> 0:19:53.720 to that positively taken action. Whild you just update the 0:19:53.760 --> 0:19:57.800 audience that's familiar with Twilio where we stand please, Yeah. 0:19:57.800 --> 0:19:59.560 I just think fundamentally, like we're trying to run the 0:19:59.560 --> 0:20:01.600 company well well right, I mean, I think that's something 0:20:01.720 --> 0:20:04.959