Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and Eva low in Sent Francisco.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: The White House says Apple will commit to spend another
Speaker 3: one hundred billion dollars on domestic manufacturing.
Speaker 4: Plus, we speak with AMD CEO Lisa Sue on the
Speaker 4: back of the company's earnings.
Speaker 3: And Bloomberg reports Open aiyes in talks for a potential
Speaker 3: insider share sale that would value the company at five
Speaker 3: hundred billion dollars extraordinary valuations.
Speaker 4: I turn my attention to the companies that are already
Speaker 4: public and already reporting earnings ed and actually I'm on
Speaker 4: the downside. They're all in the red at the moment.
Speaker 4: Quickly wit through what AMD is up to down the worst.
Speaker 4: It's October twenty twenty four. This is the China concerns,
Speaker 4: the idea of when we're going to seem I three
Speaker 4: or eight actually getting into the hands of Chinese customers,
Speaker 4: non enough charity. We dig into that with Lisasu a little.
Speaker 2: Bit in the show.
Speaker 4: Because remember the earnings did beat on expectations thirty two
Speaker 4: percent growth and revenue. I'm looking at Disney also beating,
Speaker 4: but again there is a concern perhaps around age old
Speaker 4: entertainment movies about TV that didn't manage to live up
Speaker 4: to expectations, held back some of those profitability growth targets.
Speaker 4: We're looking at Disney off by three percent, uber also
Speaker 4: by two point four percent.
Speaker 2: It too be It too actually.
Speaker 4: Said they're going to be doing twenty billion dollar buy back,
Speaker 4: but they're going to have to invest in autonomous and
Speaker 4: maybe that's the insecurity here, Ed, But what do you got?
Speaker 2: Okay, let's get to that Apple news.
Speaker 3: The stocks actually just come off session highs, but it's
Speaker 3: on track for its biggest jump since early May. One
Speaker 3: hundred billion dollars in additional investment in US manufacturing and
Speaker 3: supply chain. But here's the thing, that's all coming from
Speaker 3: the White House. So let's get out to Washington, DC
Speaker 3: and bloombergs Tyler Kendall, who joins us from the White
Speaker 3: House as we wait for I guess the Apple side
Speaker 3: of what's happen happening?
Speaker 2: But Tyler, what do we need to know?
Speaker 5: Yeah?
Speaker 6: Hey, Ed, Well, the White House says that this one
Speaker 6: hundred billion dollar investment pledge is expected to go towards
Speaker 6: a new manufacturing program that would in theory bring more
Speaker 6: of Apple supply chains to the US, and the official
Speaker 6: says that this brings the cumulative investment from Apple to
Speaker 6: six hundred billion dollars. Because, as you well know and mentioned,
Speaker 6: this bill A builds on a previous five hundred billion
Speaker 6: dollar pledge from the company over four years. But with
Speaker 6: that pledge we saw some really specific investment angles, including
Speaker 6: that some of it would go towards building a factory
Speaker 6: in Texas that holds AI servers. Part of it would
Speaker 6: go towards twenty thousand jobs in the US really focused
Speaker 6: on training as well as research and development. Now, our
Speaker 6: reporting indicates that while this investment is substantial, it likely
Speaker 6: falls short for the full production shift that this White
Speaker 6: House really wants to see, though it is worth pointing
Speaker 6: out twenty four percent of Apple suppliers are based in
Speaker 6: the US already, the most of any country. Still, well,
Speaker 6: we'll have to see if it's enough for President Trump
Speaker 6: to perhaps give some sort of a reprieve when it
Speaker 6: does come to the company. We know that the CEO team,
Speaker 6: Tim Cook, has been lobbying for some sort of carve
Speaker 6: out here, considering that earlier this year, President Trump had
Speaker 6: threatened a twenty five percent tariff ed if Apple did
Speaker 6: not move production to the United States.
Speaker 4: Amid all of this, of course, is that threat on
Speaker 4: Apple exclusively, but also there's threats on high tariff for India,
Speaker 4: where they've been shifting some of their supply chain to Tyler.
Speaker 4: As we know, it is incredibly difficult, if not nigh
Speaker 4: on impossible for them to really bring production of the
Speaker 4: iPhone to the United States. Do you think that that's
Speaker 4: starting to curry favor or at least appreciation in the administration.
Speaker 6: Right Well, today we saw really an escalation when it
Speaker 6: did come to India rate. President Trump now posing an
Speaker 6: additional twenty five percent tariff over India's imports of Russian
Speaker 6: energy supply, which would bring the tear freight on that
Speaker 6: country up to fifty percent. They're expected to be stacked
Speaker 6: on top of each other. That additional rate to go
Speaker 6: into effect in the next twenty one day, So we'll
Speaker 6: have to see if there's some sort of negotiation that
Speaker 6: happens here. It is clear though that the administration is
Speaker 6: going to like this investment. The White House is already
Speaker 6: out touting it because they really want to start to
Speaker 6: see these funds coming in. And if you look at
Speaker 6: all the unique deals perhaps that we've gotten from our
Speaker 6: training partners so far, a lot of them do ultimately
Speaker 6: have to do with investment funds. And the second thing
Speaker 6: that I'll also put on your radar is that we
Speaker 6: are expecting those sector specific tariffs to come down soon.
Speaker 6: This administration has said we can see them as soon
Speaker 6: as next week when it comes to chips. But really
Speaker 6: important to keep in mind that the Section two thirty
Speaker 6: two investigations, yes, are into semiconductors, but they're into the
Speaker 6: entire supply chain, which means that we could really see
Speaker 6: some wide ranging impacts.
Speaker 2: That's far.
Speaker 4: One hundred billion dollar extra commitment adds one hundred and
Speaker 4: twenty billion dollars in terms of market cap to Apple
Speaker 4: on the day, Tyler Kendall, thank you. Let's check in
Speaker 4: on other companies now. Earnings Disney lower after the media
Speaker 4: company reported third quarter revenue actually coming in slightly below
Speaker 4: expectations but highlighting strength and streaming and the sparks business bugs.
Speaker 4: Felix Jullett joins us for more look, they were ever
Speaker 4: so slightly amiss in terms of general revenue growth of
Speaker 4: just two percent, But it really seems to be the
Speaker 4: old school part of the business they let them down.
Speaker 7: Yeah, the traditional part of the business in terms of
Speaker 7: you know, the movie studio, the cable and broadcast channels
Speaker 7: are all you know, continuing to show decline and that
Speaker 7: you know has been offside someone by the growth in
Speaker 7: streaming and parks, which have been very strong.
Speaker 2: Felix.
Speaker 8: Uh.
Speaker 3: Streaming is many parts. But listening to Bob Iiger on
Speaker 3: the Cool Sports, I just want to recap his position
Speaker 3: on ESPN because I think it's worth discussion.
Speaker 2: Listen to this.
Speaker 5: We're building ESPN into the pre eminent digital sports platform
Speaker 5: with our highly anticipated Director consumer sports offering launching on
Speaker 5: August twenty first, and there are just announced plans with
Speaker 5: the NFL that will expand ESPN's programming and content offerings
Speaker 5: for fans.
Speaker 2: August twenty first, not far away.
Speaker 3: Like how big a piece of the strategy is sports
Speaker 3: and streaming and combination?
Speaker 7: Oh, a huge part of the strategy. I mean, they
Speaker 7: want to grow their advertising revenue and streaming. To do that,
Speaker 7: you need live events. There's nothing bigger in live events
Speaker 7: than the NFL. This deal with the NFL that they
Speaker 7: announced today, NFL gets a stake in ESPN and ESPN
Speaker 7: gets control of some of the NFL's media properties, including
Speaker 7: the Red Zone NFL Network, and also crucially, we'll get
Speaker 7: more NFL games as part of this package. That's huge.
Speaker 7: It's going to help them in terms of growing their
Speaker 7: advertising business. And at the same time they announced the
Speaker 7: deal today with TKOSWWE, the Wrestling Network, they're going to
Speaker 7: get a bunch of big live events, including in WrestleMania. Again,
Speaker 7: that too is going to bolster this new ESPN product
Speaker 7: and get more people watching it at particular times, which
Speaker 7: will help them with advertisers.
Speaker 4: Is there going to be any regulatory concern around this
Speaker 4: about just the big getting to a bigger in the
Speaker 4: world of sports.
Speaker 7: I mean, yeah, I think that this is going to
Speaker 7: have to get regulatory approval. As we've seen with Paramount,
Speaker 7: that can cause a lot of problems in this current
Speaker 7: environment with the Trump administration, So that is a concern,
Speaker 7: But I think you know, what they're trying to do
Speaker 7: is again just build up. You know, they've been talking
Speaker 7: about this direct to consumer ESPN product for years now.
Speaker 7: This is a huge launch. It's been a long time
Speaker 7: in the making and to come out with news that
Speaker 7: you're going to have more NFL games, more WWE. I
Speaker 7: think that's what they're trying to drive the excitement around
Speaker 7: at the moment.
Speaker 3: Felix, you learn when you cover technology earnings in particular,
Speaker 3: sometimes it's what they don't say that drives stories. And
Speaker 3: I'm sorry to even ask this, but what's the latest
Speaker 3: on Bob Eiger?
Speaker 2: Like is he going to be there.
Speaker 3: Forever and ever infinity or do they have some plans
Speaker 3: in place for what happens next?
Speaker 7: Yeah, I mean, the succession issue with Disney never quite
Speaker 7: goes away. You know, it's been the focus of investors
Speaker 7: long time. They bodged it the last time Bob came back.
Speaker 7: They have to get it right this time. You know,
Speaker 7: there's been endless speculation about who that's going to be.
Speaker 7: Looks like the internal candidates are really getting narrowed down.
Speaker 7: But you know, again, TBD, that's all the next chapter
Speaker 7: of Disney and they have to really stick the landing
Speaker 7: this time.
Speaker 3: Welcome to our global audience across Bloomberg television and radio.
Speaker 3: We're joined by AMD CEO Lisa Sue. And it was
Speaker 3: such an interesting quarter to look back at Data Center
Speaker 3: in particular CPU strength, not just accelerators, strong AI outlook
Speaker 3: on accelerators, gaming PC, and then some concern about the
Speaker 3: future of the China business. But Caroline and I Lisa
Speaker 3: have talks for quite a while now about AMD as
Speaker 3: the best performing chip stock so far this year. I
Speaker 3: wondered if we start by just asking what in the
Speaker 3: quarter changed for a MD what the kind of biggest
Speaker 3: move forward was, do you think.
Speaker 8: Yeah, absolutely so. First of all, Ed and Caroline, great
Speaker 8: to be here with you. We always, you know, look
Speaker 8: at these things and say, when we have a business
Speaker 8: where all of our businesses are actually performing extremely well,
Speaker 8: it's a good it's a good place to be.
Speaker 9: So we had a very.
Speaker 8: Strong first half of the year, you know, second quarter
Speaker 8: up thirty two.
Speaker 9: Percent year over year.
Speaker 8: We're guiding to a third quarter you know, up twenty
Speaker 8: eight percent.
Speaker 9: And underneath that what you see is.
Speaker 8: You know, first of all, data center business is doing
Speaker 8: extremely well. Our server CPUs are continuing to gain share
Speaker 8: in cloud and in enterprise. One of the things that
Speaker 8: we're seeing with AI is the AI investments from the
Speaker 8: largest hyperscalers are actually pulling you know, both GPU and
Speaker 8: CPU revenue, you.
Speaker 9: Know, which is good for us overall.
Speaker 8: You know, augentic AI actually requires lots and lots of
Speaker 8: compute going forward. We're also seeing strength in you know,
Speaker 8: PCs as well as gaming. Our products are extremely well positioned,
Speaker 8: whether you're talking about you know, consumer or commercial. And
Speaker 8: then we're also seeing you know, some improvement in the
Speaker 8: embedded side of our business as you know, that is
Speaker 8: also you know, going to I would say, return to
Speaker 8: growth in the second half of the year. So we've
Speaker 8: seen a lot of positive signals over the last ninety
Speaker 8: days in terms of, you know, what the market needs
Speaker 8: from computing and sort of the investment and things. You know,
Speaker 8: there are some questions about China, of course, which you
Speaker 8: know we can certainly talk about.
Speaker 3: Well, let's talk first about the AI accelerator outlook, because
Speaker 3: actually from analysts to investors, to develop a community, when
Speaker 3: we say that you're coming on the show, we get
Speaker 3: questions from all quarters. You had said that the AI
Speaker 3: accelerator business will grow to the tens of billions, and
Speaker 3: what I'm kind of seeing is people just want granularity
Speaker 3: from Lysia a little bit like when does that happen
Speaker 3: and when does it happen? And you talked about the hyperscalers.
Speaker 3: But what's the growth pathway to tens of billions in
Speaker 3: accelerator revenue?
Speaker 8: Yeah, absolutely, ed, So let me give you a few
Speaker 8: important markers. So what we said is the second half
Speaker 8: of the year, our growth would be primarily driven in
Speaker 8: the data center by accelerators. We launched a new product
Speaker 8: just in June I three fifty five product. It's extremely competitive.
Speaker 8: We really like how we stack up in terms of
Speaker 8: total cost of ownership for inferencing and training workloads. Customers
Speaker 8: really like that product. That's driving some of our second
Speaker 8: half growth, and certainly when we talk about our sequential
Speaker 8: growth into Q three, that's being primarily driven by that
Speaker 8: accelerator capability.
Speaker 9: And now when you.
Speaker 8: Extend forward, you know I've said that the AI TAM
Speaker 8: for accelerators and data center will be over five hundred
Speaker 8: billion over the next couple of years. You know, we
Speaker 8: expect to get a large portion of that new accelerator
Speaker 8: TAM and that's how we get to tens.
Speaker 9: Of billions of dollars.
Speaker 8: Very key is also, you know, we've accelerated our roadmap
Speaker 8: and so we are on an annual cadence and next
Speaker 8: year we'll have yet a new capability with our four
Speaker 8: hundred series, which will bring full rack level solutions, which
Speaker 8: will be another giant step forward in terms of capability
Speaker 8: for you know, AI solutions. So I think that's the
Speaker 8: roadmap and path for the next couple of years. We're
Speaker 8: really excited about the traction. We're getting lots of customer
Speaker 8: validation saying hey, you're on absolutely the right path, and
Speaker 8: you know we're making strong progress towards those goals.
Speaker 4: Lisa, the granularity there was demanded time and time again
Speaker 4: on that earning score with analysts was around China though,
Speaker 4: and I know it's so hard to give because in
Speaker 4: many ways, as m I threeh eight, it's depending on
Speaker 4: the licenses from the US government.
Speaker 9: How are those discussions going with.
Speaker 4: The US government. How quickly do you think they can
Speaker 4: get through the backlog?
Speaker 9: Yeah, Caroline, definitely.
Speaker 8: Look, you know, I know people always want precision, and
Speaker 8: what I will give you is exactly how things are
Speaker 8: playing out from our standpoint. I think we've seen an
Speaker 8: improvement over the last ninety days. You know, ninety days ago,
Speaker 8: you know, we did not expect to believe to shift
Speaker 8: to be able to ship to China because of some
Speaker 8: of the regulations I think this administration, the Department of Commerce,
Speaker 8: the government has actually been very open to trying to
Speaker 8: find the right balance between national security and ensuring that
Speaker 8: we have AI USAI technologies proliferated across the world. So
Speaker 8: we think that's a great balance. We now know that
Speaker 8: we have a number of licenses that are under review.
Speaker 8: We've been given good indications that those are moving through
Speaker 8: the review process, and we will certainly inform everyone when
Speaker 8: the licenses are granted. But given that it's hard to
Speaker 8: predict exact timing, just given all of the things that
Speaker 8: are in front of the government at the moment, we
Speaker 8: thought the right thing to do right now is just say, hey,
Speaker 8: let's not include that in the third quarter revenue. But
Speaker 8: even with that, we're growing twenty eight percent year over year,
Speaker 8: which is fantastic growth rate. And if you asked me,
Speaker 8: you know what we've learned in the last ninety days,
Speaker 8: We've learned that the demand is even stronger in the
Speaker 8: second half of the year. And we necessarily, you know,
Speaker 8: thought maybe just a few months ago.
Speaker 4: And analysts really cooperated and thought it was right that
Speaker 4: we should see such caution perhaps and not show up
Speaker 4: in the numbers. But Lisa, I'm interested in the inventory
Speaker 4: that you had been very clear about the eight hundred
Speaker 4: million dollar knock on the fact that you couldn't access
Speaker 4: China for a while. I know that most of those
Speaker 4: manufacturing hadn't been complete, but do you think you can
Speaker 4: unwind that eight hundred million how much you think can
Speaker 4: you bring that back to bear?
Speaker 8: Well, we certainly expect that once licenses are approved, that
Speaker 8: we will restart our supply chain and get those in place.
Speaker 8: We do have, you know, a bit of time that
Speaker 8: it takes to complete those, but we would expect to
Speaker 8: be able, you know, to ship some of those products
Speaker 8: as licenses are approved. And you know, again the exact
Speaker 8: timing will depend on when licenses are approved. But I
Speaker 8: again would hope that we don't get caught up in
Speaker 8: something that I would say is moving actually in the
Speaker 8: right direction and really see like the overall business is
Speaker 8: doing extremely well. Right when I look at data center growth,
Speaker 8: when I look at client and gaming growth, and really
Speaker 8: the return to growth in the embedded those are the
Speaker 8: key aspects to really understand about where the business is today.
Speaker 2: Lisa.
Speaker 3: The final question that we have on China, if I may,
Speaker 3: is something that we've also discussed quite often with Video
Speaker 3: and Jensen. One which is the idea that in the
Speaker 3: interim period you just outlined, China's domestic chip makers have
Speaker 3: made some progress on their own accelerators. Does a m
Speaker 3: D make an assessment of that of how performance a
Speaker 3: comparable Huawei or other Chinese accelerator is relative to them?
Speaker 2: I three hundred family.
Speaker 8: And of course, I mean, look, it's a very competitive
Speaker 8: market out there. At the end of the day, everybody
Speaker 8: wants AI computing, Like AI computing is the foundation for
Speaker 8: you know, all the great things that we know that
Speaker 8: AI can add to, you know, businesses and you know,
Speaker 8: sort of.
Speaker 9: The overall capability.
Speaker 8: So yes, we're always looking at the competitive environment. That
Speaker 8: being the case, you know, I think we are well positioned.
Speaker 9: Overall.
Speaker 8: Our roadmap for the rest of the world is very strong,
Speaker 8: and we think is just getting stronger as we go forward,
Speaker 8: and as it relates to China, it's something that we
Speaker 8: have to work through with the administration, but as I said,
Speaker 8: we've had very close conversations and we're making good progress there.
Speaker 8: So from that standpoint, you know, I think the overall
Speaker 8: competitiveness of our AI roadmap has never been stronger. And
Speaker 8: we're excited about what we can deliver across you know,
Speaker 8: AI GPUs as well as you know, our our CPU
Speaker 8: franchise and all of the rest of our portfolio.
Speaker 3: This is Bloomberg Tech Live on Bloomberg Television and Bloomberg Radio,
Speaker 3: and we're speaking with AMD CEO Lisa Sue Strong in
Speaker 3: PC Strong in server particularly CPU. Is that an a
Speaker 3: m D capturing market share story or is that just
Speaker 3: a rebound in demand generally story?
Speaker 2: Lisa Well, I.
Speaker 9: Think it's both.
Speaker 10: Ed.
Speaker 8: I think the demand is is good. I think the
Speaker 8: demand patterns are better. But clearly we're very, you know,
Speaker 8: very competitive with our products. I think we have leadership
Speaker 8: CPUs in both.
Speaker 9: Server and client.
Speaker 8: We've shown significant traction in cloud as well as enterprise,
Speaker 8: and I think going forward you're going to see, you know,
Speaker 8: enterprise customers want the best solution out there, and that is.
Speaker 9: You know, a m D for computing and gaming.
Speaker 4: Nisa so Strong. I'm interested into the nuance of pull
Speaker 4: forward because you said on the call that you didn't
Speaker 4: see a whole lot of pull forward. Are people trying
Speaker 4: to get ahead of tarifs and price increases, but did
Speaker 4: you see any.
Speaker 9: You know, very little Caroline.
Speaker 8: I think what we look at mostly is not just
Speaker 8: what we're selling in to customers, but we actually look
Speaker 8: at what's being sold out at end customers, and what
Speaker 8: we're seeing being you know, really transferred to end customers
Speaker 8: is good demand. I mean, people are refreshing their data centers,
Speaker 8: which is very positive. Right We're in a place where
Speaker 8: computing is important, and so we're seeing strong refresh cycles
Speaker 8: on the data center side. We're seeing strong pull through
Speaker 8: of our of our solutions in the enterprise in PC,
Speaker 8: and then from a gaming standpoint, again, we have a
Speaker 8: very strong product cycle. So you know, there's it's always
Speaker 8: hard to tell exactly what the impact of the current
Speaker 8: tariffs are, but I would say that that's the smaller
Speaker 8: part of the impact on our business. The larger part
Speaker 8: is just strong products, you know, very good traction from customers.
Speaker 9: And looking at a stronger second half.
Speaker 4: Of the year, a stronger second half of the year
Speaker 4: where you take some market share from Nvidia, Lisa, how
Speaker 4: are you seeing that grow out and the ability to
Speaker 4: compete with the next ranger chips.
Speaker 8: Well, we are very bullish on our overall roadmap capability.
Speaker 8: I think the second half of the year as a
Speaker 8: number of customers. You're really you're broadly adopting AMD.
Speaker 3: Lisa, I have a question from our audience, if that's okay,
Speaker 3: a viewer of Bloomberg Tech and as you know, like
Speaker 3: loads of AMD employees, your peers, technology industry.
Speaker 2: People want to hear what you have say. I'm just
Speaker 2: going to read it to you.
Speaker 3: Can Lisa, please explain AMD's winning and gaming consoles. But
Speaker 3: AI is where the margins are. Now, what's the plan
Speaker 3: to make a MD indispensable to the next open AI
Speaker 3: and not just cost effective alternative? I think to invideor
Speaker 3: is what they're saying well ed?
Speaker 8: The best way to say that is for you know,
Speaker 8: those of you who know us as a company, you
Speaker 8: know we execute extremely well.
Speaker 9: You know, our roadmaps are strong.
Speaker 8: We're very excited about all of the progress that we've made.
Speaker 8: You know, I three hundred was an excellent product. M
Speaker 8: I three point fifty is you know, a big increase
Speaker 8: above that, and then our next generation is also and
Speaker 8: the key for us, if you look at our history,
Speaker 8: our history is doing what we say we're going to do,
Speaker 8: delivering to customers, delivering total cost of ownership and with that,
Speaker 8: you know, being a great partner, and so from that standpoint,
Speaker 8: I think you can be very confident that we have
Speaker 8: a strong roadmap and we're going to.
Speaker 9: Execute on it well.
Speaker 8: And you know, our largest customers want to have a
Speaker 8: dependable and good partner.
Speaker 4: It's been wonderful spending time with you, Lisa sou Amd CEO.
Speaker 4: We thank you very much time now for talking tech.
Speaker 4: First up, soft Bank shares they're actually higher on the
Speaker 4: news that open Ai is set to sell shares at
Speaker 4: a five hundred billion dollar valuation insider shares. As a company,
Speaker 4: of course it has a big investment in but the
Speaker 4: news reversed an earlier fall in the Japanese company stock
Speaker 4: after it brought to net income that missed analyst expectations. Meanwhile,
Speaker 4: the US has charged two Chinese nationals. We're sending it
Speaker 4: tens of millions of dollars worth of advanced AI chips
Speaker 4: to China, violating export restrictions. Now the defendants allegedly sent
Speaker 4: sensitive technology from Nvidia, including h one hundred AI accelerators.
Speaker 4: Lawyers for the pair couldn't be immediately located for comment.
Speaker 4: And this mountain traversing robot dog is causing shares of
Speaker 4: Chinese robotics companies to climb, but the mechanical dog is
Speaker 4: from startup Unitary. China has been showing off its robotics
Speaker 4: prowess in a lot this year, including with running and
Speaker 4: kickboxing humanoids and a favorite of yours.
Speaker 3: Yeah, coming up, Matt Romberg, CEO of gaming creation platform Unity,
Speaker 3: going to talk about that company's earnings. We're going to
Speaker 3: talk more about the mobile gaming space, in particular what
Speaker 3: the dev community has been really focused on. This is
Speaker 3: Bloomberg Tech. Welcome back to Bloomberg Tech. I'm taking a
Speaker 3: look at AMD largely to just recap the conversation we
Speaker 3: just had with cly to Sue. The stock came off
Speaker 3: session lows during the course of that conversation talking about
Speaker 3: clear demand, particularly from hyperscalers in the AI accelerator market.
Speaker 3: They do think that they can shift some of that
Speaker 3: China specific AI accelerated inventory Carrow that they had written down.
Speaker 3: That's one of the responsors she gave to you. PC
Speaker 3: demand is very strong and they're taking market share. Was
Speaker 3: a very clear signal. We'll continue to track it. It's
Speaker 3: bouncing around a lot going on. Apple continues to push
Speaker 3: higher one hundred billion dollars additional investment in US according
Speaker 3: to the White House later today, we expect to hear more.
Speaker 3: The stock's now up five and a half percent. That's
Speaker 3: a big jump. Shopify is up nineteen and a half percent.
Speaker 3: It's now become Canada's biggest company by market cap. It
Speaker 3: is taking e commerce market share and absolutely barm storming
Speaker 3: print from that company. And then super Micro is down
Speaker 3: twenty one percent. Simple Story told us that in fiscal
Speaker 3: twenty six they would get thirty three billion dollars sorry,
Speaker 3: in sales. They previously told us forty billion. Everyone's going, well,
Speaker 3: what's going on? You know, it's just not as strong
Speaker 3: as they had previously told us.
Speaker 2: We have more ends.
Speaker 4: Yeah, and we've got more big slumps. Actually this time,
Speaker 4: let's check out snapshares plunging after reporting second quarter sales
Speaker 4: that fell short of Wall Street. The expectation said, Look,
Speaker 4: the company blamed a technical issue with its ad buying
Speaker 4: tools that basically set price points too low. The glitch
Speaker 4: has now been fixed. But let's break down the numbers
Speaker 4: of the outlook with jasmin Enberg where poased to welcome
Speaker 4: a back VP and principle analyst and eMarketer. This is
Speaker 4: such a self inflicted wound and the market doesn't seem
Speaker 4: to be well forgiving them for it.
Speaker 11: Yeah, absolutely, I mean it really was a dismal quarter
Speaker 11: for a SNAP, and even before it reported its earnings,
Speaker 11: I was saying that it wasn't looking great for the company,
Speaker 11: and that had less to do with the economic uncertainty
Speaker 11: and tariffs, which of course it had warned about at
Speaker 11: the end of Q one, and more to do with
Speaker 11: foundational structural issues within its AD platform and its ability
Speaker 11: to monetize. Now, I obviously could not have predicted that
Speaker 11: it would have an ad glitch in Q two that
Speaker 11: would result in the deceleration and growth, but I think
Speaker 11: that really does point to these longer term, more deeper
Speaker 11: challenges that it has within its business model. I do
Speaker 11: think in a different context, investors might have been just
Speaker 11: a little bit more forgiving, though probably not much more
Speaker 11: forgiving because they tend to be with Snap. But you know,
Speaker 11: STAP hasn't working very hard for quite some time on
Speaker 11: revamping its AD platform focus really on direct response, and
Speaker 11: I think they're getting frustrated. They're getting impatient because the results,
Speaker 11: while sometimes there's progress, it's mostly been inconsistent. And then
Speaker 11: if you take the larger context of meta and reddits
Speaker 11: blowout earnings.
Speaker 9: For Q two. It makes it really hard.
Speaker 11: For Snap to shift responsibility to macro conditions or headwinds
Speaker 11: and leaves very little room for mistakes.
Speaker 4: I mean, well said, why they consistently deliver is daily
Speaker 4: active users, unless we forget there's almost half a billion
Speaker 4: of them. But what's interesting is they're trying to move
Speaker 4: away perhaps some more volatile ad side of it to
Speaker 4: subscription is that working well.
Speaker 11: Snapchat Plus has been and continues to be a bright
Speaker 11: spot for Snap. And one of the things that that
Speaker 11: says to me is that while Snap still struggles to
Speaker 11: roll out features for advertisers that they like and need,
Speaker 11: they certainly know how to bring features to consumers that
Speaker 11: they like and that they're willing to pay for. I
Speaker 11: do think going forward, diversification of its revenue streams in
Speaker 11: general is just going to be so much more important
Speaker 11: for Snap, and Snapchat Plus continues to drive a lot
Speaker 11: of its revenue growth, especially considering the fact that while
Speaker 11: its monthly active user base showed really strong signs of
Speaker 11: progress in terms of going getting toward that one billion
Speaker 11: dollar or one billion user goal that it has, we
Speaker 11: saw a lot of weakness in North America, which is
Speaker 11: Snap's core market and where it makes most of its money.
Speaker 11: And that also means then that Snap is going to
Speaker 11: be more reliant on international markets going forward to monetize
Speaker 11: via ads, and that's extremely challenging or more challenging because
Speaker 11: it's harder to make money there. And again, the weakness
Speaker 11: in North America points to structural problems.
Speaker 3: Just real quick, I appreciate what you said about the
Speaker 3: response investors have to Snap sometimes, like I just always remember,
Speaker 3: are they going up a lot or down a lot?
Speaker 3: But that speaks to lack of consistency. Like Meta showed
Speaker 3: us that all the stuff they've done around AI shaws
Speaker 3: up the core breading but of business.
Speaker 2: Is Snap not experiencing something similar?
Speaker 11: Yeah, I mean I think Meta showed us that you
Speaker 11: can send a lot of money on AI if your
Speaker 11: core business is doing well, and it truly is. I mean,
Speaker 11: Meta is a powerhouse. It continues to deliver on efficiency
Speaker 11: and effectiveness for advertisers. You know, Snap has been playing
Speaker 11: catch up to Meta in many ways, including in AI.
Speaker 11: You know, it doesn't have the same scale and resources
Speaker 11: that Meta has to build this powerhouse AI driven ad business,
Speaker 11: but it certainly needs to do more work there. One
Speaker 11: thing I will say for Snap though, is you know,
Speaker 11: we saw an increase in SMB advertising small and medium
Speaker 11: sized businesses, and I do think that that is, you know,
Speaker 11: a direct result of its investments in AI in its
Speaker 11: ad platform, because these advertisers are generally drawn to places
Speaker 11: where it's easy to advertise, and that's you know, one
Speaker 11: of the impacts that AI has on advertising and these platforms.
Speaker 3: Jasmine Enberg from me Marketer, thank you so much for
Speaker 3: joining us on the program. Let's stick with earnings and
Speaker 3: get out to gaming. Shares of Unity software actually now
Speaker 3: lower by almost nine percent. Blinking and miss it kind
Speaker 3: of situation. This morning, Caro, the stock had spiked after
Speaker 3: the company reported better than expected second quarter earnings.
Speaker 2: Something's changed.
Speaker 3: Let's talk it through with Unity CEO Matt Brumberg.
Speaker 2: Well, help me.
Speaker 3: There was a good response. You beat expectations. There's particular
Speaker 3: focus for you guys in the mobile gaming market. The
Speaker 3: stock is sort of reverse direction, is down eight percent.
Speaker 5: Matt.
Speaker 2: You'll read on that. Please.
Speaker 12: Yeah, you know we're not stock investors or business builders,
Speaker 12: so you know, my answer to that is a little
Speaker 12: bit of who knows what we're really focused on is
Speaker 12: building or growing and during business. And I think that
Speaker 12: when we look back on the second quarter twenty twenty five,
Speaker 12: the history is going to show that it was an
Speaker 12: inflection point for our turnaround, sort of the time when
Speaker 12: accelerated product development and delivering more for customers started to
Speaker 12: show up in a really meaningful way in our business.
Speaker 13: And I think that's basically where we are.
Speaker 3: I really appreciate having you on the show. I take
Speaker 3: a lot of interest in Unity because we recently have roadblocks.
Speaker 3: CEO David Zooki on the show of their own Earnings
Speaker 3: is probably more analogous in the gaming space to put
Speaker 3: you nearer to a roadblock. Maybe you disagree, but mobile
Speaker 3: gaming right now is a huge focus. How is that
Speaker 3: a driver for your business and a prioritype It's.
Speaker 13: The biggest priority there is.
Speaker 12: We're effectively the operating system for the mobile gaming business. Globally,
Speaker 12: seventy percent of the mobile games in the world are
Speaker 12: built on Unity, and eighty five of the top one
Speaker 12: hundred advertisers mobile game advertisers advertise with us. So what
Speaker 12: we've really seen in the last year or so of
Speaker 12: this turnaround is that when we make fundamental investments in
Speaker 12: delivering better product for that set of customers for the
Speaker 12: mobile gaming business. That our business is lifting, and we've
Speaker 12: really seen that over the year, and we're actually really
Speaker 12: excited about investor reaction over the course of the year
Speaker 12: as well.
Speaker 4: I'm going to go back to perhaps the stock reaction
Speaker 4: and what our own bloombag intelligence analysts have been saying
Speaker 4: that and forgive me, it's not always bathed in positivity
Speaker 4: because they say, look, this is a cuerential decline of
Speaker 4: your Create segment in the next quarter that suggests muted
Speaker 4: adoption of your Unity six offering. Just describe that. Is
Speaker 4: that something you're seeing seeing, Jenna.
Speaker 13: I started, I think that's just incorrect.
Speaker 12: UNI six is the fast most the fastest adoption of
Speaker 12: any version of you we've ever seen.
Speaker 13: It's the most stable, it's the most performant. So we've
Speaker 13: been really really pleased by that.
Speaker 12: Again, you're drawing into wondering about the stock I would
Speaker 12: just tell you it's much more likely to be the
Speaker 12: one hundred plus percent run up over the past year
Speaker 12: in anticipation what are sharply better results, and again it's
Speaker 12: a kind of inflection point in our business.
Speaker 13: I would guess that has some more to do with those.
Speaker 4: Dynams love that context, Matt, give us the context of
Speaker 4: the ad space, and you're encroaching a bit more on
Speaker 4: app love in space for example, how do you compete?
Speaker 4: How you seeing your self take market share or indeed
Speaker 4: app love and still being a really strong competitor.
Speaker 12: Yeah, we don't really think about market share in this business.
Speaker 12: The way this business works is performance based. Mobile advertisers
Speaker 12: buy performance and they buy against their rows, their return
Speaker 12: on investment targets, and they will buy infinitely across that
Speaker 12: efficient frontier.
Speaker 13: So as we deliver.
Speaker 12: More value, customers will spend more money with us, and
Speaker 12: our business will grow.
Speaker 13: And that's what's happening. This is a big.
Speaker 12: Competitive space with some of the largest, most competitive players
Speaker 12: in the world operating in it, and we're really excited
Speaker 12: about our ability to compete and not just now but
Speaker 12: in the future.
Speaker 3: I'd love to end by talking just very quickly about
Speaker 3: developers and the creator community. Like one of the big
Speaker 3: issues in the end market the app store, Apple or
Speaker 3: Google is revenue split and just what you're doing to
Speaker 3: incentivize the creators, but also like bring everyone with you
Speaker 3: if you're growing at that click.
Speaker 2: Yeah.
Speaker 12: I mean, we are the tools that those folks use
Speaker 12: to build their experiences and then operate those business for
Speaker 12: years and years in life service. So when we deliver better,
Speaker 12: more effective tools, for example, to your point, to help
Speaker 12: them monetize commerce in a native way, for example, and
Speaker 12: help them acquire users more efficiently, and that business grows.
Speaker 13: So we're a partner in that growth.
Speaker 4: With them at Bromberg, CEO of Unity, it's great to
Speaker 4: have some time with you.
Speaker 3: Bloomberg's reporting that open ai is in talks for a
Speaker 3: potential share sale for current and former employees that would
Speaker 3: put the company at a five hundred billion dollar valuation.
Speaker 2: That's the chart right there.
Speaker 3: The move would boost open AI's price tag, according to sources,
Speaker 3: which is previously at three.
Speaker 2: Hundred billion dollars.
Speaker 3: Bloomberg's Shringafari broke the story and it's with us now.
Speaker 3: The mechanism actually doesn't even really matter. It's an insider
Speaker 3: share sale that sets this valuation of five hundred billion dollars.
Speaker 3: But it feels like just yesterday that we broke the
Speaker 3: story on the last three hundred billion dollar valuation. Tell
Speaker 3: us about the jump, tell us about what we're hearing
Speaker 3: from sources is going on.
Speaker 14: Yeah, I mean it's a significant jump in valuation, more
Speaker 14: than two thirds of the last price tag, you know,
Speaker 14: the last round that we reported on finalized in March,
Speaker 14: led by soft Bank. Since then, we've seen strong user
Speaker 14: and revenue growth as we've reported, but again, this price
Speaker 14: tag would put open a eye in a new league
Speaker 14: as one of the most highly valued private companies out there.
Speaker 9: If this sale were to go.
Speaker 4: Through, extraordinary. How it eclipses even the owner of TikTok
Speaker 4: over in China and well ahead of close second is
Speaker 4: sort of SpaceX here in the US. What's interesting is
Speaker 4: we're getting so many updates to the product itself for
Speaker 4: the world as well, Shoen. We're seeing how they're getting
Speaker 4: in offering chatchipt to federal offerings with just one dollar.
Speaker 4: They're trying to open source a little bit more. Does
Speaker 4: this just build up the idea that this is going
Speaker 4: to be the winner?
Speaker 14: I think it's still too early to say in the
Speaker 14: AGI race, who, if anyone, will be the definitive winner,
Speaker 14: but I will say this is an This has always
Speaker 14: been a rapidly moving field, and I think the past
Speaker 14: few months have been especially fast. We are seeing new
Speaker 14: releases from open Ai this week. We have the open
Speaker 14: Source model that just dropped, and it's widely expected that
Speaker 14: their more major model update, GPT five is coming soon.
Speaker 14: On top of that, you know, if you look to
Speaker 14: the left and right, we have Anthropic also released an
Speaker 14: update to its model, also in talks to have a
Speaker 14: new round of funding that would more than double their
Speaker 14: past valuation from just earlier this year.
Speaker 9: So I think this is.
Speaker 14: Really a sign that the ai market continues to grow,
Speaker 14: and it does raise questions about are these valuations justified?
Speaker 14: And I think that depends on how bullish you are
Speaker 14: on the genai market as a whole.
Speaker 3: Sharen, reading your report, there's a lot of detail here.
Speaker 3: I mean, for one important point is we understand why
Speaker 3: open ai is doing this right with the secondary The
Speaker 3: timing is because the talent wars and Sam Altman has
Speaker 3: this workforce that he has to keep happy.
Speaker 14: Right, So, as we reported, one of the reasons why
Speaker 14: Opening Eye wants to do this secondary share cal wight
Speaker 14: makes sense is that it gives employees an opportunity to
Speaker 14: essentially cash out. If you're working at Meta, which is
Speaker 14: aggressively By the way, there's this fierce talent war going
Speaker 14: on right now right and Meta has poached several prominent
Speaker 14: open ai employees if they want to retain these employees.
Speaker 14: You know, people want to be able to liquidate their
Speaker 14: shares and this provides current informer employees a potential way
Speaker 14: to do that.
Speaker 4: Sharan KAfari, thanks so much for the update on open Ai.
Speaker 4: Now let's get back to the public markets where Uber
Speaker 4: is already out with its earnings, but after the bell
Speaker 4: we get plenty more Lyft, Door, Dash, Airbnb. There is
Speaker 4: one woman who covers them all, Natalie Lung. You've got
Speaker 4: a busy day. Let's talk about Uber because it's actually
Speaker 4: trading lower. Is that more about how father shares had
Speaker 4: run into this or the worry about sort of the
Speaker 4: spending or capex on autonomous here.
Speaker 10: It's a little bit of both. Definitely, there's a lot
Speaker 10: of excitement going into the earnings today, which was mostly
Speaker 10: a beat, But there was a small miss in the
Speaker 10: core ride share business by Uber, and that was really
Speaker 10: offset by the strong performance of the delivery units.
Speaker 9: So there's a lot for us to look at.
Speaker 10: In terms of what it means for consumer spending and investors.
Speaker 10: Was also excited to hear more about the autonomous strategy
Speaker 10: in the company.
Speaker 3: It's a twenty four hour period that's like the super
Speaker 3: Bowl for Natalie Lung. In the gig economy and at
Speaker 3: based tech company space, you're super busy, as Karen said,
Speaker 3: But what always happens You get Uber and then you
Speaker 3: get Lyft. And there's obviously some read across. What are
Speaker 3: the expectations for the smaller of the two.
Speaker 10: For Lift, they're still expected to post double digit growth
Speaker 10: in the key metric of gross bookings and for this
Speaker 10: quarter in particular, we want to look at the third
Speaker 10: quarter outlook because it's the first time they're including the
Speaker 10: free Now business, which they completed the acquisition last week,
Speaker 10: and that will add business from new European markets such
Speaker 10: as UK and Germany. So that is something of interest
Speaker 10: for me.
Speaker 4: Today doing in Europe and Germany and more broadly expansion
Speaker 4: their DoorDash has been making a bit of m and
Speaker 4: a over in the UK. It shares been on a
Speaker 4: tear this year, up fifty three percent. Where do we
Speaker 4: expect numbers for that company to go?
Speaker 10: Yeah. Similarly, on the back of Uber's very strong delivery results,
Speaker 10: DoorDash is also expected to post nearly twenty percent growth
Speaker 10: on that top line as well. Their delivery deal has
Speaker 10: not closed yet, so might not be seeing those results
Speaker 10: there yet, but pretty strong spending on the US side
Speaker 10: is expected.
Speaker 3: Let's complete the grand slam, the complete sweep and do Airbnb.
Speaker 2: What are you looking for in that name?
Speaker 10: Yeah, it's again. It's a first quarter where we'll see
Speaker 10: results from their newly relaunched Experiences and a Lacarte services business,
Speaker 10: which Branchaskey has said would add one billion in analyzed
Speaker 10: revenue for the company. So we will see the first
Speaker 10: results from there, as well as a broader sentiment on
Speaker 10: US travel.
Speaker 3: One question I'd have is how does Natalie Lung do
Speaker 3: all of those earnings at the same time. Bloomberg's Natalie
Speaker 3: Lung busy evening for you ahead, Thank you very much.
Speaker 2: Okay.
Speaker 3: Apple shares are on the screen, and we're pushing towards
Speaker 3: session highs, up almost six percent now following the announcement
Speaker 3: that the White House says the iPhone maker will invest
Speaker 3: an additional one hundred billion dollars in the United States,
Speaker 3: Bloomberg's senior executive editor for Tech, Tom.
Speaker 2: Jarles, is here.
Speaker 3: It's a big number in isolation, sort of but it's
Speaker 3: also got to be taken in aggregate.
Speaker 9: Absolutely.
Speaker 15: Look, Apple spends a lot on these types of initiatives
Speaker 15: all the time. They have already been planning to spend
Speaker 15: hundreds of billions of dollars in the coming years. The
Speaker 15: Trump administration likes big, round, big honkin numbers, right, and
Speaker 15: this is a way for them to say, we've scored
Speaker 15: a victory. We are bringing manufacturing back to the United States.
Speaker 15: On Apple's part, making these pledges, throwing these numbers out there,
Speaker 15: and again, these are plans that this is money that
Speaker 15: they do plan to spend. This is a good way
Speaker 15: for them to as as BI analysts have said so eloquently,
Speaker 15: softened dampen Trump's ire because they still do have a
Speaker 15: lot of their supply chain outside of the United States.
Speaker 15: Trump administration wants to say big US corporations are bringing
Speaker 15: manufacturing back to the United States. This is the question
Speaker 15: that we need to ask, and we will be asking
Speaker 15: in the coming months and weeks, and that is how
Speaker 15: much of real production of the iPhone, how much of
Speaker 15: Apple's high end products is actually going to come to
Speaker 15: the United States versus China, versus India. That's the real question,
Speaker 15: Or is it stuff around the edges, And that's a
Speaker 15: question that we're going to be asking Apple to and
Speaker 15: a lot of other people are going to be asking
Speaker 15: Apple in the coming weeks.
Speaker 4: Yeah, because Tom, the five hundred billion thus far that
Speaker 4: had already been announced, well, that was more about servers,
Speaker 4: that was actually about training, and that was in some
Speaker 4: ways we saw a little bit of the chunk of change.
Speaker 4: I think it was about five million being allocated to
Speaker 4: actually some rare earths as well. What are we actually
Speaker 4: anticipating as to how much, if any, can really be
Speaker 4: for the iPhone?
Speaker 6: Right?
Speaker 15: And some of this is also them committing to purchasing
Speaker 15: more from US suppliers. Again, this is part of their
Speaker 15: supply chain. They need these parts, they will be spending this,
Speaker 15: But will this be creating lots of jobs? Will people
Speaker 15: be manufacturing assembling these products in the US? Time will tell. Again,
Speaker 15: these companies like to they've already been planning to spend
Speaker 15: a lot of money and they're putting lots of big
Speaker 15: round numbers around them. And again it's an opportunity for
Speaker 15: the Trump administration to claim victory. But if you're talking
Speaker 15: about server farms, if you're talking about buying from US manufacturers.
Speaker 15: If you're talking about training facilities, there's a big delta
Speaker 15: between that and actually putting together, piecing together these high
Speaker 15: end devices and moving that supply chain out of India
Speaker 15: and out of China. Look, it's in Apple's interest to
Speaker 15: diversify their supply chain. No one is doubting that. So
Speaker 15: much of it is relying on China and that really
Speaker 15: bit them and a lot of other people, you know
Speaker 15: where during the pandemic and they really need to kind
Speaker 15: of diversify away from that.
Speaker 4: President Trump doesn't particularly what I'm only diversifying into India.
Speaker 4: Bloomberg's Tom Jiles, great to have you. Thank you for
Speaker 4: the analysis that does it even this edition of Blomberg
Speaker 4: Tech and what a show.
Speaker 3: Yeah, and jokes aside, like it's a really heavy earnings period.
Speaker 3: Still we move from the megacaps, but there's a lot
Speaker 3: of names giving numbers. We're learning a lot about the
Speaker 3: world of technology. Recap it on the podcast. You know
Speaker 3: where to find it on the Bloomberg terminal, as well
Speaker 3: as online on Apple, Spotify and iHeart from San Francisco and.
Speaker 2: New York City. This is Bloomberg Tech.