Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Gene Monster. There seems to be a reaffirmation of free
Speaker 2: cash flow and profit belief among MAG seven this morning
Speaker 2: over at Looke Capital. You know them well, Genio invented it.
Speaker 2: Young Kim goes out to a five point fifty price
Speaker 2: target on Microsoft. Is it real now? Where there's a
Speaker 2: new persistency of belief in MAG seven free cash flow.
Speaker 3: That's a good way to put it, And maybe another
Speaker 3: way to put it is that we knew that these
Speaker 3: businesses had great free cash flow, typically generate between eighty
Speaker 3: and one hundred billion per year. But what we saw
Speaker 3: last night from Microsoft to Meta is that their businesses
Speaker 3: are resilient. Resilience in the face of these tariffs. Is
Speaker 3: that Meta raised their revenue by three percent. That was
Speaker 3: in the midst of this is for the June quarter,
Speaker 3: a headwind that's coming from China e commerce. They probably
Speaker 3: would have raised it by three three or or four
Speaker 3: or five percent if not for that headwind. And so
Speaker 3: to that resiliency of cash flow, Yes, as part of
Speaker 3: the story, there was this period of doubt that started
Speaker 3: with deep Seek at the end of January that I
Speaker 3: think there's this kind of realignment now we're seeing today
Speaker 3: with investors understanding that these companies are just this incredible
Speaker 3: cash machine and most likely that benefit is going to
Speaker 3: continue in the future.
Speaker 4: Gene, you know, before I guess the last three or
Speaker 4: four months, when we've all just been focused on tariffs,
Speaker 4: we actually were talking about growth stories such as the cloud,
Speaker 4: such as AI. Given what you saw from Microsoft, given
Speaker 4: what you saw from Meta talk to us about where
Speaker 4: tech spend is today, is that still a growth story
Speaker 4: that investors should be focused on.
Speaker 2: Definitely.
Speaker 3: There are two kind of forces in play last night.
Speaker 3: One was in terms of what the tech spend is,
Speaker 3: and what we heard from Microsoft was that their numbers
Speaker 3: were actually down sequentially on that CAPEX number. Some of
Speaker 3: that this is for the March quarter. Someone was related
Speaker 3: to timing to some of these data centers, but they
Speaker 3: did also say that they expect next year that apecks
Speaker 3: to grow kind of in line with revenue. And then
Speaker 3: of course Meta cranked it up by nine percent. That
Speaker 3: was a big That was a big surprise. But there's
Speaker 3: a story here kind of below the fold that I
Speaker 3: think is really important, especially when it comes to Meta,
Speaker 3: and last week we had our AI some we had
Speaker 3: a representative from open Ai as one of the fireside
Speaker 3: chats and asked the question about, like, what is the
Speaker 3: substance behind AI from a return on investment perspective, and
Speaker 3: his answer was that they have seen it in the
Speaker 3: coding side and also customers service. And that's, from my perspective,
Speaker 3: a pretty disappointing answer relative to all this anticipation. But
Speaker 3: when I saw the Meta results last night, saw this
Speaker 3: increase in revenue and also what's happening with their daily
Speaker 3: active users. It grew six percent year every year. This
Speaker 3: is three point four billion people, sixty plus percent of
Speaker 3: the world's Internet population on a daily basis. Part of
Speaker 3: the reason why this is happening is AI is actually
Speaker 3: impacting their business. In other words, I think Meta is
Speaker 3: the best example of how AI can have a real
Speaker 3: impact on an investment at scale.
Speaker 2: Gene Monster with US Leland Miller to come on China,
Speaker 2: but right now gene Monster with deep Water thrilled to
Speaker 2: have him on this morning. Migrate in the Cloud, Hey,
Speaker 2: you U stay in the cloud? Gen Monster talk about
Speaker 2: Amazon today and after seeing Microsoft, you're not counting cardboard
Speaker 2: boxes at Amazon, You're looking at their cloud.
Speaker 3: Business right Definitely I mean, we've seen good cloud numbers
Speaker 3: from Google and as you're last night, and it better
Speaker 3: be good at this point for Amazon, and it probably
Speaker 3: will be good. And part of the reason why it
Speaker 3: probably will be good is we're seeing this surge in
Speaker 3: demand from Generator AI. It's increasing usage at a bigger rate.
Speaker 3: So I think that AWS number is going to be
Speaker 3: a great number tonight for Amazon.
Speaker 2: Gene Munsters spending time by mister Bezos Yatchett. Yesterday, Joe
Speaker 2: Matthew Balance of Power in conversation with the Senator from
Speaker 2: the Commonwealth of Massachusetts. Here is Elizabeth Laurn with mister Matthew.
Speaker 1: What Donald Trump is saying is if the American people
Speaker 1: can see clearly what his tariffs are costing them, that
Speaker 1: creates a real problem for Donald Trump and for the
Speaker 1: Republicans in Congress. So his solution is not to do
Speaker 1: something more sensible on tariffs. His solution is to try
Speaker 1: to end access to the information and to persuade Jeff
Speaker 1: Bezos that he needs to erase that information. And yes,
Speaker 1: I want to hear about that conversation. In fact, I
Speaker 1: want to hear about all of the conversations.
Speaker 2: Senator Warren, the Commonwealth of Massachusetts. Gen Monster, I know
Speaker 2: you're going up in the rocket the next time the
Speaker 2: Bezos term rocket. Let me just cut to the chase,
Speaker 2: Geem Monster, is Jeffrey Bezos? Is he running Amazon?
Speaker 3: Still? Simple answer is yes, as as chairman and as founder.
Speaker 3: I think he has an outside has influenced much more
Speaker 3: than Jasse and so I think the answer is that
Speaker 3: the buck does stop with him, Jamie.
Speaker 2: That's short answer there. He really doesn't want to talk
Speaker 2: about it, that's right.
Speaker 4: Yeah, Hey, g we're going to hear from our good
Speaker 4: friends in Cooper Tino and their results. What do you expect?
Speaker 4: What do you need to hear from Apple and Tim Cook?
Speaker 4: As a again, try to navigate what is a suddenly
Speaker 4: a very you know, I guess uncertain global economic outlook.
Speaker 3: So the numbers, I've been watching this company for twenty
Speaker 3: plus years, and these numbers are less important tonight as
Speaker 3: far as the actual reported numbers. It's more about the
Speaker 3: structure that they're going to lay for how they're going
Speaker 3: to navigate what's happening with tariffs and production, and how
Speaker 3: they're building out their AI and so very unique setup
Speaker 3: where if the iPhone number is good, that would be
Speaker 3: a positive impact on the stock if it's bad, a
Speaker 3: slight negative, But for the most part, investors are looking
Speaker 3: much further down the road, and this is a pivotal
Speaker 3: moment around the company. I would say this related to
Speaker 3: what's going on on the globalization side, how that impacts Apple,
Speaker 3: and separately in terms of what's going on tariffs. Those
Speaker 3: are forces that are hard for Apple to control. There
Speaker 3: is one piece that and they will likely sort themselves out.
Speaker 3: My sense is this year. But there's one piece that
Speaker 3: I think investors have been penalizing Apple for that will
Speaker 3: come up. This will be an a topic tonight that
Speaker 3: I think there is generally a misunderstanding from investors, and
Speaker 3: that piece is Apple behind an AI. The answers yes,
Speaker 3: and how much are they being damaged by that? And
Speaker 3: I think that the answer is currently almost not at all.
Speaker 3: And part of the reason is that they really have
Speaker 3: three years to sort this out. When it comes to
Speaker 3: Apple Intelligence, when I say sort of out, I mean
Speaker 3: provide the features that give it punch and so their
Speaker 3: customers aren't going anywhere. And so when I think, Paul,
Speaker 3: when I think about these results tonight, I'm more cute
Speaker 3: into how they're going to fix Apple intelligence over the
Speaker 3: next two three years versus the next two or three quarters.
Speaker 2: Okay, Gene, what I want to do here is I
Speaker 2: got a seguity and the Leland Miller on the Beige
Speaker 2: Book and all the brilliance of China in that. So
Speaker 2: we're going to do this with Gene Monster right now.
Speaker 2: Gene Monster. I don't think this is in the zeitgeist.
Speaker 2: Tim Cook, based on my amateur take, is the number
Speaker 2: one supply chain expert in American business out of Douke
Speaker 2: All that this is the guy is more knowledgeable about
Speaker 2: Pacific rim get the stuff from there to here? Is
Speaker 2: there a lack of confidence in Tim Cook's ability to
Speaker 2: stick to survive these supply chain disruptions.
Speaker 3: There is one hundred percent confidence in Tim Cook's ability
Speaker 3: to make the best out of an extremely difficult situation.
Speaker 3: But even his magical ability to increase gross margins by
Speaker 3: using better manufacturing over the last decade, even that power
Speaker 3: is small relative to the forces of what these tariffs
Speaker 3: could mean. And I'll just kind of put some briefly
Speaker 3: into context. Is my sense is that these tariffs, when
Speaker 3: it comes to Apple, there's still mixed messages coming out
Speaker 3: of the White House in terms of how Apple's going
Speaker 3: to be impacted by that, My sense is that they're
Speaker 3: probably going to shake out somewhere between a ten and
Speaker 3: twenty percent tariff. And if that in fact ends up
Speaker 3: being the case, even with Cook's masterful use of the
Speaker 3: supply chain, They're probably going to see some diminishing of
Speaker 3: gross margins and it probably goes from call it forty
Speaker 3: percent forty one percent. They're probably going to lose a
Speaker 3: couple percent on that, call it thirty nine, and so
Speaker 3: that is a step back. But I just want to
Speaker 3: put some context when we hear about all this, the
Speaker 3: versus the Tim Cook, the levers that he can pull,
Speaker 3: there are some limitations to it, and that's why I
Speaker 3: think that I just like applaud dan Ives and him
Speaker 3: standing up and saying like, we got to get this
Speaker 3: thing figured out. And what figured it out means is
Speaker 3: just some clarity. And ultimately I think that that clarity
Speaker 3: is going to be twenty percent, and it's going to
Speaker 3: be a little bit of an impact. Again, doesn't change
Speaker 3: the long term trajectory of the business, but it's something
Speaker 3: that investors are focused
Speaker 2: She monster, thank you so much, Managing partner Seatporter Asset management,