WEBVTT - Apple Tops Sales Estimates Despite China Dip, Amazon Reports Cloud Unit Growth 0:00:02.520 --> 0:00:11.119 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business Weekdaily, 0:00:11.480 --> 0:00:15.080 reporting from the magazine that helps global leaders stay ahead 0:00:15.320 --> 0:00:19.240 with insight on the people, companies, and trends shaping today's 0:00:19.280 --> 0:00:23.920 complex economy. Plus global business finance and tech news as 0:00:23.960 --> 0:00:28.240 it happens. The Bloomberg Business Week Daily Podcast with Carol 0:00:28.280 --> 0:00:31.720 Masser and Tim Steneveek on Bloomberg Radio. 0:00:32.479 --> 0:00:35.519 It is Bloomberg Business Weekdaily. That's Carol Masser, I'm Tim Steneveek. 0:00:35.520 --> 0:00:38.040 I'm watching shares at Amazon in the after hours up 0:00:38.120 --> 0:00:40.520 eight and a half percent right now. The company reported 0:00:40.560 --> 0:00:42.839 net sales for the third quarter that beat the average 0:00:42.840 --> 0:00:46.040 analyst estimates. We're talking about one hundred and eighty point 0:00:46.120 --> 0:00:48.879 one seven billion dollars that's up thirteen percent year over year. 0:00:48.920 --> 0:00:51.159 The estimate was for one hundred and seventy seven zero 0:00:51.159 --> 0:00:56.680 point eight two billion dollars AWS coming in net sales 0:00:56.680 --> 0:01:00.520 excluding fax up twenty percent versus nineteen percent year over year. 0:01:00.600 --> 0:01:03.000 SMOs for seventeen point nine percent. As far as that 0:01:03.040 --> 0:01:05.720 forecast looks, Seeson at sales of two hundred and six 0:01:05.760 --> 0:01:07.760 billion to two hundred and thirteen billion. The estimus for 0:01:07.760 --> 0:01:10.600 two hundred and eight billion dollars, so kind of on 0:01:10.640 --> 0:01:13.759 the high like yeah, sad performance. Yeah. 0:01:13.920 --> 0:01:16.840 Putum Goyle is Bloomberg Intelligence Senior Analyst for e commerce 0:01:16.880 --> 0:01:21.240 andth Leisure. She joins us from the Bloomberg Intelligence Princeton Bureau. 0:01:21.319 --> 0:01:24.320 Let's go to you, God Putham. This looks like a 0:01:24.319 --> 0:01:27.679 really strong report on a lot on a lot of metrics. 0:01:28.160 --> 0:01:30.039 It definitely is. I mean, they hit it out of 0:01:30.040 --> 0:01:33.040 the park. Sales were very get across the board across 0:01:33.120 --> 0:01:38.040 all business segments, AWS, online advertising, even physical stores. So 0:01:38.080 --> 0:01:41.360 from a top line perspective, very very encouraging results. In fact, 0:01:41.400 --> 0:01:45.520 AWS was probably the bright spot here. Twenty percent gains. 0:01:45.520 --> 0:01:49.080 We haven't seen that in a while. On the margin side, 0:01:49.320 --> 0:01:52.080 I think AWS did really well, but then when it 0:01:52.160 --> 0:01:56.120 came to North America margins, they were weaker than we expected. 0:01:56.120 --> 0:01:59.760 So it's the only one area that I saw some skepticism, 0:01:59.840 --> 0:02:02.520 and I think that's largely due to their ability to 0:02:02.600 --> 0:02:05.960 want to maintain low prices to make sure the consumer 0:02:06.080 --> 0:02:08.240 keeps coming back and investing in its fulfillment. 0:02:08.639 --> 0:02:12.480 So you think that margins took a hit because Amazon 0:02:12.600 --> 0:02:15.000 is keeping prices low why, I. 0:02:14.919 --> 0:02:17.200 Mean, they want to drive market share gains. Right, So 0:02:17.200 --> 0:02:19.400 if you think about what's happening in retail this year, 0:02:19.800 --> 0:02:23.600 tariffs have clearly added to costs, and many retailers have 0:02:23.680 --> 0:02:28.040 decided to offset those costs through efficiencies to try to 0:02:28.160 --> 0:02:32.000 keep an old prices steady or raise them selectively, So 0:02:32.080 --> 0:02:34.160 that could be part of the pressure. And then also 0:02:34.280 --> 0:02:36.680 you know Amazon has stepped up its game on shipping 0:02:36.720 --> 0:02:39.600 where it was the leader and it still is the leader, 0:02:39.600 --> 0:02:43.560 but they're continuing to invest there to get items to faster, 0:02:43.760 --> 0:02:44.560 same day, etc. 0:02:45.120 --> 0:02:47.840 Yeah, they still do it right there, definitely completing on 0:02:47.880 --> 0:02:51.360 that one. Hey Ludlow, come on into our conversation, co 0:02:51.440 --> 0:02:55.680 host of Bloomberg A B Tech on Bloomberg Television. Watching 0:02:55.720 --> 0:03:00.000 these numbers, I mean, investors are sending shares of Amazon 0:03:00.240 --> 0:03:03.200 much higher here in the aftermarket, stock up about nine percent. 0:03:04.200 --> 0:03:07.639 The cloud computing division accounts for the majority of operating income, right, 0:03:07.680 --> 0:03:10.280 and this return to growth year and year of above 0:03:10.320 --> 0:03:13.079 twenty percent for the first time since twenty twenty two. 0:03:13.680 --> 0:03:17.680 It's absolutely timely. You know, I think Google gave us 0:03:17.720 --> 0:03:20.840 a lot of evidence that GCP, their cloud offering, has 0:03:20.880 --> 0:03:23.639 a lot of momentum at the moment, but this is 0:03:23.680 --> 0:03:27.200 a bit of a barnstormer from Amazon to say, actually, 0:03:27.200 --> 0:03:30.880 on every metric that we track, AWS is doing really well. 0:03:31.720 --> 0:03:34.680 One of the headlines that you spotted really excellent, the 0:03:34.800 --> 0:03:38.240 appreciation in their investment on Nthropic that had a non 0:03:38.600 --> 0:03:43.600 operating income impact to the bottom line, right. But also 0:03:43.800 --> 0:03:46.840 they're talking a pretty fierce game about their custom training 0:03:46.920 --> 0:03:51.200 chip Trainium too and calling it a multi billion dollar business. 0:03:51.240 --> 0:03:53.440 And what we've seen in the past is when Amazon 0:03:53.840 --> 0:03:57.120 hasn't necessarily put a specific dollar figure on something but 0:03:57.360 --> 0:04:00.640 said this AI thing is in the billions of dollars, 0:04:00.720 --> 0:04:02.760 the market has given them a lot of credit for 0:04:02.840 --> 0:04:05.920 giving us at least like a little bit more detail. 0:04:06.320 --> 0:04:08.800 Ed where does the Trainium to model fit in? 0:04:10.360 --> 0:04:12.200 Well, this is why I bring Google up. 0:04:12.280 --> 0:04:16.000 You know, when we broke the story that Anthropic had 0:04:16.040 --> 0:04:18.280 done a deal with Google for the use of one 0:04:18.400 --> 0:04:23.000 million TPUs Google's custom AI card or accelerator, it was 0:04:23.040 --> 0:04:25.560 a bit of a black eye for Amazon because Amazon 0:04:25.640 --> 0:04:28.560 is also a major investor in Anthropic, and Amazon and 0:04:28.560 --> 0:04:32.159 Anthropic have this large project called Project Rainier, a data 0:04:32.200 --> 0:04:36.560 center in Indiana. What they're saying is that this is 0:04:36.600 --> 0:04:40.599 a multi billion dollar run rate business. The offering their 0:04:40.680 --> 0:04:43.880 in house chip to third party customers. We don't know 0:04:43.920 --> 0:04:46.160 any more than that, but it does indicate that both 0:04:46.240 --> 0:04:51.600 Ranthropic and for other customers outside of Anthropic, that it's 0:04:51.640 --> 0:04:54.240 a viable business. You know, they've invested a lot of 0:04:54.279 --> 0:04:56.920 money on custom silicon and at least on the one 0:04:56.960 --> 0:04:59.680 headline we have on that it's paying dividends, so to speak. 0:05:00.000 --> 0:05:02.479 He speaking of dividends and paying dividends and put them. 0:05:02.520 --> 0:05:04.360 I want to go back to you on the retail 0:05:04.400 --> 0:05:07.120 side of this. I mean, we know that Andy Jassey, 0:05:07.600 --> 0:05:11.720 the CEO of Amazon, has really been working on improving profitability. 0:05:11.240 --> 0:05:13.600 Of that business automation. 0:05:13.760 --> 0:05:18.440 We've had their key head of robotics talking about what 0:05:18.560 --> 0:05:21.320 Amazon continues to do at that company in terms of 0:05:21.360 --> 0:05:25.640 automation and robotics. So what else can you give us 0:05:25.640 --> 0:05:28.240 in terms of color on the retail side of the business, 0:05:28.279 --> 0:05:32.000 which is something that so many of us right identify 0:05:32.200 --> 0:05:34.040 very clearly with when it comes to Amazon. 0:05:35.160 --> 0:05:37.560 Yeah, I think, look, they're making all the right investments 0:05:37.600 --> 0:05:41.839 to improve profitability. In the longer term, Amazon's retail businesses 0:05:41.880 --> 0:05:44.240 finally break even the profitable it took a long time 0:05:44.240 --> 0:05:46.880 to get here, and I think automation will be the 0:05:46.880 --> 0:05:50.240 next leg of growth to drive that further. But as 0:05:50.240 --> 0:05:55.480 I mentioned, you know earlier, AWS is driving their EBIT margins, 0:05:55.520 --> 0:05:59.279 so AWS can compensate these investments to a certain extent 0:05:59.480 --> 0:06:03.080 and advertising because the margins here are just so much 0:06:03.160 --> 0:06:05.279 higher than they'll ever be able to get in the 0:06:05.320 --> 0:06:06.039 retail business. 0:06:06.320 --> 0:06:09.640 How is how is the advertising business during PUNAM? 0:06:09.800 --> 0:06:11.919 It's doing really well, like brow twenty two percent in 0:06:11.960 --> 0:06:15.200 constant currency in the quarter, so right where we expected. 0:06:15.279 --> 0:06:18.000 And I think you know that's a high profit business. 0:06:18.040 --> 0:06:20.640 It's about seventy five to eighty percent profit margins by 0:06:20.640 --> 0:06:24.080 our estimates, and that's flowing right to the bottom line. 0:06:24.080 --> 0:06:26.200 We see it going to one hundred million dollars. So 0:06:26.240 --> 0:06:29.120 there's a lot of improvement that they can build in 0:06:29.200 --> 0:06:31.680 advertising and really drive that business higher from here. 0:06:31.800 --> 0:06:34.320 Where's that coming from? Is that coming from interstitials placed 0:06:34.320 --> 0:06:38.320 in Amazon Prime Video, which I think you know, cut 0:06:38.360 --> 0:06:40.200 a lot of people off guard when they started doing that. 0:06:40.440 --> 0:06:43.880 Was it last year maybe? Or yeah? Or is it 0:06:43.960 --> 0:06:46.679 or is it coming from like products that are paid 0:06:46.720 --> 0:06:47.400 for placement. 0:06:48.760 --> 0:06:51.160 I think it's a combination of both. You're absolutely right 0:06:51.200 --> 0:06:53.920 these ads are driving incremental revenue. But if you think 0:06:53.920 --> 0:06:57.360 about the base of this revenue base. It's still coming 0:06:57.400 --> 0:07:00.640 from product advertisements. The ads do how and they will 0:07:00.640 --> 0:07:03.720 become a larger driver as the ad business grows in size, 0:07:04.120 --> 0:07:06.479 But the core of it is still product advertisement. 0:07:06.839 --> 0:07:08.280 Hey, put them before we let you go. 0:07:08.960 --> 0:07:10.920 What's kind of top of mind for you and the 0:07:10.960 --> 0:07:13.240 areas that you cover with Amazon that you would be 0:07:13.280 --> 0:07:15.000 asking on the earnings call. 0:07:16.480 --> 0:07:18.720 On the retail side, it's really about holiday and how 0:07:18.720 --> 0:07:21.560 that's going. The October Prime Day deals that they had, 0:07:21.600 --> 0:07:24.240 how that's going and how the customer is responding. We 0:07:24.280 --> 0:07:27.440 think the customers are still holding up. Well, are they 0:07:27.480 --> 0:07:29.960 seeing the same thing and how do they see holiday 0:07:29.960 --> 0:07:31.840 shaping out to be? Where we're entering holiday? 0:07:32.160 --> 0:07:32.480 All right? 0:07:32.640 --> 0:07:32.920 Love it? 0:07:32.960 --> 0:07:33.200 Love it. 0:07:33.640 --> 0:07:35.840 Looking out for Punham's research too. That will hit the 0:07:35.880 --> 0:07:38.680 Bloomberg Punam Oil as Bloomberg Intelligence senior hours for e 0:07:38.720 --> 0:07:40.960 commerce and at leisure. We want to go back to 0:07:41.000 --> 0:07:44.640 the co host b Tech on Bloomberg TV every day 0:07:44.680 --> 0:07:48.360 eleven am to noon on Bloomberg Television, Ed Ludlow still 0:07:48.360 --> 0:07:50.800 with us at as you continue to pour over that release, 0:07:51.280 --> 0:07:52.640 what else is catching your attention? 0:07:53.400 --> 0:07:56.640 Yeah, I mean Punham gave us the story with Amazon 0:07:56.680 --> 0:07:58.640 dot com. Right, most of the audience are going to 0:07:58.680 --> 0:08:01.240 be more familiar with the e commerce business than they 0:08:01.240 --> 0:08:04.240 are with the cloud computing business. They are number one 0:08:04.240 --> 0:08:07.720 in cow computing, and as Punam put it so succinctly, 0:08:08.240 --> 0:08:13.400 the profit is compensated for the less profitable e commerce 0:08:13.440 --> 0:08:17.520 side through cloud. But Andy Jasse's really focused on retail 0:08:17.600 --> 0:08:20.640 being more profitable. Tim is absolutely right that you look 0:08:20.640 --> 0:08:23.360 at advertising and the role that that's played there and 0:08:23.400 --> 0:08:26.760 it has been improved. I would also just note that 0:08:26.840 --> 0:08:30.880 in the quarter, Amazons numbers reflect almost two billion dollars 0:08:30.880 --> 0:08:34.160 in severance costs. That's the other story of Amazon right now, 0:08:34.400 --> 0:08:35.560 getting rid of the blow. 0:08:35.600 --> 0:08:38.160 That was the previous quarter, right, not the current quarter. 0:08:38.960 --> 0:08:40.320 Previous quarter exactly. 0:08:41.120 --> 0:08:43.000 Yeah, is the current quarter going to take a hit 0:08:43.080 --> 0:08:46.520 right now or is it going to be the upcoming quarter. 0:08:46.640 --> 0:08:48.760 It's always tough with this stuff because we don't know 0:08:48.800 --> 0:08:50.160 how these employment agreements work. 0:08:50.800 --> 0:08:54.839 Yeah, but the third quarter operating income was twenty one 0:08:54.880 --> 0:08:57.840 point seven billion dollars, almost twenty two billion dollars without 0:08:57.960 --> 0:09:01.080 charges when you strip the charges out, and so you 0:09:01.120 --> 0:09:06.000 know this is a profitable business overall because of cloud. 0:09:06.240 --> 0:09:08.360 It's a funny thing to say but what's a couple 0:09:08.360 --> 0:09:11.959 of billion, you know to right size the company? And 0:09:12.600 --> 0:09:15.960 that is the thing here. Amazon has been inconsistent on 0:09:16.000 --> 0:09:19.000 this point. At one time Andy Jesse said that right 0:09:19.120 --> 0:09:22.600 sizing the company eliminating roles was because of the advent 0:09:22.640 --> 0:09:25.400 of AI. But the communication this past week when they 0:09:25.440 --> 0:09:28.440 cut fourteen thousand corporate roles was it was more about 0:09:28.520 --> 0:09:32.200 bloat and middle management, right sizing areas and simplifying the 0:09:32.240 --> 0:09:35.840 management structure more than anything. So it's hard to know 0:09:35.880 --> 0:09:38.960 which of those two stories is the predominant of prevailing 0:09:39.520 --> 0:09:43.400 one here. But yeah, it's for Amazon, like it's a 0:09:43.440 --> 0:09:45.800 one time charge that so what all right? 0:09:45.840 --> 0:09:47.920 We want to bring into the conversation to Eric Clark, 0:09:48.000 --> 0:09:51.760 chief investment officer at ACIVASQ Global Advisors and portfolio manager 0:09:52.040 --> 0:09:56.400 for the Alpha Brands Logo ETF, which has Amazon and 0:09:56.520 --> 0:10:01.640 Apple and Alphabet and Microsoft and Netflix in its holdings. 0:10:01.760 --> 0:10:03.679 Ed Lolo is going to stay with us. He's, of course, 0:10:03.720 --> 0:10:05.400 co host of b Tech on BTV. 0:10:05.679 --> 0:10:07.760 Eric, come on in on Amazon. You like this? 0:10:09.280 --> 0:10:09.880 I love it. 0:10:09.960 --> 0:10:12.320 I mean I think the market loves it too. How 0:10:12.360 --> 0:10:15.720 are you guys? I think the setup into the quarter 0:10:16.400 --> 0:10:20.400 was pretty attractive because people were nervous about AWS and 0:10:20.480 --> 0:10:23.760 losing market share, so the stock sold off into the 0:10:23.760 --> 0:10:26.679 print and then you get some reality that Amazon is 0:10:26.720 --> 0:10:28.160 still doing Amazon. 0:10:28.600 --> 0:10:30.200 Well, how do you read into this report in the 0:10:30.240 --> 0:10:33.000 context of the layoffs that we learned about earlier this week? 0:10:33.679 --> 0:10:36.280 Did Amazon need to do those layoffs? Do you see 0:10:36.280 --> 0:10:39.199 it as a directional shift for the company? Obviously they 0:10:39.200 --> 0:10:41.040 were doing pretty well with this same headcount. 0:10:42.840 --> 0:10:44.520 I mean, you're going to hear more and more of this, 0:10:44.600 --> 0:10:46.680 and I don't love that as a consumer investor, But 0:10:46.720 --> 0:10:50.760 the reality is, when you're implementing AI through your business, 0:10:50.760 --> 0:10:54.200 and you're obviously serving other companies doing the same thing, 0:10:54.840 --> 0:10:57.760 right sizing of your headcount is a big part of 0:10:57.800 --> 0:11:02.320 the story. And so with robot in warehouses plus all 0:11:02.360 --> 0:11:05.440 the typical right sizing, it's a very large company, a 0:11:05.520 --> 0:11:09.120 very large employer. So I think we're we're going to 0:11:09.200 --> 0:11:13.240 have to hear about that across most companies certainly deploying 0:11:13.280 --> 0:11:16.559 AI because they're getting a lot of efficiencies and might 0:11:16.600 --> 0:11:18.080 not need the same kind of people. 0:11:18.360 --> 0:11:20.640 Hey, Ed, I know you're doing double duty for us 0:11:20.679 --> 0:11:23.240 and for our TV team, but you know, I'm just 0:11:23.240 --> 0:11:26.440 thinking about all these names, these hyperscalers, these big tech 0:11:26.480 --> 0:11:29.160 that have been reporting, as Zanna Agrana said, they're not 0:11:29.200 --> 0:11:31.319 apples to apples, even though we sometimes. 0:11:31.320 --> 0:11:32.400 Get we're getting apple. 0:11:33.840 --> 0:11:35.400 We put them together and it's going to be back 0:11:35.440 --> 0:11:37.240 to to talk Apple with us. But how are you 0:11:37.320 --> 0:11:40.599 thinking against kind of the big cap technique? 0:11:40.720 --> 0:11:41.440 Smart question? 0:11:41.720 --> 0:11:43.120 Yeah, this fits well. 0:11:43.240 --> 0:11:45.720 So what they all have in common is capital expenditures. 0:11:45.800 --> 0:11:48.480 So okay, on the one hand, they will have capital expenditures. 0:11:48.720 --> 0:11:50.920 It's what they then are able to say on the 0:11:50.960 --> 0:11:54.080 other that they've been inconsistent. Meta didn't say anything about 0:11:54.400 --> 0:11:58.320 growth related to AI, and the stop fell precipitously. I 0:11:58.400 --> 0:12:01.160 go back to the trainium too headline from aws hit 0:12:01.200 --> 0:12:04.400 being a multi billion dollar business, their commitment to invest 0:12:04.440 --> 0:12:06.800 in infrastructure, but also giving us a number for what's 0:12:06.800 --> 0:12:10.839 come online. The kind of fighting talk from Andy Jasse 0:12:11.320 --> 0:12:14.280 on the AWS growth and its ties to AI specifically, 0:12:14.840 --> 0:12:17.840 investors seem to be rewarding any more little bits of 0:12:17.880 --> 0:12:20.880 information that you can get that shows something coming out 0:12:21.000 --> 0:12:23.920 of the investment that's happened in prior quarters. And so 0:12:24.400 --> 0:12:26.920 while they all have capex in common, the story they 0:12:26.920 --> 0:12:29.400 have to tell about literal top line growth as it 0:12:29.440 --> 0:12:32.400 relates to AI has been very different, and Amazon has 0:12:32.440 --> 0:12:33.600 something to say here clearly. 0:12:34.640 --> 0:12:36.160 All right, Ed, we know you're going to probably head 0:12:36.200 --> 0:12:37.600 over to the TV side, but you're going to come 0:12:37.640 --> 0:12:39.240 back with us a little bit later on when Apple 0:12:39.320 --> 0:12:42.400 reports in just a few minutes. Our Ed Ludlow, of course, 0:12:42.440 --> 0:12:44.640 co host of b Tech on BTV, still with us, 0:12:44.640 --> 0:12:45.000 as though. 0:12:45.120 --> 0:12:47.000 Eric Clark, Hey, Eric, I want to bring you back 0:12:47.040 --> 0:12:49.440 into this conversation. All the companies that we love to 0:12:49.480 --> 0:12:53.320 talk about are in your Logo US fund. That's the 0:12:53.320 --> 0:12:56.959 ticker logo US. Amazon is one of the top ten 0:12:57.080 --> 0:12:59.920 holdings in there. It's about four point three percent of 0:13:00.480 --> 0:13:03.640 the portfolio. Are you buying more on this? 0:13:05.360 --> 0:13:07.679 I don't know that I'm going to chase any because 0:13:07.679 --> 0:13:09.520 it'll be interesting to see if we get a little 0:13:09.520 --> 0:13:11.760 bit of fade. You know that some of the Bears 0:13:11.840 --> 0:13:14.680 might come out and say that, well it was a beat, 0:13:14.720 --> 0:13:17.960 but they're still losing market share to Google and to Azure, 0:13:18.440 --> 0:13:21.840 but off of such a big scale. I just don't 0:13:21.840 --> 0:13:24.760 think that's a very you know, wise decision or a 0:13:24.800 --> 0:13:28.240 wise conclusion to make. And people still give the retail 0:13:28.280 --> 0:13:31.560 business no respect. Margins are going to keep going up 0:13:31.760 --> 0:13:34.079 with head count's going to be right size, there's just. 0:13:34.280 --> 0:13:36.120 Yeah, why do you say margins are going to go up? 0:13:36.160 --> 0:13:40.840 They're eating tariffs right now? Well, it wouldn't. 0:13:41.160 --> 0:13:45.480 Let's say, let's say I would bet you that there's 0:13:45.520 --> 0:13:48.600 at least a more than fifty to fifty chance that 0:13:49.080 --> 0:13:52.400 these tariffs get rolled back, whether it's the Supreme Court 0:13:52.480 --> 0:13:56.360 doing it or the administration saying that we need actual 0:13:56.440 --> 0:14:00.400 growth and tariffs might not be you know, pro growth 0:14:00.440 --> 0:14:03.320 in that perspective. I just think there are too many 0:14:03.360 --> 0:14:07.880 efficiencies to be had that will eventually lead to margin expansion. 0:14:08.040 --> 0:14:10.160 This is part of a much bigger conversation. But those 0:14:10.160 --> 0:14:16.240 tariffs are supposed to at least partially offset the revenue 0:14:16.280 --> 0:14:20.080 decreases coming from the One Big, Beautiful Bell Act. So 0:14:20.200 --> 0:14:22.640 thanks cuts right that are included as part of that. 0:14:23.160 --> 0:14:26.640 So how do how does that square for the fiscal 0:14:26.720 --> 0:14:28.720 I mean, look, this is not a conversation about the 0:14:28.720 --> 0:14:31.000 fiscal health, but this all affects the consumer at the 0:14:31.040 --> 0:14:32.400 end of the day, and that's what you look at 0:14:33.520 --> 0:14:35.920 it does it does? I mean, the smaller companies don't 0:14:35.960 --> 0:14:37.960 have as many levers to pull to try to to 0:14:38.080 --> 0:14:42.080 keep prices where they are, and I think this massive 0:14:42.120 --> 0:14:46.440 headcount is being underappreciated too, because that's a pretty large 0:14:46.520 --> 0:14:49.520 number that ultimately will have an effect on their ability 0:14:49.560 --> 0:14:51.920 to keep prices which drives traffic. 0:14:52.200 --> 0:14:55.600 And Amazon, Walmart, you know, Costco. There's still the three 0:14:55.680 --> 0:14:58.120 brands that people are turning to when they're looking to 0:14:58.160 --> 0:15:02.560 save money. So there's at this amount of scale globally, 0:15:03.160 --> 0:15:06.480 there's a lot of operating efficiencies that keep margins higher. 0:15:06.480 --> 0:15:09.320 And I still think the cost to serve goes down 0:15:09.360 --> 0:15:13.080 and continues to go down, which pushes margins up over time. 0:15:13.320 --> 0:15:17.320 And I just don't think the tariffs are pro growth. 0:15:17.600 --> 0:15:21.680 And it's midterm elections next year. Pro growth is going 0:15:21.720 --> 0:15:23.920 to get a lot more focus as we head into 0:15:23.920 --> 0:15:24.800 twenty twenty six. 0:15:24.960 --> 0:15:28.720 Hey, if you're just joining us. Amazon out with earnings. 0:15:29.240 --> 0:15:32.560 Just shortly after the market closed, Amazon's cloud unit posted 0:15:32.600 --> 0:15:35.800 the strongest growth rate in almost three years, so reassuring 0:15:35.840 --> 0:15:39.760 investors concerned that the largest seller of rented computing power 0:15:39.800 --> 0:15:43.720 was losing ground to rivals AWS. Amazon Web Services posted 0:15:43.760 --> 0:15:47.040 revenue of thirty three billion dollars, an increase of twenty 0:15:47.080 --> 0:15:50.080 percent from the prior year and the biggest year over 0:15:50.160 --> 0:15:53.520 year rise since the end of twenty twenty two, analysts 0:15:53.520 --> 0:15:56.320 on average had estimated about eighteen percent growth. We are 0:15:56.360 --> 0:15:59.240 still looking at this stock up about nine point two 0:15:59.240 --> 0:16:02.080 percent in the after market. We've seen it up as 0:16:02.160 --> 0:16:06.280 much as ten percent, but again, investors definitely all. 0:16:06.120 --> 0:16:06.960 In on what they got. 0:16:07.080 --> 0:16:09.440 Okay, So Eric on the AWS side is I know, 0:16:09.440 --> 0:16:12.160 you look at the consumer, but AWS powers this company 0:16:12.160 --> 0:16:15.680 from a profitability perspective. Still more room in your view 0:16:15.720 --> 0:16:17.960 for AWS to get market share. That was a question 0:16:18.200 --> 0:16:19.880 that a lot of people had going into this call. 0:16:20.840 --> 0:16:23.000 You know, I mean, I've been listening to a bunch 0:16:23.080 --> 0:16:25.480 of calls from a bunch of different tech companies and 0:16:25.560 --> 0:16:30.360 retail companies. There is so much demand for these products 0:16:30.360 --> 0:16:33.520 and services and tools that I think there's enough business 0:16:33.560 --> 0:16:36.280 to go around for everybody. And you know, I understand 0:16:36.320 --> 0:16:40.320 that Google has Gemini and Azure has open ai and 0:16:40.400 --> 0:16:45.280 chat youpt, but you know, don't underestimate anthropic and its role. 0:16:45.640 --> 0:16:48.080 Every company is going to do things a little bit differently, 0:16:48.160 --> 0:16:51.640 and the inference is obviously the most important part long term. 0:16:51.760 --> 0:16:54.560 So I think there's enough business to go around, and 0:16:55.560 --> 0:16:59.800 I have learned not to underestimate Amazon's management team. The 0:17:00.160 --> 0:17:03.360 stock can lag when they're in these big capex cycles 0:17:03.600 --> 0:17:06.359 and then it plays WI could catch up with with 0:17:06.400 --> 0:17:09.040 the monetization part of it. But they've said now for 0:17:09.080 --> 0:17:12.320 two quarters that they their business is stable enough at 0:17:12.320 --> 0:17:15.280 the retail and at aws that they can fund the 0:17:15.320 --> 0:17:19.240 growth while not you know, spending too much. Meta got 0:17:19.240 --> 0:17:22.240 crushed because the expense structure is out of control, and 0:17:22.280 --> 0:17:23.680 I don't see that here with Amazon. 0:17:24.600 --> 0:17:28.040 So to be fair, alphabet is your fifth biggest holding 0:17:28.359 --> 0:17:31.280 in your logo ETF, so you are able to kind 0:17:31.280 --> 0:17:34.720 of get exposure to both. We do, we do. 0:17:34.880 --> 0:17:38.400 I mean the Google the Google quarter was was was stellar. 0:17:38.800 --> 0:17:41.240 Growth is strong, and that you know clearly with that 0:17:41.280 --> 0:17:45.480 big acquisition on cybersecurity that that is the next phase 0:17:45.520 --> 0:17:48.640 of Google rather than search, because we know search might 0:17:48.680 --> 0:17:50.640 be a bit of a melting ice cube over time, 0:17:50.640 --> 0:17:53.600 but it is a slow moving melting ice cube, and 0:17:53.640 --> 0:17:57.640 so they're they're doing exceptional things and clearly underestimated looking 0:17:57.640 --> 0:17:59.680 at the stock over the you know, over the last 0:17:59.680 --> 0:18:00.880 couple months, Erica. 0:18:00.720 --> 0:18:02.960 Do you want to go back to Amazon again? Still 0:18:03.040 --> 0:18:05.679 up about nine percent here in the aftermarket. You know, 0:18:05.760 --> 0:18:08.439 you mentioned anthropic and in the release I did a 0:18:08.480 --> 0:18:11.639 search as soon as it came out because investors and 0:18:11.640 --> 0:18:15.960 analysts were curious about that net income increased to twenty 0:18:16.000 --> 0:18:19.840 one point two billion in the third quarter for Amazon 0:18:19.960 --> 0:18:22.760 compared with fifteen point three billion in the third quarter 0:18:23.119 --> 0:18:23.840 one year ago. 0:18:24.359 --> 0:18:25.880 Third quarter twenty twenty five. 0:18:25.960 --> 0:18:29.000 Net income includes pre tax gains of nine and a 0:18:29.040 --> 0:18:33.760 half billion included in non operating income from their investments 0:18:33.760 --> 0:18:37.520 in Anthropic, so that investment paying off. 0:18:39.119 --> 0:18:41.680 Very much so, and the same thing could be said 0:18:41.720 --> 0:18:47.040 about Microsoft and and open Ai. So you know, they've 0:18:47.080 --> 0:18:50.399 picked a bunch of the megacaps have all picked a 0:18:50.480 --> 0:18:55.639 handful of these companies, And obviously it's about computing, power 0:18:55.920 --> 0:18:59.320 and energy because the demand is clearly there. They just 0:18:59.400 --> 0:19:01.720 need to be able to serve the demand. And the 0:19:01.720 --> 0:19:03.959 good news is they don't do it all in one 0:19:04.040 --> 0:19:07.920 or two quarters. This is probably sustainable demand and sustainable 0:19:07.960 --> 0:19:10.720 growth for the next couple of years for all these companies. 0:19:11.359 --> 0:19:14.160 Stay with us. More from Bloomberg Business Week Daily coming 0:19:14.240 --> 0:19:15.200 up after this. 0:19:19.080 --> 0:19:22.960 You're listening to the Bloomberg Business Week Daily podcast. Catch 0:19:23.040 --> 0:19:25.720 us live weekday afternoons from two to five Easter and 0:19:25.880 --> 0:19:29.840 listen on Applecarplay and Android Auto with the Bloomberg Business app, 0:19:30.000 --> 0:19:34.240 or watch us live on YouTube. 0:19:34.200 --> 0:19:36.119 Apple is out. Let's get to it, folks. 0:19:36.280 --> 0:19:38.159 Okay, well, there were some beats and there were some misses. 0:19:38.200 --> 0:19:41.240 Let's start with the missus fourth quarter Greater China revenue 0:19:41.280 --> 0:19:44.800 a big, big miss there, fourteen point four nine billion dollars. 0:19:44.840 --> 0:19:47.679 The stimus for sixteen point four to three billion dollars 0:19:47.720 --> 0:19:51.199 overall revenue, though coming in above one hundred billion dollars 0:19:51.280 --> 0:19:54.240 that for the first time ever. For the September quarter 0:19:54.480 --> 0:19:58.960 Greater China revenue twelve percent below CONCESSUS estimate. Services came 0:19:59.000 --> 0:20:02.600 in with a nice beat. Another miss, surprisingly, the iPhone 0:20:02.680 --> 0:20:05.200 forty nine point zero three billion versus forty nine point 0:20:05.200 --> 0:20:06.040 three billion dollars. 0:20:06.119 --> 0:20:10.000 Yeah, Mark Kerman saying operating expensive expenses which everyone is 0:20:10.040 --> 0:20:12.199 now closely watching. Things to meta came in line with 0:20:12.320 --> 0:20:15.520 expectations of fifteen point nine one billion. I'm sure we 0:20:15.560 --> 0:20:18.200 will hear more about investing on the call that's coming 0:20:18.720 --> 0:20:22.920 from our Markerman, who covers Apple so closely and looks 0:20:22.920 --> 0:20:24.719 at consumer tech overall. 0:20:25.400 --> 0:20:26.720 Let's get to it with Jay Goldberg. 0:20:26.760 --> 0:20:31.880 He's senior alys Semiconductors and Electronics at Seaport Research Partners. 0:20:31.880 --> 0:20:35.560 He's got to buy on Apple, joining us from San Francisco. 0:20:35.800 --> 0:20:37.480 Take it away, Apple, what do you think? 0:20:38.640 --> 0:20:39.879 Yeah, it looks it looks okay. 0:20:40.080 --> 0:20:43.320 It's it's not perfect, it's not totally clean, but it's 0:20:43.359 --> 0:20:44.240 it's got some good stuff. 0:20:44.240 --> 0:20:46.159 It's got some you know, okay stuff. 0:20:46.480 --> 0:20:48.240 The yeah, go ahead, Carol, Well what's good? 0:20:48.280 --> 0:20:50.200 What's okay? 0:20:51.080 --> 0:20:51.679