WEBVTT - Nvidia Forecasts Decelerating Growth After Two-Year AI Boom 0:00:02.720 --> 0:00:10.600 Bloomberg Audio Studios, Podcasts, radio news. You're listening to the 0:00:10.640 --> 0:00:14.600 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.640 --> 0:00:18.560 Easterned on Applecarplay and Android Auto with the Bloomberg Business App. 0:00:18.680 --> 0:00:21.880 Listen on demand wherever you get your podcasts, or watch 0:00:22.000 --> 0:00:23.120 us live on YouTube. 0:00:23.880 --> 0:00:27.440 The stock story of the day is in vidiot. Always 0:00:27.560 --> 0:00:32.040 highly anticipated. They reported numbers inline, guidance in line. But 0:00:32.120 --> 0:00:34.760 it wasn't a beat and raised Like a lot of 0:00:34.800 --> 0:00:37.560 investors had become accustomed to a lot of fuzziness in 0:00:38.000 --> 0:00:41.120 the numbers and the estimates out there, whether to include 0:00:41.200 --> 0:00:43.400 China revenue, not to include China revenue. Who are you 0:00:43.400 --> 0:00:46.080 given the US government it's fifteen percent cut. I think 0:00:46.120 --> 0:00:47.800 the numbers are kind of squishy out there, at least 0:00:47.800 --> 0:00:50.720 in the near turn. It's a CFA term squishy. Cu 0:00:50.760 --> 0:00:53.080 John Sabani. It's his job to kind of make sense 0:00:53.080 --> 0:00:56.840 of it. He's a senior analyst covering semiconductors for Bloomberg Intelligence. 0:00:57.320 --> 0:00:59.720 He's based out there in San Francisco. Cu John, love 0:00:59.760 --> 0:01:03.200 to get your informed opinion about what you saw from 0:01:03.880 --> 0:01:05.399 the good folks at in video last night. 0:01:07.120 --> 0:01:09.280 Yeah, like you said, it was once again a solid 0:01:09.400 --> 0:01:13.800 sprinted guide. It checked all the fundamental key boxes, but 0:01:14.200 --> 0:01:16.480 as has been the case with this name, you know, 0:01:16.520 --> 0:01:19.920 the expectations always run higher, and maybe not all the 0:01:20.000 --> 0:01:23.280 numbers were able to clear that high hurdle of expectations. 0:01:23.520 --> 0:01:27.000 Specifically the data center compute numbers in two Q. You 0:01:27.040 --> 0:01:28.960 would have liked to see that come in a little 0:01:28.959 --> 0:01:31.280 bit high. But there was still a lot of strong 0:01:31.840 --> 0:01:36.720 positive underlyings. One, the networking was a significant bead, which 0:01:36.920 --> 0:01:40.039 shows the strength and the attachment that they're getting from 0:01:40.120 --> 0:01:43.360 their networking switches and chips in the Blackwell ramp. 0:01:43.600 --> 0:01:45.319 Second, like you mentioned, the. 0:01:45.200 --> 0:01:49.040 Three Q consensus had China included, and they still beat 0:01:49.280 --> 0:01:51.480 their three Q guide without China. If you add in 0:01:51.560 --> 0:01:53.920 the China guide of two to five billion, they would 0:01:53.920 --> 0:01:57.000 have handsomely beaten the three Q numbers. So that noisy 0:01:57.200 --> 0:02:00.960 sort of consensus shadowed the goodness is coming out of 0:02:01.000 --> 0:02:02.240 the guide of Nvidia. 0:02:02.480 --> 0:02:06.040 All right, So what's the company telling us now about China? 0:02:06.040 --> 0:02:08.160 Guess quite frankly, I just I'm reading the press. I 0:02:08.200 --> 0:02:09.440 don't know whether they're going to be able to sell 0:02:09.480 --> 0:02:12.040 stuff in the China or when, or whether they're going 0:02:12.080 --> 0:02:14.280 to have to give a fifteen percent cut to the 0:02:14.360 --> 0:02:15.040 US government. 0:02:15.680 --> 0:02:16.640 How's that going to play out? 0:02:17.160 --> 0:02:20.280 Yeah, so China still remains, you know, after learning sort 0:02:20.320 --> 0:02:24.520 of that overhang in terms of uncertainty. The company did 0:02:24.680 --> 0:02:28.200 guide to a two to five billion revenues from the 0:02:28.280 --> 0:02:31.040 age twenty in China next quarter, which is positive. 0:02:31.120 --> 0:02:33.760 That means they feel confident that they'll. 0:02:33.560 --> 0:02:36.840 At least be able to ship some and get some 0:02:36.960 --> 0:02:39.760 of the revenues back. But yes, you know, the spark 0:02:39.840 --> 0:02:43.200 here for the China story will not appear until we 0:02:43.320 --> 0:02:46.000 have a clarity, and we believe until they have a 0:02:46.040 --> 0:02:49.360 blackwell version of a China chip, which they get approval 0:02:49.400 --> 0:02:52.400 from the government, that will end really open up a 0:02:52.440 --> 0:02:55.440 massive amount of revenues coming from China. And there's a 0:02:55.440 --> 0:02:58.320 lot of hurdle's unit to clear. Right, there's the government, 0:02:58.360 --> 0:03:00.320 which has nothing to do with in media. The US 0:03:00.400 --> 0:03:03.400 China relationship needs to get sorted out because now even 0:03:03.480 --> 0:03:06.480 China can put in a roadblock from Nvidia selling or 0:03:07.000 --> 0:03:10.760 allowing their companies in China from buying in media chip. 0:03:10.880 --> 0:03:12.799 So there is work to be done. 0:03:13.160 --> 0:03:16.040 As you mentioned, the fifteen percent cut is not ironed 0:03:16.080 --> 0:03:19.080 out in terms of laws. There is We've heard new 0:03:19.160 --> 0:03:20.600 stories about potential lawsuits. 0:03:20.639 --> 0:03:21.799 So those two. 0:03:21.960 --> 0:03:26.240 Government and geopolitical angle needs to be cleared before we 0:03:26.280 --> 0:03:29.200 can start seeing billions of dollars of data center China 0:03:29.240 --> 0:03:30.079 revenue coming. 0:03:29.880 --> 0:03:33.920 In Ku John, we're what's the competitive landscape here for 0:03:33.919 --> 0:03:37.600 these chip companies VISA, v in Nvidia and just kind 0:03:37.600 --> 0:03:40.120 of positioning for AI. 0:03:40.320 --> 0:03:43.440 I assume in Vidia's position A. Who's kind of B 0:03:43.520 --> 0:03:43.720 and C. 0:03:45.760 --> 0:03:49.280 Yeah, So you know this space is divided into two categories. 0:03:49.320 --> 0:03:51.840 One is the merchant GPUs, which is what in Vdia 0:03:51.920 --> 0:03:56.920 sells and dominates that landscape, this sort of second competitor there, 0:03:57.040 --> 0:04:00.600 or the B is AMD, which is a very far distant. 0:04:00.600 --> 0:04:03.920 You know, Nvidia today has about over ninety percent in 0:04:03.960 --> 0:04:07.640 terms of revenue share and the remaining is going to 0:04:07.720 --> 0:04:08.720 a very small to AMD. 0:04:09.000 --> 0:04:10.600 But there's another piece, which is. 0:04:10.480 --> 0:04:12.640 We call what we call A six, which is what 0:04:12.800 --> 0:04:16.400 these big hyperscalers and cloud providers like Amazon and Google 0:04:16.680 --> 0:04:19.039 designed their own chips. So that's sort of the other 0:04:19.120 --> 0:04:22.320 competitive landscape where there's a risk of the A six 0:04:22.440 --> 0:04:26.480 taking sort of share away from merchant GPUs even though 0:04:26.480 --> 0:04:29.520 they don't compete directly for the same socket, they could 0:04:29.560 --> 0:04:30.720 take away the wallet share. 0:04:31.520 --> 0:04:35.120 And so does that mean companies like Nvidia have to 0:04:35.160 --> 0:04:37.479 pour money into R and D for that next chip 0:04:37.520 --> 0:04:39.960 to stay on front, because I know in your business 0:04:40.920 --> 0:04:42.240 technology changes quickly. 0:04:43.760 --> 0:04:44.440 Yeah, definitely. 0:04:44.440 --> 0:04:47.080 I mean, look, and Media has been even before the 0:04:47.080 --> 0:04:49.599 AI event happened, and Media has been the biggest R 0:04:49.640 --> 0:04:52.720 and D spender. They have continued and this is what 0:04:52.839 --> 0:04:55.279 really got them to the stage of being ahead of 0:04:55.320 --> 0:04:58.279 everyone else, and they have to continue spending out spending 0:04:58.360 --> 0:05:01.760 everyone else to sort of keep that lead. Their roadmap 0:05:01.800 --> 0:05:03.719 for the next two and a half years does suggest 0:05:03.760 --> 0:05:06.120 that they should be able to keep this lead handsomely, 0:05:06.440 --> 0:05:09.160 and for that it will definitely require high R and 0:05:09.200 --> 0:05:09.719 D spending. 0:05:10.560 --> 0:05:14.400 So this name to me who I'm used to stocks 0:05:14.400 --> 0:05:16.760 trading in, you know, much lower multiples in my world, 0:05:17.400 --> 0:05:19.840 But this seems like a stock that can actually earn 0:05:19.880 --> 0:05:22.800 its way, and we have seen it earn its way 0:05:22.960 --> 0:05:23.920 into its multiple. 0:05:24.000 --> 0:05:25.800 I mean, you can make an argument this is not 0:05:25.839 --> 0:05:26.880 an expensive. 0:05:26.440 --> 0:05:29.680 Stock, You're right. 0:05:29.720 --> 0:05:33.960 I mean, if you look at from a historical perspective, 0:05:34.000 --> 0:05:37.240 it's actually the multiple is much more lower than what 0:05:37.279 --> 0:05:39.479 we have seen in media trade in the past two years. 0:05:39.960 --> 0:05:42.520 So given that fact, and also when we look at 0:05:42.520 --> 0:05:45.919 the relative comparison when you think about a company growing 0:05:45.960 --> 0:05:49.160 at fifty percent and making revenue in the hundreds of billions, 0:05:49.160 --> 0:05:53.799 that isn't unprecedented, especially growing with gross margins of seventy 0:05:53.920 --> 0:05:56.560 mits or low seventy percent. I mean, you're talking about 0:05:56.600 --> 0:05:59.840 a financial profile for software company, not a seving net company. 0:06:00.360 --> 0:06:04.000 So definitely, when you take into those two things into account, 0:06:04.080 --> 0:06:07.719 it does seem that it might not be really highly valuable. 0:06:08.120 --> 0:06:11.240 Stay with us more from Bloomberg Intelligence coming up after this. 0:06:13.400 --> 0:06:17.039 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:06:17.200 --> 0:06:20.279 weekdays at ten am Eastern on Apple, Cocklay and Android 0:06:20.279 --> 0:06:23.599 Auto with the Bloomberg Business app. Listen on demand wherever 0:06:23.640 --> 0:06:27.159 you get your podcasts, or watch us live on YouTube. 0:06:27.920 --> 0:06:30.599 Dollar General the stocks pretty much, they reported numbers, lifted 0:06:30.600 --> 0:06:33.240 their guidance. Stock's flat today, but boy, it's a forty 0:06:33.320 --> 0:06:36.200 seven percent year to date, so the street definitely likes 0:06:36.200 --> 0:06:38.799 what's going on at DG. Let's talk to an expert 0:06:38.800 --> 0:06:41.239 on this, Jen bartashes. She covers all the retail stuff 0:06:41.600 --> 0:06:45.000 for Bloomberg Intelligence. Jen, what'd you take away from Dollar 0:06:45.040 --> 0:06:46.320 General's results? 0:06:47.240 --> 0:06:51.320 Yeah, Hi, Paul, you know, overall, the results were pretty encouraging, 0:06:52.000 --> 0:06:55.039 and you know, we're looking at the consumer who is 0:06:55.080 --> 0:06:59.440 willing to spend selectively, and the value proposition for people 0:06:59.480 --> 0:07:02.760 who are in the discount space is really resonating. And 0:07:02.800 --> 0:07:05.919 so the tactics that the companies put in place to 0:07:05.960 --> 0:07:09.039 really improve store operations and things like that seem to 0:07:09.040 --> 0:07:11.200 be gaining traction and drawing more people into the. 0:07:11.200 --> 0:07:14.119 Stores, drawing more people into the stores, and drawing people 0:07:14.120 --> 0:07:17.960 from different income strata as well. More higher income customers 0:07:17.960 --> 0:07:20.400 are coming in. So that being the case, GEN does 0:07:20.480 --> 0:07:24.880 it need to broaden its selection of products available to customers. 0:07:26.080 --> 0:07:28.400 Well, I don't know that they need to broaden the selection, 0:07:28.560 --> 0:07:30.960 but they need to be thoughtful about the selection that's 0:07:30.960 --> 0:07:33.720 in the stores. I mean, these are small boxes, so 0:07:33.760 --> 0:07:36.800 you have very limited space, and in order to retain 0:07:36.880 --> 0:07:40.480 those higher income consumers from middle income, high income that 0:07:40.480 --> 0:07:42.920 are coming into Dollar General, part of it is going 0:07:43.000 --> 0:07:44.680 to be making sure that there are things that are 0:07:44.720 --> 0:07:48.440 fresh and interesting but still at very good value. And 0:07:48.480 --> 0:07:50.360 I think one of the interesting points is that Dollar 0:07:50.400 --> 0:07:53.160 General has been able to maintain a selection of things 0:07:53.200 --> 0:07:56.160 at one dollar price point, and when you think about it, 0:07:56.200 --> 0:07:58.800 their biggest rival in the Dollars Tree, the dollar space. 0:07:58.840 --> 0:08:02.640 Dollar Tree move to one twenty five as their baseline price, 0:08:02.720 --> 0:08:05.880 So there's definitely some opportunity there to appeal to that 0:08:06.160 --> 0:08:10.000 value seeker and give them something to be excited about. 0:08:10.520 --> 0:08:12.640 So if I look on the back of or on 0:08:12.720 --> 0:08:15.240 a tag for most of those items, I'm going to 0:08:15.280 --> 0:08:18.080 see made in China or something like that. How are 0:08:18.120 --> 0:08:20.600 they dealing with tariffs? How much are they passing on 0:08:20.640 --> 0:08:22.560 to consumers versus maybe taking in their margin. 0:08:23.840 --> 0:08:26.240 I think one of the advantages Dollar General has is 0:08:26.240 --> 0:08:29.440 that they have a lot less exposure to imports than 0:08:29.520 --> 0:08:32.880 most other retailers in the discount space, and that's really 0:08:32.920 --> 0:08:36.160 because over eighty percent of their sales are consumables, which 0:08:36.240 --> 0:08:40.360 is more food and household items, and the discretionary parts, 0:08:40.400 --> 0:08:43.559 which would be the decorations, the apparel. That sort of 0:08:43.559 --> 0:08:46.360 stuff is a much smaller part of their business, so 0:08:46.520 --> 0:08:48.880 they're able to mitigate some of the costs they are. 0:08:49.200 --> 0:08:53.200 They did talk about passing through prices when absolutely necessary, 0:08:54.040 --> 0:08:56.920 but I think that's part of the solution for Dollar 0:08:56.960 --> 0:08:59.559 General is that that product mix is playing in their 0:08:59.559 --> 0:09:00.440 favor right now. 0:09:00.920 --> 0:09:03.960 Right so they're like a smaller scale Walmart in many respects, 0:09:04.040 --> 0:09:08.720 rather than a smaller scale five below for instance. So 0:09:08.920 --> 0:09:11.040 given all of that, Jen, you had mentioned Dollar Tree 0:09:11.080 --> 0:09:13.679 being one of the biggest competitors to Dollar General. That 0:09:13.720 --> 0:09:17.000 company reports September third. How much can we take away 0:09:17.000 --> 0:09:19.240 from Dollar General and apply it to Dollar Tree. 0:09:20.320 --> 0:09:21.920 Well, I think Dollar Tree is in a bit of 0:09:21.960 --> 0:09:25.400 a unique position because they've shed off the Family Dollar operations, 0:09:25.440 --> 0:09:28.400 which means that they can really now focus on getting 0:09:28.440 --> 0:09:32.480 Dollar Tree to function at the best that it possibly can. 0:09:33.240 --> 0:09:36.679 I think that you have customers who are going into 0:09:36.720 --> 0:09:40.080 Dollar Tree. They have a multi price point program that 0:09:40.080 --> 0:09:42.480 they've been rolling out that's been doing pretty well. That 0:09:42.600 --> 0:09:45.680 should help support some of the top line growth. It's 0:09:45.679 --> 0:09:47.720 really going to be a question about margin for Dollar 0:09:47.760 --> 0:09:52.320 Tree and how much tariffs are impacting them already, although 0:09:52.320 --> 0:09:55.080 from what we've seen from other retailers, that impact may 0:09:55.120 --> 0:09:57.200 still be delayed into further in the second half of 0:09:57.240 --> 0:10:00.840 this year, just because they already had things in inventory 0:10:00.880 --> 0:10:01.920 that they're currently selling. 0:10:02.760 --> 0:10:07.760 So, Jen, in any town, USA, do these four dollars stores, 0:10:07.800 --> 0:10:10.319 Dollar Tree, Dollar Rama all that did? They are they 0:10:10.360 --> 0:10:12.760 all in the same town together? Is it more regionally 0:10:13.160 --> 0:10:13.720 carved out? 0:10:14.920 --> 0:10:18.160 Well, Dollar General by far has the greatest penetration into 0:10:18.160 --> 0:10:21.360 what you would call rural America and so you find 0:10:21.400 --> 0:10:24.240 them in very small communities sometimes is one of the 0:10:24.800 --> 0:10:28.040 key retailers in very small towns. When you look at 0:10:28.120 --> 0:10:30.440 like Family Dollar, it tends to skew a little bit 0:10:30.520 --> 0:10:33.240 more urban. There is some there is some rural presence, 0:10:33.240 --> 0:10:35.920 but not nearly as much. And they're in the process 0:10:35.960 --> 0:10:39.040 of closing a lot of stores for the other dollar, 0:10:39.400 --> 0:10:42.400 you know, the other dollar in low price you know, 0:10:42.480 --> 0:10:45.640 providers like A five below. They're still in the growth stage, 0:10:46.040 --> 0:10:48.680 so they don't have nearly a number of stores. You know. 0:10:48.720 --> 0:10:51.320 You have to remember Dollar General has over twenty thousand 0:10:51.360 --> 0:10:55.319 store locations just the United States, so it is pervasive 0:10:55.480 --> 0:10:57.240 through a lot of smaller communities. 0:10:57.920 --> 0:10:59.320 That's amazing. I didn't know that. 0:10:59.320 --> 0:11:02.240 That is pretty remarkable. Now now that Dollar Tree is 0:11:02.280 --> 0:11:05.080 shedding Family Dollar, what kind of opportunities does that provide 0:11:05.080 --> 0:11:05.880 for Dollar General. 0:11:07.280 --> 0:11:11.000 Well, it certainly gives an opportunity to look, especially where 0:11:11.120 --> 0:11:13.880 stores are closing, in terms of gaining market share, but 0:11:13.960 --> 0:11:18.920 it's also about re asserting value position and you know, 0:11:19.040 --> 0:11:23.000 capturing customers that have been dissatisfied or who may be 0:11:23.120 --> 0:11:26.960 looking for another alternative. We also saw Party City close, 0:11:27.120 --> 0:11:29.720 you know, last year and into the beginning of this year, 0:11:29.760 --> 0:11:33.000 and so you know there are there are strategic opportunities 0:11:33.040 --> 0:11:35.560 where they can go after you know, some of those 0:11:35.600 --> 0:11:38.679 types of occasions that historically people might not have gone 0:11:38.720 --> 0:11:39.679 to Dollar General for. 0:11:40.120 --> 0:11:43.240 Say, with us. More from Bloomberg Intelligence coming up after this. 0:11:45.400 --> 0:11:49.120 You're listening to the Bloomberg Intelligence podcast. Catch us Live 0:11:49.200 --> 0:11:51.880 weekdays at ten a m. Eastern on Apple, Cocklay and 0:11:51.880 --> 0:11:55.160 Android Auto with the Bloomberg Business app. Listen on demand 0:11:55.200 --> 0:11:59.200 wherever you get your podcasts, or watch US live on YouTube. 0:12:00.160 --> 0:12:02.240 One of the ones I always like is Dick's Sporting Goods. 0:12:02.240 --> 0:12:04.760 Give a sense of how the sporting goods business is doing, 0:12:05.320 --> 0:12:07.640 and they reported some number stock trading off a little bit. 0:12:07.640 --> 0:12:07.840 Here. 0:12:07.880 --> 0:12:12.560 Lindsay Dutch joins US Consumer Hardlines senior analyst from Bloomberg Intelligence. Lindsay, 0:12:12.600 --> 0:12:14.559 talk to us about dick Sporting Goods. What did they 0:12:14.880 --> 0:12:16.800 report most recently. 0:12:16.559 --> 0:12:19.800 Hi, Paul, thanks for having me. Yes, Dick's Sporting Goods 0:12:19.840 --> 0:12:24.319 had another strong quarter five percent same story growth. That's 0:12:24.320 --> 0:12:27.960 an acceleration sequentially and year over year. You know they're 0:12:28.000 --> 0:12:33.679 seeing strength across apparel, footwear, team sports, and golf. So 0:12:33.720 --> 0:12:37.040 a strong quarter, but the stock is trading off, and 0:12:37.080 --> 0:12:39.320 I think a lot of that is sort of a 0:12:39.360 --> 0:12:42.400 conservative outlook for the second half, you know, with some 0:12:42.679 --> 0:12:46.000 uncertainty and a lot of investors are still worried about 0:12:46.000 --> 0:12:49.960 the incorporation of Footlocker. With that deal to close in September, talk. 0:12:49.880 --> 0:12:51.640 Just about the foot Locker deal, what's the upside there? 0:12:52.440 --> 0:12:54.520 Yeah, So the Footlocker deal is a little bit different 0:12:54.600 --> 0:12:57.880 for DIS in terms of, you know, it leans a 0:12:57.880 --> 0:13:01.440 little bit more towards lifestyle rather than sport. It is 0:13:01.640 --> 0:13:04.840 it is a big acquisition, you're talking about adding about 0:13:05.200 --> 0:13:10.480 eight billion dollars in revenue. It also Footlocker skews to 0:13:10.640 --> 0:13:14.040 a lower income consumer and they have mall based stores, 0:13:14.080 --> 0:13:16.560 so it's a little bit of a different animal for DIS. 0:13:16.800 --> 0:13:20.040 You know, Dix has proven their own turnaround over the 0:13:20.080 --> 0:13:23.000 past couple of years and they really have strong demand 0:13:23.080 --> 0:13:25.600 with their assortment, but they're going to have to show 0:13:25.679 --> 0:13:28.319 that they can do that again with Footlocker. 0:13:29.040 --> 0:13:33.640 Is there is there a carefully articulated strategy about integrating 0:13:33.640 --> 0:13:36.679 Footlocker into Dix or I know they said that they're 0:13:36.679 --> 0:13:38.840 going to run as separate business unit. So I'm wondering, 0:13:38.880 --> 0:13:41.040 what's the point of buying footlocker then. 0:13:42.800 --> 0:13:46.239 So you're right correct, they're going to keep the footlocker banners, 0:13:46.360 --> 0:13:49.199 They're going to keep the stores there. As a customer, 0:13:49.280 --> 0:13:52.760 you might not even know that Dix has made this purchase. 0:13:53.440 --> 0:13:58.160 I think the big thing for Dix is expanding, you know, 0:13:58.360 --> 0:14:03.280 their customer reach and therefore the longer term opportunity for 0:14:03.360 --> 0:14:07.600 the company as a whole. So, like I said, you know, 0:14:07.640 --> 0:14:11.760 Dicks already caters to more of a sports type focused customer, 0:14:12.280 --> 0:14:14.800 you know, a higher income consumer. A foot locker is 0:14:14.800 --> 0:14:19.680 bringing a whole nother consumer set to two Dicks, and 0:14:19.720 --> 0:14:22.480 they're going to really try to lean into their expertise 0:14:22.560 --> 0:14:26.080 on assortment, bring newness to footwear, bring a little bit 0:14:26.080 --> 0:14:29.360 more apparel into those foot locker stores, and they're going 0:14:29.400 --> 0:14:32.320 to try to gain market share, you know, with this 0:14:32.440 --> 0:14:33.200 broader reach. 0:14:34.080 --> 0:14:38.360 Lindsay, what are the the the. 0:14:37.120 --> 0:14:39.000 The Dicks of the world, the footlockers, the lord. 0:14:39.000 --> 0:14:41.640 What are they saying about tariffs and how much they're 0:14:41.680 --> 0:14:43.600 going to take in the margin, how much they're going 0:14:43.640 --> 0:14:45.360 to pass a on the consumers. What's the because I 0:14:45.400 --> 0:14:47.400 think a lot of sneakers come from China. 0:14:49.120 --> 0:14:52.320 Yes, So Diggs noted that they have seen you know, 0:14:52.520 --> 0:14:57.240 some price increases they sound more sporadic in nature. That's 0:14:57.280 --> 0:15:00.400 relatively consistent with the other you know, coverge in my 0:15:00.560 --> 0:15:04.280 retail universe. You know, we're seeing very few retailers you 0:15:04.440 --> 0:15:07.880 to take every single item up by a certain amount. 0:15:08.800 --> 0:15:13.640 So the price increases are coming in more selectively. They're 0:15:14.120 --> 0:15:17.360 most easily passed through to the consumer when it's a 0:15:17.560 --> 0:15:21.720 new product, you know, something that people are willing to 0:15:21.800 --> 0:15:26.040 pay up for anyway, so you know they have seen, 0:15:26.320 --> 0:15:30.160 you know, new things coming from saying Nike for example, 0:15:31.080 --> 0:15:33.160 you may be able to get that customer to just 0:15:33.240 --> 0:15:36.960 take on that price increase in terms of margin. When 0:15:36.960 --> 0:15:40.000 I think about Dix, you know they're still expecting expansion 0:15:40.440 --> 0:15:43.480 both on the growth basis and on an operating basis 0:15:43.920 --> 0:15:46.920 this year. You know, they are trying to manage costs 0:15:46.960 --> 0:15:50.000 as well, but this company is also investing. They're opening 0:15:50.000 --> 0:15:54.360 new stores, and so that that is adding you know, 0:15:54.400 --> 0:15:56.760 additional cost pressure, not just on on. 0:15:56.680 --> 0:15:57.760 The product side. 0:15:58.440 --> 0:16:00.320 So Lindia, I got to ask you about that, spy 0:16:00.360 --> 0:16:00.680 as well. 0:16:00.760 --> 0:16:03.560 The stock is down more than six percent in early trading, 0:16:04.680 --> 0:16:07.480 even though the second quarter did beat analyssessments and the 0:16:07.520 --> 0:16:12.360 company ended fourteen straight quarters of quarterly sales declines. What 0:16:12.520 --> 0:16:13.840 has investors disappointed? 0:16:15.720 --> 0:16:18.760 I think the real worry bead for Best Buy is 0:16:18.880 --> 0:16:22.520 demand for second half. So even this year, you know, 0:16:22.640 --> 0:16:24.600 just for the first eight months of the year has 0:16:24.640 --> 0:16:25.400 been a little bit of. 0:16:25.320 --> 0:16:26.840 A wild ride for Best Buy. 0:16:26.960 --> 0:16:30.160 You know, we came into the year with positive demand momentum, 0:16:30.360 --> 0:16:33.880 things were looking good, you know, then we got tariff announcements, 0:16:33.920 --> 0:16:36.360 we had to roll back guidance. You know, there was 0:16:36.400 --> 0:16:39.360 a lot more uncertainty, and now we're flipping back with 0:16:39.440 --> 0:16:42.480 these results to more on the positive side. So I 0:16:42.520 --> 0:16:46.480 think there's concern entering the second half of the year 0:16:46.880 --> 0:16:49.880 about you know, where demand is going to shake out. 0:16:50.040 --> 0:16:53.840 We did see strength, you know, in gaming, particularly with 0:16:53.920 --> 0:16:59.120 the Nintendo switch to for the second quarter. We're seeing 0:16:59.120 --> 0:17:03.560 momentum continue in computing and phones for the third quarter. 0:17:04.000 --> 0:17:08.120 All of that is positive, but home theater and appliances 0:17:08.440 --> 0:17:11.440 have sort of remained weak for Best Buy, and at 0:17:11.440 --> 0:17:14.480 home theater entertainment category, that's a really big one. 0:17:14.320 --> 0:17:17.360 For the fourth quarter. Stay with us. More from Bloomberg 0:17:17.400 --> 0:17:19.000 Intelligence coming up after this. 0:17:21.160 --> 0:17:24.840 You're listening to the Bloomberg Intelligence podcast. Catch us Live 0:17:24.920 --> 0:17:28.040 weekdays at ten am Eastern on Apple Cocklay and Android 0:17:28.040 --> 0:17:31.360 Auto with the Bloomberg Business app, Listen on demand wherever 0:17:31.400 --> 0:17:34.520 you get your podcasts, or watch us live on YouTube. 0:17:35.560 --> 0:17:37.880 We want to go back to company news and how 0:17:37.880 --> 0:17:40.800 the NASAC is the lone index there that is really 0:17:40.800 --> 0:17:42.679 moving higher right now. A lot of it can be 0:17:42.800 --> 0:17:47.560 due to earnings from companies like Snowflake, like CrowdStrike, not 0:17:47.600 --> 0:17:49.960 necessarily do in video, which is lower. So let's bring 0:17:49.960 --> 0:17:54.360 in Mandeep seeing Bloomberg Intelligence senior tech industry analysts, and Mandep, 0:17:54.359 --> 0:17:56.720 I want to start on I wanted to start on 0:17:56.760 --> 0:17:58.719 CrowdStrike because I know what they do, but I'm going 0:17:58.760 --> 0:18:01.560 to go to Snowflake, which is up about eighteen and 0:18:01.560 --> 0:18:03.639 a half percent trading right now. It's another one of 0:18:03.680 --> 0:18:06.560 these enterprise software companies that there are so many of. 0:18:07.080 --> 0:18:10.760 So let's talk first about what Snowflake said that got 0:18:10.800 --> 0:18:13.960 investors so excited and how tied the AI story it is. 0:18:14.359 --> 0:18:17.720 Yeah, I mean, Snowflake is another one of those database 0:18:17.800 --> 0:18:22.560 analytics companies that got beaten up because everyone thought lms 0:18:22.680 --> 0:18:26.760 will take share from them. And there's been a pretty 0:18:26.760 --> 0:18:30.480 wide spectrum when you look at the valuations for database 0:18:30.520 --> 0:18:32.919 and analytics companies. On the one hand, you've got a 0:18:32.960 --> 0:18:36.919 palenteer that's trading at almost one hundred times sales, not 0:18:37.080 --> 0:18:40.600 earning sales. And on the other hand, you've got you know, 0:18:40.640 --> 0:18:44.680 players like Snowflake that are at a much more reasonable valuation. 0:18:44.800 --> 0:18:47.719 Mango dB, I mean, the stock is up almost fifty 0:18:47.760 --> 0:18:52.359 percent since they reported earning three days back. So to 0:18:52.400 --> 0:18:55.520 answer your question, what they said was they are now 0:18:55.600 --> 0:19:01.200 participating in this AI agent deployment. Basically, all these enterprises 0:19:01.240 --> 0:19:04.520 who are renting the GPU capacities, who are trying to 0:19:04.560 --> 0:19:09.239 build a product on chat GPT, they're actually deploying that 0:19:09.320 --> 0:19:12.840 in production. Now that AI agent, customer service agent, or 0:19:12.880 --> 0:19:16.880 that search chat pot is getting deployed with enterprise data. 0:19:16.960 --> 0:19:20.359 And that is what I think is helping someone like Snowflake, 0:19:20.680 --> 0:19:24.080 which caters to enterprises. But everyone thought they would be 0:19:24.119 --> 0:19:27.720 disintermediated with the chat GPT solving all the problems. So 0:19:27.800 --> 0:19:30.480 that's not the case. That's why Mango dB did well, 0:19:30.520 --> 0:19:33.399 That's why Snowflake did well. Not every company is going 0:19:33.440 --> 0:19:36.600 to participate like that, but clearly these companies have, and 0:19:36.640 --> 0:19:39.280 that's why you're seeing their stock getting bid up. 0:19:39.400 --> 0:19:42.399 So these I guess, I know, I guess they're classified 0:19:42.400 --> 0:19:44.360 as infrastructure software. 0:19:44.040 --> 0:19:47.960 Yeah, databases yeah, and their databases yeah. 0:19:48.000 --> 0:19:51.680 And so databases you're going they're going to have value 0:19:51.720 --> 0:19:53.800 in an AI world, right. I would just think it's 0:19:53.880 --> 0:19:56.960 the raw material of data for this launch language model. 0:19:57.080 --> 0:19:59.879 You go back in the last thirty years, database is 0:20:00.080 --> 0:20:03.400 one of the stickiest business. Like think of Oracle database. 0:20:03.960 --> 0:20:09.240 Nobody was able to get rid of their Oracle database databases. Look, 0:20:09.320 --> 0:20:12.480 I mean, and that's why databases are like so hard 0:20:12.520 --> 0:20:17.000 to displace. Once your data is in a like particular products, 0:20:17.080 --> 0:20:21.240 database I cuturally migrated. I mean, there's no way out. 0:20:21.240 --> 0:20:24.240 Technology will come, they will be AI. What do you 0:20:24.280 --> 0:20:27.640 train AI on? It's your data, right, So your custom 0:20:27.760 --> 0:20:31.639 data is still in that product, and that's why mainframes 0:20:31.640 --> 0:20:35.600 are still around. So from that standpoint, I think database 0:20:36.000 --> 0:20:38.600 when you look at their gross retention, their net retention, 0:20:38.720 --> 0:20:43.000 their metrics are always better than application software. You can 0:20:43.080 --> 0:20:46.480 replace your application software with a chat GPT product that 0:20:46.520 --> 0:20:47.800 can automate the whole thing. 0:20:47.960 --> 0:20:48.280 I see. 0:20:48.320 --> 0:20:51.679 But that's where the stickiness comes from. And you know, 0:20:51.760 --> 0:20:54.640 the pendulum keeps swinging. I mean, the market was very 0:20:54.680 --> 0:20:57.800 bearish on these companies for a while, but now they're realizing, 0:20:57.840 --> 0:21:00.600 oh guess what they will participate in this AI deployment, 0:21:00.640 --> 0:21:03.720 and I think Snowflake is definitely one open. 0:21:03.960 --> 0:21:08.600 This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 0:21:08.800 --> 0:21:12.760 and anywhere else you get your podcasts. Listen live each weekday, 0:21:12.960 --> 0:21:16.240