Speaker 1: Bloomberg Audio Studios, podcasts, radio News.
Speaker 2: The Stock Movers Report, your roundup of companies making moves
Speaker 2: in the stock market. Harnessing the power of Bloomberg Data.
Speaker 1: Let's take a look now at some stocks making news
Speaker 1: in the week ahead. I'm Nathan Hager, joined by man
Speaker 1: Deep Singh, Global Head of Tech Research at Bloomberg Intelligence.
Speaker 1: Because it is another big week for big tech earnings.
Speaker 1: Correct me if I'm wrong, man Deep, but I think
Speaker 1: we're hearing from what three more of the four major
Speaker 1: hyper scalers after we heard from Alphabet this past week.
Speaker 3: We are, indeed, and look, we know Microsoft hasn't done
Speaker 3: well in the past quarter, and they will be for me,
Speaker 3: one of the big ones. Amazon and you know Apple
Speaker 3: and Meta as well, like all these companies have had
Speaker 3: a decent quarter. So from that perspective, I think where
Speaker 3: expectations are really low, I would say it's Microsoft and
Speaker 3: for me, Google had a slight increase in their full
Speaker 3: year capex for twenty twenty six. They raised it by
Speaker 3: about four percent, and they said twenty twenty seven capex
Speaker 3: would be significantly higher. And so from that perspective, it'll
Speaker 3: be interesting to see what Microsoft and Amazon end up
Speaker 3: doing as well as Meta.
Speaker 1: Absolutely. Well, let's start with Microsoft, as you say, probably
Speaker 1: the biggest player of the three major hyperscalers we're going
Speaker 1: to hear from this week. After we heard from Alphabet
Speaker 1: two hundred and five billion dollars that increase on the
Speaker 1: top line in terms of their forecast for capital expenditure
Speaker 1: for this year, if we see similar numbers from Microsoft,
Speaker 1: what kind of a market reaction could that Sparkmandate?
Speaker 3: Actually, I expect a negative reaction if they significantly raise
Speaker 3: their CAPEX, and I feel the bar is now quite
Speaker 3: high with Alphabet going over two hundred billion dollars for
Speaker 3: this year. So with Microsoft, the challenge is they don't
Speaker 3: have the vertical integration that Alphabet has with Gemini and
Speaker 3: their TPU systems, which that Google has highlighted could be
Speaker 3: a separate line of business. So from that perspective, you know,
Speaker 3: Microsoft has to show Azure growth, and that Azure growth
Speaker 3: has been more like around forty percent. Google posted cloud
Speaker 3: growth of around eighty two percent in their second quarter.
Speaker 3: So from that perspective, there's a lot that Microsoft has
Speaker 3: to prove in terms of both the cloud growth rates
Speaker 3: that I have been trailing and also how else they
Speaker 3: can monetize that capex beyond their cloud segment growth, as
Speaker 3: Google has shown with TPU Systems, and you know how
Speaker 3: they are deploying their own Gemini model on top of it.
Speaker 1: And when it comes to Meta also reporting on Wednesday,
Speaker 1: if they see a major increase to their appital expenditure,
Speaker 1: it's a little bit different, isn't it in terms of
Speaker 1: how they deploy that kind of spending.
Speaker 3: Yeah, I said it was a bigger bar for Microsoft.
Speaker 3: For Meta, it's even higher because they don't even have
Speaker 3: a cloud business. So in the case of Microsoft, at
Speaker 3: least they have a cloud business, where azure segment would
Speaker 3: probably see accelerating sequentially accelerating growth. In the case of Meta,
Speaker 3: it all has to show up in their top line
Speaker 3: ads business, which we have seen from Google. The search
Speaker 3: business didn't accelerate. It was really their cloud business that
Speaker 3: went from you know, sixty percent growth to over eighty
Speaker 3: percent growth. So Meta doesn't have a cloud business. And
Speaker 3: so if Meta comes out and says they are raising
Speaker 3: their CAPEX for second half, I totally expect a negative
Speaker 3: reaction going by how the market has reacted to the
Speaker 3: Google capex increase.
Speaker 1: How do you see Mark Zuckerberg's strategy when it comes
Speaker 1: to AI deployment right now, particularly after all the spending
Speaker 1: metas done just building a super intelligence team and all
Speaker 1: the partnerships that it's gotten into.
Speaker 3: Yeah, so look, they've released a new model, the new
Speaker 3: Spark model. They're looking to monetize that through API use
Speaker 3: and also get into cloud rentals like the Neo clouds.
Speaker 3: That would be very interesting for me who the buyers
Speaker 3: of Meta compute could be because we've seen SpaceX rent
Speaker 3: their compute to Google and Google did say that, you know,
Speaker 3: because of the third party compute rentals, the margins may
Speaker 3: actually go down, So in effect we expect maybe Google
Speaker 3: may end up renting compute from Meta in the near trump.
Speaker 3: It would be interesting if that happens. And I think
Speaker 3: there are speculations that Meta wants to get into cloud
Speaker 3: rental business. That's where it could be a new line
Speaker 3: of business for them to justify any cap ex increase
Speaker 3: that they may have during their earnings call.
Speaker 1: In the time we have left, Mandy, but I'd be
Speaker 1: curious to get your view as well. On Apple they
Speaker 1: report Thursday. Maybe not a hyper scale or along the
Speaker 1: lines of Meta, Microsoft or Amazon, but how do you
Speaker 1: see Apple's results coming out.
Speaker 3: I mean they have a new CEO. They have been
Speaker 3: at the receiving end of all these memory and the
Speaker 3: component price increases which they have passed on to their
Speaker 3: or they plan to pass it on to their customers
Speaker 3: in terms of higher prices. I think, you know, even
Speaker 3: though expectations are for mid teens double digit growth, it
Speaker 3: will be hard for them to come up with any upside.
Speaker 3: Price increases are a big part of that top line growth.
Speaker 3: So given the CEO change and the price increases, I
Speaker 3: think it'll be hard to see any big positive surprises
Speaker 3: coming out of Apple.
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