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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: The most widely read stories on.

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Speaker 3: The Bloomberg always about Wall Street bonus.

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Speaker 4: Absolutely need readership.

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Speaker 3: Oh my god, I need readership this month or this

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Speaker 3: quarter or this year. Write a story on Wall Street bonuses.

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Speaker 2: Yeah, while we have one today. It's a Wall Street

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Speaker 2: poise for bonus increases in year of the bank. So

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Speaker 2: you can bet a lot of people are clicking on

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Speaker 2: that story. Catherine Doherty is the author of that story.

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Speaker 2: She's our Bloomberg News finance reporter, Catherine. It is only May,

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Speaker 2: but the folks you talk to say that there's been

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Speaker 2: some banner deals in the first part of the year

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Speaker 2: that has led them to conclude already that it's going

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Speaker 2: to be a big, big year for bonuses.

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Speaker 5: Right And we should covey up by saying it's still

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Speaker 5: early in the year, so things could change. But right

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Speaker 5: now the projections are looking pretty rosy. And that's because

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Speaker 5: the long awaited comeback of deals. You've started to see

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Speaker 5: that come through. We do have the big banks, they

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Speaker 5: have just reported their first quarter.

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Speaker 6: The second quarter looks to be pretty steady.

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Speaker 5: So if the second half of the year takes a

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Speaker 5: turn for the worse, that could change these projections. But

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Speaker 5: right now, it looks like the payout, especially for M

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Speaker 5: and A advisory equity underwriting quite strong.

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Speaker 6: And as we've been talking about.

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Speaker 5: The volumes that you've been seeing across equities and fixed

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Speaker 5: income as far as trading goes, those traders that are

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Speaker 5: facilitating the buying and selling are also poised to see

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Speaker 5: a pretty hefty payout if things continue as they as

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Speaker 5: they've been going.

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Speaker 3: Yeah, we've just seen so much underwriting of public debt

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Speaker 3: for the technology companies ipel market kicking up, and that

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Speaker 3: we're I guess still on the docket for some time,

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Speaker 3: maybe towards ented the second half of this year for

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Speaker 3: some mega IPOs.

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Speaker 4: Yes, SpaceX and Think so.

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Speaker 3: I mean, you can certainly if you wanted to project

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Speaker 3: out some pretty big fees for these guys, Yes.

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Speaker 5: But that is also with the assumption that those IPOs

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Speaker 5: come through. I think that that's if all things continue

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Speaker 5: in these deals. Actually see the light of day, then yes,

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Speaker 5: these bankers who are facilitating them will see their pay

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Speaker 5: bump increase. But if they don't, then we could see

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Speaker 5: a reversal. Don't expect any huge declines, but in terms

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Speaker 5: of the ten to twenty percent plus year over year

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Speaker 5: increase that is projected right now, that is considering that

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Speaker 5: all of these things kind of fall into place in

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Speaker 5: the way that everyone would hope.

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Speaker 3: Because the way we used to do it when I

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Speaker 3: worked on the street was used around December. You'd have

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Speaker 3: the really, really big discussion about how much the bonus

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Speaker 3: pool actually was going to be. And he used November

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Speaker 3: actuals and December projected, and that's what you use.

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Speaker 4: To set up your bonus pool. You're crewing for it

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Speaker 4: all year, but to say who gets what.

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Speaker 6: So that's right, and there's a lot of months between

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Speaker 6: now and December.

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Speaker 3: I've been sitting on the wrong side of the seat

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Speaker 3: where my boss will come in and say, yeah, we

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Speaker 3: had a great year, but we had a terrible month

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Speaker 3: last month, so we're going to be cautious here.

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Speaker 4: Like what there's.

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Speaker 2: Always a reason for the managers to say that to

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Speaker 2: come up at some angle. If you click on m

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Speaker 2: a go on. The Bloomberg terminal gives you a snapshot

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Speaker 2: of mergers and acquisitions and one point eight trillion dollars

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Speaker 2: of announced deals so far this year. That's up almost

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Speaker 2: thirty six percent from the same time a year ago.

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Speaker 2: So I'm guessing, Catherine that in terms of bonuses, projected payouts,

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Speaker 2: investment banking advisories top of the list.

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Speaker 5: Yes, I think that right now, and that's from a

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Speaker 5: year ago. That is not the discussion that we would

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Speaker 5: have been having. I think that again. So there were

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Speaker 5: so many months and quarters that the narrative was the

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Speaker 5: long awaited comeback of deals. Now actually starting to see

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Speaker 5: that come through, but it hasn't been quarter after quarter.

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Speaker 5: This has only been really the end of last year

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Speaker 5: and the beginning of this year that we have actually

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Speaker 5: seen the numbers. And if the rest of the year

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Speaker 5: falls into place again as projected, the pipeline is healthy,

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Speaker 5: is what executives have been saying, then yes, we might

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Speaker 5: see that these numbers do follow actually the numbers that

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Speaker 5: you're pointing out on the terminal, which is the actual

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Speaker 5: deal flow that the bankers are working on, and that's

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Speaker 5: why and how they get paid.

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Speaker 3: What's going on with headcount on global Wall Street is

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Speaker 3: this I'm thinking that there's AI could be a negative

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Speaker 3: impact for headcount and Wall Street what are we seeing

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Speaker 3: so far?

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Speaker 5: So executives were asked about this during first quarter earnings

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Speaker 5: and a lot of them echoed this same sentiment, which

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Speaker 5: is that right now headcount is flat and AI is

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Speaker 5: helping and making bankers more efficient, but right now, also

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Speaker 5: it hasn't led to that next step that everyone is expecting,

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Speaker 5: which is headcount reduction. A lot of the executives are saying, yes,

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Speaker 5: are are, and it's not just their bankers, just across

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Speaker 5: the entire company. Their executives are getting more efficient, but

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Speaker 5: that's allowing them to work on more deals. It's allowing

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Speaker 5: them to increase revenue, but not hire as much as

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Speaker 5: they might.

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Speaker 6: So instead of cutting folks right.

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Speaker 5: Now, I think the narrative is more talking about keeping

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Speaker 5: things flat.

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Speaker 2: We look at the markets and record hize for the

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Speaker 2: S and P five hundred the NASA. Can we come

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Speaker 2: back to this theme over and over again of there's

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Speaker 2: so many headwinds, yet stocks just continue to move north.

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Speaker 2: So far, the volatility that we've seen has not been

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Speaker 2: negative for trading desks. During those earnings calls, Did anyone

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Speaker 2: talk about the turn and volatility, how it can go

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Speaker 2: from good to bad quickly?

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Speaker 5: Good to bad volatility is kind of what you need

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Speaker 5: to narrow in on, right because at the end of

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Speaker 5: the day, if you are on one of these bank

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Speaker 5: trading desks and you're just facilitating and helping your clients reposition,

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Speaker 5: volatility is a good thing. So as up until now

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Speaker 5: it's been good volatility if we are distinguishing between good

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Speaker 5: and bad, and it's the same for the market making

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Speaker 5: firms outside of the banks, they've really been setting topping

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Speaker 5: their own records year after year, and so I don't

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Speaker 5: believe and it really if you go into different asset classes,

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Speaker 5: Equities has been kind of the strongest across the board,

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Speaker 5: but fixed income follows close behind.

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Speaker 2: Stay with us more from Bloomberg Intelligence coming.

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Speaker 6: Up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch US Live on to you.

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Speaker 3: You got some earnings coming out of some of the

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Speaker 3: restaurants here McDonald's Shakechack I mean, my McDonald's or been

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Speaker 3: the same since like nineteen seventy eight. It's a number

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Speaker 3: two with a coke, quote a pound of with GE's

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Speaker 3: and a coke. I mean, that's been the same way since.

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Speaker 2: You don't extra size it or notthing.

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Speaker 3: You know, if I have to do, say anything other

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Speaker 3: than number two with a coke, then I'm inconvenienced, you know,

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Speaker 3: And I've been doing that way since nineteen seventy eight,

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Speaker 3: I think.

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Speaker 4: So let's go to Mike Kaylin.

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Speaker 3: He knows what he's talking about here about these restaurants

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Speaker 3: senior restaurant and food service analysts.

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Speaker 4: Hey, Mike, let's start with McDonald's. How are they doing

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Speaker 4: with their business?

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Speaker 7: Yeah, so, you know, what we wrote today was that

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Speaker 7: they're trying to walk a tight rope right now. They're

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Speaker 7: copping some very strong results, you know, over the last

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Speaker 7: over a year ago starting in two Q, but they're

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Speaker 7: trying to do that with value, which which risks a

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Speaker 7: trade down from some of your consumers that are doing

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Speaker 7: a little bit better. So you know, sequentially, samestar sales

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Speaker 7: and growth rates are gonna are gonna decelerate starting in

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Speaker 7: the second quarter. They become very aggressive on value and

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Speaker 7: I think that's a big part of the reason why

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Speaker 7: all of the restaurant stocks, not all, but most restaurant

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Speaker 7: stocks are down and down significantly.

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Speaker 8: Today.

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Speaker 7: They're being as aggressive as I've ever seen them on value.

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Speaker 7: They have a dollar fifty sausage McMuffin right now at

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Speaker 7: two point fifty mcdouble. They have three dollars breakfast meals,

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Speaker 7: four dollars meals at other times of the day. This

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Speaker 7: is as aggressive as i've ever seen them. I think

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Speaker 7: that's much cheaper, and you know they're doing it. I

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Speaker 7: think for two reasons. Number One, they see they smell

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Speaker 7: blood in the water, Jack in the Box and Wendy's,

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Speaker 7: you know, Same Star sales were down mid single digits

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Speaker 7: last year. So those two chains, who they you know,

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Speaker 7: obviously compete directly with, are struggling mightily. And also who's

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Speaker 7: got more and better data than they do. And they

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Speaker 7: see that low income consumers are which were really struggling

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Speaker 7: last year, you know, could really feel it this year

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Speaker 7: as inflation accelerates again.

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Speaker 2: So what I also noticed, Michael, is that McDonald's has

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Speaker 2: a new lineup of specialty drinks. What are the financials

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Speaker 2: behind the beverage category versus the food category. I'm guessing

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Speaker 2: higher margins, perhaps bringing in lower demographics as a benefit.

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Speaker 7: Yeah, so a part of this, you know, beverages is big,

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Speaker 7: and a big reason why it's big is that it's

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Speaker 7: high margin. So yeah, McDonald's is hoping to increase drink

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Speaker 7: attachment rates to the orders. They're hoping to get some

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Speaker 7: business in the afternoon, people looking for a pick me up. Right,

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Speaker 7: They're going to do some Red Bull drinks in the

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Speaker 7: second half. So that's also part of their strategy to

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Speaker 7: try to lap very strong same store of sales. You know,

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Speaker 7: I don't think it's a bad idea, but you know,

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Speaker 7: trying to lap very strong comps with value and low

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Speaker 7: priced them items is just difficult to do. And you know,

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Speaker 7: and I'm saying this about McDonald's and things are slowing there,

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Speaker 7: but they're still best equipped to deal with, you know,

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Speaker 7: a downturn in the consumer because you know, they have

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Speaker 7: more scale than anyone. They can offer price points to,

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Speaker 7: you know, like I've been mentioning, whereas their competitors just can't.

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Speaker 3: Nobody buys I would think, not to me, entities out

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Speaker 3: there by more beef than McDonald's does.

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Speaker 4: What do they say about the cost.

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Speaker 3: Trends of beef and is there any relief in sight here.

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Speaker 7: Yeah, Shakesheck and McDonald's both talked about it. Beef inflate

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Speaker 7: inflation is expected to moderate, right, It was I think

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Speaker 7: mid teens in the first quarter, and it's more impactful

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Speaker 7: to Shakeshack's bottom line because they own a majority of

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Speaker 7: their restaurants. But yeah, it's expected to moderate through the year,

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Speaker 7: maybe averaging you know, high single digit inflation four full

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Speaker 7: year twenty twenty six, so still elevated, not as bad

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Speaker 7: as we saw in the fourth quarter, which was you know,

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Speaker 7: high teens or mid teens in the first quarter. It's

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Speaker 7: going to moderate through year end, and we should should

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Speaker 7: settle out around high synclepigets.

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Speaker 2: How does Shakeshack counter rising beef costs? I mean, its

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Speaker 2: entire business model is based on hammergers. Does it just

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Speaker 2: kind of lean more into chicken burgers and build out

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Speaker 2: that that offering.

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Speaker 7: Well, they're leaning into ribs. They have the first baby

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Speaker 7: back rib sandwich they've had on the menu. You know,

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Speaker 7: it's two ways. First of all, you know, I think

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Speaker 7: there was some low hanging fruit in this in this company.

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Speaker 7: You know, I don't think it was the most efficiently

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Speaker 7: run business for quite some time, and so management has

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Speaker 7: done a good job over recent quarters being much more

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Speaker 7: efficient with labor, so that's offset some of the costs.

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Speaker 4: And then moving.

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Speaker 7: Forward, it's going to be more out supply chain and

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Speaker 7: productivity in the restaurants, right, So you know those are

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Speaker 7: going to be the two areas that they're looking at,

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Speaker 7: you know, but you know they're expecting some stam star

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Speaker 7: sales growth and that's the best way to boost your margins, right,

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Speaker 7: is just driving more foot traffic through your stores. So

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Speaker 7: they're still confident that they can drive at least some

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Speaker 7: restaurant margin expansion here in twenty twenty six.

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Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app, Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 3: All right, we got some learnings out there and including

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Speaker 3: some media companies, Warner Brothers, Discovery, Pelothons, out there etha

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Speaker 3: wrong and nothing. She covers all the media stuff or

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Speaker 3: Bloomberg Intelligence. She's not into this silly wellness stuff.

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Speaker 7: She's a player.

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Speaker 3: Warner Brothers Discovery getha. They reported numbers that they're just

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Speaker 3: about to get acquired by Paramount Skuidance.

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Speaker 4: What do we learn about Warner Brothers Discovery's business.

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Speaker 9: Yeah, things are going along pretty nicely, Paul. For Warner

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Speaker 9: Brothers Discovery, as expected, we did the plenty of weakness

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Speaker 9: in the linear TV network division. I mean this was

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Speaker 9: well telegraphed by the company. Part of this is, of course,

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Speaker 9: just the structural weakness in TV advertising, but more importantly

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Speaker 9: and specifically for Warner it was the lack of NBA

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Speaker 9: and so we saw TV advertising fall about eleven percent,

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Speaker 9: but it's going to get far worse in the second quarter,

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Speaker 9: where they've guided to about a twenty percent decline. But

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Speaker 9: the other parts of the business, the parts of the

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Speaker 9: business that investors are most excited about, and especially Paramount

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Speaker 9: Skuidance is most excited about, which is the studios in

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Speaker 9: the streaming business is actually doing really, really well. So

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Speaker 9: the good thing that we saw with streaming was that

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Speaker 9: they added a lot of subscribers for HBO Max as

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Speaker 9: part of their international expansion efforts. So they've expanded into

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Speaker 9: a lot of European markets, and more importantly, it's not

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Speaker 9: just subscriber growth, it's it's that they're tracking really well

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Speaker 9: ahead of expectations in terms of praftability. So they already

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Speaker 9: achieved fairly strong craftability last year with one point three

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Speaker 9: billion for their streaming unit. Looks like they'll get maybe

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Speaker 9: close to even two billion this year. You know, the

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Speaker 9: estimates came up really nicely, and then Studio again doing

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Speaker 9: pretty well as well.

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Speaker 2: Has there ever been any discussion at Warner Brothers about

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Speaker 2: maybe creating tiers within HBO, you know, where you might

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Speaker 2: have advertising and the shows might be broken up with commercials,

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Speaker 2: So that is already there.

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Speaker 9: We do have an ad tier for you know, the

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Speaker 9: HBO Max product. I mean, this was part of this

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Speaker 9: whole wave of all of these different streaming platforms introducing ads,

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Speaker 9: started out with you know, Netflix and Disney Plus and

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Speaker 9: then Max. So it is slightly cheaper, but EAHBO show.

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Speaker 2: Is like broken up, the sopranos will be interrupted by commercials.

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Speaker 9: Ah yeah, okay, they do license it out that way,

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Speaker 9: So I think again, I'm not really sure what exactly

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Speaker 9: the Warner Brothers team is going to do. I think

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Speaker 9: at this point Scarlator, it might be a little bit immaterial.

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Speaker 9: I think the big focus right now is what Paramount

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Speaker 9: is going to do with this asset, because they are

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Speaker 9: pretty much on the verge of closing the deals supposed

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Speaker 9: to happen sometime in third quarter, and we're still unclear

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Speaker 9: whether they're going to operate this as two separate platforms,

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Speaker 9: Paramount plus an HBO Max, or whether they're kind of

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Speaker 9: going to consolidate it. What they're going to name the

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Speaker 9: new product. All of that is still kind of a

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Speaker 9: little bit unclear. But the one thing that we are

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Speaker 9: clear about is Paramount is acquiring a very strong asset,

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Speaker 9: and an asset that has really delivered a whole string

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Speaker 9: of hits this year for HBO Max. And remember the

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Speaker 9: big thing coming a little bit later this year for

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Speaker 9: HBO Max is the new Harry Potter series. So a

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Speaker 9: lot of excitement, a lot of buzz around that.

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Speaker 2: I never understood why they use the word Max in

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Speaker 2: the app name, like it just goes It's.

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Speaker 3: HBO was deemed by some people on the right as

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Speaker 3: being too woke and to hollywood ish.

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Speaker 2: So Max brought it back to earth.

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Speaker 7: Yes that was the reason.

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Speaker 2: Okay, but then it just confused everyone exactly.

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Speaker 7: It was a terrible decision.

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Speaker 2: And HBO, the branding on its own is so powerful

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Speaker 2: in terms of content spend, Gita, is that something that

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Speaker 2: Paramount is going to stick to. I mean, HBO is

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Speaker 2: known for being willing to spend on content. Is David

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Speaker 2: Ellison willing to spend in the same way.

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Speaker 9: He is absolutely willing to spend. So they have outlined

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Speaker 9: six billion dollars in synergies Scarlett, but none of those

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Speaker 9: cuts are going to come on the content spend side.

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Speaker 9: So we're looking at a combined programming budget for both

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Speaker 9: those companies at about thirty thirty two billion dollars. That

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Speaker 9: is the highest in the industry. And remember, Paramount, even

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Speaker 9: before they went and acquired Warner Brothers, really did a

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Speaker 9: whole host of different content deals. We had that really

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Speaker 9: important deal with Duffer Brothers. We had the south Park

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Speaker 9: streaming rights deal where they're paying something like one point

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Speaker 9: five billion dollars. We had the UFC deal, which was

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Speaker 9: you know, close to almost eight billion dollars over a

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Speaker 9: period of seven years. So David Ellison is not holding back.

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Speaker 9: He's made this commitment to have thirty film releases. That's

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Speaker 9: basically doubling the output at both the studios starting next year.

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Speaker 9: He's saying all the right things and doing all the

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Speaker 9: right things as far as Hollywood is concerned right now.

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Speaker 9: From a content investment perspective, KEITHA.

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Speaker 3: Karen from The Jersey Shore writes in asked about Peloton,

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Speaker 3: I know they released some earnings. We got the peloton,

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Speaker 3: we got the bike, we got the tread, we got

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Speaker 3: also what's going on there?

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Speaker 9: So this is a story where you know, we've seen

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Speaker 9: consistent progress in terms of praftability metrics. So again, we

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Speaker 9: had a quarter where they really reported strong numbers when

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Speaker 9: it came to EBITDAU. When it came to free cash flow,

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Speaker 9: they raised their free cash flow targets pretty significantly. I

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Speaker 9: mean this was a company that just a few years

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Speaker 9: ago was burning a lot of cash. So they've definitely

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Speaker 9: definitely right sized their cost bace, lots of cost savings initiatives.

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Speaker 9: All of that is going well. But really, the the

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Speaker 9: ultimate story I think for Peloton is are they going

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Speaker 9: to be able to turn around the demand story? And

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Speaker 9: that is where we really have a tough time kind

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Speaker 9: of getting behind this name, because you know, the consumer

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Speaker 9: demand for connected fitness just doesn't seem to be there.

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Speaker 9: I mean in terms of existing subscribers, yes, they're hanging

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Speaker 9: on to them, but in terms of attracting new subscribers,

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Speaker 9: we're really not seeing much traction there at all.

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Speaker 2: Yeah, it's not a growth story. Is Peloton a content

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Speaker 2: company or a hardware company? Very quickly it.

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Speaker 9: Is actually a mix of both. So they're trying to

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Speaker 9: really kind of shift the narrative from being a hardware

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Speaker 9: company to a subscription based company, and I think they've

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Speaker 9: they've done that, done a pretty successful job. But again

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Speaker 9: it's coming down to growth in subscribers and they really

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Speaker 9: aren't getting much progress there.

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Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this.

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Speaker 1: You're less and into the Bloomberg Intelligence podcast. Catch us

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Speaker 1: live weekdays at ten am Eastern on Applecarplay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 3: Let's get back to the earnings land right now. Sabani

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Speaker 3: Joints to share Bloomberg Intelligence senior semiconductor analysts. We had

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Speaker 3: arm holdings. They reported I guess some weakness in their

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Speaker 3: phone business, but they do have some AI tailwinds as well.

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Speaker 3: Stock trading off here today on the news, let's go

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Speaker 3: to Sabani Kunjan talk to us about arm holdings.

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Speaker 4: What did you hear today?

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Speaker 10: Yeah, this was a roller coaster of a stock, right,

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Speaker 10: So if you look at the reaction post market, the

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Speaker 10: stock was up at one point eight to nine percent

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Speaker 10: and is now dined down equally the same amount. What

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Speaker 10: people initially really liked. Just for context, just six weeks ago,

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Speaker 10: this is an IVY company, does not sell chips until recently,

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Speaker 10: just six weeks ago, they had their coming out party

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Speaker 10: that they are going to enter the chip selling business

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Speaker 10: and they guided revenue for their AI server CPU chip

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Speaker 10: to one billion of revenue in their fiscal twenty eight,

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Speaker 10: which is really proxy for fiscal twenty.

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Speaker 8: Seven so next year.

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Speaker 10: Just within six weeks yesterday, they came in and said

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Speaker 10: the demand was now two billion. So investors really loved that.

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Speaker 10: I mean, in a matter of six weeks double your

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Speaker 10: demand for one year out is amazing as a brand

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Speaker 10: new chip selling company. I think what they didn't like

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Speaker 10: is towards the end of the call, the management said

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Speaker 10: we are still going to keep the same outlook of

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Speaker 10: one billion because we don't know if we will have

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Speaker 10: supply to meet that. So that was sort of a

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Speaker 10: really getting excited and let down moment. Other than that,

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Speaker 10: in terms of their numbers, they reported there was nothing

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Speaker 10: really to scream about. You know, everyone is aware handsets

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Speaker 10: are having weakness. They are almost immune to that because

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Speaker 10: of their content in a richer handset mix, and they

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Speaker 10: get the newer generation of IP gets them a lot

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Speaker 10: more dollar per chip, so their business is still likely

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Speaker 10: to grow through the year, while other headset makers are

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Speaker 10: going to see that headphines.

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Speaker 2: So Armholdings is run by Renee has And what's interesting

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00:21:10,600 --> 00:21:14,520
Speaker 2: here Kanjohn is that he's got a side hustle. I

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Speaker 2: think he also has a role leading SoftBank Group International.

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Speaker 2: How does that work? How does he do both jobs?

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Speaker 10: Yeah, so he has been the CEO for ARM for

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Speaker 10: many years. The new role that you're referring to is

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Speaker 10: sort of a new incident. Look, this is that soft

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Speaker 10: Bank just just tells you the amount of trust and

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Speaker 10: the reliant soft Bank has on ARM. Now they have

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Speaker 10: been their initial investors, they have been all SoftBank I

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Speaker 10: think is still the largest holder of ARM. And this

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Speaker 10: boards really well for ARMED shareholders. That especially now that

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Speaker 10: it's going into the chip making or the chip selling business.

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Speaker 8: Having that seat running.

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Speaker 10: Sort of the AI semiconductor strategy for saft Bank, which

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Speaker 10: again is a very important semi doctor company. Now when

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Speaker 10: you think about outside the US, that really bodes well

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Speaker 10: for armshareholders.

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Speaker 3: Kunjan, what's the streets consensus or belief here at this

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Speaker 3: early early stage of this entrance into the chip business,

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Speaker 3: because I think there's some established players there. It's kind

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Speaker 3: of a competitive business as I understand.

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Speaker 10: It, it is, But the good thing for them is,

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Speaker 10: you know they are here to coming from a zero

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Speaker 10: share basis, right, So even a few percentage of share

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Speaker 10: pickup on a.

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Speaker 8: Very big and large growing market.

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Speaker 10: Remember, even the X eighty six guys who are the

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Speaker 10: incumbents the Intel and AMD have doubled their TAM in

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Speaker 10: less than six months, So the pile is like growing

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Speaker 10: two x in a very short amount of time. So

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Speaker 10: even if ARM grabs a few single percentage points of

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Speaker 10: share here, this is billions of dollars of new revenue

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Speaker 10: for them which didn't have, So we see it as

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Speaker 10: quite positive for them.

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Speaker 8: Despite the rising competition.

439
00:22:53,920 --> 00:22:57,320
Speaker 2: Memory chip makers have been super in demand. Their share

440
00:22:57,359 --> 00:23:02,120
Speaker 2: prices reflect the of memory chips, you know, the most

441
00:23:02,119 --> 00:23:05,400
Speaker 2: basic memory chips, because all of them are moving towards

442
00:23:05,960 --> 00:23:09,439
Speaker 2: high bandwith memory chips. What does that transition in the

443
00:23:09,440 --> 00:23:12,879
Speaker 2: memory chip industry mean for a company like ARM.

444
00:23:13,119 --> 00:23:15,400
Speaker 8: Well, they are seeing that pin point. Right.

445
00:23:15,440 --> 00:23:18,199
Speaker 10: The first end market that is being squeezed because of

446
00:23:18,240 --> 00:23:21,760
Speaker 10: this is the smartphones, right and again today's still smartphone

447
00:23:21,840 --> 00:23:23,880
Speaker 10: is their biggest royalty business.

448
00:23:23,920 --> 00:23:25,680
Speaker 8: So they are seeing that impact.

449
00:23:26,119 --> 00:23:28,640
Speaker 10: Like I said, fortunately for them, the stage they are

450
00:23:28,680 --> 00:23:32,240
Speaker 10: in the royalty they're getting pert chip is sort of

451
00:23:32,359 --> 00:23:35,960
Speaker 10: keeping that impact softened. But they are definitely seeing that impact.

452
00:23:36,080 --> 00:23:38,760
Speaker 10: The next market that could see a squeeze here could

453
00:23:38,760 --> 00:23:41,720
Speaker 10: be PC markets, right, So the top market, which is

454
00:23:41,720 --> 00:23:43,840
Speaker 10: the data center market, is of course going to get

455
00:23:43,840 --> 00:23:46,720
Speaker 10: all the priority. ARM is pivotting to increase a lot

456
00:23:46,760 --> 00:23:49,520
Speaker 10: more revenues coming from data center market, whether it's on

457
00:23:49,560 --> 00:23:51,560
Speaker 10: the IP side, whether it's on the chip side. So

458
00:23:51,880 --> 00:23:55,000
Speaker 10: we don't see other than smartphone headwinds, we don't see

459
00:23:55,040 --> 00:23:58,119
Speaker 10: a lot of impact to other markets for ARM and

460
00:23:58,240 --> 00:23:58,720
Speaker 10: this chip.

461
00:23:58,880 --> 00:24:02,760
Speaker 3: Just broadly speaking, Kujohn talk to us about this memory

462
00:24:02,800 --> 00:24:06,560
Speaker 3: chip shortage. What's the status I mean? And is this

463
00:24:06,800 --> 00:24:12,200
Speaker 3: just a function of time the chip makers make more chips, yes.

464
00:24:12,080 --> 00:24:14,480
Speaker 8: And no, it's a combination of both.

465
00:24:14,520 --> 00:24:17,520
Speaker 10: So if you think about memory right typically it's been

466
00:24:17,560 --> 00:24:20,320
Speaker 10: the most one of the most cyclical in the semiconductor

467
00:24:21,280 --> 00:24:24,639
Speaker 10: It's similar to a lot more of a big manufacturing business,

468
00:24:24,800 --> 00:24:28,280
Speaker 10: right where the memory makers don't usually go ahead and

469
00:24:28,359 --> 00:24:31,479
Speaker 10: install more capacity because of the risk of losses when

470
00:24:31,520 --> 00:24:32,320
Speaker 10: the cycles you turn.

471
00:24:32,640 --> 00:24:34,920
Speaker 8: Where we have come to this inflection because of.

472
00:24:34,880 --> 00:24:39,000
Speaker 10: AI is just the memory demand has superseded any prior expectations.

473
00:24:39,040 --> 00:24:42,400
Speaker 10: So we don't see this really going away anytime soon.

474
00:24:42,800 --> 00:24:45,880
Speaker 10: It's not very easy. Yes, the memory makers are installing

475
00:24:45,920 --> 00:24:49,119
Speaker 10: new capacity and working every day to get more capacity up,

476
00:24:49,160 --> 00:24:51,600
Speaker 10: but it takes time and we don't think.

477
00:24:51,440 --> 00:24:53,520
Speaker 8: This is just going to turn around anytime soon.

478
00:24:55,040 --> 00:24:57,920
Speaker 2: I look at the Philadelphia Semiconductor Index and the move

479
00:24:58,560 --> 00:25:02,000
Speaker 2: has been incredible. I mean since March thirtieth, it's been

480
00:25:02,160 --> 00:25:04,600
Speaker 2: a straight line up and I know it's off about

481
00:25:04,640 --> 00:25:07,479
Speaker 2: one percent today, but it's pretty much sitting at record highs.

482
00:25:07,840 --> 00:25:10,160
Speaker 2: What's the next catalyst, Conjohn to keep this thing going?

483
00:25:12,440 --> 00:25:15,960
Speaker 10: It's I mean, look, the demand numbers have been continued

484
00:25:15,960 --> 00:25:19,199
Speaker 10: to increase for the last four quarters. And what we saw,

485
00:25:19,720 --> 00:25:22,399
Speaker 10: especially after the war started in the Middle East that

486
00:25:22,520 --> 00:25:26,160
Speaker 10: socks was not doing much despite the numbers were kept

487
00:25:26,200 --> 00:25:28,320
Speaker 10: on going up and up. So we now are seeing

488
00:25:28,359 --> 00:25:30,439
Speaker 10: a little bit of a phenomenon where the risk on

489
00:25:31,160 --> 00:25:34,480
Speaker 10: trade is come back and investors are now reacting to

490
00:25:34,560 --> 00:25:37,960
Speaker 10: all of those numbers uplift. I think catalysts growing up

491
00:25:38,000 --> 00:25:40,120
Speaker 10: from here are going to be much harder. I mean,

492
00:25:40,640 --> 00:25:43,440
Speaker 10: it could surprise us like the CBU makers did surprises

493
00:25:43,480 --> 00:25:46,240
Speaker 10: this earning season, but again, you know, most of the

494
00:25:46,320 --> 00:25:49,320
Speaker 10: numbers continue to stay high, we lose things, they will

495
00:25:49,320 --> 00:25:52,200
Speaker 10: continue to go up in terms of fundamentals and expectations,

496
00:25:52,440 --> 00:25:54,600
Speaker 10: but right now I think the big catalysts.

497
00:25:54,200 --> 00:25:56,800
Speaker 8: Are going to be clarity on the twenty twenty eight numbers.

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00:25:58,480 --> 00:26:03,199
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499
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500
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