WEBVTT - Charitable Giving, Reporting Tech Earnings and Outlook 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:07.240 --> 0:00:10.559 You're listening to Bloomberg Business Week with Karl Messer and 0:00:10.600 --> 0:00:13.000 Tim Steneveek on Bloomberg Radio. 0:00:13.240 --> 0:00:15.600 When you're thinking about inflation and how much it has 0:00:15.640 --> 0:00:20.320 strained consumers' finances in recent years, it's also affecting charities 0:00:20.440 --> 0:00:24.239 that depend on donations for their fillent anthropic work. And 0:00:24.320 --> 0:00:26.960 a new study for Wells Fargo on Giving in America 0:00:27.040 --> 0:00:31.440 Today that analyze consumers feelings on charitable giving. Three quarters 0:00:31.440 --> 0:00:34.000 of Americans say that generosity is a part of their 0:00:34.000 --> 0:00:37.160 core values, though how feel like they don't have enough 0:00:37.200 --> 0:00:39.880 money to give. Although giving remains a study for most, 0:00:39.920 --> 0:00:42.800 nearly a third are donating less this past year. So 0:00:43.159 --> 0:00:46.600 what exactly gives Tim? And as the calendar nears twenty 0:00:46.680 --> 0:00:50.040 twenty five, can a new incoming administration Washington change those 0:00:50.040 --> 0:00:54.040 feelings in anticipation of favorable tax policies? So here to 0:00:54.080 --> 0:00:57.120 impact the survey for us is Stephanie Buckley, head of 0:00:57.240 --> 0:01:00.880 Trust in Philanthropic Services at Wells Fargo, joining us from 0:01:01.040 --> 0:01:04.600 Los Angeles. Thanks so much Stephanie for being here with us. 0:01:04.680 --> 0:01:07.280 Walk us through sort of this latest report, and why 0:01:07.400 --> 0:01:09.680 is it that you're starting to see not even just 0:01:09.840 --> 0:01:12.560 you know, inflation that especially over the past few years 0:01:12.560 --> 0:01:14.640 that had weighed on consumers, but you're also seeing it 0:01:14.880 --> 0:01:16.640 in particular corners of the market when it comes to 0:01:16.680 --> 0:01:17.959 charities in those donations. 0:01:19.520 --> 0:01:23.880 Absolutely, our survey result was very interesting. I was interested 0:01:24.000 --> 0:01:26.840 to see what was going on, and as you noted, 0:01:27.880 --> 0:01:31.960 roughly twenty nine percent gave less, but yet seventy eight 0:01:32.000 --> 0:01:36.080 percent again, as you noted, are have generosity as one 0:01:36.120 --> 0:01:39.440 of their core values. So it's an interesting mix. And 0:01:39.520 --> 0:01:40.119 in terms of. 0:01:40.120 --> 0:01:42.280 The inflation that we're seeing, you know, a. 0:01:42.200 --> 0:01:43.600 Lot of it is if you think about it, like 0:01:43.640 --> 0:01:45.280 if you go to the grocery store for one hundred dollars, 0:01:45.319 --> 0:01:47.840 it used to be a whole basket of groceries coming out. 0:01:47.920 --> 0:01:49.680 Now maybe I get a bag of groceries. And I 0:01:49.680 --> 0:01:53.080 think people are really feeling that pinch, and so that 0:01:53.240 --> 0:01:56.680 is carrying over into the philanthropic world, and that's what 0:01:56.720 --> 0:01:57.560 we're seeing. 0:01:59.800 --> 0:01:59.840 It. 0:02:00.360 --> 0:02:03.120 I feel like going into the philanthropic world this year 0:02:03.720 --> 0:02:07.080 in a different way than last year. I mean, by 0:02:07.880 --> 0:02:13.360 pretty much every measure, inflation has eased from where it 0:02:13.400 --> 0:02:15.000 was a year ago, and of course where it was 0:02:15.040 --> 0:02:15.720 two years ago. 0:02:17.600 --> 0:02:20.240 Yes, but what we're seeing and what we're seeing with 0:02:20.240 --> 0:02:23.000 our clients in particular, is they don't yes, it's easing 0:02:23.000 --> 0:02:25.959 a bit, but they're not feeling that it's easing enough 0:02:26.040 --> 0:02:28.520 that they have a lot of extra funds to give. 0:02:29.120 --> 0:02:32.400 And that's what the survey was showing, is that people 0:02:32.440 --> 0:02:35.680 just don't feel like they have the extra But the 0:02:35.720 --> 0:02:38.360 other side of it is they still fill that tug 0:02:38.440 --> 0:02:41.200 that pool to give to charity and to help others 0:02:41.200 --> 0:02:45.040 who are in need. And so again the surveys showed 0:02:45.080 --> 0:02:48.320 that that core value, most of them still have the 0:02:48.320 --> 0:02:51.040 core value of generosity. And we even saw some who 0:02:51.240 --> 0:02:53.840 what we call the sacrificial giving who will say, you know, 0:02:53.919 --> 0:02:56.880 I'm going to defer my own needs to help others 0:02:56.960 --> 0:03:00.520 who may be in a worse situation than I am. 0:03:01.080 --> 0:03:03.760 So when it comes to different types of tax policies, 0:03:03.800 --> 0:03:05.080 I know a lot of people want to point to 0:03:05.120 --> 0:03:07.960 that is potentially something that could help out the situation, 0:03:08.040 --> 0:03:11.680 but walk us through kind of the difficulties there and 0:03:11.720 --> 0:03:13.800 what would need to happen in order to see that 0:03:13.919 --> 0:03:16.400 help charitable giving, because there's a lot of different types 0:03:16.400 --> 0:03:18.079 of things when it comes to deductions that are a 0:03:18.120 --> 0:03:20.520 little bit more convoluted not as easy to decipher. 0:03:21.760 --> 0:03:25.720 Yeah, that's a great question. What we're seeing is what 0:03:25.760 --> 0:03:29.840 the past tax changes. The standard deduction went up significantly, 0:03:30.440 --> 0:03:33.120 and what that meant is that less people are itemizing 0:03:33.200 --> 0:03:37.720 their deduction and for gifts to charities, that's an itemized deduction. 0:03:38.000 --> 0:03:39.520 So for some people they feel like, well, if I'm 0:03:39.520 --> 0:03:41.839 not going to get that extra tax benefit, and maybe 0:03:41.880 --> 0:03:43.600 I don't feel like I have a lot of extra money, 0:03:43.640 --> 0:03:47.640 I'm not going to give. But for those who are itemizing, 0:03:48.160 --> 0:03:51.040 that is a big lever that they can use because 0:03:51.360 --> 0:03:55.880 essentially that charitable gifting, if they are itemizing their deductions, 0:03:56.320 --> 0:03:59.360 whatever they give to charity is going to proportionately reduce 0:03:59.400 --> 0:04:02.160 some of their tax axes. And so we are seeing 0:04:02.200 --> 0:04:05.200 that and that was a big thing that came out 0:04:05.440 --> 0:04:08.880 when the standard deduction raised significantly. As we know with 0:04:09.000 --> 0:04:12.880 the current incoming administration, they were the ones that did 0:04:12.920 --> 0:04:16.440 that big jump in the standard deduction, so likely it's 0:04:16.480 --> 0:04:21.320 going to maintain. And for charities, that shift was focusing 0:04:21.360 --> 0:04:25.800 on their larger donors who are itemizing, and those donors 0:04:25.839 --> 0:04:28.400 who give maybe it's the ten one hundred, one thousand 0:04:28.440 --> 0:04:32.040 dollars amounts which might seem small, but honestly, for charities 0:04:32.080 --> 0:04:35.159 that is a significant lifeblood for them to get those 0:04:35.200 --> 0:04:38.320 smaller amounts because those smaller amounts over a large amount 0:04:38.360 --> 0:04:41.120 of people do add up for them. So it is 0:04:41.200 --> 0:04:45.159 important for all levels of donors that give to charity 0:04:45.240 --> 0:04:47.520 to continue to give to support the charities that are 0:04:47.560 --> 0:04:48.599 doing the important work. 0:04:49.640 --> 0:04:55.520 Stephanie, I'm wondering if your survey accounted for income level 0:04:55.680 --> 0:04:58.560 or net worth level in terms of people who gave, 0:04:58.640 --> 0:05:02.120 and what you can tell us about how giving changes 0:05:02.160 --> 0:05:06.400 across income spectrums, like as a proportion of how much 0:05:06.400 --> 0:05:08.039 money people have, how much they give. 0:05:09.000 --> 0:05:12.880 Now again, when it comes to giving, interesting enough, what 0:05:13.040 --> 0:05:15.560 studies historically so not just the walls part of a study, 0:05:15.640 --> 0:05:19.120 but those at the lower income levels often give a 0:05:19.200 --> 0:05:23.640 higher percentage of their assets. And the other piece too, 0:05:23.640 --> 0:05:25.479 that I think is important to talk about in terms 0:05:25.520 --> 0:05:27.680 of giving. It's not just giving money, right, so we 0:05:27.720 --> 0:05:31.960 call what the treasures the five te's. It's also giving time. 0:05:32.320 --> 0:05:36.040 It's also giving of your expertise, it's giving you know, 0:05:36.120 --> 0:05:41.839 in addition to the treasure, it's giving testimony, it's the 0:05:41.880 --> 0:05:44.400 actual service. And so part of what I think is 0:05:44.400 --> 0:05:47.599 important when we talk about philanthropy is to broaden the 0:05:47.640 --> 0:05:51.760 conversation beyond just the treasure in the in the five t's, 0:05:51.839 --> 0:05:54.159 it's to broaden it to all sorts of aspects. And 0:05:54.200 --> 0:05:56.960 when you are that inclusive, what we find is those 0:05:57.000 --> 0:06:00.200 who are at the lower income levels typically give more 0:06:00.320 --> 0:06:02.719 to society than those who are at the higher in 0:06:02.839 --> 0:06:05.000 terms of like a percentage of assets. 0:06:05.640 --> 0:06:08.080 So how are the demographics of donor shifting? 0:06:10.000 --> 0:06:12.880 Well, again, as I mentioned before, if we're talking about 0:06:12.880 --> 0:06:16.000 and what usually the measurable piece of it is the 0:06:16.040 --> 0:06:18.200 treasure right, we can measure how much people are giving 0:06:18.240 --> 0:06:21.200 based on tax returns or what charities are reporting that 0:06:21.240 --> 0:06:24.479 they received for donations in a particular year. And so 0:06:24.560 --> 0:06:27.120 again with the higher standard deduction, as I mentioned before, 0:06:28.000 --> 0:06:30.360 what we're measuring the treasure amount is those who are 0:06:30.400 --> 0:06:34.960 in the higher income who have the ability to overcome 0:06:34.960 --> 0:06:38.599 the hurdle of the standard deduction, are giving more. They're 0:06:38.640 --> 0:06:41.479 becoming the larger base of donors for a lot of 0:06:41.600 --> 0:06:46.000 charities and charities we are seeing that in the giving numbers, 0:06:46.640 --> 0:06:49.320 and as part of that, they are also looking at 0:06:49.360 --> 0:06:52.599 those who, like I said before, give those lower amounts, 0:06:52.640 --> 0:06:55.279 and those amounts are critical. So I think The important 0:06:55.320 --> 0:06:58.040 part for people to realize is, you know, maybe you're 0:06:58.080 --> 0:07:01.160 not getting the benefit of the day action, but the 0:07:01.279 --> 0:07:04.320 charities still need those those gifts. You say, well, ten dollars, 0:07:04.320 --> 0:07:05.960 what is that going to do? It actually does a lot, 0:07:06.040 --> 0:07:10.760 especially when it's multiplied across a larger, break larger group 0:07:10.800 --> 0:07:11.800 of people who are giving. 0:07:12.720 --> 0:07:16.240 So let's look forward to twenty twenty five and how 0:07:16.360 --> 0:07:18.080 you and the team at Wells Fargar are thinking about 0:07:18.080 --> 0:07:20.960 a new administration when it comes to charitable giving. We 0:07:21.040 --> 0:07:24.560 know a big part of the priorities of the incoming 0:07:24.560 --> 0:07:28.760 Trump administration is to extend the Tax Cuts and Jobs 0:07:28.760 --> 0:07:32.160 Act when they do when it does expire next year. 0:07:33.000 --> 0:07:36.000 How did that shift I believe it was twenty seventeen. 0:07:37.560 --> 0:07:41.960 How did that change charitable giving in the first administration 0:07:42.040 --> 0:07:45.560 based on previously because of rules about deduction and those 0:07:45.560 --> 0:07:46.520 sorts of things. 0:07:47.600 --> 0:07:47.880 Yep. 0:07:48.640 --> 0:07:52.840 In some ways, as I've said before, it's changed who 0:07:52.920 --> 0:07:56.040 is giving. But in other ways, I think it also 0:07:56.200 --> 0:07:59.360 has encouraged those who maybe are not in an agreement 0:07:59.440 --> 0:08:02.800 with thet to really give to support the causes that 0:08:02.840 --> 0:08:05.160 are important to them. So one of the things we're 0:08:05.200 --> 0:08:08.480 seeing is, for example, you know, maybe women's rights. A 0:08:08.520 --> 0:08:11.160 lot of people are rising up and saying, you know what, 0:08:11.240 --> 0:08:13.760 that is important to me, and I want to give 0:08:13.800 --> 0:08:16.200 to that cause. So in other ways where they might 0:08:16.240 --> 0:08:18.440 not have been as encouraged to do it before, they're 0:08:18.480 --> 0:08:21.400 really focusing on that. And that's another note too that 0:08:21.440 --> 0:08:24.119 I think is important to be aware of, is that 0:08:24.400 --> 0:08:27.080 a lot of people want to be able to be 0:08:27.240 --> 0:08:31.280 strategic with their philanthropy. They want to be able to say, like, hey, 0:08:31.600 --> 0:08:35.320 whatever I'm giving here is really making a difference. And 0:08:35.400 --> 0:08:38.040 so as part of that, it's important for people to 0:08:38.080 --> 0:08:40.240 think about, you know, maybe just not what we call 0:08:40.280 --> 0:08:43.760 spreading pockets of sunshine here and there, but to say, 0:08:43.800 --> 0:08:45.520 you know, how much do I have in my budget 0:08:45.559 --> 0:08:47.640 to give to philanthropy or to give to the charities 0:08:47.679 --> 0:08:50.000 I want to support this year, and to focus a 0:08:50.040 --> 0:08:54.280 good portion on those particular causes where they know that 0:08:54.559 --> 0:08:57.440 giving a large amount can get a bigger impact for 0:08:57.520 --> 0:08:59.000 what's truly important to them. 0:08:59.200 --> 0:09:03.040 Stephanie Buckley, head of Trust Philanthropic Services at Wells Fargo, 0:09:03.360 --> 0:09:06.400 joining us this afternoon. All right, well, look at chairs 0:09:06.440 --> 0:09:10.520 of Hewlett Packard Enterprise kind of jumping all over the place, 0:09:10.760 --> 0:09:13.720 higher by about one point six percent right now, in 0:09:13.760 --> 0:09:16.280 the after hours, the company did report better than expected 0:09:16.360 --> 0:09:19.080 quarterly revenue and a jump in sales of servers to 0:09:19.120 --> 0:09:23.320 power AI work We've got with us right now, Crawford 0:09:23.320 --> 0:09:25.840 del Pratt, President over at I d C, joining us 0:09:25.880 --> 0:09:28.600 here in the Bloomberg Interactive Brokers studio. Welcome back, Crawford. 0:09:29.960 --> 0:09:31.640 You've had a chance to dive into these numbers a 0:09:31.679 --> 0:09:33.320 little bit. What sticks out to you? 0:09:33.760 --> 0:09:37.440 Yeah, so great to see you guys, Thanks for having me. So, look, 0:09:37.440 --> 0:09:41.120 this is a record revenue quarter for for HPE, and 0:09:41.200 --> 0:09:43.920 I think it's it's indicative of a number of things. 0:09:43.960 --> 0:09:49.200 It's indicative of this extraordinary server and storage growth that 0:09:49.240 --> 0:09:52.040 we're seeing. So, you know, just for context, the server 0:09:52.120 --> 0:09:56.120 business was a single digit growth business for multiple years. 0:09:56.559 --> 0:09:56.959 I d C. 0:09:57.320 --> 0:10:00.360 Overall, we forecast you know, wait for it, thirty seven 0:10:00.400 --> 0:10:04.880 percent growth in servers and storage this year in dollars. Okay, 0:10:04.920 --> 0:10:08.480 So what's driving that. It's an architectural shift to AI, 0:10:08.920 --> 0:10:12.719 right and we are seeing that service providers and then 0:10:12.840 --> 0:10:17.040 ultimately enterprises will need to upgrade their infrastructure to support 0:10:17.240 --> 0:10:19.280 these new what we call AI workloads. 0:10:19.720 --> 0:10:22.040 So especially because when you hear AI, always think of 0:10:22.080 --> 0:10:25.000 maybe companies like an Nvidia, maybe not as sexy as 0:10:25.000 --> 0:10:27.040 a name quite like this, but when it comes to 0:10:27.240 --> 0:10:30.680 especially sort of the it spending side of things with 0:10:30.960 --> 0:10:33.800 HPE as well as some of its other competitors, who 0:10:33.800 --> 0:10:35.679 do you think can really benefit from this Beyonce when 0:10:35.679 --> 0:10:39.079 we're talking about other type of chip type semiconductor type stocks. 0:10:39.360 --> 0:10:42.559 Yeah, So when you start looking at what's happening with AI, 0:10:42.720 --> 0:10:46.160 and this is what you're seeing in HPEES numbers, is 0:10:46.200 --> 0:10:49.720 that you have to upgrade your overall infrastructure. So that 0:10:49.880 --> 0:10:53.560 means that companies like HPE are benefiting, companies like Dell 0:10:53.720 --> 0:10:59.560 are benefiting. You're seeing also ultimately you'll see the software 0:10:59.559 --> 0:11:05.280 stack associated with managing your infrastructure. Ultimately your applications will benefit. 0:11:05.360 --> 0:11:08.000 But that's going to take a longer period of time. 0:11:08.400 --> 0:11:10.760 But in the near term, you know, beyond the Nvidia, 0:11:10.800 --> 0:11:14.319 you're seeing that the entire infrastructures that needs to get grinded. 0:11:14.360 --> 0:11:16.720 Now for let's just get back to HPE for a second. 0:11:16.840 --> 0:11:19.679 What's also happening at HPE is that a number of 0:11:19.800 --> 0:11:24.200 years ago they went on diversification strategy. They bought a 0:11:24.200 --> 0:11:28.040 company called Uruba Networks and a Ruben Networks expanded their 0:11:28.040 --> 0:11:32.360 footprint in the enterprise. So last quarter, HPE, you had 0:11:32.400 --> 0:11:34.440 a tougher reaction from Wall Street because they saw their 0:11:34.480 --> 0:11:37.160 gross margins dip. They saw them dip again, but that 0:11:37.320 --> 0:11:40.280 was really related to a slow down and a stall 0:11:40.440 --> 0:11:43.360 in the enterprise infrastructure space in a RUBA networks what'll 0:11:43.360 --> 0:11:45.440 we call the edge of the network, the wireless and 0:11:45.480 --> 0:11:48.960 wireless infrastructure. And as that infrastructure now is working through 0:11:49.080 --> 0:11:52.240 its inventory, HP saw a sequential increase in that business, 0:11:52.320 --> 0:11:54.600 even though it's still down twenty percent year over year. 0:11:54.800 --> 0:11:58.280 Sequentially that business is starting to stabilize and their gross 0:11:58.280 --> 0:12:01.880 margins will start to have started the stabilized as well, 0:12:01.880 --> 0:12:04.320 although like I said, they were down about four hundred BIPs. Now, 0:12:05.160 --> 0:12:07.640 I think going forward, what you're seeing at the company 0:12:07.720 --> 0:12:09.720 is and you're seeing this in other companies as well, 0:12:09.840 --> 0:12:14.840 like Dell, that the demand is just sustained for infrastructure 0:12:15.320 --> 0:12:18.560 and the demand for n HP's case, HPEES case, the 0:12:18.600 --> 0:12:21.959 demand for infrastructure around the network will likely increase and 0:12:22.000 --> 0:12:25.040 it'll forget. They announced that they have the air intent 0:12:25.080 --> 0:12:29.160 required Juniper Networks that will add their ability to get 0:12:29.240 --> 0:12:31.480 the service provider side of the network and they expect 0:12:31.480 --> 0:12:34.120 to close that deal sometime in early twenty five. So 0:12:35.040 --> 0:12:37.520 it's a very interesting story. Is this company is really 0:12:37.559 --> 0:12:40.480 reinventing itself and is seeing the benefit of that reinvention 0:12:40.600 --> 0:12:41.120 in their numbers. 0:12:41.320 --> 0:12:42.400 What's it trying to leave behind? 0:12:43.640 --> 0:12:46.560 So, what it's trying to leave behind is running on 0:12:46.800 --> 0:12:51.760 that X eighty six Intel treadmill of commoditization, right. I mean, 0:12:51.880 --> 0:12:54.040 so you know, HPE sat back a number of years 0:12:54.080 --> 0:12:56.959 ago and said, where are the largest profit pools that 0:12:57.000 --> 0:13:00.439 we can prosecute in the enterprise networking at the top 0:13:00.440 --> 0:13:02.840 of the list. That's why they went after Ruba software. 0:13:02.880 --> 0:13:05.800 That's why they brought out things like es Morale Storage. 0:13:05.880 --> 0:13:08.360 That's why they and by the way, Dell Body MC right. Yeah, 0:13:08.600 --> 0:13:11.960 in the in the case of HPE, they brought out Electro, 0:13:12.000 --> 0:13:14.920 which is their new storage platform. Now they're looking at 0:13:15.280 --> 0:13:18.040 at networking and saying, huh, well, there's also this service 0:13:18.040 --> 0:13:23.240 provider networking, this really high capacity, high bandwidth networking. Juniper 0:13:23.440 --> 0:13:25.880 adds that that's what is So what they're trying to 0:13:25.920 --> 0:13:29.000 do is they're they're basically the gravitational force of commoditization, 0:13:29.120 --> 0:13:30.760 is what they're leading. They're trying to leave behind. 0:13:30.960 --> 0:13:34.319 Jessman and Timsten of Akure the Bloomberg Interactive Brokers Studio. 0:13:34.360 --> 0:13:38.319 We're actually back with Crawford del President at IDC International 0:13:38.440 --> 0:13:41.880 Data Corp, joining us in the Bloomberg Interactive Broker Studio 0:13:42.440 --> 0:13:45.520 once again. And so we were just speaking Crawford about 0:13:45.520 --> 0:13:49.520 obviously HPE posting higher than expected fourth quarter revenue due 0:13:49.520 --> 0:13:52.640 to that continuing AI demand and looking at that stock HPE, 0:13:52.720 --> 0:13:55.000 and after I was trading up close to two percent. 0:13:55.280 --> 0:13:57.160 But another stock I wanted to point out that a 0:13:57.160 --> 0:13:59.880 lot of tension is given to is super Micro SMC. 0:14:00.360 --> 0:14:02.679 Now at a certain point it was one of the 0:14:02.960 --> 0:14:05.320 worst performing stocks in the S and P five hundred 0:14:05.320 --> 0:14:08.640 this year just because of those questions surrounding its accounting practices. 0:14:08.679 --> 0:14:10.680 Though if you look here to date, it's recovered some 0:14:10.720 --> 0:14:13.640 of those losses and it's actually help around forty five percent. 0:14:13.960 --> 0:14:16.360 You were talking about kind of the exposure when it 0:14:16.360 --> 0:14:20.840 comes to service providers. If you're thinking about like Metas Salesforce, Microsoft, 0:14:21.360 --> 0:14:24.240 SMCI doesn't exactly have the same kind of broad reach 0:14:24.320 --> 0:14:26.240 that some of its competitors do when it comes to 0:14:26.280 --> 0:14:29.440 a company like this, and especially some of the accounting 0:14:29.440 --> 0:14:31.400 news that has come past. How do you make of 0:14:31.440 --> 0:14:33.080 this and is its stock performance so far? 0:14:33.560 --> 0:14:36.560 Yeah, So when you look at super Micro, it's a 0:14:36.600 --> 0:14:40.800 fascinating company because where an HPE or a Dell or 0:14:40.960 --> 0:14:45.920 Lenovo sells a broad range of products that address the 0:14:45.960 --> 0:14:48.800 needs of many many different kinds of enterprises and also 0:14:48.920 --> 0:14:53.040 service providers, certainly super Micro has a range of products, 0:14:53.040 --> 0:14:55.960 but really what they do is a significant amount of 0:14:56.040 --> 0:15:00.400 engineering and innovation really for what we call ultra dense 0:15:00.720 --> 0:15:05.320 service provider applications. And so you know you're a hyperscaler, 0:15:05.400 --> 0:15:08.000 so you're a Microsoft, or you're a or you're a Meta, 0:15:08.120 --> 0:15:10.920 or you're a Google. Super Micro is going to do 0:15:10.960 --> 0:15:15.480 that really really tight engineering between the components as well 0:15:16.120 --> 0:15:19.080 between between component suppliers as well as the actual physical 0:15:19.120 --> 0:15:21.800 box and bring that box out and and and allow 0:15:21.880 --> 0:15:27.800 you to have a very very dense environment. The downside 0:15:27.800 --> 0:15:30.880 of that is that they don't have the same distribution channel, 0:15:30.920 --> 0:15:33.040 they don't have the same reach that you would see 0:15:33.040 --> 0:15:35.920 at a Lenovo or at a Dell. So the concentration 0:15:36.040 --> 0:15:38.160 of customers is very very high. 0:15:38.200 --> 0:15:40.520 Oh, it's incredible. You go to this, Uh, well, the 0:15:40.560 --> 0:15:43.600 concentration of customers, the concentration of who they're buying. 0:15:43.360 --> 0:15:45.720 From both Okay, yeah, yeah, yeah. 0:15:45.560 --> 0:15:47.600 Because they see that on both it's like it's pretty remarkable. 0:15:47.960 --> 0:15:51.960 I mean, they're a huge customer of Nvidia. Yeah, oh absolutely, 0:15:52.320 --> 0:15:54.000 it's like they're one of the top customers there. 0:15:54.080 --> 0:15:57.520 So so think about the AI and actually this this 0:15:57.560 --> 0:16:00.120 is a great metamor think about the AI kind of 0:16:00.280 --> 0:16:03.480 market right now is an upside down triangle. At the 0:16:03.480 --> 0:16:05.640 top of the triangle or the service providers, and that's 0:16:05.640 --> 0:16:08.640 where the majority of your demand is coming. Okay, that's 0:16:08.680 --> 0:16:11.920 the animal that's eating all the Nvidia processors right now. 0:16:12.160 --> 0:16:14.080 So that's the Microsoft's and the Amazon that's. 0:16:13.960 --> 0:16:17.960 The hyperscalers, the Microsofts, the Amazon's, the salesforces, the the 0:16:18.040 --> 0:16:22.200 metas and as that triangle comes down, it gets narrow 0:16:22.320 --> 0:16:26.800 or narrow because the enterprise customers haven't really stepped up 0:16:27.000 --> 0:16:31.840 and bought into generative AI in the same way within 0:16:32.000 --> 0:16:32.840 their data center. 0:16:33.120 --> 0:16:35.520 Is that but if they do it, wouldn't they just 0:16:35.560 --> 0:16:38.920 go to a hyperscaler. Well that's just it, rather than 0:16:39.000 --> 0:16:41.400 doing it on prem potentially. 0:16:41.720 --> 0:16:46.360 But what we see is we see a lot of customers. 0:16:46.400 --> 0:16:48.120 I'm not saying this is a customer, but a customer 0:16:48.240 --> 0:16:50.080 like a a JP Morgan or something like that, but 0:16:50.520 --> 0:16:55.520 significant investment in custom applications, and those custom applications they 0:16:55.560 --> 0:16:57.360 want to be able to take those data stores that 0:16:57.360 --> 0:17:00.360 they're creating in their custom applications. Those are in their 0:17:00.400 --> 0:17:03.960 own data centers, and they will ultimately want to train 0:17:04.080 --> 0:17:07.359 their own large language models and have their custom applications 0:17:07.400 --> 0:17:09.600 be able to use those large language models to be 0:17:09.600 --> 0:17:12.639 able to get generative AI answers to serve their customers 0:17:12.800 --> 0:17:15.720 and their employees in new ways. That is when the 0:17:16.160 --> 0:17:19.280 bottom of the pyramid starts to get wider, because then 0:17:19.520 --> 0:17:23.359 enterprises start buying into this technology. But we're not there yet. 0:17:23.480 --> 0:17:26.000 Where we are is the top is what's consuming the 0:17:26.119 --> 0:17:30.680 vast majority of these processors. And what's interesting about generative 0:17:30.680 --> 0:17:34.520 AI is that usually with these compute architectures, it becomes 0:17:34.520 --> 0:17:36.879 a law of diminishing returns, where the performance starts to 0:17:38.200 --> 0:17:40.719 tap out no matter how much capacity you throw at it. 0:17:40.880 --> 0:17:43.360 We haven't seen that yet. With generative AI. You can 0:17:43.480 --> 0:17:46.600 keep throwing processing capacity at it and the system gets 0:17:46.800 --> 0:17:48.880 more and more and more capable, and you can also 0:17:48.920 --> 0:17:50.640 get significant speed gains. Yeah. 0:17:50.680 --> 0:17:53.120 One of my favorite functions in the terminal is s PLC, 0:17:53.200 --> 0:17:55.280 so you to see the supply chains. I'm sure to 0:17:55.400 --> 0:17:56.200 me have been looking at. 0:17:56.080 --> 0:17:57.560 To customer. 0:18:00.119 --> 0:18:02.520 US for our radio listeners so that they know so 0:18:02.560 --> 0:18:05.479 you can get engauge there. So super Micro has been 0:18:05.480 --> 0:18:06.919 in the S and P five hundred for less than 0:18:06.920 --> 0:18:07.200 a year. 0:18:07.200 --> 0:18:07.800 It got at it. 0:18:08.400 --> 0:18:11.240 Yeah, this you got added toward the end of the 0:18:11.240 --> 0:18:14.159 first quarterback in March. So I mean, what do you 0:18:14.200 --> 0:18:16.200 make of kind of like what's next here after it's 0:18:16.240 --> 0:18:18.679 trying to get over this hurdle with the accounting issues. 0:18:19.080 --> 0:18:21.080 Yeah again, you know, and I see you know, we 0:18:21.080 --> 0:18:23.360 we we don't pick stocks, but I but I will 0:18:23.400 --> 0:18:26.840 tell you that from a from a performance standpoint, there 0:18:26.920 --> 0:18:29.840 is such a significant amount of engineering and so much 0:18:29.840 --> 0:18:32.240 as a significant amount of a demand within that company. I 0:18:32.320 --> 0:18:34.679 believe that in the long term they are going to 0:18:34.760 --> 0:18:38.640 benefit continue to benefit from this AI boom, particularly as 0:18:38.640 --> 0:18:42.119 service providers continue to invest. So you know, take that, 0:18:42.200 --> 0:18:44.760 take that with what you will. But I don't see 0:18:44.800 --> 0:18:47.520 a world where super Micro is not continuing to participate 0:18:47.720 --> 0:18:48.359 in this market. 0:18:48.400 --> 0:18:50.800 Okay, Crawford, I'm going to go off script a little bit, sure, 0:18:50.840 --> 0:18:52.480 because I want to get your take on this. You're 0:18:52.480 --> 0:18:54.520 in Boston, that's where you're absolutely Okay, you spend a 0:18:54.560 --> 0:18:56.520 lot of time in the Bay Area. Have you taken 0:18:56.520 --> 0:18:56.919 a weaimo. 0:18:58.160 --> 0:19:01.040 I have not taken away moh, but I have crossed 0:19:01.080 --> 0:19:03.000 the street in front of one and it didn't hit you. 0:19:03.119 --> 0:19:04.240 It didn't hit it didn't. 0:19:04.240 --> 0:19:07.840 You're that I like to see. Yeah, here's why I ask. 0:19:08.000 --> 0:19:09.720 I was out in San Francisco a few weeks ago. 0:19:10.040 --> 0:19:11.920 Now anyone can take these way mos. You don't have 0:19:11.960 --> 0:19:13.600 to be on a list anymore. I downloaded the app 0:19:13.720 --> 0:19:16.240 further right, I don't. I mean it was I was 0:19:16.280 --> 0:19:18.040 only able to go within San Francisco. That's all I 0:19:18.080 --> 0:19:20.560 needed to do. I know they're training them, Yeah, they're 0:19:20.600 --> 0:19:22.679 they're training them to go to the airport. Now you 0:19:22.680 --> 0:19:25.000 can't get on the highway with them. Yet it blew 0:19:25.040 --> 0:19:28.720 my mind. It was incredible. I was a skeptic. I'm 0:19:28.720 --> 0:19:31.320 totally sold. Now after this one twenty eight minute trip. 0:19:32.440 --> 0:19:35.160 Are we are we going? Where do the companies that 0:19:35.240 --> 0:19:37.480 you cover just in the last minute that we have, Yeah, 0:19:37.480 --> 0:19:40.280 where are the companies that you cover play in that space? 0:19:40.320 --> 0:19:42.920 Like if if we're working to a world where these 0:19:42.960 --> 0:19:44.399 are all going to be these are going to be 0:19:44.440 --> 0:19:46.600 all over, how do the companies that you cover benefit. 0:19:47.280 --> 0:19:50.399 Boy, there's there's number, there's a number of ways. And 0:19:50.880 --> 0:19:52.520 it also blew my mind. One of my team members 0:19:52.560 --> 0:19:55.560 sent me a video of her in a wamo and bananas. 0:19:55.400 --> 0:19:58.680 It's it's driving itself. It's driving itself around a lot 0:19:58.720 --> 0:20:02.639 of ways. So companies like so think of a driverless 0:20:02.720 --> 0:20:07.000 vehicle as a little data center, a little smart connected 0:20:07.040 --> 0:20:09.800 node on the network. It has its own network inside 0:20:09.800 --> 0:20:13.400 of it, and it's obviously consuming a lot of processing 0:20:13.440 --> 0:20:16.160 power from the network. But what's different about a self 0:20:16.200 --> 0:20:19.000 driving vehicle is the amount of processing it needs to do. 0:20:19.200 --> 0:20:22.440 We call this compute at the edge of the network 0:20:22.560 --> 0:20:25.199 because it has to decide very very rapidly. Is that 0:20:25.240 --> 0:20:27.040 a human, is that a mailbox? Is that a dog? 0:20:27.119 --> 0:20:29.560 Is that a shadow? And it has to be able. 0:20:29.680 --> 0:20:32.320 It can't compute that at the core of the network. 0:20:32.320 --> 0:20:34.200