WEBVTT - Nvidia Delivers Upbeat Forecast to AI-Wary Market 0:00:02.520 --> 0:00:13.360 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 0:00:13.360 --> 0:00:17.200 from coast to coast with Caroline Hyde in New York 0:00:17.480 --> 0:00:19.439 and Eva Low in San Francisco. 0:00:22.800 --> 0:00:25.520 This is Bloomberg Tech coming up in Video's latest sale 0:00:25.600 --> 0:00:29.560 forecast draws a bearish response from investors, with concerns over 0:00:29.560 --> 0:00:32.040 a potential bubbles still weighing on the company. 0:00:32.120 --> 0:00:34.800 Plus, we break down more tech earnings for the CEOs 0:00:34.800 --> 0:00:36.319 of Snowflake and Chime later this. 0:00:36.320 --> 0:00:39.800 Hour, and Warner Brothers, Discovery and Paramount both out with 0:00:39.840 --> 0:00:44.199 earnings too. As the bidding war drama continues. Let's get 0:00:44.240 --> 0:00:46.120 right to our top story, and Video is now down 0:00:46.200 --> 0:00:49.960 around five percent. Earlier in the session, it had been 0:00:49.960 --> 0:00:52.520 down and on track for its worst day since April 0:00:52.880 --> 0:00:56.920 of last year. It is a change of direction and 0:00:57.160 --> 0:01:00.800 sentiment from where we traded in after our in its 0:01:00.800 --> 0:01:03.960 earning sprint, the forecast for the fiscal first quarter is 0:01:04.000 --> 0:01:07.000 sales of seventy eight billion dollars plus or minus two percent. 0:01:07.680 --> 0:01:11.800 Interesting margin guidance that sales forecast does not include any 0:01:11.800 --> 0:01:15.200 contribution from data center revenues from China. Let's get to 0:01:15.200 --> 0:01:18.840 Bloombsie inking who leads our coverage of this name. It 0:01:18.920 --> 0:01:21.280 was all about the outlook. So that's the data points 0:01:21.319 --> 0:01:24.480 seventy eight billion dollars of sales there or thereabouts. Actually, 0:01:25.600 --> 0:01:28.399 Jensenwong and collect Crest. The CFO went beyond that to 0:01:28.440 --> 0:01:31.039 say that five hundred billion dollar guide, which is just 0:01:31.080 --> 0:01:34.120 Blackwel and Rubin. Actually they're probably tracking ahead of that now. 0:01:34.120 --> 0:01:35.360 The SOCK is down five percent. 0:01:35.720 --> 0:01:38.480 Yeah, you're breaking down the numbers. And we tried to 0:01:38.520 --> 0:01:41.120 do the same. I spoke to numerous people after the 0:01:41.200 --> 0:01:44.600 report yesterday, and nobody is pointing to any number and 0:01:44.640 --> 0:01:47.680 saying that's a problem. That's worse than what we're expecting. 0:01:48.240 --> 0:01:51.200 Across the board, they were saying other numbers were better 0:01:51.280 --> 0:01:55.080 than we expected if there is an identifiable problem. It 0:01:55.200 --> 0:01:58.400 was this amorphous idea that well, where's the news story, 0:01:58.480 --> 0:01:59.520 what's going to take. 0:01:59.360 --> 0:02:02.559 This to the next and is that GtC ian. 0:02:04.240 --> 0:02:07.320 That was the conclusion that people have come up with that. 0:02:07.600 --> 0:02:09.720 You know, they want Jensen to walk out on stage 0:02:09.760 --> 0:02:12.400 and santase like he does and tell them something new 0:02:12.440 --> 0:02:17.840 and exciting, show them a new path forward, and that 0:02:18.000 --> 0:02:18.640 was the end of it. 0:02:18.680 --> 0:02:19.000 Really. 0:02:19.160 --> 0:02:21.880 GtC is in Nvidia's big showcase for the audience and 0:02:21.919 --> 0:02:24.079 those aren't familiar with it, and often they do come 0:02:24.080 --> 0:02:25.919 out and say something quite big. 0:02:26.280 --> 0:02:27.720 There were other bits in there. 0:02:27.560 --> 0:02:30.359 For example, if we continue to talk about how this 0:02:30.440 --> 0:02:34.480 is a supply constrained industry, right detail about how they 0:02:34.480 --> 0:02:37.680 have inventory and capacity for several quarters, but are warning 0:02:37.720 --> 0:02:41.600 at the same time from collect press that actually supplies 0:02:41.680 --> 0:02:45.000 still something to think about, how are they managing the 0:02:45.040 --> 0:02:47.960 world of intense AI compute demand. 0:02:48.120 --> 0:02:50.120 Yeah, I mean, that's just one of the questions that 0:02:50.240 --> 0:02:53.639 they had to answer and did. And the answer was, look, 0:02:53.680 --> 0:02:55.520 we've spent a lot of money, We've got a lot 0:02:55.680 --> 0:02:59.520 of inventory ready. We can support growth into twenty twenty seven, right, 0:03:00.000 --> 0:03:02.880 as an answered. At the same time, people were like, 0:03:03.080 --> 0:03:06.160 what about memory chips, what about you know, high end capacity, 0:03:06.200 --> 0:03:08.080 and she did said, look, it is tight, but we 0:03:08.240 --> 0:03:09.799 have what we need for now. 0:03:10.560 --> 0:03:13.560 Glimpergsy and King with the breakdown. We thank you, let's 0:03:13.560 --> 0:03:16.359 get more in the video. Sereney Pajuria is with us 0:03:16.480 --> 0:03:19.280 OBBC Capital Markets research analyst. He has an outperform rating 0:03:19.320 --> 0:03:21.640 on the stock, has raised his price target from two 0:03:21.680 --> 0:03:25.080 hundred fourteen to two hundred and fifty. And You're not alone, shoney, 0:03:25.160 --> 0:03:27.919 because I'm looking at True Securities raising their price target, 0:03:27.960 --> 0:03:30.800 City did JP Morgan did Morgan Stanley raise their price target, 0:03:30.919 --> 0:03:33.560 called it the largest cleanest beat and raised in the 0:03:33.720 --> 0:03:36.000 history of semis industry. 0:03:36.680 --> 0:03:37.520 What was missing? 0:03:39.120 --> 0:03:42.560 Right? I mean, they delivered on everything. You know, they 0:03:42.800 --> 0:03:45.840 checked all the boxes. You know, for Nvidia, given their 0:03:45.840 --> 0:03:49.640 track record, the expectations are always high, and they were 0:03:49.720 --> 0:03:52.120 high this quarter. And you know, they came in well 0:03:52.360 --> 0:03:55.240 well even the high end of the so called whisper numbers. 0:03:55.600 --> 0:03:59.880 And also they talked about visibility extending well into you know, 0:04:00.400 --> 0:04:03.760 twenty twenty seven. And if you look at the breakdown 0:04:03.800 --> 0:04:07.240 of the quarter, you know what drew actually what led 0:04:07.280 --> 0:04:12.760 the growth was interestingly the non hyperscaler business, which is 0:04:12.840 --> 0:04:15.480 kind of you know, suggests that you know, the AI 0:04:15.720 --> 0:04:19.279 momentum is spreading into you know, the broader markets like 0:04:19.440 --> 0:04:22.640 enterprise and in a smaller cloud customers, et cetera. And 0:04:22.720 --> 0:04:27.479 then in addition to that, networking was particularly strong. That's 0:04:27.520 --> 0:04:31.040 also a positive sign in our view because networking is 0:04:31.080 --> 0:04:34.240 a market where and video is actually gaining share. You know, 0:04:34.279 --> 0:04:36.680 they don't have as dominant as a position as they 0:04:36.760 --> 0:04:39.360 as they do in compute, So you know, I would 0:04:39.400 --> 0:04:42.800 say those are actually, you know, definite incremental positives in 0:04:42.839 --> 0:04:46.160 the quarter, and then there were some concerns about gross 0:04:46.200 --> 0:04:49.719 margins heading into the print, and you know, they guide 0:04:49.720 --> 0:04:52.240 it to mid seventy percent despite the fact that memory 0:04:52.279 --> 0:04:54.279 pricing is up, you know, more than one hundred percent 0:04:54.320 --> 0:04:56.880 this year. So you know, as I said, you know, 0:04:56.880 --> 0:04:59.039 they checked every every box. I think I think the 0:04:59.080 --> 0:05:01.479 reason for the stock action, if I have to guess, is, 0:05:01.520 --> 0:05:05.880 you know, the concerns about the broader AI spending sustainability. 0:05:06.720 --> 0:05:08.800 So you know, that's more of a market concern as 0:05:08.800 --> 0:05:10.240 a post a thing that this said. 0:05:10.880 --> 0:05:14.400 Call about that sustainability, because you've just outlined how they 0:05:14.480 --> 0:05:18.039 managed to diversify their end customer. About fifty percent of 0:05:18.120 --> 0:05:20.520 data center demand was from hyperscalers, but they are looking 0:05:20.560 --> 0:05:23.200 for sovereign AI and the like. Are we needing to 0:05:23.200 --> 0:05:25.680 hear more about growth in China for example, which again 0:05:25.800 --> 0:05:28.400 isn't being factored into the forecast. How much can we 0:05:28.440 --> 0:05:30.800 support that the capital expenditure is going to last through 0:05:30.839 --> 0:05:32.000 twenty twenty seven. 0:05:31.800 --> 0:05:36.279 Fiscal Yeah, so look, you know it's it's the adaptation 0:05:36.480 --> 0:05:38.600 is broadening that there's no question about it. We are 0:05:38.640 --> 0:05:41.159 seeing that, you know, on the enterprise side. On this 0:05:41.240 --> 0:05:44.560 sovereign side, you know, China is going a little tricky 0:05:44.640 --> 0:05:47.359 because you know, there's a lot of geopolitical issues here. 0:05:47.760 --> 0:05:50.159 The good thing is that the management did not include 0:05:50.160 --> 0:05:53.440 any China revenue in the guidance. So if it comes through, 0:05:53.480 --> 0:05:54.880 it's it's upside to the model. 0:05:55.800 --> 0:05:56.040 I think. 0:05:56.160 --> 0:05:58.200 I think it's going to be incremental longer term. We're 0:05:58.240 --> 0:06:00.880 not counting on China. You know, look at the valuation. 0:06:01.800 --> 0:06:03.359 You know it's in the you know, a load of 0:06:03.360 --> 0:06:06.760 mid twenties today on forward numbers. You know, that's pretty 0:06:06.800 --> 0:06:10.560 attractive for a stock or a company that's growing. You know, 0:06:10.600 --> 0:06:13.960 it grew a seventy percent plus. Obviously that's not sustainable, 0:06:14.279 --> 0:06:17.159 but our expectation is that even in twenty seven this 0:06:17.279 --> 0:06:21.120 company can grow at least thirty percent, and at this 0:06:21.240 --> 0:06:23.760 level of gross margins and profitability, I think that's a 0:06:23.760 --> 0:06:25.159 particularly attractive valuation. 0:06:26.000 --> 0:06:29.960 In your risks rating column, in your research, not very clearly, 0:06:30.080 --> 0:06:34.440 hyper scale spending is a leading indicator for AI demand. 0:06:34.800 --> 0:06:37.040 Gensmung was asked that on the call. This is what 0:06:37.080 --> 0:06:37.479 he said. 0:06:38.760 --> 0:06:42.760 I am confident in their cash flow growing. You need 0:06:42.839 --> 0:06:46.680 compute capacity, and that translates directly to growth, and that 0:06:46.720 --> 0:06:48.320 translates directly to revenues. 0:06:50.680 --> 0:06:55.080 He was asked about capital expenditures growth going forward. His 0:06:55.279 --> 0:06:58.720 answer was confidence in cash flows because of course cash 0:06:58.720 --> 0:07:01.920 flows have been impacted by the capets commitment. He didn't 0:07:02.000 --> 0:07:04.960 really answer the question, but what did you interpret from 0:07:05.000 --> 0:07:05.720 what he did say. 0:07:07.160 --> 0:07:09.359 Look, at the end of the day, you know, the 0:07:09.400 --> 0:07:11.880 spending has to have a return, right The ROI is 0:07:12.000 --> 0:07:15.280 very important, But we're still very early in terms of 0:07:15.320 --> 0:07:18.480 the AI cycle. And part of the reason we are 0:07:18.560 --> 0:07:22.040 speeing we're seeing this, you know, elevated spending, is that 0:07:22.120 --> 0:07:25.320 the competition among these big four or five hyperscalers is 0:07:25.320 --> 0:07:29.680 pretty intense. You know, it's still the battle for leadership 0:07:29.760 --> 0:07:32.440 is still not settled. I mean, just recently, you know, 0:07:32.560 --> 0:07:35.640 Google took the lead in terms of the large language 0:07:35.640 --> 0:07:39.200 model performance, and you know you have open Ai Anthropic 0:07:39.280 --> 0:07:43.040 right behind them and x Ai. So there's the competition 0:07:43.120 --> 0:07:45.440 is quite intense and we don't expect that battle to 0:07:45.440 --> 0:07:48.160 settle anytime soon. So it's not so much about ROI 0:07:48.320 --> 0:07:51.160 right now. Longer term, it does matter, of course, you know, 0:07:51.200 --> 0:07:54.360 we need we need to generate free cashlows for the 0:07:54.360 --> 0:07:57.760 investments that these companies are making but at the same time, 0:07:58.120 --> 0:08:00.840 right now, it's more about the competition and the battle 0:08:00.840 --> 0:08:02.520 for leadership in AI in my view. 0:08:04.240 --> 0:08:06.880 Very quickly, Jensen Wong sprung to the defense of the 0:08:06.880 --> 0:08:12.640 software industry. Is the ecosystem of his other customers healthy. 0:08:14.320 --> 0:08:16.440 Yeah, I mean, look, I'm not an expert in software, 0:08:16.480 --> 0:08:19.360 but at the same time, we are seeing broadening adaptation 0:08:19.480 --> 0:08:23.680 of AI in the enterprise. His views, as he stated yesterday, 0:08:24.160 --> 0:08:26.840 is that you know, AI is you know, it is 0:08:26.960 --> 0:08:30.640 more of an agentic in nature. You know, the software 0:08:30.760 --> 0:08:34.760 essentially the tools. Our software team agrees with that. You know, 0:08:34.880 --> 0:08:39.080 our software has been you know, positive on the sector. 0:08:39.600 --> 0:08:41.800 But at the same time, I'm not an expert in 0:08:41.840 --> 0:08:44.920 that sector. So all right, I'll probably refrain from commenting 0:08:44.920 --> 0:08:45.120 on that. 0:08:45.800 --> 0:08:48.679 Shinny Bajeria Barbously Capital Markets, thank you very much for 0:08:48.760 --> 0:08:51.800 coming up. Snowflake CEO joins us to talk about his 0:08:51.840 --> 0:08:55.120 company's earnings and the fears of AI driven disruption. That's 0:08:55.120 --> 0:08:57.840 one move is to the upside. This is Bloomberg Tech. 0:09:02.200 --> 0:09:05.199 Snowflake another of the tech names that released earnings yesterday 0:09:05.240 --> 0:09:07.520 after the bell and as investors look for signs of 0:09:07.559 --> 0:09:11.360 AI adoption or disruption, it's forecast product revenue for the 0:09:11.440 --> 0:09:13.880 current quarter will be about one point two six billion dollars. 0:09:13.920 --> 0:09:16.160 That's up twenty seven percent. They reported more than nine 0:09:16.160 --> 0:09:19.079 thousand accounts using Snowflake AI features shares. 0:09:19.160 --> 0:09:20.400 You can see three. 0:09:20.280 --> 0:09:24.400 Point seven percent. Let's bringing the Snowflake CEO Shida Ramaswami Shida, 0:09:24.520 --> 0:09:27.480 I'm reading notes f mazoo Ho saying bookings were a standout. 0:09:27.480 --> 0:09:30.040 They're talking about the seven nine figure deals that have come. 0:09:30.600 --> 0:09:33.240 Where are those deals coming from? What are those customers 0:09:33.240 --> 0:09:33.920 demanding of you? 0:09:35.880 --> 0:09:38.640 Great to see you, Caroline. Yes, we had seven nine 0:09:38.640 --> 0:09:42.040 figure deals, including a man of four hundred million dollar deal. 0:09:42.760 --> 0:09:47.320 It reflects the confidence that our customers have, both in 0:09:47.800 --> 0:09:51.640 where Snowflake is right now, but importantly where we are going. 0:09:52.040 --> 0:09:55.440 We all understand that software is being disrupted by AI 0:09:55.760 --> 0:09:59.000 in a very very big way. But what our customers 0:09:59.040 --> 0:10:02.839 understand is that what enterprise AI to truly succeed, they 0:10:02.880 --> 0:10:05.520 need a single source of enterprise true. They need built 0:10:05.520 --> 0:10:09.440 in security, auditibility, trust and access. Of course, you also 0:10:09.480 --> 0:10:12.800 need the best models. That's what Snowflakes provides for them. 0:10:13.040 --> 0:10:15.800 And we're creating great products, products like Snowflake Intelligence that 0:10:15.960 --> 0:10:18.720 put the power of data into the hands of every 0:10:18.840 --> 0:10:24.120 business user. The healthcare company, I mean the health company 0:10:24.440 --> 0:10:28.680 loves using us, and there are lots of partners that 0:10:29.000 --> 0:10:31.800 are using products like Cortex Code to speed up what 0:10:31.920 --> 0:10:34.880 can be done with Snowflake. They're really looking to the 0:10:34.960 --> 0:10:38.679 future and making sure that we can deliver value with Snowflake, 0:10:38.840 --> 0:10:41.400 and we are creating the products that help them deliver 0:10:41.480 --> 0:10:43.600 that kind of value, Dane, and they are. That's why 0:10:43.640 --> 0:10:46.080 you are seeing companies, as you said, make commitments of 0:10:46.120 --> 0:10:49.040 four hundred plus million dollars with Snowflick. 0:10:49.360 --> 0:10:51.719 I'm really interested in codex code with something that was 0:10:51.720 --> 0:10:54.760 talked a lot about recall and people are adopting swiftly. 0:10:55.000 --> 0:10:56.959 But that partnership model that you have, the fact that 0:10:57.000 --> 0:11:00.000 you have integrations with Anthropic, Open ai Cloud, also Google 0:11:00.200 --> 0:11:02.920 how but some of these have very good coding tools 0:11:02.920 --> 0:11:05.640 of their own. How do you see this ecosystem evolving 0:11:05.679 --> 0:11:08.400 because customers get it, but the investments have been questioning 0:11:08.440 --> 0:11:10.600 whether they'll take away your market share. 0:11:12.440 --> 0:11:14.559 Well, so there are a lot of things that are 0:11:14.600 --> 0:11:19.680 specific to Snowflake and to data. Absolutely, there are coding 0:11:19.720 --> 0:11:22.880 agents that are often provided by the model companies themselves. 0:11:23.040 --> 0:11:25.320 But we know a lot about how data systems are 0:11:25.320 --> 0:11:27.960 supposed to work, about how Snowflake is supposed to work, 0:11:28.120 --> 0:11:32.319 and Cortex Code is super tightly integrated with the customer's 0:11:32.320 --> 0:11:35.480 Snowflake account. Data does not go anywhere. And remember we 0:11:35.559 --> 0:11:38.720 have earned the trust of all of these customers with certifications, 0:11:38.760 --> 0:11:42.760 with the guarantee around things like AIUS. We never use 0:11:42.800 --> 0:11:46.560 customer data for things like training models. They get the 0:11:47.080 --> 0:11:50.120 superior models that we get through partnerships with these folks, 0:11:50.320 --> 0:11:53.520 but we also add the secret sauce of data of 0:11:53.559 --> 0:11:57.400 how Snowflake works into products like Cortex Code, and we 0:11:57.440 --> 0:12:01.400 are seeing amazing wins both internally and also externally. One 0:12:01.440 --> 0:12:04.400 of our partners told us that having Cortex Code was 0:12:04.559 --> 0:12:08.040 like Snowflake supplying them with bulldozers were previously they had shovels. 0:12:09.240 --> 0:12:09.560 Shauda. 0:12:09.640 --> 0:12:11.840 One of the core pillars for you to grow is 0:12:11.880 --> 0:12:14.480 to go out and find new customers. And I wondered, 0:12:14.520 --> 0:12:16.920 if you just give some detail on what's happening in 0:12:16.920 --> 0:12:20.720 the world of technology in ai that would bring a 0:12:20.760 --> 0:12:23.280 customer to Snowflake for the first time. What is it 0:12:23.320 --> 0:12:24.920 that they need that they didn't before. 0:12:28.080 --> 0:12:30.920 Typically they come to us because they need better insight 0:12:31.160 --> 0:12:34.240 into data it is sitting somewhere. It's hard for them 0:12:34.280 --> 0:12:37.600 to get these insights. But increasingly what we're able to 0:12:37.600 --> 0:12:41.800 do is have our sales team build an honest to 0:12:41.840 --> 0:12:45.959 goodness customize demo of something like a Snowflake intelligence on 0:12:46.360 --> 0:12:48.640 data that on the kind of data that a customer 0:12:48.679 --> 0:12:52.240 is going to have. It is that easy access that really, 0:12:52.640 --> 0:12:55.839 you know, is the big winner for our customers. And 0:12:56.080 --> 0:12:59.679 smart customers are also quickly realizing that having data in 0:12:59.760 --> 0:13:03.520 snow means that they can think about how this data 0:13:03.600 --> 0:13:05.240 is going to be used in ways that they had 0:13:05.280 --> 0:13:08.240 not done before. Santa Fe, which is an existing customer, 0:13:08.520 --> 0:13:12.040 is now is now using Snowflake intelligence our AI products 0:13:12.120 --> 0:13:15.200 to redefine a lot of workflows, replacing a lot of 0:13:15.240 --> 0:13:19.000 existing software. These are the use cases that drive these 0:13:19.040 --> 0:13:21.199 customers to come to Snowflake and adopt it. 0:13:22.080 --> 0:13:22.440 Shrida. 0:13:22.559 --> 0:13:25.600 Last night, Jensen Wang, who you know very well, talked 0:13:25.640 --> 0:13:29.480 about profitable tokens, the idea that the output of an 0:13:29.480 --> 0:13:33.160 AI model is worth paying for. Customers do pay, and 0:13:33.200 --> 0:13:35.920 they pay it a price that is greater than the 0:13:35.960 --> 0:13:37.480 compute used to generate it. 0:13:38.080 --> 0:13:39.400 Are you able to give me any. 0:13:39.200 --> 0:13:42.160 Evidence through snowflakes lens that you actually see that in 0:13:42.200 --> 0:13:42.840 the real world. 0:13:44.320 --> 0:13:49.480 Well, what I can assure you is getting projects done 0:13:49.880 --> 0:13:54.120 as being changed dramatically. Something like setting up a pipeline 0:13:54.559 --> 0:13:56.680 used to be a multi week task, We can get 0:13:56.679 --> 0:13:59.600 that done in a small number of hours. My team's 0:13:59.600 --> 0:14:04.480 come to me just last weekend with speed ucks going 0:14:04.559 --> 0:14:07.880 from four weeks for a software engineering project that they 0:14:07.920 --> 0:14:11.360 did down to forty minutes. That is one hundred x 0:14:11.480 --> 0:14:13.839 speed up. And we are happy to spend any number 0:14:13.840 --> 0:14:16.560 of tokens in those forty minutes to save that kind 0:14:16.600 --> 0:14:19.560 of time. I think coding agents are really quite magical 0:14:19.600 --> 0:14:22.960 in the value that they deliver, and I think it's 0:14:23.000 --> 0:14:26.400 only going to accelerate from here, and so these investments 0:14:26.480 --> 0:14:29.840 are going to be pretty foundational in every company you 0:14:29.840 --> 0:14:33.160 know succeeding and thriving. And that's why we're so bullish 0:14:33.160 --> 0:14:34.160 about codex. 0:14:33.840 --> 0:14:35.920 Code and how much you have to invest in your 0:14:35.920 --> 0:14:38.360 own business. I mean, the bullet case for many is 0:14:38.560 --> 0:14:40.880 you need to keep up with a furious pace of innovation. 0:14:41.080 --> 0:14:42.560 Can you at this moment? 0:14:42.600 --> 0:14:48.400 Briefly, we can because we are organized to drive rapid innovation. 0:14:48.880 --> 0:14:51.720 The team that is driving a product like Snowflake Intelligence 0:14:51.840 --> 0:14:53.960 is not that large, but we have structured it in 0:14:54.000 --> 0:14:57.240 such a way that they can make rapid progress. And 0:14:57.840 --> 0:15:00.480 it is more the meta structure of how you set 0:15:00.520 --> 0:15:04.120 up environments where people can get work done quickly and effectively. 0:15:04.200 --> 0:15:06.600 That matters a lot more than things like how much 0:15:06.600 --> 0:15:10.240 hardware you are investing in and things like that. The 0:15:10.280 --> 0:15:12.800 current moment is magical because all of us have access 0:15:12.840 --> 0:15:16.400 to great tools. It really comes down to how effectively 0:15:16.480 --> 0:15:19.080 we set up teams on projects to get things done. 0:15:19.200 --> 0:15:21.640 And that's why we are very bullish on how we 0:15:21.680 --> 0:15:24.200 have set things up at Snowflake because we now have 0:15:24.320 --> 0:15:28.240 a demonstrated capability to be right at the cutting edge 0:15:28.360 --> 0:15:30.640 of where AI is having impact. 0:15:31.360 --> 0:15:33.920 Snowflake SEO shreet A Ramaswami. Great to have you back 0:15:33.960 --> 0:15:36.320 on Bloomberg Tech. Thank you very much. Now coming up 0:15:37.640 --> 0:15:40.560 continues and this time it's with Hollywood. We'll discuss results 0:15:40.560 --> 0:15:44.440 from Warner Brothers and Paramount. That's next. This is Bloomberg Tech. 0:15:49.480 --> 0:15:53.920 Ward continues to lead a rigorous, highly competitive and thorough 0:15:54.000 --> 0:15:58.880 sales process. We engage with four bidders which lent to 0:15:58.960 --> 0:16:03.360 eight pricing and have thus far achieved the sixty three 0:16:03.400 --> 0:16:06.480 percent increase in value for it's the first offer the 0:16:06.560 --> 0:16:12.200 seed in September, delivering significant value for WBD shareholders. 0:16:12.240 --> 0:16:16.280 Throughout the process, Warner Brothers Discovery CEO Davids Aslav, they're 0:16:16.280 --> 0:16:19.960 discussing the progress of deal talks. An increased offer from 0:16:20.000 --> 0:16:22.280 Paramount has renewed the take of attention, and it comes 0:16:22.360 --> 0:16:25.160 as Warner Brothers posted a six percent decline in revenue 0:16:25.240 --> 0:16:27.400 during the fourth quarter of Paramounts Guidance also came out 0:16:27.440 --> 0:16:30.400 with this numbers as bringing bring by media reporter Hannah Miller, 0:16:30.760 --> 0:16:35.920 and all of this speaks to still profitable cable companies 0:16:36.400 --> 0:16:40.240 where they're trying to subsidize basically revenue, well profits not 0:16:40.280 --> 0:16:43.160 showing up and streaming thus far. But subscriber growth is there. 0:16:43.320 --> 0:16:46.520 Yeah, this is subscriber growth is there, and you know, 0:16:46.560 --> 0:16:48.800 Warner Brothers has made a point that they want to 0:16:48.840 --> 0:16:51.320 build up that subscriber account. They're shooting for one hundred 0:16:51.400 --> 0:16:55.000 and fifty million people for their streaming services by the 0:16:55.040 --> 0:16:57.480 end of this year. And you know, we have seen 0:16:57.520 --> 0:17:00.760 these gains, but again they're overshadowed by the fact that 0:17:00.960 --> 0:17:03.880 revenue earnings have declined compared. 0:17:03.560 --> 0:17:04.160 To last year. 0:17:05.840 --> 0:17:08.040 There's also this idea of like what's happening with the 0:17:08.240 --> 0:17:10.679 bottom line, and we can't get away from what's happening 0:17:10.680 --> 0:17:11.280 in the background. 0:17:11.320 --> 0:17:12.640 You know, it's awkward when you have. 0:17:12.720 --> 0:17:15.520 Company earnings and all the players involved are in a 0:17:15.600 --> 0:17:16.400 kind of bidding war. 0:17:16.520 --> 0:17:19.360 Did they explain any of that, Hannah. 0:17:18.840 --> 0:17:21.960 Yeah, so, you know, all these earnings results, they've been 0:17:22.000 --> 0:17:24.680 overshadowed by this bidding war. And we saw on birth 0:17:24.760 --> 0:17:27.439 both earnings calls that you know, the CEOs were like, 0:17:27.440 --> 0:17:29.239 we don't really want to comment on this. Things are 0:17:29.320 --> 0:17:33.240 still underway. What's happening right now is the Warner Brothers 0:17:33.240 --> 0:17:37.400 board has to determine whether or not the most paramounts 0:17:37.400 --> 0:17:40.720 most recent offer could be considered superior to their current 0:17:40.720 --> 0:17:44.760 agreement with Netflix. If they do make that declaration, Netflix 0:17:44.800 --> 0:17:47.760 has four days to respond with either sweetened offer or 0:17:47.840 --> 0:17:48.639 just bowing out. 0:17:50.160 --> 0:17:50.560 Playbox. 0:17:50.600 --> 0:17:52.840 Hannah Miller, who's been across all of this in real time, 0:17:52.880 --> 0:17:54.720 Thank you very much. Let's move on to another big 0:17:54.720 --> 0:17:57.960 media named Paramount. It posted eight point one five billion 0:17:58.000 --> 0:18:00.440 dollars in revenue in the shares again, and it's kind 0:18:00.440 --> 0:18:04.280 of interesting they're reacting significantly. We're up eleven percent? Are 0:18:04.280 --> 0:18:06.679 we up eleven percent? Because of the health of the 0:18:06.720 --> 0:18:08.879 business and the content of earnings, or are we up 0:18:08.920 --> 0:18:11.560 for another reason. Let's discuss with Laura Martin, senior Entertainment 0:18:11.600 --> 0:18:14.879 and Internet analysts and Needham and Company. Laura, you're recommending 0:18:14.960 --> 0:18:19.320 fundamental investors. Hello, remain on the sidelines. I just showed 0:18:19.359 --> 0:18:22.160 the chart. Maybe they'll bring it back up sup eleven percent. 0:18:23.000 --> 0:18:24.159 Reconcile that please? 0:18:25.320 --> 0:18:25.520 Right? 0:18:25.800 --> 0:18:29.080 So, I think what Wall Street likes is the fact 0:18:29.080 --> 0:18:31.600 that this is company is subscale, and it looks like 0:18:31.680 --> 0:18:35.480 they're more likely to wish to win a bid for 0:18:35.720 --> 0:18:38.960 Warner Brothers, which would then not make them subscale because 0:18:38.960 --> 0:18:41.840 they would be like a third of total linear channels. 0:18:41.880 --> 0:18:46.080 They've owned two of the largest film studios and so 0:18:46.400 --> 0:18:48.680 and really their revenue was up two percent. They had 0:18:48.680 --> 0:18:51.560 a lot of positive comments about UFC, which was their 0:18:52.200 --> 0:18:55.200 top rated streaming channel, and streaming revenue is up seventeen 0:18:55.240 --> 0:18:58.840 percent at Paramount Plus in the fourth quarter, and it 0:18:58.840 --> 0:19:03.040 should so, I mean all of those numbers, fundamentally we're better. 0:19:03.040 --> 0:19:05.560 At least this business is growing. Warner Brothers is shrinking, 0:19:05.640 --> 0:19:09.600 but Paramount Peace Guy is growing still. 0:19:09.640 --> 0:19:11.440 I think we'll get to Warner Brothers in a moment, 0:19:11.560 --> 0:19:14.200 Like really simple question and it comes from a sincere place. 0:19:14.280 --> 0:19:16.639 A lot of our audience have this based on what 0:19:16.680 --> 0:19:21.040 you've just outlined with Paramount's guide. Once, what does doing 0:19:21.080 --> 0:19:24.720 the deal with Warner Brothers Discovery the whole entirety of 0:19:24.760 --> 0:19:27.520 it fix or improve or accelerate. 0:19:28.760 --> 0:19:32.200 Okay, So if they don't win, if Netflix wins instead, 0:19:32.520 --> 0:19:35.600 they're an eleven billion dollar market cap company and their 0:19:35.640 --> 0:19:38.760 primary competitors will be Netflix, which if affuys Warner will 0:19:38.760 --> 0:19:42.560 be a five hundred billion dollar market cap, and Amazon 0:19:42.560 --> 0:19:45.399 and Google, which are three trillion dollars round numbers, So 0:19:45.520 --> 0:19:48.680 it's competitive. It will be more subscale than it is today. 0:19:49.040 --> 0:19:53.240 If it wins Warner Brothers, it suddenly combines and cut 0:19:53.320 --> 0:19:57.199 costs from several of the largest streaming companies, several of 0:19:57.200 --> 0:19:59.720 the largest. It will be thirty percent of total linear 0:20:00.160 --> 0:20:02.640 TV ownership, and it will combine it will have two 0:20:02.640 --> 0:20:04.560 of the biggest studios, so there's a lot of cost 0:20:04.600 --> 0:20:07.000 cutting in that, and it will not be near a 0:20:07.080 --> 0:20:10.240 subscale round numbers, it will be around the same size 0:20:10.400 --> 0:20:14.520 as Disney and Netflix. If it wins Warners, so it 0:20:14.640 --> 0:20:19.080 basically it basically makes it a legitimate competitor to those 0:20:19.119 --> 0:20:20.359 other streaming companies. 0:20:20.520 --> 0:20:22.879 And I think what Paramount's guide once Laura did in 0:20:22.920 --> 0:20:25.840 its numbers was showed they can cut costs. And then 0:20:25.880 --> 0:20:27.960 some Sunday, when it comes to the cable pot of 0:20:27.960 --> 0:20:35.520 the business, how much does it need Warner Brother's Discovery. 0:20:35.800 --> 0:20:38.760 So good question because price is the thing you're not asking, 0:20:38.800 --> 0:20:43.159 but strategically it must have Warner Brothers Discovery. But of course, 0:20:43.359 --> 0:20:45.760 you know, we do stocks and we do valuations, and 0:20:45.800 --> 0:20:49.720 they're paying an awful premium for a shrinking business. As 0:20:49.760 --> 0:20:53.840 you saw, like every single business segment, every single advertising 0:20:54.000 --> 0:20:57.639 was down. You know, a lot a lot at Peace guys. 0:20:57.640 --> 0:21:00.800 So some of their businesses at Warner Brothers are shrinking 0:21:01.320 --> 0:21:04.040 or a lot of them are shrinking. Actually so I 0:21:04.040 --> 0:21:07.840 mean they're buying a business is weakening fundamentally every single quarter, 0:21:07.880 --> 0:21:11.360 and they're paying piece guys bidding higher and higher values, 0:21:11.800 --> 0:21:14.400 which it implies they're not going to get a good 0:21:14.440 --> 0:21:16.399