WEBVTT - Meta, Microsoft and Alphabet All Report Earnings 0:00:02.520 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business 0:00:10.520 --> 0:00:14.400 Week Daily reporting from the magazine that helps global leaders 0:00:14.440 --> 0:00:18.360 stay ahead with insight on the people, companies, and trends 0:00:18.360 --> 0:00:23.360 shaping today's complex economy. Plus global business finance and tech 0:00:23.440 --> 0:00:27.320 news as it happens. The Bloomberg Business Week Daily Podcast 0:00:27.640 --> 0:00:31.720 with Carol Masser and Tim Stenebek on Bloomberg Radio. 0:00:31.920 --> 0:00:33.920 Let's head out to our Chicago News bureau. 0:00:33.920 --> 0:00:36.920 That's where we find Bloomberg Intelligence Senior Technology analyst Ana 0:00:37.000 --> 0:00:39.000 agr anaag. We want to give you a little time 0:00:39.600 --> 0:00:42.199 to stew over this, walk us through what we've got 0:00:42.240 --> 0:00:45.240 so far from Microsoft, because investors seem a little disappointed. 0:00:46.560 --> 0:00:48.199 Yeah, I mean I don't I don't really find a 0:00:48.200 --> 0:00:50.559 whole lot of mistakes. And there's these numbers and you 0:00:50.640 --> 0:00:53.040 look at as your growth of thirty nine percent, I 0:00:53.080 --> 0:00:56.520 mean given that size, that's pretty good. The margins actually 0:00:56.560 --> 0:00:58.920 stood out way, you know, way higher than what we 0:00:58.920 --> 0:01:01.600 were anticipating. We thought there was going to be pressure 0:01:01.600 --> 0:01:03.920 on margins because of all the spending, and then the 0:01:04.000 --> 0:01:07.200 last league when you look at the capex number substantially 0:01:07.319 --> 0:01:10.520 higher than the thirty billion that they talked about now in. 0:01:10.800 --> 0:01:13.160 You know, to some people, maybe that's a disappointment, but 0:01:13.200 --> 0:01:15.560 for us, that's a good thing because I think they 0:01:15.560 --> 0:01:18.280 have so much demand coming in. They're going to add 0:01:18.319 --> 0:01:21.640 more capacity this year and that's something that you know, 0:01:21.640 --> 0:01:22.679 we have been saying for a while. 0:01:22.880 --> 0:01:24.920 Well, you know, I'll ask you the same question that 0:01:24.959 --> 0:01:27.040 I asked Angelo Zino a little earlier. Maybe it's too 0:01:27.040 --> 0:01:28.640 early to tell me if we won't hear anything about 0:01:28.640 --> 0:01:32.319 on the call, but the cloud race between the three 0:01:32.360 --> 0:01:36.720 biggest providers out there, Aws, Azure, Google Cloud, is there 0:01:36.760 --> 0:01:41.520 an opportunity for Azure to get market share from companies 0:01:41.520 --> 0:01:45.200 that might have been affected by last week's AWS outage. 0:01:45.520 --> 0:01:46.520 Is that an opportunity? 0:01:47.600 --> 0:01:50.160 Well, I typically I would say no, because they are 0:01:50.160 --> 0:01:53.120 facing the same problem today. Frankly, so when you look 0:01:53.160 --> 0:01:56.760 at some of these large install bases, it's very difficult 0:01:56.800 --> 0:01:59.880 to change your applications. But what is the big opportunity, 0:02:00.000 --> 0:02:02.920 not just for Amazon or not just for Microsoft, but 0:02:02.960 --> 0:02:06.880 for all of them, including Oracle, is most companies eventually 0:02:06.960 --> 0:02:09.480 will have a backup cloud provider. They don't have it 0:02:09.600 --> 0:02:11.880 right now, but that is going to be one of 0:02:11.880 --> 0:02:14.720 the bigger growth drivers down the road. After the AI 0:02:14.760 --> 0:02:18.000 boom is done, you know. So, I mean, from our side, 0:02:18.120 --> 0:02:20.280 the market is big enough for all of them to 0:02:20.320 --> 0:02:23.320 prosper very very well in the coming years. 0:02:23.400 --> 0:02:26.320 I mean, honor as you said that the Azure cloud 0:02:26.360 --> 0:02:29.440 computing unit posted a thirty nine percent revenue can in 0:02:29.480 --> 0:02:33.720 the quarter when adjusting for currency fluctuations. That did beat 0:02:33.720 --> 0:02:37.119 the street estimate of thirty seven percent. I'm reading some 0:02:37.520 --> 0:02:39.919 you know analysis that says, well, that was a disappointed 0:02:39.960 --> 0:02:44.080 the expectations were high. What what was there a whisper 0:02:44.160 --> 0:02:45.880 number in terms of growth on the street. 0:02:47.080 --> 0:02:49.360 No, the consensus was thirty seven. This is what the 0:02:49.400 --> 0:02:52.120 company said. Now there is if you really want to 0:02:52.160 --> 0:02:55.200 dissect it, you know badly, then you could say, well, 0:02:55.600 --> 0:02:59.120 Google Cloud growth accelerated in the quarter compared to the 0:02:59.160 --> 0:03:02.359 previous quarter, but Microsoft it was thirty nine. It's it's 0:03:02.360 --> 0:03:04.919 still at thirty nine. But you know, there are different basis. 0:03:04.960 --> 0:03:07.760 That one's you know, Microsoft is running at about seventy five percent, 0:03:07.840 --> 0:03:10.640 you know, eighty billion dollars in annual run rate. You know, 0:03:10.800 --> 0:03:13.960 Google Cloud is still at thirty percent, and yet Azure 0:03:14.040 --> 0:03:17.120 growth is higher than Google's cloud growth. So, you know, 0:03:17.320 --> 0:03:20.120 I think people are probably just splitting hairs at this point. 0:03:21.919 --> 0:03:24.200 Yeah, and you reference that when you were answering my question. 0:03:24.240 --> 0:03:28.560 You reference the outage that Microsoft has having right now, 0:03:28.560 --> 0:03:31.040 this global Microsoft outage, So we should note that, Yeah, 0:03:31.160 --> 0:03:35.080 just cloud cloud companies are cloud companies, and sometimes it's 0:03:35.120 --> 0:03:37.720 AWS that has the outage. Sometimes it's Microsoft that that 0:03:37.760 --> 0:03:40.560 has the that has the outage. Hey, the open Ai question, 0:03:40.640 --> 0:03:42.680 we talked a lot about this with you yesterday, and 0:03:43.120 --> 0:03:45.160 I imagine that on the call, investors will have a 0:03:45.200 --> 0:03:48.320 lot of questions about, Okay, this close to thirty percent 0:03:48.600 --> 0:03:52.680 ownership of open ai, the parent company of chat GPT, 0:03:53.360 --> 0:03:55.000 what is that going to do for Microsoft? 0:03:56.520 --> 0:03:56.760 See? 0:03:56.760 --> 0:03:58.960 I think from our site, the equity part is not 0:03:59.120 --> 0:04:02.280 what you know, for concerned, it's really the technology that 0:04:02.320 --> 0:04:05.200 Microsoft is holding on to that's really the critical piece 0:04:05.240 --> 0:04:07.320 because you know, one of the ways we think about 0:04:07.440 --> 0:04:09.960 is they will sell more products, they will sell more 0:04:09.960 --> 0:04:13.680 cloud services using that technology than they would just on 0:04:13.720 --> 0:04:15.960 the you know, share side of it. And that's a 0:04:15.960 --> 0:04:19.000 bigger thing for us because they have, you know, a 0:04:19.080 --> 0:04:21.120 hold of that for the next seven years. 0:04:21.720 --> 0:04:23.200 Hey, one of the things I want to ask you, 0:04:23.240 --> 0:04:26.560 and I know this isn't typically your coverage, but you know, 0:04:26.680 --> 0:04:30.239 you're smart to cover all things technology, but Meta Meta 0:04:30.320 --> 0:04:34.520 down almost eight percent here in the aftermarket as you 0:04:34.600 --> 0:04:38.320 see this, Uh, what's what's the problem. There's one tax 0:04:38.839 --> 0:04:40.760 one time tax charge. I guess we're still trying to 0:04:40.760 --> 0:04:43.160 figure this out. But is it all about that or 0:04:43.200 --> 0:04:44.640 is it just that we were caught off guard? 0:04:45.800 --> 0:04:47.279 See I think that could be a lot of the 0:04:47.320 --> 0:04:49.560 noise then the number, and you know, I'm very sure 0:04:49.560 --> 0:04:51.720 they're going to give clarity on that. But the big 0:04:51.800 --> 0:04:55.200 question of the overhand of Mega Meta always is, you know, 0:04:55.480 --> 0:04:58.120 how are you monetizing AI. You're spending all this money, 0:04:58.480 --> 0:05:00.520 where's the revenue you show for it? I think that's 0:05:00.600 --> 0:05:03.200 where management really needs to give and address that in 0:05:03.200 --> 0:05:06.040 a much more succinct way than they have. The other 0:05:06.080 --> 0:05:08.159 side is they don't have a cloud platform just like 0:05:08.200 --> 0:05:11.359 Google does or Amazon does or Microsoft does. So Meta 0:05:11.640 --> 0:05:14.440 is the one that needs to explain these things far 0:05:14.520 --> 0:05:16.280 better than, frankly, the other three. 0:05:17.480 --> 0:05:20.120 I want to bring in Ivan find Seth, a research 0:05:20.120 --> 0:05:22.960 director and chief investment officer with Tiger's Financial Partners, got 0:05:22.960 --> 0:05:25.560 over five hundred million dollars in assets under management, and 0:05:25.680 --> 0:05:29.440 pose that same question to him about meta platforms the company, 0:05:29.760 --> 0:05:32.479 saying that the implementation of the One Big Beautiful Bill 0:05:32.480 --> 0:05:36.400 Act led to the recognition of a valuation allowance against 0:05:36.400 --> 0:05:39.520 our US federal deferred tax assets reflecting the impact of 0:05:39.560 --> 0:05:42.840 the US Corporate Alternative Minimum Tax. The result of one 0:05:42.880 --> 0:05:46.160 time non cash income tax charge of fifteen point nine 0:05:46.200 --> 0:05:50.320 three billion dollars, shares Caroll down seven point eight percent. Ivan, 0:05:50.360 --> 0:05:51.920 You've had some time to dig into this a little 0:05:51.960 --> 0:05:55.280 bit on the meta platform side. What's going on here? 0:05:56.640 --> 0:05:56.880 Well? 0:05:56.920 --> 0:05:59.320 All right, so the Big Beautiful Bill caused the recognition 0:05:59.360 --> 0:06:02.360 of a deferred access set. It's actually a non cast charge. 0:06:02.400 --> 0:06:04.720 And there while it caused a spike in their tax 0:06:04.800 --> 0:06:07.720 rates eighty seven percent for the quarter, it actually goes 0:06:07.760 --> 0:06:10.839 down significantly going forward. I think this is really a 0:06:10.880 --> 0:06:13.880 non event. It's an accounting issue, and I think any 0:06:13.960 --> 0:06:16.920 weakness is a buying opportunity in the STOP because there's 0:06:16.960 --> 0:06:19.840 so many positive long term trends that will continue to 0:06:19.920 --> 0:06:20.920 drive the STOP higher. 0:06:21.000 --> 0:06:22.599 But is that why the stock is down right now 0:06:22.680 --> 0:06:25.360 because of this one time charge affecting the bottom line? 0:06:25.400 --> 0:06:27.160 Is that is that the concern? Or is it what 0:06:27.240 --> 0:06:32.040 Carol brought up? The idea of cap X going up 0:06:32.040 --> 0:06:33.480 next year and to spend. 0:06:33.880 --> 0:06:38.880 Well now we have seen investors make a mistake consistently 0:06:38.960 --> 0:06:43.440 in selling Meta Meta platforms. On capital investment increases, they 0:06:43.480 --> 0:06:48.800 continue to invest in driving their AI capabilities, which drives 0:06:48.800 --> 0:06:53.560 increased user engagement, it drives increase return on AD spend investment. 0:06:53.680 --> 0:06:56.960 So I like when they continue to invest, and we've 0:06:56.960 --> 0:06:59.960 seen this multiple times. If you listen to what Mark 0:07:00.120 --> 0:07:03.159 brig does every time he invests, from the beginning from 0:07:03.240 --> 0:07:06.359 changing the company from Facebook to Meta, and when he 0:07:06.480 --> 0:07:09.720 was investing in mobile, the stock sold off. Now most 0:07:09.720 --> 0:07:12.280 of the people engaging in Facebook and Instagram do it 0:07:12.320 --> 0:07:14.600 on their phone, so you have to listen to him, 0:07:14.600 --> 0:07:16.120 and he says what he does, and he does what 0:07:16.160 --> 0:07:19.160 he says, and he continues to create value. So on 0:07:19.200 --> 0:07:21.880 any weakness over the increasing capex. And again this is 0:07:21.920 --> 0:07:25.000 positive because there's been a fear that we're going to 0:07:25.000 --> 0:07:27.840 see this AI bubble burst, that companies are not going 0:07:27.880 --> 0:07:33.280 to continue to invest. We've seen all three companies reporting today, Alphabet, 0:07:34.280 --> 0:07:39.200 Microsoft and Meta all increasing capital investment in AI development. 0:07:39.240 --> 0:07:42.320 And that's positive for the companies, those three companies, and 0:07:42.360 --> 0:07:46.440 it's positive for the bullish AI investment theme. 0:07:47.160 --> 0:07:50.440 You know this fifteen percent corporate alternative minimum tax. Yeah, 0:07:50.480 --> 0:07:52.360 I'm googling some stuff here, folks, because I want to 0:07:52.400 --> 0:07:53.280 understand stand it. 0:07:53.280 --> 0:07:53.960 It came out of the. 0:07:53.880 --> 0:07:58.560 Inflyflation Reduction Act of twenty twenty two, and it generally applies, 0:07:58.600 --> 0:08:01.600 I think to corporations with our regenually just financial statement 0:08:01.640 --> 0:08:05.840 income exceeding a billion dollars every three consecutive years. 0:08:07.280 --> 0:08:08.720 Yeah, we're all going to be learning a little bit 0:08:08.760 --> 0:08:11.360 more about this. But tim you keep bringing up like 0:08:11.440 --> 0:08:13.520 why why aren't we seeing this with maybe some of 0:08:13.560 --> 0:08:14.000 the other ones? 0:08:14.080 --> 0:08:16.040 Yeah, why is metaplat? Why are we only talking about 0:08:16.040 --> 0:08:17.920 this with regard to meta platforms? 0:08:18.720 --> 0:08:20.880 They may be one of the ones that has the 0:08:21.000 --> 0:08:23.800 largest deferred tax asset and that has really to do 0:08:24.080 --> 0:08:28.840 with timing and expensing of things like R and D 0:08:28.960 --> 0:08:29.679 as an example. 0:08:30.920 --> 0:08:33.440 So, you know, we're talking about a lot of things, 0:08:33.480 --> 0:08:34.840 and I mean we want to get you know, your 0:08:34.920 --> 0:08:36.840 view on some of the other companies that have reported 0:08:37.400 --> 0:08:39.200 Anna Rag. We do want to ask you, though, what 0:08:39.200 --> 0:08:40.760 are you thinking that you want to You're going to 0:08:40.800 --> 0:08:44.000 be looking for on a call going back to Microsoft, 0:08:44.400 --> 0:08:46.840 if you will, As we continue to see that one 0:08:47.360 --> 0:08:49.559 trading lower here in the aftermarket. Let me just pull 0:08:49.559 --> 0:08:51.960 it up on my Bloomberg because we have seen some 0:08:52.080 --> 0:08:55.200 pressure here the stock continuing. It's down still about three 0:08:55.200 --> 0:08:58.000 point four percent, is it? What do you want to hear. 0:08:57.880 --> 0:08:58.640 From this company? 0:08:59.840 --> 0:09:00.360 I think. 0:09:01.720 --> 0:09:04.679 Let me let me get Anaog first, forgive me Ivan, okay. 0:09:04.920 --> 0:09:07.240 All right, So the biggest thing for us, who's going 0:09:07.280 --> 0:09:09.640 to be you know, what's the back half the capic spending? 0:09:09.920 --> 0:09:12.520 The CAPEX and the first sport was very high, thirty 0:09:12.520 --> 0:09:15.160 five billion compared to thirty which they guided to. We 0:09:15.200 --> 0:09:17.079 want to know what is it going to be in 0:09:17.120 --> 0:09:19.319 the back half of the year. Are they going to 0:09:19.360 --> 0:09:22.200 slow down dramatically or is it going to keep pace? 0:09:22.280 --> 0:09:23.400 It where we are right now? 0:09:23.640 --> 0:09:25.840 All right, Anaag, we know you've got research to right 0:09:25.840 --> 0:09:27.559 We're going to let you go and look forward to 0:09:27.600 --> 0:09:28.000 reading that. 0:09:28.120 --> 0:09:29.800 Ivan, we want to stay with you for a little bit. 0:09:30.000 --> 0:09:33.120 We are talking with Ivan find Seth, research director and 0:09:33.160 --> 0:09:36.640 chief investment officer with Tiger's financial Partners on a ug 0:09:36.720 --> 0:09:39.640 run of course, our senior tech analyst here at Bloomberg Intelligence. 0:09:39.679 --> 0:09:43.640 I'ven other companies that reported Meta obviously caught our attention. 0:09:43.800 --> 0:09:46.960 We just talked with Microsoft, are talked about Microsoft at 0:09:47.000 --> 0:09:48.840 the anarog. What's your take on what we got from them, 0:09:48.840 --> 0:09:51.439 because that stucks down about three percent here in the aftermarket. 0:09:52.559 --> 0:09:54.559 Well, right now we're in an environment of you know, 0:09:55.120 --> 0:09:57.319 people who have been buying these stocks have headed results. 0:09:57.440 --> 0:09:59.960 They sell into the results. But I say, I'll say 0:10:00.360 --> 0:10:05.080 that this AI investment theme is powerful and the companies 0:10:05.160 --> 0:10:10.040 leading it are Meta uh, Google and Microsoft, and you 0:10:10.160 --> 0:10:12.079 got to buy on any weakness. I want to hear 0:10:12.120 --> 0:10:17.959 from Microsoft about increase AI driven uh application and engagement 0:10:18.000 --> 0:10:23.520 and subscription increases, how users are buying and implementing and 0:10:23.600 --> 0:10:26.439 using copilot. Of course, you want to see growth in 0:10:26.480 --> 0:10:29.080 all key categories like cloud Azure. 0:10:30.120 --> 0:10:33.400 I mean Azure was up thirty nine. That's pretty good, right. 0:10:34.240 --> 0:10:39.480 Phenomenal, and that's their big growth engine and they have 0:10:39.559 --> 0:10:44.480 been announcing huge contracts so as Google. Unfortunately Amazon had 0:10:44.480 --> 0:10:50.400 that outage was it was uh disappointing, but didn't really 0:10:50.400 --> 0:10:53.760 set back the stock. But these are the growth drivers 0:10:53.800 --> 0:10:57.319 that the cloud hosted AI platforms. 0:10:57.600 --> 0:11:01.000 Yeah, I was, I was uh surprised to see hmas 0:11:01.000 --> 0:11:04.000 on stock actually higher that day, I know, but I 0:11:04.000 --> 0:11:06.000 think also speaks to the power of Amazon and like 0:11:06.000 --> 0:11:08.600 you got in a good understanding of how much it has. 0:11:09.360 --> 0:11:12.480 Remember the company is investigating outages. This is Microsoft is 0:11:12.520 --> 0:11:16.120 investigating out of office and game applications today also, so 0:11:16.600 --> 0:11:19.319 this kind of goes both ways. I've ben on Microsoft 0:11:19.360 --> 0:11:20.760 one more and then we're going to get back to 0:11:20.800 --> 0:11:23.439 some more meta platforms I think. But a small one 0:11:23.480 --> 0:11:27.199 point two percent beat on adjusted diluted EPs on Microsoft 0:11:27.240 --> 0:11:31.360 for my You know, everybody the company does not give 0:11:32.040 --> 0:11:34.520 guidance in this statement. It does that on the conference call. 0:11:35.200 --> 0:11:38.000 It's doing that on the conference call. Is it like 0:11:38.280 --> 0:11:42.480 worth even talking about it without even having it? Oftentimes 0:11:42.480 --> 0:11:44.680 we wait for the call to get more information, but 0:11:44.760 --> 0:11:47.120 in this case, like forward guidance coming from the call, 0:11:47.840 --> 0:11:48.839 it's kind of a moot point. 0:11:50.360 --> 0:11:54.400 Well, the disconnect and the dichotomy that exists between companies 0:11:54.400 --> 0:11:57.000 and Wall Street is that companies planned for one, three 0:11:57.040 --> 0:11:59.880 and five years and Wall Street wants to measure everything 0:12:00.000 --> 0:12:04.599 on a quarterly basis. I mean, the guidance it's somewhat important, 0:12:04.920 --> 0:12:08.920 but you wanted to see consistent growth driven by their 0:12:08.960 --> 0:12:13.000 investments in technology, the adoption and use of their technology 0:12:13.120 --> 0:12:16.840 that creates their competitive advantage, and those are the key 0:12:16.880 --> 0:12:20.520 things to look at. And we are in the first 0:12:20.600 --> 0:12:26.160 inning of the World Series of AI driven economic global 0:12:26.280 --> 0:12:29.880 economic growth, and this trend is going to continue, and 0:12:29.920 --> 0:12:31.640 it's going to be powerful, and it's going to be 0:12:31.679 --> 0:12:34.760 game changing. And I think that AI is going to 0:12:34.880 --> 0:12:39.119 enhance and create many more jobs than it will eliminate. 0:12:39.760 --> 0:12:42.080 Going back to the costing though, for Meta, you know, 0:12:44.559 --> 0:12:50.120 I'm just that operating margin for the third quarter down 0:12:50.160 --> 0:12:54.839 from forty three percent last year. Is that worrisome or 0:12:54.920 --> 0:12:55.880 you think manageable? 0:12:56.040 --> 0:12:56.920 Not really, okay. 0:12:57.480 --> 0:13:00.679 We've looked at companies that have had huge growth to 0:13:00.800 --> 0:13:04.640 directories while their margins we're contracting. In fact, Amazon doesn't 0:13:04.679 --> 0:13:07.280 focus on margin. They focus on revenue growth. They don't 0:13:07.320 --> 0:13:09.480 focus on return on capital actually, which is one of 0:13:09.520 --> 0:13:11.840 the key things we focus on. But they do drive 0:13:11.960 --> 0:13:15.840 a huge return. So you know, there are times where 0:13:15.840 --> 0:13:19.559 your growth margin can contract, but your economic margin can increase. 0:13:19.600 --> 0:13:22.840 And that is the economic margin is the difference between 0:13:22.840 --> 0:13:25.240 return on capital and cost of capital. That is the 0:13:25.240 --> 0:13:29.600 most powerful driver of shareholder value creation. So it's not 0:13:29.640 --> 0:13:35.040 so much important by what happens with gross margin. It's 0:13:35.080 --> 0:13:38.600 in fact, I've seen many companies drive huge growth by 0:13:38.679 --> 0:13:42.800 lowering their growth margin because you're just becoming more competitive 0:13:42.920 --> 0:13:45.319 and they're actually making it up on return on capital. 0:13:45.360 --> 0:13:47.240 Okay, we're going to talk about alphabet with you in 0:13:47.360 --> 0:13:49.319 just a minute, Carol, reminding me that shares are surging 0:13:49.360 --> 0:13:52.440 higher in the after hours six percent. Okay, one more 0:13:52.480 --> 0:13:54.520 on meta platforms down eight point four percent in the 0:13:54.559 --> 0:13:59.160 after hours. Reality Labs losses for the third quarter four 0:13:59.200 --> 0:14:02.840 point four billion. It's about the same as one year prior. Obviously, 0:14:02.840 --> 0:14:07.160 it's a huge investment area for meta platforms. In the 0:14:07.200 --> 0:14:10.200 press release, Mark Zuckerberg specifically calling out the success of 0:14:10.200 --> 0:14:12.960 the eyewear and saying, essentially, I don't have it in 0:14:12.960 --> 0:14:15.959 front of me. To be essentially said, if we think 0:14:16.000 --> 0:14:18.200 the future is going to be what it is, this 0:14:18.280 --> 0:14:20.320 is going to be the most exciting moment for meta 0:14:20.360 --> 0:14:23.000 platforms ahead of us. These will be the most exciting 0:14:23.040 --> 0:14:25.840 years for meta platforms. What is the opportunity that meta 0:14:25.880 --> 0:14:27.600 platforms has when it comes to eyewear. 0:14:28.960 --> 0:14:33.440 This is going to be a tremendous communication and interactive 0:14:33.520 --> 0:14:36.360 platform and it's only going to get better in a 0:14:36.400 --> 0:14:39.160 few years. We're going to look back on these original glasses, 0:14:39.200 --> 0:14:41.200 the ones that they've launched from ray Band, the recent 0:14:41.240 --> 0:14:45.960 ones from Oakleigh, and the functionality in a few years 0:14:45.960 --> 0:14:48.520 from now is just going to be more and more incredible. 0:14:48.960 --> 0:14:53.160 But this ability to engage with real time information, to 0:14:53.280 --> 0:14:56.880 share pictures and images and videos in real time with 0:14:56.960 --> 0:14:59.480 other people that you're talking to. And while I'm up, 0:14:59.560 --> 0:15:04.600 Mark believes that the glasses are going to replace your smartphone. 0:15:04.680 --> 0:15:06.800 You're just going to keep your smartphone in your pocket 0:15:07.200 --> 0:15:10.600 and you're going to interact with data and information and 0:15:10.640 --> 0:15:14.480 people who you're communicating with these glasses. And eventually we're 0:15:14.480 --> 0:15:18.400 going to see ones. Meta just launched ones with displays. 0:15:18.440 --> 0:15:21.280 It's going to be all about having displays embedded in 0:15:21.720 --> 0:15:24.000 the lens so you don't even have to touch your phone. 0:15:24.280 --> 0:15:26.360 So this is going to be a huge growth oup 0:15:26.400 --> 0:15:28.440 and this is going to be what the cell phone 0:15:28.600 --> 0:15:29.760 was in the mid nineties. 0:15:29.920 --> 0:15:32.040 No rose colored glasses. 0:15:32.080 --> 0:15:34.160 Though right now, because Medicinae is now down near their 0:15:34.240 --> 0:15:36.720 loads in the aftermarket, down about nine percent, I'm going 0:15:36.800 --> 0:15:37.560 to remember that. 0:15:37.760 --> 0:15:40.280 Ivan said this is going to be what cell phones 0:15:40.320 --> 0:15:41.960 were in the nineties. And by the way, he's not 0:15:42.000 --> 0:15:43.520 wearing any metaglasses right now. 0:15:43.520 --> 0:15:46.160 Well, and I will say our markerment really really likes 0:15:46.200 --> 0:15:48.920 him as well. Hey, we do have to ask you 0:15:48.960 --> 0:15:51.520 about alphabet because we are seeing this one actually up 0:15:51.560 --> 0:15:53.880 about six percent here in the aftermarket. 0:15:54.680 --> 0:15:56.960 What do you like? What's of note do you think 0:15:57.360 --> 0:15:58.440 in their release. 0:15:59.320 --> 0:16:03.480 Cloud growth, big cloud contract wins that they've had over 0:16:03.520 --> 0:16:08.600 the past few months with with Meta, with Open Ai, 0:16:08.840 --> 0:16:15.960 with other companies this you know that Meta, Amazon and Microsoft. 0:16:16.000 --> 0:16:21.040 I'm sorry, Alphabet, Amazon and Microsoft are building the AI 0:16:21.320 --> 0:16:25.880 and cloud infrastructure that everybody is connecting to and going 0:16:25.920 --> 0:16:29.720 to continue and increasingly coming are going to be connected 0:16:29.760 --> 0:16:35.240 cars as we move through to full autonomy, so we 0:16:35.280 --> 0:16:38.560 are going to need high speed, real time, constant connectivity 0:16:38.880 --> 0:16:42.680 to the cloud, and those are huge opportunities for the 0:16:42.720 --> 0:16:48.520 three major public cloud service providers Alphabet, Google and Microsoft. 0:16:48.560 --> 0:16:49.480 Well, and they're spending big. 0:16:49.640 --> 0:16:52.280 They're now seeing fiscally your capax ninety one and ninety 0:16:52.280 --> 0:16:55.240 three billion. They had seen about eighty five billion dollars. 0:16:55.240 --> 0:16:57.400 So, hey, you got to spend money to make money, Carol, 0:16:57.680 --> 0:16:59.040 You got to spend money to make money. 0:16:59.400 --> 0:17:02.640 They say, it's wild, right, like the number they also 0:17:02.720 --> 0:17:05.200 Gemini their app now has over six hundred and fifty 0:17:05.240 --> 0:17:06.840 monthly active users. 0:17:06.960 --> 0:17:08.399 Siry fifty million, six. 0:17:08.320 --> 0:17:11.240 Hundred and fifty million. Yeah, didn't I say that? It's 0:17:11.280 --> 0:17:11.680 a lot. 0:17:12.600 --> 0:17:15.400 How do we how do we know that this AI thing, 0:17:17.680 --> 0:17:19.879 How do we know that all this spend is going 0:17:19.920 --> 0:17:20.480 to pay off? 0:17:21.040 --> 0:17:24.480 Ivan, are we still a little exuberant? 0:17:25.320 --> 0:17:27.840 Well, because the functionality we see today is going to 0:17:27.880 --> 0:17:30.760 be blown away by the functionality in the future. More 0:17:30.760 --> 0:17:34.120 and more people are going to rely on this technology 0:17:34.200 --> 0:17:37.440 for all different aspects. And I do give credit to 0:17:37.440 --> 0:17:41.680 Tom Siebel, the founder of Seble Systems and C three AI, 0:17:41.800 --> 0:17:45.080 that I believe he said it that every company is 0:17:45.119 --> 0:17:48.480 going to be an AI company. Every company is to 0:17:48.640 --> 0:17:52.160 use AI on all aspects of their business, whether it's 0:17:52.200 --> 0:17:56.879 to manage supply chain, manage pricing, target marketing. That the 0:17:56.880 --> 0:17:59.679 functionality is going to increase and people are going to, 0:18:00.200 --> 0:18:03.119 like you said when Carol, when you wanted to understand 0:18:03.119 --> 0:18:08.080 more about metas a tax charge, you googled it and 0:18:08.359 --> 0:18:10.960 we're going to get more information. I did also, I 0:18:11.359 --> 0:18:13.639 like perplexity. I looked up it, looked it up in 0:18:13.720 --> 0:18:17.200 Perplexity and kind of and I did understand what they said, 0:18:17.200 --> 0:18:18.840 but it gave me a little more detail. 0:18:19.520 --> 0:18:25.119 And uh right, it's right, yeah, is it right? 0:18:25.240 --> 0:18:25.639 Do I know what. 0:18:27.240 --> 0:18:27.479 Is right? 0:18:28.640 --> 0:18:32.200 Yes? Well, because I do understand that the tax that 0:18:32.359 --> 0:18:35.880 it's really the timing and charge, and of managing your 0:18:35.920 --> 0:18:39.080 tax payment and your tax liability that you tend to 0:18:39.119 --> 0:18:43.160 offset through capital investment, through R and D and other 0:18:43.240 --> 0:18:46.200 types of things that happen. So it's really timing issues 0:18:46.600 --> 0:18:49.640 on how you're a crude tax liability or your crude 0:18:49.680 --> 0:18:53.919 tax asset falls versus the taxes you will eventually have 0:18:54.040 --> 0:18:56.440 do or the tax credit you will eventually aren't. 0:18:56.520 --> 0:18:57.760 I just want to know is this soa? 0:18:57.960 --> 0:19:00.400 Is this really Ivan? Finds it, Seth? I just want 0:19:00.440 --> 0:19:05.360 to make sure it is really me Listen, perfect guest 0:19:05.440 --> 0:19:08.040 to talk about all of this so much coming at us, Ivan, 0:19:08.200 --> 0:19:09.959 Thank you so much, really appreciate it. 0:19:10.280 --> 0:19:10.879 I've in fine. 0:19:10.920 --> 0:19:14.520 Seth, Research director, chief investment officer of A Tiger's Financial Partners, 0:19:14.520 --> 0:19:17.639 over five hundred million in assets under management as of 0:19:17.680 --> 0:19:18.720 the middle of this year. 0:19:19.000 --> 0:19:20.520 Joining us right here in New York City. 0:19:21.800 --> 0:19:24.560 Stay with us more from Bloomberg Business Week Daily coming 0:19:24.680 --> 0:19:25.600 up after this. 0:19:29.640 --> 0:19:33.480 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:19:33.560 --> 0:19:36.240 us live weekday afternoons from two to five eas during 0:19:36.440 --> 0:19:39.679 Listen on Apple Karplay and Android Auto with the Bloomberg 0:19:39.720 --> 0:19:43.119 Business app, or watch us live on YouTube. 0:19:43.480 --> 0:19:46.040 Okay, once again, got to bring in what's going on 0:19:46.160 --> 0:19:51.120 with these companies? Microsoft sliding after reporting that modest EPs beat. 0:19:51.160 --> 0:19:53.600 We're waiting for Microsoft's call to get forward guidance, so 0:19:53.640 --> 0:19:55.600 that's important to keep in mind. A small one point 0:19:55.640 --> 0:19:59.520 two percent beat on adjusted diluted EPs, Alphabet soaring as 0:19:59.560 --> 0:20:04.480 AI cloud demand, supercharges earnings, and then meta platforms. Looking 0:20:04.520 --> 0:20:07.960 at our live blog on meta earnings again, waiting for 0:20:08.000 --> 0:20:10.320 the call to start, sheares a meta platform still down 0:20:10.320 --> 0:20:12.000 about seven and a half percent. We're going to talk 0:20:12.000 --> 0:20:13.840 to Kurt Wagner in just a few minutes and really 0:20:13.840 --> 0:20:17.760 get the details on this one time charge close to 0:20:17.800 --> 0:20:20.600 sixteen billion dollars because still got to get to the bottom. 0:20:20.320 --> 0:20:20.879 Of the well. 0:20:20.920 --> 0:20:22.679 And I can't ignore and you pointed this out this 0:20:22.840 --> 0:20:25.560 you know, expecting total expenses to significant increase in twenty 0:20:25.600 --> 0:20:29.399 twenty six, continuing to invest at historic levels in AI, 0:20:29.560 --> 0:20:30.600 so the spend is on. 0:20:30.760 --> 0:20:32.240 Let's see what Brooke May has to say. 0:20:32.280 --> 0:20:34.800 She's a managing partner at the independent wealth management and 0:20:34.840 --> 0:20:38.000