WEBVTT - BI Weekend: Oracle's Money Making Moves, America's Hot Garbage Problem 0:00:00.280 --> 0:00:11.560 Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence 0:00:11.720 --> 0:00:12.799 with Paul Sweeney. 0:00:12.960 --> 0:00:16.160 The real AP performance has been the US corporate high yield. 0:00:16.280 --> 0:00:18.720 The market's telling me here's another AI play, Just bid 0:00:18.720 --> 0:00:22.240 it by it. One person's cast is another person's animal spirits, 0:00:22.440 --> 0:00:23.600 breaking market. 0:00:23.320 --> 0:00:26.120 Headlines and corporate news from across the globe. 0:00:26.200 --> 0:00:29.360 The semiconductor business is a really cyclical business. 0:00:29.400 --> 0:00:30.200 These are two. 0:00:30.280 --> 0:00:34.240 Big time blue chip companies, so people just too exuberant 0:00:34.240 --> 0:00:34.599 out there. 0:00:34.840 --> 0:00:39.440 Bloomberg Intelligence with Paul Sweeney on Bloomberg Radio, YouTube and 0:00:39.520 --> 0:00:40.760 Bloomberg Originals. 0:00:41.400 --> 0:00:44.360 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:44.400 --> 0:00:47.320 business stories impacting Wall Street and the global markets. Each 0:00:47.360 --> 0:00:49.680 and every week we provide in depth research and date 0:00:49.760 --> 0:00:51.720 on some of the two thousand companies and one hundred 0:00:51.720 --> 0:00:55.319 and thirty industries our animals cover worldwide. Today we'll look 0:00:55.360 --> 0:00:58.720 at Oracle signing a cloud deal with thirty billion dollars 0:00:58.760 --> 0:01:01.600 a year. Plus later on a big take story on 0:01:01.640 --> 0:01:05.680 the Treasury Department's cybersecurity vulnerabilities. But first we begin with 0:01:05.800 --> 0:01:08.319 an outlook into travel and leisure for the second half 0:01:08.360 --> 0:01:13.160 of twenty twenty five. According to a bi US travel survey, tariffs, inflation, 0:01:13.240 --> 0:01:17.319 and geopolitics could deter consumers from spending money on hotels 0:01:17.440 --> 0:01:21.280 and flights. Jody Lourie, Bloomberg Intelligence Analysts breaks it down. 0:01:21.640 --> 0:01:23.759 For a large part, the companies have been doing pretty well, 0:01:23.760 --> 0:01:27.680 and from a credit perspective, we've seen pretty decent total 0:01:27.720 --> 0:01:32.360 returns for the indices, and that's compared to high yield 0:01:32.440 --> 0:01:35.080 and investment grade as a total. You know, we've seen 0:01:35.120 --> 0:01:40.120 that for discretionary that these leisure related companies have actually 0:01:40.160 --> 0:01:42.600 been doing better than most of discretionary and it makes 0:01:42.600 --> 0:01:46.080 sense because other parts of discretionaries, such as retail, are 0:01:46.200 --> 0:01:50.680 much more sensitive to know these tariffs and trade talks 0:01:50.720 --> 0:01:52.800 that are really affecting a lot of our outlook. 0:01:53.080 --> 0:01:55.840 Jody, I'm looking through your note where you talk about 0:01:55.840 --> 0:01:57.600 the fact that there's a lot of uncertainties right now 0:01:57.640 --> 0:01:59.760 that are a lot of these consumers are grappling with 0:01:59.800 --> 0:02:04.520 as pertains to leisure traveling, with tariffs, inflation, China economy, 0:02:04.560 --> 0:02:07.400 and geopolitics. Can you just give us a little bit 0:02:07.440 --> 0:02:09.720 more of the backdrop right now? What is the consumer 0:02:09.800 --> 0:02:13.040 thinking as it relates to travel right now during the summer. 0:02:14.320 --> 0:02:17.480 So I think that consumers are still going along with 0:02:17.520 --> 0:02:20.640 their plans for the most part, but maybe slightly tweaking it. 0:02:20.919 --> 0:02:23.560 What we saw in our second half leisure survey that 0:02:23.600 --> 0:02:26.600 we ran We run this every half a year, is 0:02:26.639 --> 0:02:29.720 that consumers are not pulling back on experiences. They're not 0:02:29.720 --> 0:02:32.280 pulling back on accommodations. What they might be pulling back 0:02:32.320 --> 0:02:35.880 on is destination to do a cheaper destination if they 0:02:35.919 --> 0:02:38.679 need to cut costs. But by and large, most consumers 0:02:38.720 --> 0:02:43.480 are looking at spending on travel, spending on experiences as 0:02:43.520 --> 0:02:46.040 a way to escape what's going on and sort of 0:02:46.120 --> 0:02:50.160 the last party before maybe the chair gets pulled out 0:02:50.160 --> 0:02:50.680 from under them. 0:02:51.080 --> 0:02:54.960 How about my favorite, UH secrament, which is the casino business. 0:02:55.000 --> 0:02:57.520 How does Zach perform in a time of maybe some 0:02:57.600 --> 0:02:58.520 uncertainty out there? 0:02:59.240 --> 0:03:01.760 So I think it's a question of what region we're 0:03:01.800 --> 0:03:05.760 talking about. And so for Las Vegas, you're dealing with 0:03:05.800 --> 0:03:08.480 the fact that we had really strong comps because we 0:03:08.520 --> 0:03:10.440 had a couple of one time events such as the 0:03:10.480 --> 0:03:12.960 Super Bowl, such as the first Step one that really 0:03:13.080 --> 0:03:15.160 drove a lot of last year and the year before 0:03:15.160 --> 0:03:19.280 it's performance. This year, we're not seeing that same momentum there, 0:03:19.560 --> 0:03:23.120 So it's a little less exciting when you talk about regionals. 0:03:23.160 --> 0:03:25.120 I mean, that's really my question. So a lot of 0:03:25.160 --> 0:03:27.840 the companies like to talk about how regional casinos are 0:03:27.919 --> 0:03:31.959 counter cyclical, meaning people will still go to regional casinos 0:03:31.960 --> 0:03:36.080 to gamble even during a recession. But I think the 0:03:36.520 --> 0:03:39.880 question I have is the last sort of data points 0:03:39.880 --> 0:03:42.760 we have on that is before we had online gaming. Right. 0:03:42.960 --> 0:03:46.000 Online gaming is definitely a game changer to the whole industry, 0:03:46.080 --> 0:03:48.560 and my colleague Brian Egger, who covers on the equity side, 0:03:48.760 --> 0:03:51.520 can talk at nauseum about online gaming, as you know. 0:03:52.320 --> 0:03:55.000 But I think really the question is from more of 0:03:55.040 --> 0:03:58.839 a macro standpoint, how that's going to affect these companies 0:03:59.440 --> 0:04:02.560 as it really lates to their regional casinos. Now, when 0:04:02.560 --> 0:04:05.760 we talk about Macau, there's a lot of sort of 0:04:05.840 --> 0:04:09.720 questions about China and China's economy and how that might 0:04:09.760 --> 0:04:13.160 trickle into the effects of a Macau. Never mind the 0:04:13.200 --> 0:04:14.880 fact that we're now going to have competition in the 0:04:14.960 --> 0:04:17.680 UAE with the Wind casino that's opening up in a 0:04:17.680 --> 0:04:22.440 few years. You know, we're seeing Thailand has been not 0:04:22.600 --> 0:04:26.080 so not so quick to get on the casino game, 0:04:26.360 --> 0:04:28.960 but we've seen japan As starting to open up with MGM, 0:04:29.040 --> 0:04:32.520 so there's a lot of competition globally that might change 0:04:32.560 --> 0:04:35.000 the dynamics of casinos at large. 0:04:35.200 --> 0:04:38.800 Judy, when you think of travel, I immediately think of airlines. 0:04:38.839 --> 0:04:40.080 You know, how I'm I going to get from where 0:04:40.080 --> 0:04:41.600 I need to go point A to point B. Able 0:04:41.680 --> 0:04:43.400 we look at airlines, I'm looking at an index it's 0:04:43.440 --> 0:04:46.760 not about eighteen percent. But then hotels you have to 0:04:46.839 --> 0:04:49.320 need somewhere to stay. We're seeing them popping up about 0:04:49.400 --> 0:04:52.000 nine percent so far this year. What's going on in 0:04:52.000 --> 0:04:53.080 the hotel space right now? 0:04:54.080 --> 0:04:57.239 So in the hotel space, they're still commanding these good 0:04:58.680 --> 0:05:01.560 prices for the rooms, right and I think that's a 0:05:01.560 --> 0:05:04.080 function of the fact that you're seeing business and conference 0:05:04.080 --> 0:05:08.120 travel tick up. Now, the question is how are people traveling? 0:05:08.480 --> 0:05:11.239 And are people doing more domestic travel? Are they driving 0:05:11.279 --> 0:05:13.880 to places, are they taking the train, are they opting 0:05:14.000 --> 0:05:16.400 out of airlines because it's just so uncomfortable, and are 0:05:16.400 --> 0:05:18.800 they not doing international travel as much? And I think 0:05:18.839 --> 0:05:21.320 that's really what's sort of playing out is is that 0:05:21.440 --> 0:05:24.839 question of it is how are people getting to their destination? 0:05:24.960 --> 0:05:27.400 What destination are they going to? You know, there's definitely 0:05:27.480 --> 0:05:29.640 data points out there. I was just reading a report 0:05:29.640 --> 0:05:32.599 this morning. I was talking about how July fourth is 0:05:32.640 --> 0:05:35.520 going to be the busiest in terms of travel. But really, 0:05:35.600 --> 0:05:38.160 I mean for July fourth, are we flying places? Are 0:05:38.160 --> 0:05:41.440 we driving to barbecues? That's really the question. And I 0:05:41.480 --> 0:05:45.160 think you know, with the sort of airline component, is 0:05:45.240 --> 0:05:48.640 that rental car component, right? And so when you look 0:05:48.720 --> 0:05:52.120 at what you know, the CPI, the Consumer Price Index 0:05:52.240 --> 0:05:54.760 is for airlines what it is for rental cars. You know, 0:05:54.800 --> 0:05:57.040 rental cars has shown a weakness of late, and I 0:05:57.080 --> 0:05:58.720 think that's a function of the fact that you're seeing 0:05:58.720 --> 0:06:02.160 consumers sort of not necessarily opting to rent a car, 0:06:02.240 --> 0:06:04.800 especially when so many rental cars are tied to airlines. 0:06:05.240 --> 0:06:07.719 I know you cover six Flags as in six Flags 0:06:07.720 --> 0:06:10.919 Great Adventure in New Jersey. Haven't been since my junior 0:06:11.040 --> 0:06:11.720 year in high school. 0:06:11.760 --> 0:06:12.640 I went three years ago. 0:06:12.800 --> 0:06:15.520 You did, great time, great time. It's awesome. How about 0:06:15.520 --> 0:06:17.840 the theme park business, because a lot of listeners and 0:06:17.920 --> 0:06:21.400 viewers are Disney shareholders, and that's the biggest part of 0:06:21.400 --> 0:06:23.960 Disney's business. Are people still going to the high price 0:06:24.040 --> 0:06:24.560 theme parks? 0:06:24.839 --> 0:06:27.000 People are still going to theme parks, But I think 0:06:27.080 --> 0:06:32.159 there's sort of a question of destination versus regional. Now 0:06:32.200 --> 0:06:36.440 we've been sort of, you know, less constructive. I guess 0:06:36.440 --> 0:06:39.800 on regional theme parks of late then say cruise lines, 0:06:39.800 --> 0:06:41.160 And that's a function of the fact that I think 0:06:41.200 --> 0:06:44.799 people were looking outside their general area. You know, somebody 0:06:44.839 --> 0:06:47.680 in New Jersey isn't necessarily seeing six fives Great Adventure 0:06:47.680 --> 0:06:50.440 as their big vacation. They're seeing, you know, the cruise 0:06:50.480 --> 0:06:53.679 to the Hamas as their big vacation. But I think, 0:06:53.920 --> 0:06:57.000 as you know, consumers, if and one consumers start really 0:06:57.040 --> 0:06:59.200 feeling the straight on their wallet, we might see some 0:06:59.240 --> 0:07:00.920 of them come back to theme parks. And we're still 0:07:00.960 --> 0:07:03.320 trying to figure that out what that's going to look 0:07:03.400 --> 0:07:06.599 like and what percentage. But for someone like United Parks, 0:07:06.600 --> 0:07:09.800 which is formerly SeaWorld, you know, they're benefiting from the 0:07:09.800 --> 0:07:13.040 fact that Universal is opening up a theme park in Florida. 0:07:13.080 --> 0:07:16.160 You know, they have the large portion of their properties 0:07:16.600 --> 0:07:19.120 are in Florida. You know, of course, they have the 0:07:19.160 --> 0:07:21.680 bush gardens, they have the Sesame place, they have stuff 0:07:21.680 --> 0:07:25.880 in San Diego. But a large percentage of their parks 0:07:25.920 --> 0:07:28.320 and their revenue comes from Florida. And so when you 0:07:28.360 --> 0:07:31.560 think about someone like a SeaWorld or United Parks, as 0:07:31.560 --> 0:07:35.120 they go by. Now they are much more sensitive to 0:07:35.120 --> 0:07:37.280 what's going on with Disney and Universal and if they're 0:07:37.280 --> 0:07:39.680 building new parks, if they're getting people to come, they 0:07:39.760 --> 0:07:42.320 might then accidentally also go to SeaWorld. 0:07:42.520 --> 0:07:45.960 Oh thanks to Jody Lorie Bloomberg Intelligence Credit analysts, if 0:07:45.960 --> 0:07:48.280 you choose to stay close to home this summer, no worries. 0:07:48.360 --> 0:07:50.800 There are still plenty to do, like watching a movie 0:07:50.840 --> 0:07:54.440 starring Brad Pitt on a Formula one racing track. That's 0:07:54.440 --> 0:07:57.559 exactly what Apple wants you to do. Apple Original Film 0:07:57.680 --> 0:08:00.720 f one. The movie is quickly becoming a some blockbuster 0:08:00.800 --> 0:08:04.280 and could be the catalyst to supercharge bidding prospects for 0:08:04.680 --> 0:08:08.239 Formula ones US TV rights. For more Onette Emli Grafeo 0:08:08.280 --> 0:08:10.800 and I turned to geth It rang Anathan Bloomberg Intelligence 0:08:10.920 --> 0:08:12.680 Senior US Media Analyst. 0:08:12.920 --> 0:08:15.520 So this was obviously a big success story for Apple. 0:08:15.960 --> 0:08:19.160 They've been dabbling in these theatrical films for quite a 0:08:19.160 --> 0:08:21.080 bit now, but none of you know, none of their 0:08:21.120 --> 0:08:23.600 movies have had this much of a success. So this 0:08:23.640 --> 0:08:25.080 is really good news and I think it kind of 0:08:25.120 --> 0:08:28.920 really emboldens them with respect to their strategy. So definitely, 0:08:28.960 --> 0:08:30.720 movie theaters are happy. And the other point that I'd 0:08:30.760 --> 0:08:32.760 like to make is, you know, more than twenty to 0:08:32.800 --> 0:08:36.120 twenty five percent of the total box office actually came 0:08:36.120 --> 0:08:38.760 in from Imax. So this is really good news for 0:08:38.760 --> 0:08:42.000 the exhibiters because the premium large format, that whole thing 0:08:42.040 --> 0:08:45.920 about going to the theater to experience the movie is 0:08:46.000 --> 0:08:46.600 really working. 0:08:46.720 --> 0:08:50.040 Okay, so your latest note is about how this F 0:08:50.120 --> 0:08:53.920 one movie here from Apple is going to jolt you say, 0:08:54.040 --> 0:08:59.720 lackluster lackluster bidding for the Formula one rights in the US. 0:09:00.200 --> 0:09:03.040 Give us a little bit of context here the landscape 0:09:03.080 --> 0:09:06.240 of rights for Formula one, Who currently has the rights, 0:09:06.400 --> 0:09:09.800 when does that expire? And just put into context kind 0:09:09.840 --> 0:09:11.600 of the current bidding right now? 0:09:12.040 --> 0:09:15.080 Sure, Emily, so right now. So Formula one is, you know, 0:09:15.120 --> 0:09:19.080 as a global sports, global media property in the US, 0:09:19.120 --> 0:09:22.640 the rights to distribute Formula one content is owned by 0:09:22.679 --> 0:09:26.800 Disney's ESPN, So they have rights that go through the 0:09:27.000 --> 0:09:29.000 end of this year through the end of twenty twenty five. 0:09:29.360 --> 0:09:32.960 They're currently paying about eighty five million dollars a year. 0:09:33.600 --> 0:09:36.840 That's up from their last negotiation negotiation cycle when they 0:09:36.880 --> 0:09:40.080 were paying only about five million dollars. So it's up 0:09:40.120 --> 0:09:42.400 to eighty five million. But what F one is saying 0:09:42.480 --> 0:09:45.200 is that this is such an interesting property, this is, 0:09:45.240 --> 0:09:47.200 you know, a hot property, you should be paying up 0:09:47.200 --> 0:09:49.920 for it. And they are really looking for something upwards 0:09:49.920 --> 0:09:52.480 of about one hundred and fifty two hundred and sixty million, 0:09:52.840 --> 0:09:55.600 and I'm not so sure ESPN wants to pay that 0:09:55.600 --> 0:09:58.480 that much money. So it's really price is really a 0:09:58.480 --> 0:10:00.280 sticking point here, and it looks like we've hit a 0:10:00.280 --> 0:10:03.199 little bit of a stalemate. By the way, this problem, 0:10:03.280 --> 0:10:05.280 you know, F one really kind of shot into the 0:10:05.280 --> 0:10:10.160 limelight in the US with the Netflix drive to survive series. Now, 0:10:10.200 --> 0:10:13.000 Netflix has been hugely actually instrumental in kind of driving 0:10:13.040 --> 0:10:15.920 this Surgeon popularity. So everybody was kind of wondering whether 0:10:16.240 --> 0:10:19.360 Netflix or you know, maybe another streamer like an Amazon 0:10:19.400 --> 0:10:21.080 would kind of come in and bid for the rights. 0:10:21.360 --> 0:10:22.760 But I think what we're seeing with a lot of 0:10:22.760 --> 0:10:26.360 these streaming platforms is that they want global rights. These 0:10:26.400 --> 0:10:30.000 are all global streaming platforms. They want rights to distribute 0:10:30.000 --> 0:10:31.839 this content and all markets, and they're not going to 0:10:31.880 --> 0:10:32.920 be able to get that right. 0:10:32.800 --> 0:10:36.920 Now because Formula one, who's their European over is that 0:10:37.040 --> 0:10:39.320 Warner Brothers Discovery, who distributes. 0:10:39.120 --> 0:10:45.600 Ski Ski actually distributes them in most markets, so you know, Ireland, UK, Germany, 0:10:45.720 --> 0:10:49.320 Italy again, France, Spain, they all have a little bit 0:10:49.360 --> 0:10:52.160 different you know, distributors, but ski is a is a 0:10:52.320 --> 0:10:54.240 very big one across most of Europe. 0:10:54.320 --> 0:10:58.760 Wouldn't Apple be the obvious choice to partner up and 0:10:58.960 --> 0:11:01.040 you know, get the rights to Formula one because they 0:11:01.120 --> 0:11:06.000 just made this a blockbuster hit about Formula one. 0:11:05.800 --> 0:11:08.960 You would think so, you know, but it's been a 0:11:08.960 --> 0:11:12.920 little bit of you know, again, it's hard to actually 0:11:13.679 --> 0:11:15.920 figure out what Apple is thinking here. One thing that 0:11:15.960 --> 0:11:20.600 Apple doesn't have, which both Amazon and Netflix have, is scale. 0:11:20.640 --> 0:11:24.439 So Netflix has well over three hundred million global subscribers. 0:11:24.480 --> 0:11:27.600 Amazon probably has closed about three hundred million as well 0:11:27.640 --> 0:11:30.600 on their video streaming service. Apple, on the other hand, 0:11:30.640 --> 0:11:33.640 has probably less than fifteen million, so they don't necessarily 0:11:33.720 --> 0:11:35.880 have the scale to support it. And remember there are 0:11:35.880 --> 0:11:37.959 a few other things with the Formula one property. You 0:11:38.000 --> 0:11:41.400 don't have a lot of advertising inventory necessarily, So again 0:11:41.440 --> 0:11:44.640 that's something that doesn't necessarily appeal to streamers, especially because 0:11:44.640 --> 0:11:47.080 all of these different streaming platforms are really trying to 0:11:47.120 --> 0:11:50.240 build out their ad business. A Formula one doesn't necessarily 0:11:50.320 --> 0:11:53.400 lend itself to that, but you're absolutely right. Apple could 0:11:53.480 --> 0:11:55.560 be a very interested party down the road. 0:11:56.080 --> 0:11:59.800 And for those who care, one can actually invest directly in. 0:12:00.000 --> 0:12:04.040 Formula one is a public traded company FWNK. I like 0:12:04.160 --> 0:12:07.800 Formula one K, it's owned by John Malone and Liberty Media. 0:12:07.880 --> 0:12:11.560 There's a million different share classes out there, but Formula one, Keith, 0:12:11.720 --> 0:12:14.360 I mean, under John Malone's leadership, they've done a good 0:12:14.440 --> 0:12:18.080 job of increasing rights, sporting rights and sponsorships and all 0:12:18.120 --> 0:12:20.880 that kind of stuff, making it actually profitable. 0:12:20.480 --> 0:12:23.560 Very profitable, Paul, And they've they've done a fantastic job 0:12:23.559 --> 0:12:26.000 with the media rights. Again, they've really capitalized on this 0:12:26.240 --> 0:12:29.240 huge surgeon popularity because remember F one was really more 0:12:29.280 --> 0:12:32.760 of a European really not so big in America, but 0:12:33.120 --> 0:12:37.360 they've really kind of capitalized on this huge momentum in 0:12:37.400 --> 0:12:40.160 the United States. And you're absolutely right. They've added a 0:12:40.160 --> 0:12:42.480 whole lot of races, made it a year round calendar, 0:12:42.559 --> 0:12:45.200 lots of sponsorship money. So they've done a very good 0:12:45.240 --> 0:12:47.520 job with this new Liberty Media management team. 0:12:47.800 --> 0:12:50.520 Oh thanks to the Keith ron Ganathan Bloomberg Intelligence senior 0:12:50.600 --> 0:12:53.600 US media analyst, coming up a tech breakdown as we 0:12:53.640 --> 0:12:57.920 talk Tesla sales, Oracle and Apple outsourcing some AI assistants. 0:12:58.280 --> 0:13:01.319 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:13:01.679 --> 0:13:04.120 research and data on two thousand companies and one hundred 0:13:04.120 --> 0:13:07.559 and thirty industries. You can access Bloomberg Intelligence via bi 0:13:07.600 --> 0:13:11.000 go on the terminal. I'm Paul Sweeney. This is Bloomberg. 0:13:15.800 --> 0:13:21.040 You're listening to Bloomberg Intelligence with Paul Sweeney on Bloomberg Radio. 0:13:21.840 --> 0:13:25.040 This is the Bloomberg Intelligence Show. I'm Paul Sweeney. Tesla 0:13:25.120 --> 0:13:27.960 this past week reported second quarter deliveries on its vehicles 0:13:28.080 --> 0:13:30.360 and it was not good. Tesla now finds itself in 0:13:30.400 --> 0:13:33.000 a deep hole to dig out of to avoid consecutive 0:13:33.080 --> 0:13:36.080 annual declines. To help break down the numbers normally, Linda 0:13:36.120 --> 0:13:39.800 Nice Book to Pierre Ferubu, head of Global Technology Infrastructure 0:13:39.800 --> 0:13:41.200 at New Street Research. 0:13:41.000 --> 0:13:43.760 There is a bit of a positive surprise, like people 0:13:43.800 --> 0:13:48.080 tracking very precisely deliveries in various markets by expecting slightly 0:13:48.120 --> 0:13:52.319 lower numbers. The surprise comes from the US. The US 0:13:52.360 --> 0:13:54.480 did is a place where it's the most difficult to 0:13:54.520 --> 0:13:57.360 track the number of Tesla being delivered, and the US 0:13:57.440 --> 0:14:01.800 beat beat expectations that model while coming in doing actree 0:14:01.880 --> 0:14:05.080 quite well, that's good. But then the at the end 0:14:05.080 --> 0:14:06.960 of the day, you have to remember the big picture. 0:14:07.360 --> 0:14:10.800 We are down thirteen persons here on air. So we 0:14:11.520 --> 0:14:14.800 are facing a situation where Tesla is struggling to sell cars. 0:14:15.360 --> 0:14:19.840 A gross margin is in the latins. To me, Tesla 0:14:19.880 --> 0:14:22.320 facing good demons should be able to defend like mid 0:14:22.560 --> 0:14:25.960 mid twenties gross margin. So we have like we are 0:14:26.000 --> 0:14:28.320 facing like a core business and not a business that 0:14:28.440 --> 0:14:30.280 is really at a very low point that is struggling. 0:14:31.320 --> 0:14:34.479 And so that's the difficulty. You have, like one structural 0:14:34.520 --> 0:14:38.400 difficulty that is relatively that we understand relatively well. It's 0:14:38.440 --> 0:14:42.120 that with their current product, Tesla has kind of saturated 0:14:42.120 --> 0:14:46.600 its opportunity. Tesla needs lower high points to keep growing 0:14:47.080 --> 0:14:49.680 and that's in the plan they're working on it. And 0:14:49.720 --> 0:14:51.920 then you have a number of other issues. You know, 0:14:52.040 --> 0:14:54.840 electric cars are less fashionable than they were a couple 0:14:54.920 --> 0:14:59.720 of years ago. The Tesla brand has suffered, particularly in 0:14:59.800 --> 0:15:02.680 New Rope where numbers are down like almost forty percent 0:15:02.960 --> 0:15:08.160 on air, and so it is definitely it's difficult to quantify, 0:15:08.400 --> 0:15:13.040 but it is a significant headwind as well. And overall, 0:15:13.080 --> 0:15:15.960 you know, the economy is not right, the best you 0:15:15.960 --> 0:15:18.640 can imagine for auto dim Yeah. 0:15:18.640 --> 0:15:20.840 I mean when we look at the mag seven stocks, 0:15:20.840 --> 0:15:23.760 we see Tesla as the primary laggard this year, down 0:15:23.800 --> 0:15:26.720 about twenty three percent. And of course we know that 0:15:26.720 --> 0:15:29.760 investors have really been vying for Musk's attention as he's 0:15:29.800 --> 0:15:32.880 been really politically involved. So as we're seeing these numbers 0:15:32.960 --> 0:15:36.520 come through, what do things like moving forward? Are these 0:15:36.600 --> 0:15:40.400 numbers a massive impact or are the Tesla loyalists still 0:15:40.400 --> 0:15:44.120 out there and is there some further positivity to come. 0:15:44.320 --> 0:15:47.720 Yes, you the Tesla stock has been on a royal cost. 0:15:48.440 --> 0:15:50.440 It's like a very low performer this year, but it 0:15:50.600 --> 0:15:53.600 was like a clear out performer last year last year. 0:15:53.640 --> 0:15:57.000 And as you said, you know, it's following, it's following, 0:15:57.040 --> 0:15:59.600 you know, the political carrier, if I may say, of 0:15:59.680 --> 0:16:06.000 the sea in a Musk and like this has created 0:16:06.040 --> 0:16:09.680 this situation. Now if you look at the stock, you know, 0:16:09.800 --> 0:16:13.720 since you know, like April first, what you see that 0:16:13.880 --> 0:16:16.720 what tends to really move the stock is actually the 0:16:16.760 --> 0:16:20.560 news flow around how the company is now focused on 0:16:20.600 --> 0:16:25.200 deploying fleets of robot taxes. They've just started that in 0:16:25.840 --> 0:16:29.240 a couple of weeks ago, like late late last months 0:16:29.720 --> 0:16:31.720 and I think that's going to be the primary driver 0:16:32.360 --> 0:16:35.840 of the stock going forward. Of course, there is a 0:16:35.880 --> 0:16:38.880 lot of uncertainty on you know, how fast THETA is 0:16:38.920 --> 0:16:41.280 going to be able to deploy robotaxy or even make 0:16:41.320 --> 0:16:43.920 a profits, like generate the profits out of the robot 0:16:43.920 --> 0:16:48.000 taxi fleet. But the size of the price is so 0:16:48.200 --> 0:16:50.760 gigantic and so much more than the ATOL business that 0:16:51.000 --> 0:16:53.400 this is probably what drives the stock going forward. 0:16:53.760 --> 0:16:57.560 Are thanks to Pierre Fair ahead of Global Technology Infrastructure 0:16:57.600 --> 0:17:01.720 at New Street Research with tech Oracle this past week 0:17:01.840 --> 0:17:04.600 said it had signed a single cloud deal worth thirty 0:17:04.640 --> 0:17:07.520 billion dollars in annual revenue. It's more than the current 0:17:07.520 --> 0:17:11.080 size of its entire cloud infrastructure business. For more on 0:17:11.119 --> 0:17:13.920 this deal and what this means for the computer software company, 0:17:13.960 --> 0:17:17.240 we turned to Anorak Rana, Bloomberg Intelligence technology analyst. 0:17:17.880 --> 0:17:20.199 We think this is part of the Stargate contract. This 0:17:20.320 --> 0:17:23.280 is something that's going to flow from open aie, you know, 0:17:23.320 --> 0:17:27.040 the combination between soft Bank, Uticle and open AI. So 0:17:27.080 --> 0:17:29.679 if you remember there was a big deal, you know, 0:17:29.840 --> 0:17:32.000 just I think a day or two after the president 0:17:32.040 --> 0:17:34.840 took office, where Laddie Allison and you know got on 0:17:35.160 --> 0:17:37.760 TV and talked about it. I you know, we think 0:17:37.800 --> 0:17:39.600 this is a byproduct of that. 0:17:41.080 --> 0:17:44.479 How is Oracle matching up with its competitors? I mean, 0:17:44.520 --> 0:17:47.600 I know it's gained traction for renting out computing power 0:17:47.640 --> 0:17:49.679 over the Internet, and of course it's been targeting a 0:17:49.680 --> 0:17:52.880 lot of its clients that are focused on AI there. 0:17:53.040 --> 0:17:55.719 But how does it look in comparison to peers? 0:17:56.480 --> 0:17:58.800 Yeah, I think you know, it was really I go 0:17:58.960 --> 0:18:01.159 back a few years. It was, you know, to be honest, 0:18:01.200 --> 0:18:04.320 non existent about three years ago. So the revenue was 0:18:04.400 --> 0:18:06.879 you know, just a handful of billion dollars or so, 0:18:07.200 --> 0:18:09.960 compared to you know, somebody like an AWS which is 0:18:10.040 --> 0:18:12.520 now running at a rundred of over one hundred billion dollars. So, 0:18:12.960 --> 0:18:15.960 but this, if you look at it, in last year alone, 0:18:16.760 --> 0:18:19.719 oracles infrastructure as a service business, which is what we 0:18:19.760 --> 0:18:22.840 look as the proxy for their cloud infrastructure business, had 0:18:22.880 --> 0:18:26.240 revenues of about ten billion dollars. So and then here 0:18:26.320 --> 0:18:29.320 comes a contract that in three years and you know, 0:18:29.400 --> 0:18:32.720 they will have thirty billion dollars annually from one just 0:18:32.800 --> 0:18:35.960 one customer. So you could see just the overall what's 0:18:36.000 --> 0:18:39.399 happening with AI? What is really need so much of 0:18:39.440 --> 0:18:42.919 computing power to run these models, and this is you 0:18:42.960 --> 0:18:45.960 know again they are going everywhere, but Oracle is you know, 0:18:45.960 --> 0:18:47.760 one of the bigger beneficiaries over here. 0:18:48.520 --> 0:18:52.240 Rich go rich, the world's richest people. Larry Ellison of 0:18:52.400 --> 0:18:55.680 Oracle clocks in at number four, two hundred and twenty 0:18:55.760 --> 0:19:00.600 nine billion dollars, up thirty seven billion dollars year to date. 0:19:01.520 --> 0:19:03.879 The stock is up fifty two week high on a 0:19:03.960 --> 0:19:08.560 rockets at an all time high. What's the bookcase for Oracle? 0:19:08.600 --> 0:19:14.120 Here's just just another way to play cloud slash AI. 0:19:14.880 --> 0:19:17.879 Yeah, so that's the bookcase. Definitely on that end, you 0:19:17.880 --> 0:19:20.239 could see their growth rates are going to pick up 0:19:20.280 --> 0:19:22.440 so much more than any of the other cloud providers, 0:19:22.560 --> 0:19:25.440 and partially because they're you know, the numbers are too small. 0:19:25.480 --> 0:19:27.720 As I said, They're only at about ten billion run 0:19:27.840 --> 0:19:29.840 rate or so in this case at this point. So 0:19:30.320 --> 0:19:32.439 that's one. But on the other side, you know, they 0:19:32.480 --> 0:19:34.800 will have to spend a lot on capex right now, 0:19:35.040 --> 0:19:37.840 so that capex number is going to go up. Margins 0:19:37.880 --> 0:19:40.520 are going to most likely take a hit. But frankly speaking, 0:19:40.560 --> 0:19:43.399 in this market right now, it's all about market share 0:19:43.440 --> 0:19:46.879 gains and which of the companies can actually benefit from 0:19:46.920 --> 0:19:51.040 all these large language model training or inference basically, you know, 0:19:51.119 --> 0:19:53.000 they are you know, they're going everywhere. I mean look 0:19:53.000 --> 0:19:56.000 at for example, code WEEP their growth rate. The SAME's 0:19:56.040 --> 0:19:59.600 the case with Microsoft, Azure or EWS. I mean, everybody 0:19:59.600 --> 0:20:02.280 in this particular ecosystem is going to make lots of money. 0:20:03.000 --> 0:20:05.240 We know, expectations remain high for a lot of these 0:20:05.240 --> 0:20:08.359 tech firms, especially as we think about the AI push. 0:20:08.400 --> 0:20:10.280 What do investors want to see right now? What's the 0:20:10.320 --> 0:20:11.640 next step for Oracle? 0:20:12.840 --> 0:20:15.000 I think a lot of this would become to execution 0:20:15.119 --> 0:20:17.199 in this case, because you know, this is we are 0:20:17.240 --> 0:20:21.399 assuming flawless execution in terms of data centered expansion. But 0:20:21.440 --> 0:20:23.160 what if they are not able to get enough power 0:20:23.200 --> 0:20:25.280 in there out there? I mean, what if we get 0:20:25.280 --> 0:20:27.240 into a shortage in that area. So there's going to 0:20:27.240 --> 0:20:29.360 be a lot to you know, I would say ups 0:20:29.400 --> 0:20:32.000 and downs, not just for article, but everybody in the 0:20:32.040 --> 0:20:35.960 equation where maybe the project gets delayed some funding issues. 0:20:36.359 --> 0:20:38.879 Right now, everything is fine when it comes to funding 0:20:38.920 --> 0:20:41.720 for these particular projects, but you know, those are the 0:20:41.760 --> 0:20:44.000 things that we would watch for. But other than that, 0:20:44.119 --> 0:20:46.240 I think the the you know, future is really bright 0:20:46.320 --> 0:20:49.520