Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast, with Caroline Hide in New York
Speaker 1: and Eva Low into San Francisco.
Speaker 2: This is Bloomberg Tech coming up. Amazon cuts sixteen thousand
Speaker 2: corporate jobs to remove letyers of bureaucracy and quote increase ownership.
Speaker 3: That's ASML also announcing job cuts to boost efficiency and posting.
Speaker 4: Strong fourth quarter orders, and.
Speaker 2: Sources tell Bloomberg that SoftBank is in talks to invest
Speaker 2: as much as thirty billion dollars more into Open AI.
Speaker 3: Let's check in on these markets though, because there's been
Speaker 3: some interesting whipsawing airsm hell among them.
Speaker 4: But we go more macro right now.
Speaker 3: One point, we saw the S and P five hundred
Speaker 3: above that seven thousand dollars seven thousand level. We have
Speaker 3: never seen that before, and that is as we see
Speaker 3: the momentum in AI continuing.
Speaker 4: But we have a crucial FED meeting. What is going
Speaker 4: to be put to J.
Speaker 3: Powell later today that independence of the Federal Reserve. We're
Speaker 3: not thinking that there will be any move in terms
Speaker 3: of race, but still there's nervousness, nervousness around Iran as well.
Speaker 3: And there's a lot to be focusing in on. But
Speaker 3: for now, now as that one hundred holds on to
Speaker 3: a gains of four tens percent, what are you looking.
Speaker 5: At the breaking new story of the morning.
Speaker 2: Amazon is cutting sixteen thousand more corporate roles, eliminate middle management, streamline.
Speaker 2: It confirms a lot of what Bloomberg had already reported.
Speaker 2: The slot kind of bouncing around in the session now
Speaker 2: softer by seven tenths of one percent. We're going to
Speaker 2: get to that later in the program and go deep
Speaker 2: on what's happening in Amazon and tech more broadly. Then
Speaker 2: there's ASML at one point in the session up more
Speaker 2: than seven percent and pushing to a fresh record high,
Speaker 2: great blockbuster bookings, bookending the thirteenth consecutive year of growth,
Speaker 2: and also doing its own job cuts. I guess, you know,
Speaker 2: fix the roof while the sun is shining. Kind of
Speaker 2: an allergy carrow. But now the stock is down softer
Speaker 2: two and a half percent, something might have been happening
Speaker 2: on the core.
Speaker 4: Yeah, we've got to.
Speaker 3: Dig into it because, as you mentioned, seventeen hundred jobs
Speaker 3: to go in the Dutch maker.
Speaker 4: The semiconductor equipment is.
Speaker 3: World used, says it plans to cut seventeen hundred roles,
Speaker 3: around four percent of the workforce, as an effort to
Speaker 3: streamline the organization. The CEO has said. This is as
Speaker 3: the company reported earnings that you mentioned, showing record fourth
Speaker 3: quarter bookings field of course by AI demand. The SML
Speaker 3: CEO Christophe Fuget, did speak with Bloomberg on the phone earlier.
Speaker 4: Take to listen to what he had to say.
Speaker 6: The last three months have brought a lot of clarity,
Speaker 6: and I think what you see basically is that the
Speaker 6: semi industry, our customers start to believe that this AI
Speaker 6: demand is sustainable, and therefore they have moved into building
Speaker 6: capacity and they are moving very aggressively. And I think
Speaker 6: this has been very nicely translated indeed into a record
Speaker 6: booking number. So that's of course very good news for
Speaker 6: the mid term.
Speaker 4: Why are the shares down, then, let's talk about.
Speaker 3: The results when PFO is higher, global tech, infrastructure and
Speaker 3: new street research. Why did we sell the rally the
Speaker 3: record high and the shares earlier today?
Speaker 7: Yes, that's a great question. So I think.
Speaker 8: A SML basically confirmed what everybody suspected that twenty twenty
Speaker 8: six is going to be a great year. Now you
Speaker 8: have to take a step back and think what does that.
Speaker 7: Mean agrate great year?
Speaker 8: The guided revenue grows between four and nineteen percent, which
Speaker 8: in absolute term is very strong growth. As you mentioned,
Speaker 8: like the bookings were never seen. We've never seen that
Speaker 8: level of orders at the SML, like exceeding thirteen billion
Speaker 8: in a single in a single quarter. Now, when you
Speaker 8: take a step back, think about what is the downstream
Speaker 8: of SML.
Speaker 7: Who are the clients. It's a Micron, it's a high.
Speaker 8: Nix, it's a Samsuing, it's a TSMC, and these player
Speaker 8: are actually growing much much faster than that. They're growing,
Speaker 8: Like if you take for instance, c SMC is probably
Speaker 8: going to grow like between thirteen and thirty five percent
Speaker 8: this year. So we already see that semiicap equipment starts
Speaker 8: lagging a bit their clients in terms of growth, and
Speaker 8: that's a very natural thing because they sell equipment to
Speaker 8: add capacity. And when you look at the trajectory of
Speaker 8: growth of air, we are actually just passing the inflection points.
Speaker 8: Going forward, gross is going to continue to be very strong,
Speaker 8: but it is going too slow and so it's going
Speaker 8: to translate into slower growth at semicap equipment manufacturers. And
Speaker 8: I really think this is the way the street is
Speaker 8: digesting the news today and overnight. Initially the stock was
Speaker 8: up and now the street is raising. Okay, but if
Speaker 8: twenty twenty six is a peak spending air, maybe it's
Speaker 8: time to actually take profits on SML as a stock.
Speaker 3: So you think this is peak, I mean, that's not
Speaker 3: what one would hear from Johnson one who thinks we
Speaker 3: still got trillions to go. Still in this mode of
Speaker 3: trying to question whether we're in an AI bubble or not,
Speaker 3: do you think that we've got any curacy on that
Speaker 3: from ASML after we of course got TSMC of skah
Speaker 3: next showed such strength and memory.
Speaker 8: Yeah, so we're definitely not at peak on AI. And
Speaker 8: you look at the TSMC guide to twenty twenty nine
Speaker 8: growth between fifty five and sixty percent, so we are
Speaker 8: still in a very.
Speaker 7: High growth environment in AI. The peak I refer to
Speaker 7: Caroline is.
Speaker 8: A peak in actually capacity increase, because if in twenty
Speaker 8: twenty seven you still grow very fast but a bit
Speaker 8: slower than twenty twenty six, you will not need more
Speaker 8: equipment than you needed in twenty twenty six. So this
Speaker 8: is this idea that Semica players are driven by incremental capacity,
Speaker 8: not by growth directly. It's the first order of derivative
Speaker 8: of the growth of their clients. And that's the reason
Speaker 8: why the market is right to be a bit nervous
Speaker 8: specifically on submitting now when it comes to their clients.
Speaker 8: Like the groser for twenty six is amazing. It's already
Speaker 8: very strong for twenty twenty seven, and it looks really
Speaker 8: good for twenty twenty eighteen, twenty twenty nine. So we
Speaker 8: are still in very, very very strong growth environments in AI.
Speaker 2: Yeah, if the stocks down and twenty twenty six is
Speaker 2: the peak, the market doesn't believe mister Fuque, he thinks
Speaker 2: it's about sustainability.
Speaker 5: Listen to this real quick.
Speaker 6: I think we have all been surprised by the magnitude
Speaker 6: of AI, and we all saw it coming a bit.
Speaker 6: But at the same time, you know, we see those
Speaker 6: investment coming out and it's really big, and I think
Speaker 6: that all of us are continuing to watch basically for
Speaker 6: the sustainability of those investments. I think sustainability is a keyword.
Speaker 6: I think the question is always.
Speaker 7: Is this going to last?
Speaker 6: I think that more and more of our customer are
Speaker 6: responding positively to that question.
Speaker 2: Is this going to last? And he's saying that the
Speaker 2: signals from its customers are that it is going to last.
Speaker 2: And you're saying the market isn't showing us.
Speaker 8: That, whereas the market is showing is being careful about
Speaker 8: it because this is going to last. For the CEO
Speaker 8: of might mean we still have very good level of
Speaker 8: spending in twenty twenty seven. But if twenty twenty seven
Speaker 8: is as good as twenty twenty six, how is the
Speaker 8: STUG going to work on that?
Speaker 7: It's rightly not going to work.
Speaker 2: Well, I have a question for you, what is the
Speaker 2: leading indicator in the world of tech?
Speaker 7: Right?
Speaker 5: I can give you a chart right now.
Speaker 2: It shows you expected capital expenditures for the hyperscalers and
Speaker 2: other associated names like Meta and Oracle. Right, is that
Speaker 2: the leading indicator? Or Bloomberg's Ian King is going to
Speaker 2: come on next and tell us that Texas Instruments is
Speaker 2: a leading indicator for the health of the economy, or
Speaker 2: ASML and EUV demand is a leading indicator? Which data
Speaker 2: set is most critically important to you right now?
Speaker 8: Per So what's most critically important? Ed east to connect
Speaker 8: these data sets rightfully?
Speaker 7: I love that chart you just showed.
Speaker 8: This is like capex and you see that we expect
Speaker 8: capex to grow a lot this year growth next year,
Speaker 8: and as we are not too sure, we don't model
Speaker 8: much beyond that. This is a leading indicator. Now, what
Speaker 8: is going to drive the business of ASML is how
Speaker 8: much incremental capex you add every year. And what you
Speaker 8: see very clearly is that this incremental capex is now
Speaker 8: plateauing and coming down. And that's the reason why in
Speaker 8: semi cap equipment you have to be careful and expect
Speaker 8: like a significant slowdown.
Speaker 7: In revenue growth for the rest of the industry.
Speaker 8: Capex growth is a very very good indicator and it
Speaker 8: takes us instrument is actually a very interesting indicator. That
Speaker 8: is the most important indicator today outside of AI, because
Speaker 8: it's quite important to understand what is the global economy
Speaker 8: doing outside of AI. And we've been into like a
Speaker 8: very very painful, lengthy downce I can in automotives, in
Speaker 8: industry roles and what simply said, it's confirmed signals that
Speaker 8: we've had already for a few weeks that we are
Speaker 8: at the bottom and things are improving.
Speaker 2: Just trying to answer the question is this going to last,
Speaker 2: Pierre fair Agree from New Street Research, thank you very much.
Speaker 2: I alluded to it just then. Shares of texts instruments
Speaker 2: soaring after the company gave a surprisingly robust forecast for
Speaker 2: the first quarter, signaling that customers have worked through inventory
Speaker 2: and a returning for chips analog chips. Multiple analysts are
Speaker 2: raising price targets, calling the outlook encouraging. Bloomberg's inking is
Speaker 2: here analog chips simple translation of a touch of a
Speaker 2: button into a signal. But we always write in our story,
Speaker 2: in our summary of earnings, this is like the bell weather,
Speaker 2: the crystal ball for the economy. What do we learn
Speaker 2: through their earnings prece.
Speaker 9: I mean, they've got tens of thousands of products, tens
Speaker 9: of thousands of customers, so they are literally everywhere everything
Speaker 9: that's got a on and off switch, that's where they are.
Speaker 9: What they said was again, you were very careful, and
Speaker 9: they're incrementally better. They had been talking about a recovery
Speaker 9: being kind of off pace, not as kind of robust
Speaker 9: as we would normally get. Now they're saying, actually orders
Speaker 9: are improving and are continuing to improve. The signs are
Speaker 9: now better.
Speaker 3: How much are they able to harness any of the
Speaker 3: AI vibes rather than auto's industrials, the bell Weather part.
Speaker 9: Yeah, that's a very good question. The answer is they
Speaker 9: confirmed the AI vibe is good for them. It's now
Speaker 9: a significant business, but really it's not the main business.
Speaker 9: The main business for them remains industrial and automotive, the
Speaker 9: things that are a broader I mean, we know that
Speaker 9: data centers is a big right and they confirm that. What
Speaker 9: they told us was that industrial is getting better as well,
Speaker 9: which is what we want to hear.
Speaker 2: We've really focused right now on how global these companies are,
Speaker 2: like currency impacts, like China, what's going on with China.
Speaker 2: Is there anything kind of extra that Texas Instruments can
Speaker 2: tell us about different geographies, other industries? Industrial good? Is
Speaker 2: there anything that's pretty bad?
Speaker 7: Yeah?
Speaker 9: I mean they talked about consumer electronics not being fantastic,
Speaker 9: and that's because consumer electronic actually recovered earlier than other
Speaker 9: markets and now it's kind of slowing down a little bit.
Speaker 9: Some of the consumer electronics devices, home theater maybe PCs
Speaker 9: a little bit memory dependent. We talked about memory. The
Speaker 9: press of memory is going up. That's snow secret and
Speaker 9: that has a knock on impact.
Speaker 3: Thinking as always breaking it down, and you mentioned memory,
Speaker 3: We're going to go there check out Skhiinex shares. They
Speaker 3: have really rocketed on the back of their earnings, and
Speaker 3: there's this relentless appetite for AI memory, which s CA
Speaker 3: Heinex serves. They're also in fact going to be establishing
Speaker 3: an AI data center. Solutions from here in the usaid
Speaker 3: how much has that to do with South Korea US
Speaker 3: relationships going forward and the need to invest in the
Speaker 3: United States. It's going to be backed by ten billion
Speaker 3: dollars of capital to pursue partnerships and investments in the sector.
Speaker 4: So keep an eye on that stock. And that was
Speaker 4: its training in South Korea today.
Speaker 2: Hey, coming out, trade tensions rise between the US and
Speaker 2: South Korea.
Speaker 5: More on the why. Next, this is Bloomberg Tech.
Speaker 2: Taking a look at shares of Amazon softer seven tens
Speaker 2: of one percent, the company announcing the card of sixteen
Speaker 2: thousand corporate jobs worldwide, saying it's an effort to remove
Speaker 2: layers of bureaucracy and to quote, increase ownership. It also
Speaker 2: confirms quite a lot of what Bloomberg has been reporting
Speaker 2: of late. Bloomberg Spencer Soper, who covers Amazon joins us. Now,
Speaker 2: sixteen thousand corporate jobs is the latest.
Speaker 5: Wave of more than one wave.
Speaker 2: And the messaging and in line with your reporting, right
Speaker 2: is that this is about efficiency and streamlining, not about AI.
Speaker 2: What are the details of this particular trim that we're seeing.
Speaker 10: Yeah, definitely delayering, the kind of targeting the middle. And
Speaker 10: this is something that goes back to last year when
Speaker 10: Jase was talking about you know, more more people who
Speaker 10: are doing the direct work and fewer people managing the
Speaker 10: work you know in the middle. So there's that in there.
Speaker 10: It also hit a large you know, different parts of
Speaker 10: the organization. So when they had initially laid off fourteen
Speaker 10: thousand back in October, departments were given a choice, they
Speaker 10: said they had to hit some numbers. They were given
Speaker 10: a choice, do you want to cut people now or
Speaker 10: wait until after after the holiday season. And so a
Speaker 10: lot of departments, particularly the retail division, waited until after
Speaker 10: Christmas to do their cuts. So now we're seeing a
Speaker 10: total of thirty thousand, which is the biggest in Amazon's
Speaker 10: history for the corporate side.
Speaker 5: And that's you know, compared.
Speaker 10: To I think twenty seven thousand, which was a few
Speaker 10: years ago, Back in twenty twenty one and twenty two now.
Speaker 3: Phil Spencer that they've been at length to say this
Speaker 3: isn't some regular occurrence. I know, Beth Galetti, who's really
Speaker 3: in charge of people experience technology, is this isn't going
Speaker 3: to be some rolling set of cuts that we see
Speaker 3: every few months. But thirty thousand last three months is
Speaker 3: a huge amount.
Speaker 10: Yeah, thirty thousand is a big amount. But also if
Speaker 10: you read her statement very carefully, it's really corporate goblety
Speaker 10: Google trying to strike that tone between you know, reassuring
Speaker 10: employees but also not making any promises, you know what
Speaker 10: I mean. So's she's saying some might ask if this
Speaker 10: is going to be a rolling theme and you know,
Speaker 10: but she's not really saying, hey, we're not going to
Speaker 10: cut anymore over this period of time. So it's kind
Speaker 10: of just not noncommittal Gobletygoog if you really read it carefully.
Speaker 4: Yeah, saying is this the beginning of a new rhythm.
Speaker 4: That's not our plan.
Speaker 3: But just as we always have, every team will continue
Speaker 3: to evaluate the ownership, speeding capacity to invent for customers.
Speaker 3: Bloomberg Expense of Sofa thanks for breaking it down for us. Now,
Speaker 3: the Trump administration is demanding the South Korea implement it's
Speaker 3: a six month old trade deal with the US to
Speaker 3: prevent Harrison rising to twenty five percent. Trade Tensions between
Speaker 3: the two countries have been rising mean worse by the
Speaker 3: US's frustration with Korean digital services regulations. New Vaccinia tech
Speaker 3: editor Mike Shephard joined US Now to unpack what is
Speaker 3: a tech centric story in many ways because it involves
Speaker 3: key chip makers over in Korea, for example, Well, it
Speaker 3: really does.
Speaker 11: And we saw actually the flashes of this growing as
Speaker 11: long as ten days ago Caroen, we saw Howard Lutnik
Speaker 11: threatening those memory makers with tariffs of up to one
Speaker 11: hundred percent if they didn't step up their investments here.
Speaker 7: In the US.
Speaker 11: And that is one of the issues that we have
Speaker 11: seen surge more recently with the president's threat of increasing
Speaker 11: tariffs to twenty five percent from the current agreed upon
Speaker 11: fifteen percent level. And a lot of that has to
Speaker 11: do with what is happening with those investments. Remember, under
Speaker 11: the deal, South Korea had promised to invest as much
Speaker 11: as three hundred and fifty billion dollars in the US
Speaker 11: over the next several years, but that step has been
Speaker 11: installed in the South Korean parliament. They are just beset
Speaker 11: by a lot of issues, including currency woes and capital outflows,
Speaker 11: and so lawmakers there have really not been able to
Speaker 11: codify how this investment would go forward.
Speaker 12: But we heard this morning from.
Speaker 11: US Trade Representative Jamison Greer that time is up in
Speaker 11: South Korea needs to start moving otherwise the US will
Speaker 11: move to the next step, perhaps, and that is implementing
Speaker 11: a potential tarer of increase.
Speaker 5: Mike.
Speaker 2: The other news story at the intersection of tech and
Speaker 2: what's happening in Washington, DC is Intel pledging to match
Speaker 2: Trump account contributions for its employees.
Speaker 5: What do we need to know about that?
Speaker 11: Well, it's an interesting step, and it's one that other companies,
Speaker 11: including Blackrock, have already taken and that they are in Dell,
Speaker 11: of course, Michael Dell, the founder of Dell Computing, is
Speaker 11: one of the pioneers behind this Trump accounts project and
Speaker 11: has made some big pledges that we've talked about.
Speaker 7: On this program before.
Speaker 11: But Intel is getting in line with that. And of
Speaker 11: course the stakes for Intel are quite different. And when
Speaker 11: I say stakes, it's quite literal. The US government owns
Speaker 11: currently five point five percent of the company and is
Speaker 11: on course to own as much as ten percent of
Speaker 11: the chip maker. And it's also interesting ed that in
Speaker 11: December the company hired Robin Colwell from the White House
Speaker 11: to serve as its next government head of government affairs
Speaker 11: here in Washington. So Intel is in a way really
Speaker 11: aligning with this initiative, the Trump Accounts, which are designed
Speaker 11: to encourage saving and investment by parents four young children
Speaker 11: over the next several years, to try to get people
Speaker 11: not only invested in the stock market, but saving over
Speaker 11: the long haul. And in this way, Intel is trained
Speaker 11: to get on the right side of the story with
Speaker 11: the administration in another one of the president's priorities.
Speaker 2: Blouemberg's Mike Shefard, thank you very much, Caro.
Speaker 4: It's time now for talking tech ed first up.
Speaker 3: Elil Musk has suggested the timing of SpaceX is possible.
Speaker 3: Blockbuster IPO could come in mid June and is according
Speaker 3: to a report in the Financial Times. The owner of
Speaker 3: the rocket maker, of course, is wanted to be targeting
Speaker 3: the IPO for when Jupiter and Venus will appear very
Speaker 3: close together in the sky.
Speaker 4: Mask's fifty fifth birthday is also in June.
Speaker 3: Plus, Snap has created a subsidiary dedicated to augmented reality
Speaker 3: glasses specs. Now the unit is intended to give the
Speaker 3: smart Iwear team more independence.
Speaker 4: Will allow it to raise some money.
Speaker 3: A spokesperson confirmed Snap will launch the AAR glasses regardless
Speaker 3: of external investment, and Apple CEO Tim Cook, who has
Speaker 3: joined other tech leaders weighing in on the killing of
Speaker 3: Alex Pretti by federal agents in Minnesota. In an internal memo,
Speaker 3: Cook called for de escalation. He said he had spoken
Speaker 3: to President Trump about the situation. Soft Bank as in
Speaker 3: talks to invest as much as thirty billion dollars.
Speaker 4: More into Open Ai. And now that's according to sources, the.
Speaker 3: Japanese firm is already one of opening Ice big as
Speaker 3: backers within eleven percent steak in the chatchipt maker and
Speaker 3: with More's bloomgs AI and data centers are Lin Dwan.
Speaker 3: And so thirty billion really makes massa all in. I mean,
Speaker 3: we know he takes big bets.
Speaker 13: Yeah, and I think we had one of the nalysts
Speaker 13: out in Asia saying he is literally betting the house
Speaker 13: on open in other AI.
Speaker 4: Six.
Speaker 13: Now that being said, it's probably worth pointing out that
Speaker 13: it's as much as thirty billion dollars as opposed to
Speaker 13: thirty billion dollars itself, So we'll see exactly where he
Speaker 13: lands there. But I mean, let's face it, like Saffink
Speaker 13: has already invested tens of billions of dollars in open Ai,
Speaker 13: so it's another thirty billion dollars at this point, right.
Speaker 2: Lynn, There are lots of people in my world asking
Speaker 2: equally if open ai is good for it in all
Speaker 2: their capital commitments for infrastructure and where the soft bank
Speaker 2: has up to thirty billion dollars. But the main thrust
Speaker 2: of it is that this is part of a that
Speaker 2: we know is happening. Right open ai wants to raise money.
Speaker 2: What do we know about its target raise overall and
Speaker 2: the valuation it wants to hit irrespective of how much
Speaker 2: soft Bank contributes to that.
Speaker 13: That's exactly right, and we've been reporting on this funding
Speaker 13: round that open ai has been orchestrating over the past
Speaker 13: several months for a while now. Obviously stop Bank isn't
Speaker 13: the only name that is intended to invest in this round.
Speaker 13: We very recently broke the news that open ai has
Speaker 13: been in conversations with very big name investors in the
Speaker 13: Middle East, and so it's possible that we see some
Speaker 13: sovereign wealth money wind up in this round. Now in
Speaker 13: terms of like what their targeting valuation wise, very difficult
Speaker 13: to say. It's even like difficult to say exactly how
Speaker 13: much they may end.
Speaker 4: Up raising in the end.
Speaker 13: The ranges that you see out there from us, from
Speaker 13: others in the media are kind of all over the place.
Speaker 13: It's like anywhere from some hundred and fifty billion dollars
Speaker 13: to eight hundred than fifty billion dollars depending on where
Speaker 13: investors in Open AI decide to land in the end.
Speaker 13: So it's very much an active round and we continue
Speaker 13: to try to keep tabs of exactly where it lands.
Speaker 3: What's interesting is how SoftBank has been very focused on
Speaker 3: the AI play, but also selling down an invidio to
Speaker 3: be able to loosen up some cash. They made a
Speaker 3: purchase of Ampare, for example in the chips area. Are
Speaker 3: they deemed winner in the AI space right now?
Speaker 13: Well, I think it's probably two different questions that you're
Speaker 13: looking to unpack there. One is what does stopping selling
Speaker 13: down its sake and in VideA really mean? And I
Speaker 13: think that for a moment, people were making the mistake
Speaker 13: of interpreting that as ooh, stopping sees that it's getting
Speaker 13: like way over its skis and it's not really you know,
Speaker 13: all in on AI, when in fact, what it was
Speaker 13: really doing is trying to raise enough money to make
Speaker 13: even more bets on AI. Your other question though, was like,
Speaker 13: is Stoppank a winner in AI? I mean, is anybody
Speaker 13: a winner in AI? I think that the concerns of
Speaker 13: an AI bubble are still relevant. We saw is Sameltho
Speaker 13: report some strong bookings, So.
Speaker 4: Welcome back to Bloomberg Tech.
Speaker 3: Let's check in on these markets which I've been flip flopping,
Speaker 3: and we build anticipation of the FED decision and indeed
Speaker 3: many feeling we're not going to get a rate change.
Speaker 4: But what will J Powell say at the press conference.
Speaker 3: We also got building geopolitical anxiety where it's about Iram,
Speaker 3: whether we've got still tensions with South Korea in terms
Speaker 3: of trade. Nevertheless, one point, the S and P five
Speaker 3: hundred go is above seven thousand, and then as that
Speaker 3: one hundred holds onto its gains, earnings are coming thick
Speaker 3: and fast. This is where we see the fundamental picture
Speaker 3: of this tech rally that we're so used to seagate
Speaker 3: best performer in terms of actual percentage move when you're
Speaker 3: look at the nast that one hundred and twenty percent.
Speaker 3: This is again winning formula on memory and it is
Speaker 3: calling the numbers that came put out last night terrific.
Speaker 3: Texas Instruments also came out with numbers. This is like
Speaker 3: the bell weather when you're thinking about industrials and ththing
Speaker 3: about autos and we've hit a bottom word coming back
Speaker 3: out of it. Were up almost eight percent on that
Speaker 3: now ASML actually turns red it had blowout orders. But
Speaker 3: see many people questioning perhaps where they can keep on
Speaker 3: building momentums selling chip equipment to those chip makers such
Speaker 3: as TSMC Intel here in the United States, Intel, as
Speaker 3: I say, up ten percent. Keep an eye on how
Speaker 3: the moon music has changed around AI or whether there's
Speaker 3: a bubble or not ed. It's all about these.
Speaker 4: Earnings right now.
Speaker 2: It is, and big tech earnings are well and truly
Speaker 2: upon us, and that includes service now. Bloomberg Intelligence says
Speaker 2: investors want to hear about the pending acquisition of cybersecurity
Speaker 2: startup Arms, along with new AI sales and a lot more.
Speaker 2: Bloomberg's Brady Ford, who covers the software space, is here
Speaker 2: with us generally right now that the IT spending environment
Speaker 2: isn't great. What is the kind of read through an
Speaker 2: expectation from the street on how service Now will talk
Speaker 2: about that, right and how it will show up in
Speaker 2: their own numbers.
Speaker 14: Application software has just had a really tough stretch the
Speaker 14: last year, right. I Mean we've seen all of these
Speaker 14: big vendors, whether it be Salesforce or Service Now, talk
Speaker 14: up their new AI tools, but it just seems that
Speaker 14: we can't quite see it in the numbers that there's
Speaker 14: a real revenue uplift and with service Now, add on
Speaker 14: top that they've made two big deals in the last years,
Speaker 14: so I just see a lot more investor anxiety about
Speaker 14: them than I had at any point in recent years.
Speaker 3: I mean, you just have to look back to how
Speaker 3: their shares have deeply underperformed last year, where they were
Speaker 3: off by basically almost thirty percent. When you flip into
Speaker 3: what we might hear from IBM, it has actually outperformed
Speaker 3: software names, But their consultancy side of the business is
Speaker 3: maybe the one that you get the AI part of
Speaker 3: the equation coming in exactly.
Speaker 14: IBM is facing this moment where the discretionary spending is
Speaker 14: being taken out of those traditional consulting projects. But it
Speaker 14: doesn't seem to matter too much for them because a
Speaker 14: lot of their infrastructure software is doing quite well and
Speaker 14: people are still buying a ton of mainframes. Who knew
Speaker 14: so IBM has actually face study pretty you know, positive
Speaker 14: environment for a name that in the past was associated
Speaker 14: with kind of stargy, boring, slow growth company.
Speaker 2: You know.
Speaker 3: Don't even get them started on quantum, Brody, We've got
Speaker 3: a lot to digest after the biles.
Speaker 4: Thanks to you. We appreciate it, Brodie Forward. Now, another
Speaker 4: stock we're watching is Microsoft.
Speaker 3: Investors are paying close attention to its cloud computing service
Speaker 3: as You and the impact of AI generalor AI how
Speaker 3: thin can is.
Speaker 4: A Wolf Research analyst.
Speaker 3: Expects the platform's growth to exceed guidance at thirty nine percent, writing,
Speaker 3: we believe that open ai training revenue will begin contributing
Speaker 3: more materialy to as You're in the second fiscal quarter
Speaker 3: and beyond, which could provide incremental upside to our preview.
Speaker 4: Alex joins us. Now, the question is do.
Speaker 3: They have the capacity to serve the relentless demand from
Speaker 3: a player such as open ai ad it.
Speaker 15: Yeah, I mean that's the I think the big question
Speaker 15: and look We're excited. We think this is the bell
Speaker 15: weather that's going to help usher AI into the enterprise era,
Speaker 15: the mo from co pilot to coworker that never sleeps,
Speaker 15: never eats, never complains, just works on complicated problems all
Speaker 15: the time with the same tool chain that you're used
Speaker 15: to as a human. We think Microsoft is very well
Speaker 15: positioned as a platform to deliver on all parts of
Speaker 15: that stack and journey, the most important metric being Azure.
Speaker 15: The capacity constraint issues we think do start to get
Speaker 15: resolved as they bring the Fairwater data centers online. We
Speaker 15: see both the Wisconsin and Atlanta data center starting to
Speaker 15: ramp and contribute. We think that unlocks about a gigawatt
Speaker 15: of capacity over the course of the next year, which
Speaker 15: we estimate about twenty billion dollars of incremental Azure unlock.
Speaker 15: We think that they also are contracting and expanding their
Speaker 15: capacity with third parties like the Neo Clouds, n Scale, Nebius,
Speaker 15: and a few others that could be up to another
Speaker 15: gigawatt of capacity or another potential twenty billion. So we
Speaker 15: think that you start to see those resolutions come through
Speaker 15: over the course of the next few quarters.
Speaker 3: I want to go back to where you started co
Speaker 3: pilot and then you went coworker. What's so interesting really
Speaker 3: on the show the last few days and really thinking
Speaker 3: about anthropics offering cowork how much is that potentially a
Speaker 3: real competitor to Microsoft?
Speaker 4: Could it up end it in the space?
Speaker 16: To me?
Speaker 15: And the way we think about it is that we're
Speaker 15: in phase zero of adoption in the enterprise. A lot
Speaker 15: of the tools, the way they're being used right now,
Speaker 15: we're in the discovery phase of what's possible. We think
Speaker 15: that anthropic open AI really all the model companies have
Speaker 15: an opportunity to massively expand the value creation that they're
Speaker 15: delivering in their offerings in the enterprise specifically, and so
Speaker 15: this is a demonstration, we believe where different vendors at
Speaker 15: different times will be able to exhibit share gains with
Speaker 15: functionality that they launch in their ecosystems to enable value creation.
Speaker 15: We view it less as a zero sum and more
Speaker 15: of as an infinite game that we're just starting to play.
Speaker 2: A I find this so interesting that we started this
Speaker 2: conversation about top line growth and Azure right almost the
Speaker 2: reverse of a conversation we might have had one or
Speaker 2: two quarters ago, which would have started with kappas or expenditures.
Speaker 5: How much do you need to just get a projection.
Speaker 2: Of confidence from Microsoft on their capital expenditure figures to
Speaker 2: keep this big story alive.
Speaker 15: Yeah, So look, last quarter was the big shift quarter
Speaker 15: in terms of CAPEX, going from you know something where
Speaker 15: we thought it was going to be one hundred billion
Speaker 15: to one hundred and fifty billion this year.
Speaker 12: We think that the CAPEX shift has been made.
Speaker 15: We think now it's a question of stability and you know,
Speaker 15: to some extent, maybe aligning the increase from here with
Speaker 15: some of your kind of core revenue growth assumptions.
Speaker 12: But look, that could change too. Over the last month, we.
Speaker 15: Think inference has quite frankly exploded with the amount of
Speaker 15: tokens being generated for autonomous coding tasks that are now
Speaker 15: running you know, at large when people sleep, as well
Speaker 15: as some of the possible functionalities exhibited by things like
Speaker 15: clog bot and these other kind of orchestration engines. So
Speaker 15: it's anyone's guest. We don't think CAPEX is going down
Speaker 15: anytime soon. We think kind of stable to up is
Speaker 15: how we are thinking about it.
Speaker 2: When it comes to genuinely autonomous agents. You know, Microsoft's
Speaker 2: are very good. I always say this on the program.
Speaker 2: That's what I grew up with, selling software that you
Speaker 2: can otherwise get for free elsewhere. They're not the only game, right.
Speaker 2: When it comes to the coworker, AWS has a very
Speaker 2: similar story they like to tell. They like to talk
Speaker 2: up their prowess in observability, right, really important critical factor
Speaker 2: when an agent is an autonomous and they talk up
Speaker 2: at AWS how well they're doing to help engineers get
Speaker 2: through backlog. How are you going to discern addicts which
Speaker 2: companies better at that you know, and therefore which will
Speaker 2: be adopted in the enterprise.
Speaker 12: Well, look, I think all three hyperscalers have a role
Speaker 12: to play.
Speaker 15: I think the one element about autonomous agents, particularly ones
Speaker 15: that have to handle sensitive, oftentimes customer privileged information is security. Now,
Speaker 15: we think one of the key differentiators for Microsoft is
Speaker 15: their security portfolio, their security stack, their security graph as
Speaker 15: well as you know, all of the investments that they've
Speaker 15: made in other parts of the data platform has stayed
Speaker 15: over time. So we think that is a critical piece
Speaker 15: of the puzzle that will help them gain share of
Speaker 15: this developing market that we're just kind of starting to discover.
Speaker 2: The use cases around Alex Zuchin and four research greats.
Speaker 2: Have you on the show in Advanced Microsoft now coming up?
Speaker 2: While b CEO Raquel Eredison joins us to talk about
Speaker 2: the self driving startups, latest funding and push into robotaxis.
Speaker 5: A's next. This is Bloomberg Tech.
Speaker 3: Self driving startup warbe I secured one billion dollars in
Speaker 3: new funding and includes a seven hundred and fifty million
Speaker 3: Series C that was led by Coast Adventures by G
Speaker 3: two venture partners, plus two hundred and fifty million in
Speaker 3: a milestone based investment from Uber to lunch.
Speaker 4: Wabi enabled robotaxis.
Speaker 3: Joining us now Raquel Rotisen, she's a CEO founder of Wabi.
Speaker 3: How important is this focus on physical AI in the
Speaker 3: trucking space now moving to the robo taxi?
Speaker 4: How significant is that for you?
Speaker 17: Yeah, so it's a really exciting moment. I will say,
Speaker 17: where you know, the physically a revolution is here and
Speaker 17: sold Iran is what is going to skill first, and
Speaker 17: you know we have a very Advanne system in tracking
Speaker 17: and now we are entering rowo taxi with a massive
Speaker 17: furnitshire with with Uber and you know it's really the
Speaker 17: next stage for that company is really exciting to be
Speaker 17: you know, reading their way in physical AI.
Speaker 3: What's interesting is we had gatekon yesterday also raising fun well,
Speaker 3: they're securing new deals, they're already commercializing.
Speaker 4: How is your go to market looking?
Speaker 3: It's all about the platform that you offer when it
Speaker 3: comes to trucking and now robotaxis.
Speaker 4: What is it that makes you so distinct?
Speaker 17: So what makes us very very unique is the fact
Speaker 17: that we have next generation technology physically I platform that
Speaker 17: for the first time in the industry, in the industry
Speaker 17: is going to be able to drive both fhon factors
Speaker 17: robotaxes as well as the driving trucks. We are very
Speaker 17: advanced in terms of both the technology as well as
Speaker 17: commercialization in trucking and now you know entering robotaxi, and
Speaker 17: we're going to enter robotaxi really really quickly. So it's
Speaker 17: very you know, it's great to see that, you know,
Speaker 17: this next generation technology enables you to go so much faster,
Speaker 17: so much more capital efficient, and with a product that
Speaker 17: really miss the customer demands.
Speaker 2: Okue, Well, congratulations on the round, you know, really notable.
Speaker 2: It reads like the money that's coming in from Uber
Speaker 2: is continue on. You hitding some milestones in robotaxi, right,
Speaker 2: your focus has been autonomous trucking.
Speaker 5: What are those milestones in.
Speaker 2: Robotaxi that Uber requires you to hit so you can
Speaker 2: unlock access to that cash.
Speaker 17: So so not sharing a lot of details yet on
Speaker 17: the amazing partnership with Uber, but those are simple milestones
Speaker 17: that we can you know, we can achieve quickly and
Speaker 17: you know, thanks to the technology that we have, you know,
Speaker 17: already today we have the capabilities to you know, the
Speaker 17: core capabilities required for robot taxis with our cell arriving
Speaker 17: trucks unless the Unlike the rest of the industry, we
Speaker 17: can drive not only on highways but in generalized surface streets.
Speaker 17: So that's why you know, we feel, you know, very
Speaker 17: confident that you know, we can enter robot taxi and
Speaker 17: dis wrapted market really really, you know, swiftly.
Speaker 2: You're Canadian company essentially, and one of the conversations that
Speaker 2: we were having yesterday with Gattik is in American US
Speaker 2: a need for a federal regulation. Your framework you able
Speaker 2: to give me a kind of assessment of going to
Speaker 2: market in Canada versus the United States, which jurisdiction you
Speaker 2: think is ahead right in accommodating this nascent technology.
Speaker 17: Yeah, the US is definitely ahead of the Canadian market
Speaker 17: in terms of you know, regulatory peace as well as adoption,
Speaker 17: and Canada has to do you know, quite a bit
Speaker 17: to catch up. But there is a lot of excitement
Speaker 17: on the Canadian eical system to make this possible. They
Speaker 17: really understand that this technology has so many benefits from
Speaker 17: safety to you know, all the efficiency that is, sustainability,
Speaker 17: extra sustainability that is going to come with the technology.
Speaker 17: So definitely there is a desire, but the US is
Speaker 17: way ahead of Canada. So we will you know, for us,
Speaker 17: our first market has been over the last couple of
Speaker 17: years for tracking really the US or a march lagger
Speaker 17: market and then we will see a out you know,
Speaker 17: more expansion in the years to come.
Speaker 3: What's interesting is that you've been in AI deeply entrenched
Speaker 3: in the academic side of it, still a full professor
Speaker 3: over in the University of Toronto for twenty five years.
Speaker 4: Is talent everyone is for you people, so know who
Speaker 4: you are.
Speaker 3: They must gravitate towards the expertise you've brought in physical AI.
Speaker 3: But it's getting very expensive. Is that almost what some
Speaker 3: of this funding round is for.
Speaker 17: It's a great, great point, Caroline. So there is definitely
Speaker 17: you know, a lot of you know, talent war for
Speaker 17: EI these days with obviously the revolution that is happening.
Speaker 17: But you know why we can't attract the best in
Speaker 17: class without paying premiums.
Speaker 4: And the reason why is that if you're.
Speaker 17: Interested in physically, if you're interested in you know, bringing
Speaker 17: a product that is you know, you said, once in
Speaker 17: a lifetime or in a generation sort of opportunity to
Speaker 17: really change the world as we know it today, and
Speaker 17: you want to do it with innovative technology that and
Speaker 17: really pushing the industry to the next level, then what
Speaker 17: is the place to be? And that's what you know,
Speaker 17: we have hired divesting class, you know, talent team, and
Speaker 17: we continue to attract the best in class. And you
Speaker 17: know also what attention numbers are of the chart, so
Speaker 17: definitely you know, amassing team and we continue to double
Speaker 17: down in terms of hiring.
Speaker 2: Okay, I have another question about Canada, and you know,
Speaker 2: forgive me, it's just been so much in the news
Speaker 2: recently the ecosystem in Canada. You probably saw that why
Speaker 2: Combinator cut Canada from its list of countries that it
Speaker 2: would invest in startups in what do you make of that?
Speaker 2: And like what is the ecosystem in Canada right now?
Speaker 2: Like on the software and hardware side, do you see
Speaker 2: the talent pool that you need available in your home country.
Speaker 17: Yeah, so I'm not going to comment on you know,
Speaker 17: you know why combinitory specifically, but I will say that,
Speaker 17: you know, there is a vibrant, you know, take an
Speaker 17: ecosystem in Canada. You know, as you as you know,
Speaker 17: Canada has been at the forefront of really all the
Speaker 17: innovation and the majority of the innovation that under pin
Speaker 17: the AI revolution that we're seeing today with folks like
Speaker 17: you know, give Hinton, Nobel, Price, et cetera. Right, So,
Speaker 17: so the talent is there, the CoSystem is there, and uh,
Speaker 17: you know, from my perspective, you know, Wabi is a
Speaker 17: proud Canadian company and there is you know a few
Speaker 17: others that are really leading the way. And it's a mass.
Speaker 17: You know, it's an amazing market. And if you look
Speaker 17: at that list of investors, you know, we have plenty
Speaker 17: from the value plenty for Canada from Canada as well
Speaker 17: as Europe and the even me the list now, so
Speaker 17: you know, I will say that we you know, Canada
Speaker 17: can really attract capital from you know, across the globe
Speaker 17: and and you know it's it's a miss if you don't,
Speaker 17: you don't invest in Canada.
Speaker 5: Thank you.
Speaker 2: Riquel Edison, CEO and founder of WARB closing seven hundred
Speaker 2: and fifty million dollar Series C, taking up to a
Speaker 2: billion dollars with support from Uber to.
Speaker 4: Wool Street.
Speaker 3: Feeling some mixed signals on has ahead of its earnings
Speaker 3: price targets. For the ev maker, they're rising despite investor
Speaker 3: concerns over its earnings potential this year.
Speaker 4: Here with more is Steve Man a Bluemeg Intelligence and
Speaker 4: for Tesla.
Speaker 3: It's always a question of whether you care about the
Speaker 3: fundamentals and the court are just gone, or whether you're
Speaker 3: betting on AI optimists and the future of robotics.
Speaker 6: Yeah.
Speaker 16: I think if you look at the stock price over
Speaker 16: the last quarter, there's definitely some push and pull on
Speaker 16: the stock price. It's been pretty steady where it's at
Speaker 16: at the moment. So there are two camps. One is
Speaker 16: looking at the business fundamentals. You know, sales in the
Speaker 16: fourth quarter was down fifteen to sixteen percent, not you know,
Speaker 16: there's been a lot of pull ahead before the seventy
Speaker 16: five hundred dollars US tax credit went away, so earnings
Speaker 16: are probably not gonna be pretty. But on the other camp,
Speaker 16: you know, investors are really stoked with their cybercav robot
Speaker 16: taxi rollout.
Speaker 2: Steve, in your January twelfth preview, you wrote that twenty
Speaker 2: six is the pivot for AI and robotics, right, and
Speaker 2: that you expect management to talk up those things.
Speaker 5: But what do you actually need to hear?
Speaker 2: What things of substance do you want Musks to say
Speaker 2: on the call that actually will be a driver of
Speaker 2: confidence in the near term, even if that is this year.
Speaker 16: Yeah, I think investors is very anxious about that. You know,
Speaker 16: Elon Musk has talked about you know, the vision system,
Speaker 16: self driving vision system that they're rolling out. There's a
Speaker 16: lot of anticipation because you know, I think the next
Speaker 16: leg for the company is really scaling that business. So
Speaker 16: it's about robotaxi, it's about rolling out the cybercab, the
Speaker 16: new you know, steering wheelless brake, pedaliss vehicle, and the
Speaker 16: f ST subscription. So, I mean there's investors are very
Speaker 16: stoked about this, and they're really looking for Elon mus
Speaker 16: to tell them that, hey, in the next three to
Speaker 16: six months. We are really going to scale it up
Speaker 16: beyond astin.
Speaker 2: See Man of bloom Megan Intelligence. We're all bracing for
Speaker 2: aftermarket today and Tesla. We're also bracing for Meta, which
Speaker 2: reports after the bow. Investors are focused on AI capital
Speaker 2: expenditure plans for twenty twenty six, which analysts say could
Speaker 2: overshadow the company's advertising revenue growth. Luvis Kurt Wagner joins
Speaker 2: us for the details. It's a pretty familiar formula at
Speaker 2: this point. I hand it over to you. Give us
Speaker 2: the Meta earnings preview as best you can.
Speaker 18: I feel like we've been talking about a lot of
Speaker 18: the same stuff for the past year, which is what
Speaker 18: is spending going to look like? And can the company
Speaker 18: paint this picture for investors that all the spending ultimately
Speaker 18: pay off down the line. And you remember it was
Speaker 18: just a year ago that Mark Zuckerberg was saying, hey,
Speaker 18: record spending up to sixty five billion in capital expenditures,
Speaker 18: and everyone's head spun around, you know, crazy to think
Speaker 18: of that. I saw the estimates on the Bloomberg today
Speaker 18: that they think capital expenditures could be one hundred and
Speaker 18: eleven billion dollars for Meta in twenty twenty six, and
Speaker 18: so it's just hard to quantify, you know, easy to
Speaker 18: quantify a harder rager head around the jump we've seen
Speaker 18: and spending from this company in particular as they rush
Speaker 18: toward AI, and there's going to be a lot of
Speaker 18: questions about what the ROI on that is going forward.
Speaker 4: And that is why the stock has taken some hits.
Speaker 3: I mean, initially it was talk up your capex and
Speaker 3: you're rewarded for it, but then in the last innings,
Speaker 3: I'm just looking at the chart of how swiftly they
Speaker 3: fell back in October as maybe we then started to
Speaker 3: be worried about the commitment of capital expenditure.
Speaker 4: How can they steady nerves in other parts of the business.
Speaker 3: What do we need to hear on the bread and
Speaker 3: butter of ads sales?
Speaker 18: And they like, well, I imagine we'll hear them talk
Speaker 18: about how AI is improving ads today, right, and that's
Speaker 18: going to be in automated campaigns, that's going to be
Speaker 18: in better targeting, pretty much anything they can do to show, hey,
Speaker 18: look this this fifty billion dollar data center we're building
Speaker 18: in Louisiana is actually helping our revenue or will help
Speaker 18: our revenue immediately. I think that's going to be very
Speaker 18: important because a lot of their futuristic bets we talked
Speaker 18: about the metaverse on here, virtual reality, even the AI glasses,
Speaker 18: which seem to be going well. I mean, these are
Speaker 18: not driving meaningful revenue to the company, and yet they
Speaker 18: are sucking tons of cash to operate, and so that
Speaker 18: is the trade off. A lot of the big bets
Speaker 18: still haven't materialized on the revenue side just yet. So
Speaker 18: they need to show that AI is continuing to help
Speaker 18: on that ads business.
Speaker 3: Most Kurt Wagner, He's going to be all over them
Speaker 3: post the bell today.
Speaker 4: Thank you. That does it for this meeting edition of
Speaker 4: Bloomberg Tech. So much more to comment.
Speaker 2: Yeah, the mag seven starts in ernest. Today is the
Speaker 2: day and it's the market run up going into it
Speaker 2: kind of got.
Speaker 5: Me on edge, you know, recap on the podcast. Carry's right,
Speaker 5: it was meeting.
Speaker 2: You know where to find it on the Bloomberg platforms online, Apple, Spotify,
Speaker 2: and iHeart. I know I'll be at my desk after
Speaker 2: the market bell. I know what I'm bracing for. Question
Speaker 2: is will you be back with us? This is Bloomberg
Speaker 2: Tech