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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: The big earning story of the day is in Vidia

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Speaker 2: put out a really, really solid number but being caught

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Speaker 2: up in the downdraft. Continued downdraft selling of technology, in

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Speaker 2: particular software kind of AI themed names more specifically Kunjan Sobani.

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Speaker 2: He is the senior analyst covering the semiconductor companies for

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Speaker 2: Bloomberg Intelligence. He's based out in our San Francisco office.

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Speaker 2: I'm just reading your research note here. Give us a

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Speaker 2: sense of how you think the quarter went for Nvidia.

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Speaker 3: Yeah, this was one of the more stronger quarter showings

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Speaker 3: if you look at the last four quarters. The one

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Speaker 3: Q guide is the next quarter guide blew off most

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Speaker 3: of the high bar of the byside bogies that we

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Speaker 3: think the buyside was at. There was really nothing negative

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Speaker 3: to find, even if we go through a fine core

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Speaker 3: in this quarter and print, there were a couple of

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Speaker 3: positives that we really liked. One is the revenues from

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Speaker 3: their customers outside of the top five CSP and hyper

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Speaker 3: scales grew actually faster than those five customers. When we

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Speaker 3: look at the whole PHISS last fiscal year, that group

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Speaker 3: grew almost close to the top five. So all the

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Speaker 3: focus always goes to the top five, but this really

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Speaker 3: speaks to the breadth and the quality and the diversification

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Speaker 3: of demand for n media products, which is a good

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Speaker 3: robust side. Second thing we really liked is networking. So

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Speaker 3: if we look at the four Q numbers, majority of

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Speaker 3: the beat in data center was coming from networking. Their

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Speaker 3: networking attached continues to get stronger and honestly surpassing expectations

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Speaker 3: of what investors have or the networking division. And the

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Speaker 3: final thing we really liked was the gross margins. We

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Speaker 3: all are aware of the rising memory cost, the rising

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Speaker 3: way for the rising substrate cost. Despite all of these costs,

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Speaker 3: which the company does not pass through to its customers,

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Speaker 3: so sort of in a way eats that cost, they're

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Speaker 3: able to maintain this ridiculously high software level gross margins

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Speaker 3: for a hardware company.

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Speaker 4: What about growth and other segments like automotive or edge computing?

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Speaker 4: How important are those when it comes to the company's

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Speaker 4: long term earnings profile.

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Speaker 3: I don't think right now anyonus focus on those when

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Speaker 3: you look at the scale, I mean, majority of the

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Speaker 3: revenues coming from the data center, right, so they don't

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Speaker 3: really move a needle a lot. Automotive, however, will become

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Speaker 3: very critical when you think about the next three to

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Speaker 3: five years, because once we get to the stage where

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Speaker 3: we have a massive deployment of L three plus L

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Speaker 3: four plus automobiles on the road, not just in the US,

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Speaker 3: but also in China, this is where you know, this

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Speaker 3: could bring in tens of billions of dollars of revenue

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Speaker 3: for for Nvidia.

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Speaker 2: So what are we How should we think about China here?

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Speaker 2: Because I can't keep track. I don't know what chip's

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Speaker 2: allowed in, not allowed in, how long it will be

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Speaker 2: allowed in. Is the company just saying we're just going

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Speaker 2: to step back until we get greater clarity.

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Speaker 3: Yeah, And that's not just with Nvidia, it's with all

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Speaker 3: a chip makers. Right now, I mean for the last

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Speaker 3: I guess twelve two to three quarters, nobody's been able

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Speaker 3: to ship to China right, so on there's two factors,

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Speaker 3: A US allowing them to chip to China and then

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Speaker 3: also once that happens, will China accept these chips or not?

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Speaker 3: So until that issue is completely resolved, the street has

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Speaker 3: taken out numbers. Companies have taken out those numbers. They're

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Speaker 3: just not talking and you know, not thinking about that

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Speaker 3: right now.

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Speaker 4: So it's been a blowout quarter. Any risk that investors

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Speaker 4: should be watching that might effect grows and margins in

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Speaker 4: the next quarters.

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Speaker 3: Nothing specific to the company. What has really been hampering

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Speaker 3: the sentiment is this overall AI for TIG. I mean, look,

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Speaker 3: on one hand, the top customers who are announcing these

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Speaker 3: big capex raises are getting punished because they're spending too much, right,

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Speaker 3: So you can't have it both ways. Where the same

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Speaker 3: investors who don't like this spending too much from the

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Speaker 3: customers and Vidia is getting rewarded because of high capex

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Speaker 3: spend will also keep on getting rewarded. So there is

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Speaker 3: this AI fatigue that how long can you keep on

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Speaker 3: increasing this spend and what happens next year? Every year

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Speaker 3: when these numbers go up, a question comes about, well

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Speaker 3: can you keep going making them go up again next year? No?

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Speaker 2: No, I'm looking at the chip stocks, Kunjohn, your list

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Speaker 2: is looking really good here Advanced micro Devices and Intel

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Speaker 2: both up ninety percent and Vidia forty percent all on

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Speaker 2: trailing twelve month basis. Are tech investors software investors? Are

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Speaker 2: they hining out in you? Chip names?

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Speaker 3: Well, chip names definitely are doing better from a sector

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Speaker 3: perspective overall in the tech and for the obvious reasons.

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Speaker 3: When you now look at the EPs growth prospects, the

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Speaker 3: revenue growth prospects, right, A significant big portion of now

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Speaker 3: that in the next two to three years is definitely

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Speaker 3: coming to the chip name. So fundamentally a good spot

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Speaker 3: to be in.

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Speaker 2: I would say, what's the uh, what's the the next

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Speaker 2: play here for the chip space? Here? Is it simply iterating, iterating, iterating,

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Speaker 2: iterating on new chips and that drives the longer term

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Speaker 2: revenue Outlook.

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Speaker 3: Yeah, exactly what you said. Look, when we think about

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Speaker 3: the markets where AI has already proliferated, which is really

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Speaker 3: data centers, is just keeping up, you know, iterating to

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Speaker 3: make the compute more efficient, so we can reach the

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Speaker 3: stage where all this AI capex spending is no longer

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Speaker 3: a concern because the customers are able to monetize from that.

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Speaker 3: The second big wave will come from markets where AI

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Speaker 3: has not yet prolifitted. So think of your edge device,

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Speaker 3: your smartphones, your PCs, think of your automotive vehicles. Right,

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Speaker 3: So this will be the new vectors of secular growth

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Speaker 3: for the chip names where if AI proliferates faster here

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Speaker 3: they can start collecting a lot more revenue.

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Speaker 4: So just very quickly. How confident are you that this

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Speaker 4: demand will remain strong so at twenty twenty six and beyond.

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Speaker 3: So from the visibility that the Nvidia and its peers

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Speaker 3: have announced, it definitely looks like for the chip guys

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Speaker 3: at least until first half twenty twenty seven, is sort

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Speaker 3: of locked in and pretty safe unless something major macro

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Speaker 3: or geopolitical event doesn't happen beyond you know, starting second

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Speaker 3: half twenty seven. We don't have a lot of risk

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Speaker 3: modeled in, but that is something we cannot say, but

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Speaker 3: for sure that it's locked in already.

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Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: We are fortunate here at Bloomberg to speak. Some of

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Speaker 2: the really the smartest people out there in the marketplace

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Speaker 2: are our next guest certainly qualify. It's been so kind

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Speaker 2: to give us time over the years to help us

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Speaker 2: get up. You know what's going on in the world

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Speaker 2: of technology, and that's Genemunster, Managing partner for Deepwater Asset Management. Gene,

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Speaker 2: let's just start with I guess the topic of the day,

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Speaker 2: which is in Vidia. You know, I know you tech

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Speaker 2: guys look for the beaten raised type of thing, and

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Speaker 2: I think that's what we got here. What do you

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Speaker 2: make in Vidia's report, Gene.

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Speaker 5: Well, there's like three orbits here, Paul. There's the reaction

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Speaker 5: the report, the reaction to the report, there's the fundamentals.

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Speaker 5: Then there's kind of the AI trade. So there are

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Speaker 5: three different orbits. And maybe specifically on the stock being down,

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Speaker 5: we'll call it five percent today on what objectively was

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Speaker 5: better than the whisper numbers, and some want to zero

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Speaker 5: in on what the key whisper was. That was revenue

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Speaker 5: growth for the April quarter. The street was in print

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Speaker 5: at sixty four percent. The whisper was that they were

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Speaker 5: going to guide to around seventy percent, and they guided

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Speaker 5: to seventy nine percent. It's the high end of their range.

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Speaker 5: And so if you put the together, that's kind of

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Speaker 5: why you got that first like up three percent kind

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Speaker 5: of reaction when the when initially the numbers hit, the

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Speaker 5: guidance hit, and so, like you said, it's about beating rays,

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Speaker 5: beating the whispers specifically. So how do you make sense

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Speaker 5: if that is in fact the case? How do you

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Speaker 5: make sense of what the stock is doing? And I

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Speaker 5: think part of it comes down to there is this

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Speaker 5: broader narrative just around this company is just getting too big.

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Speaker 5: There is also the piece that some of this, like

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Speaker 5: I mentioned, is that the whisper number was higher than

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Speaker 5: the imprint numbers. Shares of Nvidia since we saw Google

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Speaker 5: and Amazon ramp up their capex commentary three weeks ago,

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Speaker 5: Shares Nvidia, even with the sell off today are up

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Speaker 5: about eight percent now. That compares to the Nasdaq which

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Speaker 5: is up about two percent. So essentially some of this

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Speaker 5: was priced in even though they beat the numbers. I

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Speaker 5: think that's really some important context. But if I may

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Speaker 5: just kind of even zoom back even further and look

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Speaker 5: at the broader narrative around in Nvidia is since October

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Speaker 5: twenty eighth, that's when Meta shares got hit because of

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Speaker 5: their big CAPPAX guide and kind of change the narrative

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Speaker 5: in terms of how investors think about AI infrastructure since

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Speaker 5: October twenty eighth, and the NASAQ is down about four

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Speaker 5: percent and shares of Nvidia are down ten percent, even

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Speaker 5: though the numbers have gone up, call it thirty percent

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Speaker 5: since then. And so what you're really seeing here is

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Speaker 5: this continued skepticism that investors have specifically about the sustainability

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Speaker 5: of the trade. And I don't think it's any commentary

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Speaker 5: about the strength of the fundamentals, but I think that's

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Speaker 5: what we're seeing with the share price reaction this morning.

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Speaker 4: I think it's also because Nvidia has a huge mote

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Speaker 4: in training because if it's GPU, but when it comes

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Speaker 4: to inference, not so much. And I feel like that's

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Speaker 4: where AMD is a competitor and Broadcom with its custom chips,

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Speaker 4: and maybe that's where the disappointment came from, at least

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Speaker 4: when we're seeing this morning, well you.

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Speaker 5: Know this that all plays in to this longer narrative,

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Speaker 5: which had less to do about what was said on

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Speaker 5: the call last night and so what you're tapping into

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Speaker 5: is as inference, and I just want to quickly frame

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Speaker 5: in inference for those listeners who may not be as

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Speaker 5: familiar with that. A lot of the AI infrastructure spend,

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Speaker 5: of course, has been related to training. The inference piece

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Speaker 5: is that's really the substance of what AI is. Think

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Speaker 5: of AI's inference inferences. Thinking that piece is there's debates

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Speaker 5: about what are the most what are the optimal chips,

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Speaker 5: the optimal GPUs you need for that. And my sense

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Speaker 5: is that as part of the conversation, I think in

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Speaker 5: video is going to be in a great place. I

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Speaker 5: suspect that they're going to grow and count, So I

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Speaker 5: think inference is going to be huge opportunity. I want

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Speaker 5: to just quickly frame in how big inference is that

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Speaker 5: you can have multiple winners here if you look at

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Speaker 5: the size of inference, Jensen talks about being potentially a

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Speaker 5: thousand times bigger than what traditional compute is. What we're

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Speaker 5: seeing in our own use of AI internally is we're

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Speaker 5: seeing tens of thousands of times more use of tokens

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Speaker 5: when it comes to inference. And so inference is this

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Speaker 5: scary topic because for some Nvidia investors because this competitive

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Speaker 5: dynamic comes up. Do you need less power chips? But

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Speaker 5: the reality is the amount of chips still, the amount

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Speaker 5: of AI infrastructure that's going to be needed to power

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Speaker 5: this over the next decade, I think is being grossly

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Speaker 5: underestimated by investors.

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Speaker 2: Gene, you've been covering this technology industry for decades. You've

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Speaker 2: seen everything. I want to ask you, based upon your experience,

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Speaker 2: how do you think about what's happening in the software

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Speaker 2: side of the business right now? Stock selling off, particularly

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Speaker 2: the software is a service stocks like a software Salesforce

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Speaker 2: dot Com Really under the guys that wait, AI is

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Speaker 2: going to really disrupt this software business. How do you

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Speaker 2: put that into context for people?

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Speaker 5: So I think that for those who are reading the

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Speaker 5: headlines and looking at the stock reaction to these earnings,

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Speaker 5: I think kind of the substance of what's going on

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Speaker 5: underneath the hood is being missed. It's really hard for

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Speaker 5: I think that audience to really grasp the improvement that

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Speaker 5: these models have had over the past three months. Of course,

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Speaker 5: open claw and claud code claw work are kind of

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Speaker 5: the signature products that have caused some of that breakthrough,

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Speaker 5: But that change has had what I think is going

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Speaker 5: to have a profound impact on software, and the way

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Speaker 5: we've been investing around it is we've lowered our exposure

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Speaker 5: to seat based software companies because ultimately, if this is right,

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Speaker 5: that knowledge work is going to be impacted, there will

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Speaker 5: be less seats out there. AI agents don't purchase seats,

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Speaker 5: and separately that the usage based models. So we're still

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Speaker 5: holders of companies like data Dog and Snowflake, and so

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Speaker 5: those models I think are going to do well. So, Paul,

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Speaker 5: the answer is is that software is at a profound crossroad.

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Speaker 5: And I don't think that all software has created equal

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Speaker 5: I think the usage based models, but I would say

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Speaker 5: that software needs to do something that we still haven't seen,

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Speaker 5: even with the Salesforce results last night. We need to

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Speaker 5: see these software companies stand up and basically punch back

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Speaker 5: at AI. They haven't done that. That's exactly what Google

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Speaker 5: did in the June quarter last year when they showed

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Speaker 5: that they can use generative AI to their advantage and search.

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Speaker 5: They really short circuited that negative narrative. And until software

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Speaker 5: companies can say, look at our seat growth moving higher,

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Speaker 5: look at how our RPU is per user is improving,

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Speaker 5: until they really have that flex that stand up. I

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Speaker 5: think that this narrative, this negative narrative around software is

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Speaker 5: going to persist.

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Speaker 2: Gene, Thank you so much yet again. Gene Mounster, Managing partner,

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Speaker 2: Deepwater Asset Management. He was one of the first folks

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Speaker 2: that kind of got helped me understand what AI is,

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Speaker 2: and now I kind of get a little bit of

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Speaker 2: a better understanding of what the potential threat for software

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Speaker 2: can be when you think about the seat licenses and

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Speaker 2: that could be a weakness for some of that revenue model. There.

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Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg and Tellen's podcast. Catch us

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Speaker 1: Live weekdays at ten am Eastern on Apple Coarclay, and

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Speaker 1: Android Auto with the Bloomberg Business App. Listen on demand

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Speaker 1: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 2: For months, we've been talking about the potential sale of

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Speaker 2: Warner Brothers Discovery, either to Netflix or to Paramount Skydance,

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Speaker 2: and we're going to get the latest on that because

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Speaker 2: there has been some movement, but these two companies actually

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Speaker 2: reported results and let's get the latest. There Etherrong Andath

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Speaker 2: and she's the media analyst of Bloomberg Intelligence. Ether will

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Speaker 2: get the deal update in a minute, but just give

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Speaker 2: us a sense of how these two companies are performing

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Speaker 2: on their own.

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Speaker 6: I mean, I think you've summed it up perfectly, Paul.

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Speaker 6: You know, you said it's a good thing that Warner

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Speaker 6: Brothers Discovery is being sold, and that's absolutely right. I mean,

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Speaker 6: you look at the TV network's division. This has been

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Speaker 6: the problematic division for all of these media companies. TV networks.

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Speaker 6: Ibada slumped something like twenty seven percent in the fourth quarter.

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Speaker 6: You look at the whole of twenty twenty five, you know,

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Speaker 6: Ibada for that segment is down twenty one percent. Writing

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Speaker 6: is on the wall. I mean, this is why this

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Speaker 6: company is up for sale. It's very clear. And you know,

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Speaker 6: I think really what everybody is going to be worried

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Speaker 6: about is what is the outlook should the spin happen,

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Speaker 6: Should Discovery Global be spun out into a separate company,

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Speaker 6: What really is the outlook for the TV network business?

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Speaker 6: And again we saw kind of very similar results with

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Speaker 6: Paramount as well. Yes, they're making, you know, the best

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Speaker 6: of what they can, but again the fundamentals themselves are

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Speaker 6: pretty weak.

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Speaker 2: Across the board.

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Speaker 4: Management also flagged the multi billion dollar efficiency program. How

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Speaker 4: should investors think about the trade offs between short term

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Speaker 4: cost and long term profitability for these initiatives.

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Speaker 6: Yeah, this is what we've always been worried about. I mean,

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Speaker 6: we've seen, you know, this story play out multiple times

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Speaker 6: Isabelle in all of these media companies, and yes, there's

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Speaker 6: always synergies and there's always efficiencies to be extracted, but

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Speaker 6: it does come at the expense of long term growth.

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Speaker 6: We've seen that with Warner Brothers Discovery. You know, they

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Speaker 6: came out with very aggressive synergy targets and yes, they

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Speaker 6: were able to deliver on a lot of those, but

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Speaker 6: then it did kind of hamper their growth prospects, especially

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Speaker 6: you know in the TV networks business, where we've seen

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Speaker 6: a significant deterioration in the fundamentals in the outlook. So

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Speaker 6: that is always there's you know, it's a very very

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Speaker 6: tricky balancing act. There's a very you know, they have

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Speaker 6: to walk this really this tie trope. Again. The whole

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Speaker 6: deal with Warner Brothers Discovery for Paramount is predicated on

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Speaker 6: something like about six to eight billion dollars in synergies.

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Speaker 6: So you know, we'll we'll see how all of that

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Speaker 6: plays out. But Yeah, it's going to be a tough

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Speaker 6: road ahead regardless of whether they win or they don't.

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Speaker 2: What is the update on the deal mechanics, ETHA, Where

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Speaker 2: are we right now?

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Speaker 6: Yeah, So it was really interesting policy. In Paramount's earnings

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Speaker 6: release yesterday, they said that, you know, there's a good

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Speaker 6: chance of the Paramount thirty one dollars per share offer

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Speaker 6: for all of Warner Brothers Discovery being deemed a superior proposal.

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Speaker 6: And we've seen of Paramount rally a little bit on that.

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Speaker 6: We've also seen actually Netflix rally on that. I think

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Speaker 6: investors are becoming more and more comfortable with Netflix kind

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Speaker 6: of walking away from this deal. So again, a lot

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Speaker 6: to play out here, But there hasn't been any official

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Speaker 6: word just yet from the Warner Brothers Discovery board about whether,

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Speaker 6: you know, the Paramount proposal is in fact superior.

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Speaker 4: It seems like it's still a story that we're going

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Speaker 4: to be following closely. Paramount also offered modest revenue growth

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Speaker 4: targets for twenty twenty six. What key drivers do you

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Speaker 4: think will determine whether the company meets that outlook or

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Speaker 4: exceeds that outlook or even surprise investors perhaps.

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Speaker 6: I mean, so the organic growth outlook Isabelle. Yes, they're

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Speaker 6: trying to do their best. Remember they did you know

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Speaker 6: this is this is also a merged company paramount. You know,

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Speaker 6: they just recently acquired sky Dance, so they're trying to

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Speaker 6: do the best with you know, those new film assets.

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Speaker 6: But again, you know, if you just kind of look

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Speaker 6: at it across the board, you know, in the context

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Speaker 6: of the entire media landscape, it's still a very very

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Speaker 6: subscale company. Whether we're looking at streaming numbers you know,

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Speaker 6: about eighty million subscribers versus almost three hundred and twenty

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Speaker 6: three hundred and thirty million for Netflix, or whether you're

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Speaker 6: looking at the film business or even the TV business.

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Speaker 6: Everything is fairly subscale. So they definitely need some kind

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Speaker 6: of an m and a strategy. Obviously, Warner would be

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Speaker 6: perfect if it happens. If it doesn't, we'll have to

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Speaker 6: wait and watch. But you know, they're doing their best

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Speaker 6: that they can from an organic growth perspective, I just

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Speaker 6: don't think it's going to be enough.

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Speaker 2: Do you think Netflix will walk away? That would be

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Speaker 2: pretty bold.

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Speaker 6: They should, you know, collect they should collect the collected

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Speaker 6: to almost three billion dollars in termination fear. I mean,

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Speaker 6: this is really I mean, you know, you think about

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Speaker 6: this PALL in the long term. Yes, it's a great

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Speaker 6: asset to have, there's no doubt about it. But there's

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Speaker 6: it also comes with a tremendous amount of risk, not

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Speaker 6: to mention the biggest one being regulatory. So that's going

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Speaker 6: to be a big, big overhang, you know, for the

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Speaker 6: next twelve to eighteen months, and and of course after

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Speaker 6: that you have integration execution risks. So it's by no

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Speaker 6: means is it going to be you know, a Rosie

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Speaker 6: path ahead. I actually think Netflix will be better off

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Speaker 6: on its own.

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Speaker 2: Stay with us more from Bloomberg Intelligence coming up here

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Speaker 2: For this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: We are here in York City at the Bloomberg Interactive

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Speaker 2: Brokers Studio, streaming live on YouTube as well. Earning season

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Speaker 2: well in gear here and that includes Magna International Chicker MGA.

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Speaker 2: Magna is one of the world's largest automotive suppliers headquartered

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Speaker 2: in Ontario, Canada. Joining us today is Swami Kota Geary,

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Speaker 2: CEO of Magna International. Swami, thanks so much for joining

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Speaker 2: us here. I know you guys recently released earnings. What

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Speaker 2: can you tell us about your earnings that you just released,

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Speaker 2: maybe your outlook that you shared with your investors.

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Speaker 7: Good morning, Paul, Thanks for having me. You know, we

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Speaker 7: finished really the fourth quarter was strong, helped us finish

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Speaker 7: the year twenty twenty five in a strong way, setting

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Speaker 7: us up really good for twenty twenty six. We delivered,

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Speaker 7: you know, good cash flow. We hit the margin range

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Speaker 7: of five point six percent in EBIT that we talked about,

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Speaker 7: which set us up really good for twenty twenty six.

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Speaker 7: We are forecasting an EBIT range of six to six

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Speaker 7: point six. We are confident in the cash flow generation

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Speaker 7: and actually converting the earnings to cash. So we gave

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Speaker 7: a clear indication that we're going to be returning value

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Speaker 7: to the shareholders in the form of repurchase of twenty

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Speaker 7: four million shares in twenty twenty six, and all this

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Speaker 7: in a flat wallume as you see in our automotive industry,

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Speaker 7: that is the result of operational excellence and capital allocation discipline.

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Speaker 7: We have been doing this for the last three years

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Speaker 7: thirty five to forty BIPs annually, So if you take

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Speaker 7: twenty twenty six into account, this is the fourth year

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Speaker 7: running and our total margin expansion would adapt to about

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Speaker 7: two hundred basis points. So all in all, we feel

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Speaker 7: pretty good. It is a structural change in the operating

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Speaker 7: methodology and how we set our cost basis to the

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Speaker 7: reality of the industry today. So all in all, we

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Speaker 7: feel pretty good about twenty six.

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Speaker 4: With global auto production expected to stay flat, how realistic

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Speaker 4: is a midteen's profit growth this year?

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Speaker 7: Yeah, I think, Like I said, the key of the

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Speaker 7: margin expansion has been operational excellence from our site. It

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Speaker 7: is actually controlling the control of as we said. And

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Speaker 7: on top of that, we are going through digitization process

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Speaker 7: where eighty percent of the plants are online on a

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Speaker 7: unified platform, which gives real good operational visibility for us,

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Speaker 7: looking at every little detail, how the lines are running,

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Speaker 7: what are the stoppages, how is the material flowing? Every

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Speaker 7: penny counts, So all of this is what has helped

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Speaker 7: us add the margin expansion in the last three years,

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Speaker 7: and we have good visibility, not just for this year.

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Speaker 7: We believe it's still early innings. Going into next year.

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Speaker 7: So time part really was you know, working through the inflation,

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Speaker 7: right it started in twenty twenty two, and we have

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Speaker 7: started coding jobs in twenty two, twenty three, twenty four

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Speaker 7: with new economic terms. The new programs are rolling in.

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Speaker 7: So a combination of self help and new economic terms

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Speaker 7: is what gives the you know, incremental margins that we're

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Speaker 7: talking about.

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Speaker 2: Swami talked to us about terrors, how they have impacted

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Speaker 2: your company, what changes you have made, or what to

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Speaker 2: deal with the tariff situation.

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Speaker 7: So to samitap last year we had roughly ten basis

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Speaker 7: points of impact. The actual tariff impact was somewhere in

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Speaker 7: the range of one hundred and seventy million for the

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Speaker 7: nine months because you know, it started in April. First.

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Speaker 7: We have been able to mitigate, you know, with some

436
00:23:28,880 --> 00:23:32,240
Speaker 7: of our own actions, working with our customers and then

437
00:23:32,320 --> 00:23:37,600
Speaker 7: staying USMCA compliant, increasing the USMCA compliance going forward. So

438
00:23:37,640 --> 00:23:40,600
Speaker 7: all in all, in twenty twenty six, we believe it

439
00:23:40,600 --> 00:23:44,320
Speaker 7: will be in the same range. The annual impact given

440
00:23:44,440 --> 00:23:47,240
Speaker 7: everything as we know today stays it's about two hundred

441
00:23:47,240 --> 00:23:50,520
Speaker 7: million or so. But we believe we can mitigate, continue

442
00:23:50,520 --> 00:23:53,200
Speaker 7: to work with our customers and so on and so forth.

443
00:23:53,960 --> 00:23:56,320
Speaker 7: So the net impact still would be in the range

444
00:23:56,320 --> 00:23:57,960
Speaker 7: of twenty five to thirty million this year.

445
00:23:59,000 --> 00:24:01,600
Speaker 4: How much of the growth would come from higher content

446
00:24:01,640 --> 00:24:06,159
Speaker 4: per vehicle, especially as Detroit, for example, shifts towards larger

447
00:24:06,160 --> 00:24:07,920
Speaker 4: pickups and SUVs.

448
00:24:08,960 --> 00:24:12,760
Speaker 7: Yeah, I think part of the margin increments that you're

449
00:24:12,800 --> 00:24:15,440
Speaker 7: seeing is the mix and the new programs coming in

450
00:24:15,600 --> 00:24:18,400
Speaker 7: and the change in content per vehicle. But a good

451
00:24:18,440 --> 00:24:21,360
Speaker 7: point to note might be we have been doing this

452
00:24:21,440 --> 00:24:26,000
Speaker 7: for the last twenty years. The growth over market has

453
00:24:26,040 --> 00:24:28,879
Speaker 7: been about We've been growing about four percent a year.

454
00:24:28,960 --> 00:24:30,840
Speaker 7: If you look at a ten year period. For the

455
00:24:30,920 --> 00:24:33,520
Speaker 7: last five years, we've been growing at twenty half percent.

456
00:24:34,359 --> 00:24:37,760
Speaker 7: So all in all, we continue to grow in low

457
00:24:37,840 --> 00:24:40,439
Speaker 7: single digits. I would say if you take a longer

458
00:24:40,440 --> 00:24:44,280
Speaker 7: period of time, one data point which will help you

459
00:24:44,320 --> 00:24:48,119
Speaker 7: give context. Twenty years ago, Magna was a twenty billion

460
00:24:48,160 --> 00:24:52,040
Speaker 7: dollar company and North America was producing fifteen million units

461
00:24:52,040 --> 00:24:55,840
Speaker 7: in production today roughly the same production as you know,

462
00:24:55,960 --> 00:24:58,320
Speaker 7: fifteen to fifteen and a half, and we are a

463
00:24:58,359 --> 00:25:01,480
Speaker 7: forty billion dollar company, right, So all this came through

464
00:25:02,080 --> 00:25:05,880
Speaker 7: diversifying our customer base and increasing our content per.

465
00:25:05,920 --> 00:25:12,000
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00:25:12,160 --> 00:25:16,080
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00:25:16,359 --> 00:25:19,639
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