WEBVTT - Instant Reaction: Microsoft & Meta Soar After Strong Earnings

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. This is a breaking

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<v Speaker 1>news update from Bloomberg, instant reaction and analysis from our

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<v Speaker 1>three thousand journalists and analysts around the world.

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<v Speaker 2>We've got Meta platforms, Microsoft both out with earnings. Those

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<v Speaker 2>are the big ones. There's a lot that are out there,

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<v Speaker 2>but we want to get to We've got great team

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<v Speaker 2>coverage here at Bloomberg and also some great outside voices.

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<v Speaker 3>So let's get to it with Dan Ives.

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<v Speaker 2>He's managing director and senior equity analyst and global head

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<v Speaker 2>of Technology Research at Webbush Securities. We're going to start

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<v Speaker 2>with Meta. Let's talk about it. The stocks up about

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<v Speaker 2>eight and a half percent a year in the aftermarket.

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<v Speaker 2>What do you like and what don't you like? Do

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<v Speaker 2>you not like anything?

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<v Speaker 4>There's nothing not to wy.

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<v Speaker 1>I like book.

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<v Speaker 4>It speaks to.

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<v Speaker 5>You.

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<v Speaker 4>Go through this AI revolution, it's in his next stage

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<v Speaker 4>of growth. And all the money that you're seeing these

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<v Speaker 4>big tech players hat bocsw you're ultimately starting to see

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<v Speaker 4>some of those differdence get paid. And then you think

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<v Speaker 4>about the advertising growth and of what we saw with Alphabet,

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<v Speaker 4>what you see with meta subscriber growth. I mean this

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<v Speaker 4>it's goldilocks.

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<v Speaker 1>You know, for for tech, how how does Meta harness

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<v Speaker 1>AI to make money? Apart from making its advertising more efficient, It's.

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<v Speaker 4>About the billions of users. It's about going forward, how

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<v Speaker 4>they're going to monetize AI. They're not just spending to spend.

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<v Speaker 4>They're going to be able to monetize from an advertising perspective.

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<v Speaker 4>When you think about the billions of users.

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<v Speaker 1>They have, that's how do they do that?

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<v Speaker 5>Though?

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<v Speaker 4>Dan, And the reason Zuckerberg right now is what I

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<v Speaker 4>do is like a wartime CEO. It's the view that

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<v Speaker 4>when you think about AI today, this is just the beginning.

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<v Speaker 4>You're gonna and you're gonna have AI driven search, You're

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<v Speaker 4>going to have sort of the future that Meta alphabet

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<v Speaker 4>are going to play huge pieces in the advertising piece.

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<v Speaker 3>But I want to.

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<v Speaker 2>Go so it's just advertising that that's where they're going

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<v Speaker 2>to make all their money back. We know that they

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<v Speaker 2>have been on such an aggressive AI talent grab and

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<v Speaker 2>you know Meta.

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<v Speaker 1>Has hundreds of millions of dollars, Yeah, like pay individuals.

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<v Speaker 2>So there that's all going to pay off their return

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<v Speaker 2>on just the beginning.

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<v Speaker 4>Okay, advertising advertising just to begin when you think about

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<v Speaker 4>full what I've used sort of like fully GI and

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<v Speaker 4>it was like the Holy graul. What Meta is trying

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<v Speaker 4>to build, what every big tech player is trying to build,

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<v Speaker 4>Meta is basically, we're going to create a whole nother

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<v Speaker 4>company over the next decade. That's what they're spending on.

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<v Speaker 1>This is what I'm still waiting for, like you know,

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<v Speaker 1>meta platforms. Look, no question, this was in a credible quarter.

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<v Speaker 1>The stock is up nine point three percent in the

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<v Speaker 1>after hours. Just to repeat the numbers. Second quarter earnings

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<v Speaker 1>per share a huge beat, seven dollars and fourteen cents,

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<v Speaker 1>the estimus for five dollars and eighty nine cents. Second

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<v Speaker 1>quarter revenue a huge beat, forty seven point five billion dollars,

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<v Speaker 1>the estimus for forty four point eight billion dollars. Third

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<v Speaker 1>quarter revenue forty seven point five to fifty point five billion,

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<v Speaker 1>that's the outlook. The estimate was for below that at

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<v Speaker 1>forty six point two billion. But I want, Dan, I

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<v Speaker 1>want to look with you years out when the hardware

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<v Speaker 1>that they're working on that they're spending billions of dollars

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<v Speaker 1>on will start paying dividends. What does that future look

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<v Speaker 1>like for Meta users and for Meta investors?

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<v Speaker 4>And you have to think about it like, what's the

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<v Speaker 4>future in terms of robotics, in terms of software, in

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<v Speaker 4>terms of how AI is going to play a role

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<v Speaker 4>in the every day of a consumer. I mean Meta

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<v Speaker 4>is thinking not in the next year, three, five, eight,

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<v Speaker 4>ten years out.

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<v Speaker 2>I want to bring in man deep saying if I

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<v Speaker 2>may of our Bloomberg intelligence team.

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<v Speaker 3>I don't know if it's too soon.

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<v Speaker 2>I know you're going through all the numbers because I

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<v Speaker 2>want to bring into the conversation with.

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<v Speaker 3>Dan good quarter killer quarter. How do you see it

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<v Speaker 3>for that?

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<v Speaker 6>Yeah, I mean there is a sequential acceleration in ad

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<v Speaker 6>impressions as well as ad pricing growth, and to my mind,

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<v Speaker 6>there is a sign of them applying AI to boost engagement. Obviously,

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<v Speaker 6>the user growth has been almost the same every quarter,

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<v Speaker 6>you know, four to five percent, So the fact that

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<v Speaker 6>impressions grew eleven percent is a sign that people are

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<v Speaker 6>spending more time on their family of apps. And then

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<v Speaker 6>the ad pricing going up nine percent, That to me

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<v Speaker 6>is the real tailwind, because that was the risky part.

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<v Speaker 6>Chinese advertisers like Timu and Cheen pull it back because

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<v Speaker 6>of the Deminimus rule changes that didn't happen, that didn't

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<v Speaker 6>show up in the numbers, and look when it comes

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<v Speaker 6>to applying AI. I mean small advertisers are now connecting

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<v Speaker 6>META to their CRM systems and actually that is what's

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<v Speaker 6>driving the at targeting and efficiency. That wasn't the case before.

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<v Speaker 6>That has been enabled by JENNYI. So that's why you

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<v Speaker 6>see that list.

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<v Speaker 3>Do you agree with Dan?

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<v Speaker 6>I think jenny I use case is quite prominent. We

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<v Speaker 6>keep hearing about coding agents, customer service. Here is the

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<v Speaker 6>precise use case for meta, and that is what they

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<v Speaker 6>are showing in their ad pricing numbers.

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<v Speaker 1>Dan, come on in I saw you. You're saying something

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<v Speaker 1>that sounds like that.

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<v Speaker 4>Sounds like a bullish man deep. I mean that's probably

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<v Speaker 4>on the man deep scale. That's that's pretty both.

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<v Speaker 1>I like that. Hey, Dan, I noticed something striking today

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<v Speaker 1>when I opened up Instagram. I was searching for a

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<v Speaker 1>video from Mike Berbigley, a comedian who I really like.

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<v Speaker 1>And what I noticed when I was just I was

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<v Speaker 1>just looking for his profile. When I typed in his name,

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<v Speaker 1>what appeared was as an AI answer about a biography

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<v Speaker 1>of who he was. Information about him is the goal?

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<v Speaker 1>What is the vision for Instagram? Is this going to

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<v Speaker 1>be metas super app.

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<v Speaker 4>I mean to some extent, they're basically creating a super

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<v Speaker 4>I mean similar to what you see in China, but

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<v Speaker 4>an AI driven super Adit that's and you start to

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<v Speaker 4>go through that, you look in at a four digit stop.

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<v Speaker 1>They tried to do this years ago with David Marcus

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<v Speaker 1>on the messenger side. Man Deep, it didn't necessarily work.

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<v Speaker 1>It was supposed to be payments and everything. Is that still,

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<v Speaker 1>in your view, an area of growth for the company

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<v Speaker 1>here or is that strategy gone?

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<v Speaker 6>I mean right now, it feels like they have a

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<v Speaker 6>lot of runway with ads and there is a clear

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<v Speaker 6>use case for Jenni with ads. I mean, they still

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<v Speaker 6>have to fix the model. So I think the advantage

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<v Speaker 6>that they have is really they are the best when

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<v Speaker 6>it comes to at targeting and know with everything that's

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<v Speaker 6>going on, I mean, they have the surface area to

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<v Speaker 6>apply jen Ai. But look when it comes to payments

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<v Speaker 6>and other areas, they still lack the diversification of a

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<v Speaker 6>Microsoft or a Google. It's still a one trick set.

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<v Speaker 6>I mean, albeit a two dollar company, yees still dependent

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<v Speaker 6>on ads.

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<v Speaker 1>Dan.

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<v Speaker 2>You know, it's funny because I was thinking about that

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<v Speaker 2>because we you know, we talk about all of these companies,

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<v Speaker 2>and I think about the hyperscalers like an alphabet. We've

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<v Speaker 2>talked about that a lot man deep about just all

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<v Speaker 2>of their different platforms and how much data that gives

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<v Speaker 2>them to make their model smarter and smart smarter. I mean, Dan,

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<v Speaker 2>is it going to be okay for Meta to be

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<v Speaker 2>kind of a one trick pony even if it's I

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<v Speaker 2>mean it's a massive one trick pony, But is it enough?

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<v Speaker 5>Well?

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<v Speaker 4>I mean, like, look, I think if you think about

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<v Speaker 4>like on a packing scale of course, like Nvidio the

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<v Speaker 4>top Microsoft, and you'll get these numbers just just unbelievable

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<v Speaker 4>in terms of across the board. You look at Meta, Yeah,

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<v Speaker 4>you call one trick pony ish, but that's but they're

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<v Speaker 4>going to significantly expand that over the coming years.

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<v Speaker 6>I mean, at least for now, there is no proof.

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<v Speaker 6>I feel they are under earning by twenty percent because

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<v Speaker 6>of all the losses in reality labs, But the street

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<v Speaker 6>doesn't care because their ad business is really going gangbusters.

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<v Speaker 6>When the ads slow down and the comps will get

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<v Speaker 6>tougher and there will be a point when ads will

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<v Speaker 6>not grow twenty percent, That's when I think the question

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<v Speaker 6>will be asked why are they losing twenty billion dollars

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<v Speaker 6>on reality labs because it's not making any money.

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<v Speaker 1>When will it start making money?

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<v Speaker 6>Dan?

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<v Speaker 3>And does it matter?

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<v Speaker 4>I mean, look, that's it's going to be okay, it's

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<v Speaker 4>going to be a while. But the whole point is

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<v Speaker 4>right now, that's background noise. Like you know, it's like

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<v Speaker 4>Street wants them to continue to in fast and vast

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<v Speaker 4>builders further out and at the end of the day,

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<v Speaker 4>that is going to come into the fold. But you're

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<v Speaker 4>not right now in this arms race in big tab

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<v Speaker 4>you're a weaser focused on who's going to be the winner,

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<v Speaker 4>and that's what we're seeing from Microsoft to Alphabet to

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<v Speaker 4>Meta you know obviously you know across bording we'll scale

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<v Speaker 4>with Amazon as well. Like it's an arm trace.

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<v Speaker 6>I mean, the one other data point I would want

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<v Speaker 6>to bring in is token counts. So Google and Microsoft

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<v Speaker 6>have shared the GENII consumption, the token count We don't

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<v Speaker 6>know how much metas models are being used. Yes, their

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<v Speaker 6>AT targeting is great, which is why AT pricing was

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<v Speaker 6>such a solid number this quarter. But at the end

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<v Speaker 6>of the day, if you're investing seventy billion dollars in capex,

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<v Speaker 6>you want to see your model being used and the

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<v Speaker 6>open series strategy work. We have no proof points of that,

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<v Speaker 6>so I still believe they have the most uphill task

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<v Speaker 6>in terms of showing ROI on the you know, the Capex,

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<v Speaker 6>besides their family of apps. And that's still the case.

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<v Speaker 4>Dan.

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<v Speaker 1>I know you got to go, but thirty seconds, last

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<v Speaker 1>question for you. What's the one question you'd ask Mark

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<v Speaker 1>Zuckerberg tonight.

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<v Speaker 4>Look, I think it's really about cap back trajectory because

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<v Speaker 4>I think that's even though that was slow a bit,

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<v Speaker 4>they're putting as they continue to spend, you know what,

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<v Speaker 4>That shows confidence and that's what we saw on Alphabet.

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<v Speaker 4>That's what you've seen the Microsoft, and that means it

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<v Speaker 4>continues to be like the AI revolution is AI party.

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<v Speaker 4>It's ten pm, was nine pm, party goes to four am.

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<v Speaker 2>Hey, listen before you go. I know we said last question,

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<v Speaker 2>but not that we lie. But you know you're here

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<v Speaker 2>in your Dan ives Microsoft you said that was also

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<v Speaker 2>a big, big, big killer report. I mean the stock

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<v Speaker 2>was just crazy in the aftermarket's up about six point

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<v Speaker 2>eight percent.

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<v Speaker 4>Scotti Scheffer like results, right. I mean the point is

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<v Speaker 4>like massive beat on cloud. You see more and more

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<v Speaker 4>of these use cases, these hyper scalers, those are the

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<v Speaker 4>best indicators. That just shows where the next spending in

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<v Speaker 4>AI is going. And that's why right now, if you're

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<v Speaker 4>attagged back, you're in hibernation mode in that cave and

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<v Speaker 4>you can't find AI in the spreadsheet.

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<v Speaker 3>Pretty crazy, pretty interesting.

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<v Speaker 2>Hey, listen, we know you're busy, we know you're bouncing

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<v Speaker 2>around and got stuff to do, but always good to

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<v Speaker 2>get some time with you. Dan I was managing director

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<v Speaker 2>and senior equity analyst oft web Bush Securities, also Globe

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<v Speaker 2>Ahead of Technology Research.

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<v Speaker 1>I just want to remind everybody where we've come in

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<v Speaker 1>the last few years with Meta Platforms. There was a

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<v Speaker 1>lot of talk in late twenty twenty two of leaving

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<v Speaker 1>this company for dead. When they made their pivot to

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<v Speaker 1>the Metaverse, shares were trading at eighty eight dollars.

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<v Speaker 3>Now it's back to the IPO. Oh sorry, yeah, I.

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<v Speaker 1>Mean, but I mean even a recent history. Right, it's

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<v Speaker 1>up six hundred and eighty six percent since then. That

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<v Speaker 1>doesn't include the surge in the after hours, which, if

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<v Speaker 1>it holds, will be a new record for Meta Platforms tomorrow.

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<v Speaker 6>Yeah, and look when people were, you know, selling the

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<v Speaker 6>stock at eighty dollars. Then they didn't really factor in

0:11:52.960 --> 0:11:57.240
<v Speaker 6>you know, Meta's engagement. So what's really brought them back

0:11:57.280 --> 0:12:00.280
<v Speaker 6>in such a big way is people are still spending

0:12:00.320 --> 0:12:03.520
<v Speaker 6>over an hour and a half across their family of apps,

0:12:04.160 --> 0:12:07.040
<v Speaker 6>so that's sort of engage. And look, that's where the

0:12:07.040 --> 0:12:10.920
<v Speaker 6>real risk comes in. So Chatchipt now is about thirty

0:12:10.960 --> 0:12:14.760
<v Speaker 6>minutes across its daily active users, which is much smaller

0:12:14.760 --> 0:12:18.680
<v Speaker 6>than Meta. Meta has over three billion, and chat ChiPT

0:12:18.840 --> 0:12:21.760
<v Speaker 6>is still you know, less than four or five hundred million,

0:12:21.840 --> 0:12:24.440
<v Speaker 6>so still much small, but they are taking share in

0:12:24.520 --> 0:12:29.360
<v Speaker 6>terms of engagement time. People are spending thirty minutes on chatchipt.

0:12:29.800 --> 0:12:33.240
<v Speaker 6>So as long as Meta keeps growing engagement, I think

0:12:33.520 --> 0:12:36.920
<v Speaker 6>they will keep growing earnings. And that's what they're showing

0:12:36.920 --> 0:12:37.920
<v Speaker 6>with their AD revenue.

0:12:39.280 --> 0:12:42.800
<v Speaker 2>All Hell's man Deep Man, Deep seeing of course, with

0:12:42.840 --> 0:12:46.280
<v Speaker 2>our Bloomberg Intelligence team. He is Bloomberg Intelligence Globalhead of

0:12:46.280 --> 0:12:48.800
<v Speaker 2>Technology Research. Be sure to check out his research on

0:12:48.840 --> 0:12:51.040
<v Speaker 2>the Bloomberg When it comes to Meta.

0:12:50.880 --> 0:12:51.800
<v Speaker 3>So appreciate it.

0:12:51.840 --> 0:12:54.840
<v Speaker 2>Meta shares, by the way, are up about eleven percent

0:12:54.960 --> 0:12:58.400
<v Speaker 2>here in the aftermarket, the company giving us stronger than

0:12:58.440 --> 0:13:00.880
<v Speaker 2>expected third quarter revenue. Four has to sign that that

0:13:01.000 --> 0:13:03.920
<v Speaker 2>core AD business is still growing quickly enough to support

0:13:03.960 --> 0:13:07.280
<v Speaker 2>aggressive spending on AI. Devil in the details, and we

0:13:07.360 --> 0:13:10.480
<v Speaker 2>heard that certainly from Mandeep. And then we've also got

0:13:10.600 --> 0:13:14.120
<v Speaker 2>Microsoft that stock is up here in the aftermarket, and

0:13:14.160 --> 0:13:18.120
<v Speaker 2>that one some really really strong numbers as well, quarterly

0:13:18.240 --> 0:13:21.160
<v Speaker 2>cloud sales profit exceeding expectations.

0:13:22.040 --> 0:13:24.359
<v Speaker 3>They say they brought in more than seventy five billion.

0:13:24.120 --> 0:13:26.800
<v Speaker 2>Dollars in the past year in terms of its cloud

0:13:26.800 --> 0:13:30.280
<v Speaker 2>business as the company continues to commercialize AI services.

0:13:30.280 --> 0:13:33.040
<v Speaker 1>Tim, We've got a great group of folks, a great

0:13:33.120 --> 0:13:35.679
<v Speaker 1>duo to talk Microsoft and more. I want to bring

0:13:35.760 --> 0:13:38.920
<v Speaker 1>in Greg Halter, director of research at the registered investment

0:13:38.920 --> 0:13:41.880
<v Speaker 1>advisor Carnegie Investment Council. They've got about six and a

0:13:41.920 --> 0:13:45.000
<v Speaker 1>half billion dollars in assets under management. I also want

0:13:45.040 --> 0:13:48.880
<v Speaker 1>to bring in Bloomberg Intelligence senior tech analyst anurog Rana.

0:13:48.920 --> 0:13:51.880
<v Speaker 1>He joins us from our Chicago bureau. Greg. Just for

0:13:51.960 --> 0:13:56.040
<v Speaker 1>some context, Microsoft is the largest holding, Is it the

0:13:56.160 --> 0:14:00.480
<v Speaker 1>largest individual holding for your group or is it because

0:14:00.480 --> 0:14:02.480
<v Speaker 1>it's an index funds I just want to set the

0:14:02.480 --> 0:14:04.439
<v Speaker 1>stage before we get into the details.

0:14:04.920 --> 0:14:07.320
<v Speaker 7>Thank you, Tim, and thanks for having me. We do

0:14:07.440 --> 0:14:11.840
<v Speaker 7>not count the index fund holding positions in that number.

0:14:11.920 --> 0:14:14.600
<v Speaker 7>If you look at our latest thirteen F filing, Microsoft

0:14:14.720 --> 0:14:18.160
<v Speaker 7>is the largest individual stockholding at Carnegie.

0:14:18.280 --> 0:14:21.160
<v Speaker 3>All right, so Microsoft investors certainly like it.

0:14:21.200 --> 0:14:24.320
<v Speaker 2>In the aftermarket, as we mentioned, Greg, the stock is

0:14:24.360 --> 0:14:27.280
<v Speaker 2>definitely soaring up about seven eight percent.

0:14:27.360 --> 0:14:29.280
<v Speaker 3>Now as I speak, what jumps out at you?

0:14:31.280 --> 0:14:34.240
<v Speaker 7>I think the Azure growth thirty nine percent versus the

0:14:34.280 --> 0:14:38.040
<v Speaker 7>thirty four percent expected, that is huge. I'll also point

0:14:38.040 --> 0:14:41.920
<v Speaker 7>out that their EPs beat of eight percent plus is

0:14:41.960 --> 0:14:46.960
<v Speaker 7>the best in seven quarters. Usually they do beat. I

0:14:46.960 --> 0:14:50.520
<v Speaker 7>think it's been now only three times four times over

0:14:50.520 --> 0:14:53.760
<v Speaker 7>the last forty five periods they have missed on earnings,

0:14:54.160 --> 0:14:59.960
<v Speaker 7>and this is a larger point of exceeding the estimate

0:15:00.480 --> 0:15:03.120
<v Speaker 7>that they've had in seven periods.

0:15:03.240 --> 0:15:05.680
<v Speaker 3>All Right, I want to agree you like it? All right,

0:15:05.760 --> 0:15:07.720
<v Speaker 3>Anna rag Grana, I want to bring you in here.

0:15:09.640 --> 0:15:11.960
<v Speaker 3>I'm not sure. I think we all went into this

0:15:12.000 --> 0:15:13.880
<v Speaker 3>week with a little trepidation.

0:15:13.560 --> 0:15:15.800
<v Speaker 2>Over everything that was coming at investors, including some of

0:15:15.880 --> 0:15:19.680
<v Speaker 2>these big tech earnings. But this certainly investors like what

0:15:19.720 --> 0:15:22.440
<v Speaker 2>they got from the company, and certainly with the outlook.

0:15:22.680 --> 0:15:25.920
<v Speaker 2>What's your take here, what's important for investors to learn

0:15:25.960 --> 0:15:26.800
<v Speaker 2>off of this release?

0:15:28.360 --> 0:15:30.960
<v Speaker 5>You know, I would go what our other guests said.

0:15:31.000 --> 0:15:33.920
<v Speaker 5>I mean, the acceleration in Azure is pretty impressive. And

0:15:34.000 --> 0:15:35.480
<v Speaker 5>one of the things I think it's going to do.

0:15:35.560 --> 0:15:37.800
<v Speaker 5>It's case, it's going to tell people that all the

0:15:37.880 --> 0:15:40.840
<v Speaker 5>capex Microsoft is spending, you know, they're getting the benefit

0:15:40.920 --> 0:15:42.840
<v Speaker 5>of it on the other side of it, and they're

0:15:42.880 --> 0:15:45.600
<v Speaker 5>probably the first one to recognize a bigger, you know,

0:15:45.680 --> 0:15:48.600
<v Speaker 5>load of AI revenue coming in. And you know, this

0:15:48.640 --> 0:15:50.800
<v Speaker 5>will pacify a lot of people out there that may

0:15:50.840 --> 0:15:53.680
<v Speaker 5>be worried that wire these companies spending so much on

0:15:54.680 --> 0:15:57.600
<v Speaker 5>infrastructure and you know, and where is the other side

0:15:57.600 --> 0:15:59.640
<v Speaker 5>of the equation. So I think a good results not

0:15:59.720 --> 0:16:02.600
<v Speaker 5>just from Microsoft, but the entire tech platform.

0:16:02.640 --> 0:16:04.280
<v Speaker 2>Well, that's what I want to just follow Ana Rogic.

0:16:04.360 --> 0:16:06.400
<v Speaker 2>You know, our preview of all of this was Microsoft

0:16:06.440 --> 0:16:09.160
<v Speaker 2>Meta investors are going to be scrutinizing over the AI

0:16:09.280 --> 0:16:12.400
<v Speaker 2>spending bench. So for Microsoft, clearly do you we are

0:16:12.600 --> 0:16:15.840
<v Speaker 2>clearly seeing the ROI when it comes to that AI spend.

0:16:17.240 --> 0:16:19.280
<v Speaker 5>Yeah, both on the top side and you know, they

0:16:19.280 --> 0:16:22.840
<v Speaker 5>are doing extremely well on the expense management side. Because

0:16:22.840 --> 0:16:26.040
<v Speaker 5>what happens is when you're seeing a rapid growth and Azure,

0:16:26.240 --> 0:16:28.680
<v Speaker 5>which has a relatively lower gross margin than the rest

0:16:28.680 --> 0:16:32.360
<v Speaker 5>of the Microsoft business. Profitability does get dented with In

0:16:32.400 --> 0:16:35.640
<v Speaker 5>addition to all the AI investments that they're making, what

0:16:35.680 --> 0:16:37.840
<v Speaker 5>they did this time was, you know, year over year

0:16:37.880 --> 0:16:40.360
<v Speaker 5>they kept their headcount flat. I mean that's a huge

0:16:40.400 --> 0:16:44.720
<v Speaker 5>boost to you could say profitability as well as productivity,

0:16:45.120 --> 0:16:47.640
<v Speaker 5>and you know, I think that's that's something for people

0:16:47.680 --> 0:16:48.160
<v Speaker 5>to take home.

0:16:48.200 --> 0:16:50.680
<v Speaker 1>Also, Hey, Greg, I want to bring you back in here.

0:16:51.120 --> 0:16:54.240
<v Speaker 1>Looking at the Azure growth here, the company reported better

0:16:54.280 --> 0:16:57.440
<v Speaker 1>than expected growth in its cloud business, the Microsoft saying

0:16:57.440 --> 0:17:00.160
<v Speaker 1>it brought in more than seventy five billion dollars in

0:17:00.200 --> 0:17:03.440
<v Speaker 1>the past year. The company continues to commercialize AI services.

0:17:03.960 --> 0:17:08.359
<v Speaker 1>Give us your bull case on AI and Microsoft because essentially,

0:17:09.040 --> 0:17:12.320
<v Speaker 1>this company is deploying AI tools and it's betting that

0:17:12.359 --> 0:17:16.080
<v Speaker 1>these conversant chatbots and more powerful automation tools are going

0:17:16.119 --> 0:17:19.920
<v Speaker 1>to boost sales of Microsoft productivity software and cloud services.

0:17:20.359 --> 0:17:21.960
<v Speaker 1>Is that bet paying off right now?

0:17:25.240 --> 0:17:27.240
<v Speaker 7>I don't know that you can say it's one hundred

0:17:27.280 --> 0:17:32.080
<v Speaker 7>percent paying off. The reaction to the stock indicates that

0:17:33.880 --> 0:17:38.439
<v Speaker 7>investors believe that it will. You know, this stock was

0:17:38.440 --> 0:17:40.639
<v Speaker 7>coming into the report at thirty four times earning, so

0:17:40.720 --> 0:17:42.800
<v Speaker 7>a lot has to go right and it appears that

0:17:42.880 --> 0:17:48.040
<v Speaker 7>a lot is going right. So yes, you know, we've

0:17:48.080 --> 0:17:51.280
<v Speaker 7>done a look at their CAPEX and R and D

0:17:51.359 --> 0:17:54.040
<v Speaker 7>over the last ten twelve years or so. It's not

0:17:54.119 --> 0:17:56.480
<v Speaker 7>like this is new. It's just that the numbers are big.

0:17:56.680 --> 0:17:59.200
<v Speaker 7>I mean the percentages are also fairly large. But you

0:17:59.240 --> 0:18:02.119
<v Speaker 7>know they're spending a billions and billions on R and D.

0:18:02.600 --> 0:18:05.000
<v Speaker 7>Of course, now they can get the text benefits from

0:18:05.000 --> 0:18:09.160
<v Speaker 7>that billions of dollars, not just Microsoft but others, and

0:18:09.480 --> 0:18:12.840
<v Speaker 7>you would hope that they're wisely investing in that R

0:18:12.880 --> 0:18:17.199
<v Speaker 7>and D for future profitable products and services.

0:18:17.720 --> 0:18:19.159
<v Speaker 2>Hey, I do want to point out too that we

0:18:19.200 --> 0:18:22.240
<v Speaker 2>see Amazon shares up about two point seven percent here

0:18:22.280 --> 0:18:25.040
<v Speaker 2>in the after market, shares of alphabet or down about

0:18:25.040 --> 0:18:28.200
<v Speaker 2>four tenths of a percent. But of course Amazon reporting

0:18:28.240 --> 0:18:32.600
<v Speaker 2>along with Apple tomorrow, Anna Rag, I don't know, is

0:18:32.600 --> 0:18:35.960
<v Speaker 2>there any any cause for concerns or things that you

0:18:36.000 --> 0:18:38.879
<v Speaker 2>want to question or would question with the C suite

0:18:39.320 --> 0:18:41.240
<v Speaker 2>following Microsoft's release here?

0:18:41.520 --> 0:18:43.879
<v Speaker 5>No, I think I would talk about the headcount growth

0:18:43.880 --> 0:18:45.879
<v Speaker 5>for next year. You know, what are they baking because

0:18:46.080 --> 0:18:48.480
<v Speaker 5>it's been almost two years where they have added very

0:18:48.480 --> 0:18:52.480
<v Speaker 5>little headcount to the overall company size. And the big

0:18:52.560 --> 0:18:54.879
<v Speaker 5>question over there is is this something that we should

0:18:54.920 --> 0:18:57.919
<v Speaker 5>anticipate going forward, that you know, you're getting all this

0:18:58.000 --> 0:19:00.800
<v Speaker 5>cloud revenue, but you're not adding a lot more headcount.

0:19:00.840 --> 0:19:03.800
<v Speaker 5>Because I think that's slightly concerning. I mean not so

0:19:03.880 --> 0:19:06.040
<v Speaker 5>much for Microsoft, but the rest of the tech industry,

0:19:06.640 --> 0:19:10.040
<v Speaker 5>because you know, somebody that is selling HR software or

0:19:10.119 --> 0:19:14.359
<v Speaker 5>sales software depends on companies hiding quite a bit because

0:19:14.359 --> 0:19:16.800
<v Speaker 5>it's a seat based model, and I think that's an area.

0:19:16.840 --> 0:19:19.639
<v Speaker 5>But that's not so much I would say Microsoft's problem,

0:19:19.640 --> 0:19:21.600
<v Speaker 5>but that the rest of the tech industry is issue.

0:19:21.680 --> 0:19:21.960
<v Speaker 4>All right.

0:19:22.080 --> 0:19:23.920
<v Speaker 3>Going to leave with there, folks, thank you so much.

0:19:24.000 --> 0:19:26.959
<v Speaker 2>Anda Grana, senior tech analyst with Bloomberg Intelligence out there

0:19:26.960 --> 0:19:29.280
<v Speaker 2>in Chicago, and Greg Halter are thanks to you as well,

0:19:29.520 --> 0:19:33.800
<v Speaker 2>director of research at the registered investment advisor Carnegie Investment,

0:19:33.840 --> 0:19:38.040
<v Speaker 2>with the latest on Microsoft and NETA.