WEBVTT - China Targets Apple, AMD Disappoints With AI Outlook 0:00:02.520 --> 0:00:09.760 Bloomberg Audio Studios, Podcasts, radio news from the heart of 0:00:09.840 --> 0:00:15.520 where innovation, money and power collide in Silicon Valley and beyond. 0:00:15.960 --> 0:00:20.160 This is Bloomberg Technology with Caroline Hyde. 0:00:19.800 --> 0:00:36.519 And Ed Lovelow live from New York on Caroline Hyde. 0:00:36.600 --> 0:00:39.440 And Aunt Jackie Devalos in San Francisco. This is Bloomberg 0:00:39.520 --> 0:00:40.599 Technology coming up. 0:00:40.760 --> 0:00:42.880 Apple in the geopolitical cross has as. 0:00:42.880 --> 0:00:47.360 China weighs a potential antitrust pope into the app store practices, 0:00:47.560 --> 0:00:50.239 plus Alphabet shares tumble after posting slower growth in its 0:00:50.240 --> 0:00:53.840 cloud business and a seventy five billion dollar capital expenditure commitment, 0:00:54.320 --> 0:00:56.920 and AMD falls on a disappointing outlook for its AI 0:00:57.000 --> 0:01:00.000 chip growth. That and so many more earnings coming up 0:01:00.320 --> 0:01:03.320 and Apple off by one point three percent. A key 0:01:03.400 --> 0:01:05.880 issue here is China and the US and a potential 0:01:05.920 --> 0:01:09.679 antitrust probe coming from China all regarding its app store. 0:01:09.720 --> 0:01:12.040 Let's get to it, Bloomberg's Peter Alstrom, because the timing 0:01:12.080 --> 0:01:15.000 here is of course amid this tip for Tap from 0:01:15.120 --> 0:01:16.480 US and China in Taris. 0:01:16.560 --> 0:01:18.560 But this started before Trump came to office. 0:01:19.040 --> 0:01:20.640 Yeah, that's exactly right. 0:01:20.680 --> 0:01:25.040 So what we've heard from sources is that Beijing regulators 0:01:25.080 --> 0:01:28.800 are looking at Apple and specifically the policies around its 0:01:28.840 --> 0:01:29.440 app store. 0:01:29.680 --> 0:01:31.360 It takes a thirty percent. 0:01:31.080 --> 0:01:34.319 Of cut of app revenue, like it does in other 0:01:34.319 --> 0:01:36.679 countries too, and also it kind of walks down payment 0:01:36.720 --> 0:01:39.360 systems because it wants you to make those payments through 0:01:39.400 --> 0:01:42.160 the Apple Store in particular. So we've heard that SAMR, 0:01:42.280 --> 0:01:44.360 the regulator there, is taking. 0:01:44.080 --> 0:01:45.200 A close look at Apple. 0:01:45.440 --> 0:01:48.160 They've called in executives from the company and some other 0:01:48.200 --> 0:01:51.040 executives too to find out more information. Now the balls 0:01:51.080 --> 0:01:54.120 and Apple's court to respond to some sort of in 0:01:54.160 --> 0:01:56.240 some sort of way and see whether they're able to 0:01:56.320 --> 0:01:58.600 address this or whether regulators are going to have to 0:01:58.600 --> 0:02:00.640 take more action to be fair. Though this is the 0:02:00.680 --> 0:02:03.040 same kind of action that Apple has faced in other 0:02:03.080 --> 0:02:05.680 countries too, where there are concerns about the app store, 0:02:05.840 --> 0:02:09.520 how much money it takes away from developers, and whether 0:02:09.600 --> 0:02:12.000 that's actually a level playing field for other companies. 0:02:12.840 --> 0:02:15.480 Peter, one of the outstanding questions is is this just 0:02:15.520 --> 0:02:18.080 a bit more bark than bite and what is the 0:02:18.160 --> 0:02:20.400 time horizon here? Because a lot of these probes take 0:02:20.480 --> 0:02:22.720 time to play out. Do you have a sense of 0:02:22.800 --> 0:02:25.440 how long it'll take before companies actually see a hit 0:02:25.480 --> 0:02:26.600 from some of these probes. 0:02:27.840 --> 0:02:32.520 Yeah, that's a very good question. This is coming, of course, 0:02:32.560 --> 0:02:34.600 in the middle of this kind of geopolitical tit for 0:02:34.639 --> 0:02:37.520 tap between the United States and China. So the US 0:02:37.600 --> 0:02:41.000 levied the ten percent tariffs on Chinese imports, and China 0:02:41.040 --> 0:02:44.560 has responded with some more careful targeted things, including an 0:02:44.600 --> 0:02:47.600 investigation into Google, which has a similar kind of app 0:02:47.600 --> 0:02:50.399 store issue. Doesn't have that many operations in the country 0:02:50.280 --> 0:02:51.960 beyond that, so I think. 0:02:51.840 --> 0:02:53.280 Politics are going to play a role here. 0:02:53.280 --> 0:02:56.160 We're going to see how that plays into the negotiations 0:02:56.200 --> 0:03:00.280 with these companies. Visiing has a very forceful regulatory arm. 0:03:00.360 --> 0:03:02.280 If they do decide to go ahead and take action 0:03:02.400 --> 0:03:06.000 against Apple, Google, we know they're investigating in Nvidia too, 0:03:06.280 --> 0:03:09.880 it could be very putitive for those countries, but at companies, 0:03:09.919 --> 0:03:12.359 but it may have to do with the dynamics between 0:03:12.360 --> 0:03:15.440 the two countries in fact, rather than the companies themselves. 0:03:16.320 --> 0:03:19.760 Bloomberg's Peter Alstrom, we thank you. Alphabet's share is dropping 0:03:19.840 --> 0:03:23.960 after fourth quarter earnings missed expectations yesterday. Investors were disappointed 0:03:23.960 --> 0:03:26.600 by a slowdown in sales and Google's cloud unit. For 0:03:26.720 --> 0:03:31.120 more on this, we're joined by Brent phil from Jeffries. Brent, I, 0:03:31.560 --> 0:03:34.840 you know when we look at Google, Alphabet's cloud sales 0:03:35.040 --> 0:03:38.000 lagged by two percent. This was, you know, behind estimates. 0:03:38.080 --> 0:03:41.480 It's the second hike per scaler to lag on this 0:03:41.640 --> 0:03:45.320 front in the last week. Microsoft last week posted disappointed 0:03:45.320 --> 0:03:49.840 cloud numbers. What's driving the decline for Google specifically because 0:03:49.840 --> 0:03:51.960 the Microsoft story was a little bit different there. 0:03:52.520 --> 0:03:55.240 Yeah, I mean the common thread is Google and Microsoft 0:03:55.320 --> 0:03:58.200 are indicating, you know, slower growth. 0:03:59.200 --> 0:03:59.520 Now. 0:04:00.080 --> 0:04:02.720 Want to be clear, last quarter was an anomaly for Google, 0:04:02.800 --> 0:04:04.640 so growth went to thirty five and then went to 0:04:04.680 --> 0:04:08.440 thirty this last quarter, So I think everyone is concerned 0:04:08.440 --> 0:04:10.480 about the magnitude that they did say there were some 0:04:10.480 --> 0:04:13.800 one time items. Growth in Q four is still up 0:04:13.840 --> 0:04:15.480 from the front half of the year, so it's not 0:04:16.160 --> 0:04:17.920 like things are falling out of the sky. 0:04:18.000 --> 0:04:19.719 And even for Microsoft, right. 0:04:19.600 --> 0:04:22.280 They had low thirty percent growth, they wanted to see 0:04:22.279 --> 0:04:24.159 mid thirties and they didn't see that acceleration. 0:04:24.240 --> 0:04:25.360 They took up the table. 0:04:25.440 --> 0:04:29.600 So we're still talking, you know, thirty percent growth across 0:04:30.240 --> 0:04:33.920 both companies, and we were at the beginning of the 0:04:33.920 --> 0:04:36.920 AI changed, So I wouldn't I'd be careful to look 0:04:36.920 --> 0:04:39.640 at just one quarter and say it's a massive trend. 0:04:39.720 --> 0:04:42.360 The trend has actually been pretty healthy. And then I 0:04:42.400 --> 0:04:44.560 think the other thing is you kind of have this 0:04:44.640 --> 0:04:47.560 bug zopper light as we call it with AI. Everyone 0:04:47.560 --> 0:04:49.880 gets attracted to this light over here and says. 0:04:50.680 --> 0:04:52.200 AI AI AI, and then. 0:04:52.080 --> 0:04:54.799 They forget about the core workloads, right, And so Microsoft 0:04:54.880 --> 0:04:58.640 highlighted that their aipiece was strong, the non aipiece was 0:04:58.640 --> 0:05:01.880 a little weaker. So again I think part of this 0:05:02.040 --> 0:05:04.160 is we're on a journey, or at the beginning of 0:05:04.200 --> 0:05:06.440 the journey, there are going to be some rocks and 0:05:06.440 --> 0:05:09.919 pebbles and you know, barking dogs across the path on 0:05:09.920 --> 0:05:12.080 the way that you got to navigate. And it's not 0:05:12.680 --> 0:05:15.560 like a straight line up. But ultimately I think it's 0:05:15.560 --> 0:05:16.159 pretty good. 0:05:16.040 --> 0:05:18.880 Now that but Brent, just on the pretty good thing. 0:05:18.920 --> 0:05:20.920 Can I just ask about the seventy five billion dollar 0:05:20.960 --> 0:05:23.040 capex though, because we are trying to understand whether you 0:05:23.040 --> 0:05:26.160 should be committing such significant investment at this time. If 0:05:26.160 --> 0:05:28.600 the return on AI is still questioned. 0:05:28.320 --> 0:05:30.719 One hundred percent, you should be committing the question that 0:05:30.760 --> 0:05:34.279 everyone's asking in every company when you ask the companies 0:05:34.279 --> 0:05:36.680 of this question, and Microsoft will say do you want 0:05:36.720 --> 0:05:39.159 us to get five percent market share fifty We're at 0:05:39.200 --> 0:05:42.360 one of the big biggest tectonic shifts, the CM medtronic 0:05:42.440 --> 0:05:46.360 every board in America. Globally, we're talking about China taking 0:05:46.400 --> 0:05:49.200 down a trillion dollars in market cap last Monday. Do 0:05:49.279 --> 0:05:52.200 you you want to be involved or not? And there's 0:05:52.240 --> 0:05:56.159 a price to admission. And so this is very clear 0:05:56.640 --> 0:05:59.160 that the time to spend is now, and the time 0:05:59.200 --> 0:06:01.920 to spend is now in four or five six quarters. 0:06:02.440 --> 0:06:06.960 And so to your point, what happened last Monday, the 0:06:07.040 --> 0:06:10.680 takedown was born by Deep Sea And actually we did 0:06:10.720 --> 0:06:12.720 hear from soopitch I talking about Deep Seak. Just take 0:06:12.720 --> 0:06:13.040 a listen. 0:06:13.120 --> 0:06:18.040 Run There's been a lot of observations on deep Seek. 0:06:18.480 --> 0:06:21.560 First of all, you know, I think tremendous team. I 0:06:21.600 --> 0:06:24.159 think they've done very very good work. I would say 0:06:24.360 --> 0:06:26.960 both are two point zero flash models or two point 0:06:27.000 --> 0:06:30.120 zero flash thinking models. You know, they are some of 0:06:30.160 --> 0:06:34.719 the most efficient models out there, including comparing to Deep Seeks. 0:06:35.800 --> 0:06:39.440 From your perspective, does Alphabet able to compete when it 0:06:39.480 --> 0:06:40.400 comes to cheaper models? 0:06:41.920 --> 0:06:46.679 Yeah, I mean, look, the China training thing is nonsense. Okay, dude, 0:06:46.720 --> 0:06:49.919 Sacks from the White house came nonsense. Nonsense, Okay, so 0:06:50.200 --> 0:06:52.360 we got to get that off the table. The technology 0:06:52.400 --> 0:06:55.560 is there, but the training run costant six million is nonsense. 0:06:56.360 --> 0:07:00.159 So I think, yeah, look they're going to be We 0:07:00.200 --> 0:07:03.520 have software companies using twenty five lll ms and lasting 0:07:03.560 --> 0:07:06.440 twenty five into it using ten. These are all going 0:07:06.440 --> 0:07:08.360 to commoditize and they're all going to have a place, 0:07:08.720 --> 0:07:10.120 and deepseq will have a place. 0:07:10.680 --> 0:07:11.760 But it's not this. 0:07:12.200 --> 0:07:14.000 You open your garage s dooor with one button and 0:07:14.480 --> 0:07:16.520 you open your iPhone with another button. There's getting me 0:07:16.560 --> 0:07:19.440 multiple multiple buttons. Okay, it's not just one. 0:07:19.920 --> 0:07:21.160 And so we think. 0:07:21.080 --> 0:07:25.800 Ultimately the big platforms with the users, with the capital 0:07:25.880 --> 0:07:28.679 and the data win and Google has a lot of data, 0:07:29.680 --> 0:07:32.520 they have a lot of great technology. So again this 0:07:32.600 --> 0:07:34.840 is why Meta is doing so well. Meta is going 0:07:34.920 --> 0:07:38.680 to perform very well with LAMA. So we are o 0:07:38.680 --> 0:07:43.080 a believer that look, yeah, better AI efficiency will come, 0:07:43.360 --> 0:07:45.119 but it's not coming at the pace that the market 0:07:45.120 --> 0:07:45.960 thinks with deep seak. 0:07:46.040 --> 0:07:46.480 It's just not. 0:07:46.840 --> 0:07:50.560 And look at all the capics numbers between the last 0:07:50.600 --> 0:07:53.040 Meta and Google. They've raised capis by twenty five billion. 0:07:53.080 --> 0:07:55.720 If it was that efficient, these are pretty smart companies. 0:07:55.880 --> 0:07:58.240 They don't want to waste shareholder money. They don't want 0:07:58.240 --> 0:08:00.720 to waste They have a lot of loyees that work 0:08:00.720 --> 0:08:04.800 there because they get paid in stock, Like they wouldn't 0:08:04.800 --> 0:08:07.280 do this if they felt like, oh, yeah, it's so efficient, 0:08:07.360 --> 0:08:09.240 Like why would you jack up the numbers as much 0:08:09.280 --> 0:08:12.920 as they have. So again, I think everyone's being misled 0:08:13.000 --> 0:08:17.200 by one comment from a Chinese comment firm that you 0:08:17.240 --> 0:08:21.360 can validate the spend and the bring. 0:08:21.280 --> 0:08:23.239 I'm curious if you can kind of speak to maybe 0:08:23.440 --> 0:08:27.160 you know, shifting back to Google's bread and butter search 0:08:27.480 --> 0:08:31.920 YouTube and bring in the artificial intelligence picture here, because 0:08:32.120 --> 0:08:34.720 while we're steeing seeing some of this still kind of 0:08:34.760 --> 0:08:38.720 come out on the cloud side, what sort of benefit 0:08:38.840 --> 0:08:43.199 are investors pricing in on the YouTube and search side. 0:08:43.200 --> 0:08:46.360 What AI boost are you expecting there in the next 0:08:46.400 --> 0:08:47.160 couple quarters. 0:08:48.440 --> 0:08:53.600 Well, no one's pricing anything today, so obviously stocks off 0:08:53.600 --> 0:08:56.880 big on this kind of you know, minor miss if 0:08:56.920 --> 0:08:59.680 you will. But ultimately, we think AI is going to 0:08:59.679 --> 0:09:01.960 have a huge role. Like you look at Gemini. I've 0:09:02.000 --> 0:09:05.679 and using it every day and over time, Gemini is 0:09:05.720 --> 0:09:08.360 going to get smarter and I think there's a role 0:09:08.360 --> 0:09:11.079 of core Search. I'm looking for a restaurant. I'm looking 0:09:11.120 --> 0:09:13.800 for hours of the local small business. I need to 0:09:13.880 --> 0:09:16.520 visit too. I need to get the answer of what's 0:09:16.600 --> 0:09:19.480 the population of Iceland, And I want to ask Gemini 0:09:19.559 --> 0:09:22.400 or I want a quick quick response in Gemini. These 0:09:22.400 --> 0:09:26.800 things are going to effectively I think searching, what's happening 0:09:26.800 --> 0:09:29.400 with AI and these AI agents are going to are 0:09:29.400 --> 0:09:32.679 going to effectively melt together, and so it will be 0:09:32.720 --> 0:09:35.520 a seamless experience. I think Google can do this, So 0:09:35.559 --> 0:09:37.280 there'll be chance, there'll be times where you've seen it 0:09:37.280 --> 0:09:40.160 at and sometimes you don't. Is that going to force 0:09:40.200 --> 0:09:41.720 advertisers to run away? 0:09:41.720 --> 0:09:42.400 I don't think so. 0:09:42.600 --> 0:09:45.439 Look at YouTube great numbers, Look at core search good numbers. 0:09:45.960 --> 0:09:48.520 The issue in Google's quarter has nothing to do with 0:09:48.559 --> 0:09:51.160 the core business, has to do with the smallest business 0:09:51.200 --> 0:09:56.040 at Cloud and Capex is up massively. Guess what Meta Microsoft, 0:09:56.160 --> 0:09:57.439 everyone else is doing the same thing. 0:09:57.720 --> 0:09:59.400 Yeah, and you've got to. 0:09:59.400 --> 0:10:00.000 Do it right now. 0:10:00.360 --> 0:10:03.480 So and look, we've said at this AI journey is 0:10:03.480 --> 0:10:05.520 going to take time. It's going to be a long journey, 0:10:05.520 --> 0:10:06.719 and we're at the beginning of it. 0:10:06.840 --> 0:10:07.320 Well said. 0:10:07.360 --> 0:10:09.360 And Alphabet just coming down from some record hires of 0:10:09.400 --> 0:10:11.960 yesterday as well. Jeffrey's Analystprent phil is so good to 0:10:11.960 --> 0:10:14.400 catch up with you, Thank you very much. Coming up, 0:10:14.440 --> 0:10:16.680 we're going to talk more earnings, AMD disappointing with its 0:10:16.720 --> 0:10:19.160 AI outlook. More of the chip maker's earnings and other 0:10:19.200 --> 0:10:21.800 in the silicon sector next. But as AMD fall, so 0:10:21.880 --> 0:10:25.439 tutors snap quick check on those earnings after a mixed outlook, 0:10:25.440 --> 0:10:28.400 basically sparing a load of downgrades on the street. Wills Fargo, 0:10:28.480 --> 0:10:31.400 for example, cutting it to an equal weight, saying solid 0:10:31.400 --> 0:10:34.239 revenue trends, but not enough to outweigh the period of reinvestment. 0:10:34.679 --> 0:10:41.920 This is BlueBag Technology. 0:10:47.520 --> 0:10:51.040 Shares of AMD tumbling today after the chipmaker left investors 0:10:51.040 --> 0:10:53.600 with a disappointing outlook for its AI data center business, 0:10:53.840 --> 0:10:57.360 saying they see strong double digit growth for more. Joanne Feoenie, 0:10:57.360 --> 0:11:00.320 Advisor's capital management partner joins us in investors, they don't 0:11:00.360 --> 0:11:04.400 just want double digit glows. They want a doubling of 0:11:04.440 --> 0:11:05.720 AI business, right. 0:11:06.840 --> 0:11:09.920 They want a lot line, that's for sure. And what 0:11:09.960 --> 0:11:11.840 they overlook is what's going on with the rest of 0:11:11.840 --> 0:11:14.400 the business. I mean, you know, look at how much 0:11:14.400 --> 0:11:18.720 share that AMD has taken from Intel. A data center 0:11:18.760 --> 0:11:22.560 business has nearly doubled twenty twenty four or twenty twenty three. 0:11:22.600 --> 0:11:24.720 It's PC client business up more than. 0:11:24.640 --> 0:11:28.320 Fifty percent for the whole year. They've done a tremendous. 0:11:27.800 --> 0:11:31.959 Job of really taking advantage of Intel's problems. But I've 0:11:31.960 --> 0:11:36.640 been doing it by being able to develop superior chips 0:11:36.640 --> 0:11:37.079 of its own. 0:11:37.920 --> 0:11:40.079 You're right, you know, Joanne, They're not getting a ton 0:11:40.120 --> 0:11:45.040 of credit for that revenue beat doubling their other unit. 0:11:45.280 --> 0:11:47.760 I'm curious if you can kind of speak to what 0:11:47.840 --> 0:11:51.439 they said about that estimate miss on the data center 0:11:51.559 --> 0:11:54.160 unit and what does it say about AMD's standing in 0:11:54.200 --> 0:11:55.720 the AI ecosystem broadly. 0:11:56.360 --> 0:11:58.480 Yeah, so, you know, the problem they had with their 0:11:58.559 --> 0:12:02.439 report was that the their entry into the AI side 0:12:02.440 --> 0:12:05.720 of data center is something that's a little bit slower 0:12:05.720 --> 0:12:08.240 to roll out than people were hoping, and expectations were 0:12:08.280 --> 0:12:11.160 high heading into the quarter. And so this new chip 0:12:11.280 --> 0:12:14.959 that is expected to you know, really push AMD into 0:12:15.040 --> 0:12:18.480 this business, you know, more securely, and they've only just 0:12:18.640 --> 0:12:21.640 started rolling out this whole line of chips. That new chip, 0:12:21.679 --> 0:12:24.439 the mi I three point fifty, is now expected to 0:12:24.520 --> 0:12:27.160 ramp until the second half of this year, and so 0:12:27.280 --> 0:12:30.880 consequently their guidance was softer than expected for the data center. 0:12:31.160 --> 0:12:34.000 That doesn't take anything away from the core datata center. 0:12:33.920 --> 0:12:35.280 Business, which continues to grow. 0:12:35.320 --> 0:12:38.240 But we are in a seasonally weaker quarter for PCs 0:12:38.280 --> 0:12:41.040 and for data center, and with a little bit less 0:12:41.120 --> 0:12:44.160 of a ramp on those new chaps, the gross margin 0:12:44.200 --> 0:12:45.840 takes a bit of a hit. And so you know, 0:12:45.840 --> 0:12:48.720 in the semiconductor world, gross margin is everything. And so 0:12:48.880 --> 0:12:51.959 whenever you see a decline in the gross margin expectations 0:12:52.000 --> 0:12:55.960 relative to or you know, outlook relative to expectations, typically 0:12:56.000 --> 0:12:59.640 stocks go down. But you know, more importantly, their second 0:12:59.640 --> 0:13:03.360 half for this ramp remains intact. It's just become a 0:13:03.360 --> 0:13:04.200 little bit of a wait. 0:13:04.080 --> 0:13:04.680 And see game. 0:13:05.000 --> 0:13:07.840 And some shorter term investors don't tolerate that well and 0:13:07.880 --> 0:13:09.360 they get out of the stock and they say, okay, 0:13:09.400 --> 0:13:12.640 we'll get back in later. You know, for long term investors, 0:13:12.960 --> 0:13:16.080 you know, it becomes a ride this out moment. You 0:13:16.200 --> 0:13:19.120 don't know when sentiment is going to change. People could say, okay, 0:13:19.120 --> 0:13:20.280 it's coming in the second half. 0:13:20.320 --> 0:13:22.080 Well that's July. Oh maybe I should. 0:13:21.840 --> 0:13:24.800 Start buying it, you know, in March, or you know, 0:13:24.920 --> 0:13:26.920 maybe I had better get ahead of that buying spurt 0:13:26.920 --> 0:13:29.000 and buy it, you know, later this month now that 0:13:29.040 --> 0:13:31.240 it's come down. So it's really hard to time this 0:13:31.360 --> 0:13:33.280 kind of thing. What you have to rely on is 0:13:33.280 --> 0:13:34.480 that the fundamentals are good. 0:13:35.280 --> 0:13:38.240 Speaking of the short term disruptions, Deep Seek also came 0:13:38.280 --> 0:13:40.120 up on the earnings call, and I was surprised to 0:13:40.600 --> 0:13:44.079 hear that the CEO projected a tone of confidence that 0:13:44.120 --> 0:13:47.000 they could actually benefit from some of these algorithmic breakthroughs. 0:13:47.320 --> 0:13:50.200 I'm curious if you can explain how does AMD and 0:13:50.440 --> 0:13:54.360 you know, perhaps even Qualcom's foothold and edge devices like 0:13:54.480 --> 0:13:58.160 phones make it better position perhaps to handle some of 0:13:58.480 --> 0:14:01.160 you know, the disruptions coming from a deep Seek or 0:14:01.320 --> 0:14:04.360 models like it, as opposed to an Invidia that really 0:14:04.440 --> 0:14:06.440 saw it shares tank in the wake of that. 0:14:07.760 --> 0:14:11.920 Yeah, so the deep Seek innovation, the news was surprising 0:14:12.080 --> 0:14:16.120 because they were able to achieve efficiency potentially more quickly 0:14:16.120 --> 0:14:19.640 than folksould imagine. But efficiency is always something that comes 0:14:19.680 --> 0:14:23.000 to this space. Right, Chips get smaller, faster, cheaper over time, 0:14:23.080 --> 0:14:26.440 but that never led folks to buy fewer chips. Same 0:14:26.480 --> 0:14:30.280 thing here, Right, the models become cheaper and more efficient 0:14:30.320 --> 0:14:33.280 over time, but that doesn't mean that folks are going 0:14:33.320 --> 0:14:35.480 to step away from buying the best ships they can 0:14:35.800 --> 0:14:39.400 now AMD Qualcom you have more of a focus on 0:14:39.440 --> 0:14:42.160 the inference side of this, that is the use of 0:14:42.200 --> 0:14:45.960 the models, and that's where greater efficiency will mean more use, 0:14:46.080 --> 0:14:48.120 and I think that's what they're focused on. More use 0:14:48.200 --> 0:14:50.480 is good for them. It's going to mean more chips 0:14:50.480 --> 0:14:53.280 are going to be needed to roll out those applications, 0:14:53.720 --> 0:14:56.720 and so hey, if the market shifts from the training chips, 0:14:56.720 --> 0:14:59.280 where you absolutely have to have the highest quality, most 0:14:59.320 --> 0:15:02.640 powerful and vid chips over to the inference side where 0:15:02.760 --> 0:15:06.760 there are different components like memory and speed, that plays 0:15:06.800 --> 0:15:08.680 into their strengths and on benefits. 0:15:08.720 --> 0:15:10.480 You go amine Qualcom off to the bell today. 0:15:11.360 --> 0:15:12.520 Yeah. Absolutely. 0:15:12.560 --> 0:15:16.440 You know, ARM is more diversified, I say, in a 0:15:16.440 --> 0:15:17.920 more diffuse in their exposure. 0:15:17.920 --> 0:15:19.160 I mean, yes, they. 0:15:18.920 --> 0:15:21.120 Certainly play a role in a lot of the chips 0:15:21.160 --> 0:15:23.920 that go into the AI infrastructure, but they also are 0:15:24.200 --> 0:15:27.640 more heavily tilted towards smartphones and in a very broad way, 0:15:27.800 --> 0:15:32.400 Qualcom obviously more smartphone oriented. But fortunately for them, the 0:15:32.440 --> 0:15:34.640 smartphones they go into tend to go to the higher 0:15:34.720 --> 0:15:37.520 end consumer and that is an area that continues to 0:15:37.560 --> 0:15:40.960 be strong. So we actually We do own Qualcom. We've 0:15:40.960 --> 0:15:42.920 owned it for a long time for clients. We like 0:15:43.000 --> 0:15:46.160 their growth potential. We also like the income with their 0:15:46.360 --> 0:15:47.320 pretty solid dividend. 0:15:48.040 --> 0:15:50.240 Lots to see today after the bell, Joey un Feenie 0:15:50.320 --> 0:16:02.200 of Advisor's Capital Management, Thank you. Electronic Arts cut its 0:16:02.200 --> 0:16:04.960 full year revenue outlook yesterday. That follows a decline in 0:16:05.000 --> 0:16:07.440 the company's third quarter sales. For more on what we 0:16:07.520 --> 0:16:10.080 learned from the video game publisher, were joined by Bloomberg's 0:16:10.120 --> 0:16:15.640 Jason Schreyer. Jason, This stirred concerns among investors that EA 0:16:15.760 --> 0:16:18.840 Games can continue to squeeze growth from its Tent Bowl 0:16:19.560 --> 0:16:23.720 soccer franchise games that counts for a big slice of 0:16:23.760 --> 0:16:27.680 its overall revenues. What did you learn from the earnings 0:16:27.760 --> 0:16:30.000 call about how the company plans to turn this around? 0:16:31.040 --> 0:16:34.320 Yeah, so it was an interesting call last night. EA 0:16:34.400 --> 0:16:37.640 had already reported preliminary results a couple of weeks ago 0:16:37.720 --> 0:16:41.920 and taking a bath in the sock as a result. 0:16:42.000 --> 0:16:43.760 I believe they're down about twenty percent. 0:16:43.840 --> 0:16:44.600 They had a. 0:16:44.560 --> 0:16:49.040 Slight gain overnight, partially because they said they were buying 0:16:49.080 --> 0:16:50.600 back a billion dollars in the stock. 0:16:52.040 --> 0:16:53.160 And yeah, I mean. 0:16:53.120 --> 0:16:55.160 They are looking at the Soccer franchise that is their 0:16:55.200 --> 0:16:58.200 big money maker. I believe it's something like seventy four 0:16:58.360 --> 0:17:02.000 seventy five percent of revenue, and their business is now 0:17:02.000 --> 0:17:05.600 from live service, meaning not just selling a game on 0:17:05.640 --> 0:17:09.320 a store shelf, but also recurring revenue getting players to 0:17:09.440 --> 0:17:12.480 buy stuff within the game after it launches, and the 0:17:12.520 --> 0:17:16.240 soccer game is a big part of that. This recent 0:17:16.440 --> 0:17:19.280 kind of disappointing quarter as a result of this new 0:17:19.320 --> 0:17:23.040 soccer game not having the same kind of long term revenues. 0:17:22.520 --> 0:17:23.600 That they hoped for. 0:17:24.160 --> 0:17:27.080 Anice in augustanding for example, calling out lower user acquisition 0:17:27.160 --> 0:17:29.679 software engagement with FC. They also then turn their attention 0:17:29.720 --> 0:17:33.640 to Battlefield and basically a slipping calendar date there too 0:17:33.680 --> 0:17:33.880 a bit. 0:17:33.960 --> 0:17:37.040 Jason, Yeah, it looks like they are planning on releasing 0:17:37.040 --> 0:17:40.160 the new Battlefield at some point this coming fiscal year, 0:17:40.320 --> 0:17:44.040 so before April of next year. And yeah, this one 0:17:44.119 --> 0:17:45.879 has been a little while in the making. It's been 0:17:45.920 --> 0:17:49.639 a while since Thea's recent Battlefield A most recent battlefield game, 0:17:50.359 --> 0:17:53.440 Battlefield has never been able to keep up with the 0:17:53.520 --> 0:17:57.440 biggest rival, Call of Duty from Activision Blizzards, so it'll 0:17:57.440 --> 0:18:00.720 be interesting to see how they perform this time they 0:18:01.200 --> 0:18:02.680 for I believe the first time. 0:18:02.720 --> 0:18:04.480 They have four different. 0:18:04.280 --> 0:18:07.919 Studios within the EA organization just working on this single 0:18:08.000 --> 0:18:11.160 battlefield game, so it is a humongous bet for them. 0:18:11.720 --> 0:18:14.240 Jason, one of the company's challenges right now is getting 0:18:14.400 --> 0:18:17.679 users to play the updated version of the game, but 0:18:17.720 --> 0:18:19.960 they're still pretty interested in playing the older version of 0:18:19.960 --> 0:18:22.359 the game. How does the company typically deal with something 0:18:22.400 --> 0:18:22.680 like that? 0:18:23.840 --> 0:18:27.440 This is the eternal video game industry problem right now, 0:18:27.480 --> 0:18:30.080 which is that you have so many people who just 0:18:30.119 --> 0:18:33.040 don't feel compelled to keep buying new games every single 0:18:33.080 --> 0:18:35.359 year when they can still have a great time playing 0:18:35.359 --> 0:18:39.160 their older games, playing Fortnite, or playing a previous iteration 0:18:39.280 --> 0:18:41.800 of the sports game. In the sports it's been interesting 0:18:41.840 --> 0:18:44.760 Traditionally a company like EA has been able to get 0:18:44.800 --> 0:18:50.639 people to keep buying new releases because of roster updates 0:18:50.680 --> 0:18:54.199 and kind of slight feature enhancements. In the case of 0:18:54.280 --> 0:18:58.200 the soccer games formerly called FIFA now called EA Sports FC, 0:18:59.200 --> 0:19:01.199 one of their biggest in restences is kind of like 0:19:01.240 --> 0:19:05.720 this Ultimate Team mode where basically players have to buy 0:19:05.840 --> 0:19:08.439 these kind of loop boxes or card packs that give 0:19:08.480 --> 0:19:11.879 them randomly generated players and stats, and it's this whole 0:19:11.880 --> 0:19:14.320 big ecosystem that a lot of people have criticized for 0:19:14.320 --> 0:19:17.119 filling a whole lot like gambling, and EA's hope is 0:19:17.160 --> 0:19:20.680 that EA has said that the most recent entry is 0:19:20.680 --> 0:19:23.639 a little bit unbalanced, players didn't like a lot of 0:19:23.680 --> 0:19:26.480 things about it, and they're hoping that a big update 0:19:26.480 --> 0:19:28.399 they just released a couple of weeks ago will fix 0:19:28.520 --> 0:19:30.359 things and kept people back on track. 0:19:30.600 --> 0:19:33.040 Jason, Sure, thanks so much for the update on EA. 0:19:33.240 --> 0:19:35.840 Now on to more earnings. Uber shares falling on wheat 0:19:35.840 --> 0:19:38.440 gross booking guidance, bloomag In challenges analyst Man it's seeing 0:19:38.520 --> 0:19:40.920 is in the house, and look they're blaming weather. You're 0:19:40.920 --> 0:19:44.159 actually more worried about broader deceleration from ultimately months of 0:19:44.200 --> 0:19:45.240 music with Yeah. 0:19:45.359 --> 0:19:47.840 Look, I think when you look at their three year 0:19:47.920 --> 0:19:52.040 target of mid to high teens, what could kind of 0:19:52.080 --> 0:19:54.879 get them there? It has to be the mobility segment 0:19:54.920 --> 0:19:57.959 that is the core business. The delivery side isn't that 0:19:58.040 --> 0:20:01.280 profitable still, then you compare them to DoorDash and on 0:20:01.320 --> 0:20:04.800 the mobility side, everyone is so worried about Wemo rolling 0:20:04.800 --> 0:20:07.720