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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive

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Speaker 1: from coast to coast with Caroline Hyde in New York

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Speaker 1: and ever low in sentrances, go.

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Speaker 2: This is Bloomberg Tech coming up. Amazon shares drop after

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Speaker 2: announcing plans to spend two hundred billion dollars this year

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Speaker 2: on data centers, chips and other equipment.

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Speaker 3: Mean while Bitcoin rebounds, having plummeted on Thursday when it

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Speaker 3: neared the sixty thousand.

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Speaker 2: Dollars level, and we break down more tech earnings of

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Speaker 2: the CEOs of Roadblocks, a firm, and the Warner Music Group.

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Speaker 3: First, we check in on what is a tentative bounce

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Speaker 3: back after what has been a punishing week. Remember the

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Speaker 3: Nasdaq is on track for its worst week ed in

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Speaker 3: three months since the beginning of November. But now we

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Speaker 3: see a little bit of a reprieve, a little bit

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Speaker 3: of dip by We're up percentage point if you're looking

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Speaker 3: at the big indexes, and.

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Speaker 4: I know you're going to drill into the individual movers

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Speaker 4: that push and pull.

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Speaker 3: But Crypto up almost nine percent, but only about eradicating

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Speaker 3: half of yesterday's losses. We're still only at sixty eight

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Speaker 3: thousand what are remarkable beginning to the year for this

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Speaker 3: asset class that in many ways people feel is not

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Speaker 3: a store of value.

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Speaker 4: But what are you looking at?

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Speaker 2: The analyst are calling it sticker shock. Amazon pledging to

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Speaker 2: spend two hundred billion dollars capital expenditures on AI infrastructure.

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Speaker 2: The stock down more than eight percent right now, on

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Speaker 2: track for its biggest drop since April of last year.

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Speaker 2: Operating income in the current period twenty one billion dollars

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Speaker 2: at the high end below consensus. So the concern is

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Speaker 2: is the trade off worfit here? There is a big

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Speaker 2: backlog for AWS and AI business. By the way, it's

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Speaker 2: one of the few names on the NAZAQ one hundred

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Speaker 2: that's down because in reaction to that capital expenditures pledge,

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Speaker 2: you see everyone from the GPU providers and videos now

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Speaker 2: up more than six percent in response. Memory names, infrastructure names,

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Speaker 2: energy names all higher because the capital expenditures for all

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Speaker 2: of the hyperscalers in aggregate plus meta is growing. We're

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Speaker 2: going to get to that with ananilyst just a few

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Speaker 2: minutes time, and the water cryptocurrencies traders are buying the

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Speaker 2: dip carry outlined it. Bitcoin's rebounding after plummeting on Thursday,

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Speaker 2: raising all the gains since Donald Trump's twenty twenty four election,

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Speaker 2: falling close to sixty thousand US dollars, popping back up again.

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Speaker 2: Blueberg Distal financial reporter Emily Nicole joins us with the

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Speaker 2: latest difficult Emily, what's going on?

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Speaker 5: And your guests as good as mine. To be honest,

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Speaker 5: We've been watching bitcoin over the last twenty four hours

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Speaker 5: and it's really been a roller coaster. As you said,

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Speaker 5: it dipped about thirteen percent yesterday. Now I think we're

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Speaker 5: up about ten percent, so we're recovering some of that,

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Speaker 5: but it's really just been a roller coaster week. It's

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Speaker 5: been hard to kind of guess at why that's been happening.

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Speaker 5: There's been a lot of instability over the last few

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Speaker 5: months with geopolitical tensions, and bitcoins really struggled to perhatch

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Speaker 5: onto any narrative within that, whether or not it's a

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Speaker 5: safe haven, a saw of value if it can latch

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Speaker 5: onto stocks as it used to trade pretty in line

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Speaker 5: with tech stocks back in the day. None of that

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Speaker 5: seems to be sticking, and it's just kind of doing

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Speaker 5: its own thing right now.

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Speaker 4: Fud some would call it in the market.

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Speaker 3: Fear, uncertainty, doubt just consumed the asset class as a whole,

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Speaker 3: and it's consumed companies that have written so high on

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Speaker 3: the back of the climb in crypto. I think of

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Speaker 3: Strategy in some of these other digital asset treasury companies.

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Speaker 3: That's how have you seen, particularly on the back of

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Speaker 3: Michael Sailor's earnings yesterday, have you seen people still questioning

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Speaker 3: how long they can ride this?

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Speaker 6: Boy?

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Speaker 5: If we look at Strategy, for example, that has also

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Speaker 5: had a similarly up down two days, So yesterday it

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Speaker 5: was down about seventeen percent of the close before the earnings,

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Speaker 5: Investors were really bracing for some bad news coming from that,

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Speaker 5: particularly with bitcoin having such a bad day, and then

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Speaker 5: today we're seeing it up more than sixteen percent. Because

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Speaker 5: of that kind of whipsawing effect, the earnings weren't as

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Speaker 5: bad as people expected. Losses were in line with what

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Speaker 5: we thought was happening. No new debt was being created,

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Speaker 5: and so people trying to stretch for you know, where

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Speaker 5: can we see some some like staying power within this rally?

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Speaker 5: Where is there a bottom? Where is their stability? And

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Speaker 5: that might be where we're now starting to see a

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Speaker 5: sort of bottom. Maybe that sixty thousand mark was it,

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Speaker 5: and for strategy as well, maybe it's kind of starting

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Speaker 5: to see a way out of that.

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Speaker 3: It's interesting, even with the headlines coming from China as

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Speaker 3: they tighten curbs on crypto and stable coin issuance, still

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Speaker 3: managing to catch some buying of the dick today.

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Speaker 4: Emily Nicole, what a busy week. Thanks for joining us.

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Speaker 3: Meanwhile, let's talk Waymo now using DeepMind's Genie three AI

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Speaker 3: model to create realistic worlds for a new Waymo world models,

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Speaker 3: according to the company.

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Speaker 4: In a blog post today, the self.

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Speaker 3: Driving tech developer argues this collaboration with another segment of

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Speaker 3: Google's tech ecosystem is going to help the expansion of

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Speaker 3: Waymos's self driving services across many more markets.

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Speaker 2: Ed, let's get back to Amazon, big mover, big stories

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Speaker 2: stock lower is. The company announced it's set to spend

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Speaker 2: two hundred billion dollars this year data centers, chips and equipment,

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Speaker 2: supercharging its bets on AI roll. Hit Ko carne Is

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Speaker 2: Managing directors see the analyst for Internet and Capital markets

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Speaker 2: research at Rough Capital Partners. They call it sticker shock right.

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Speaker 2: The reaction to the big capital expenditures number, But there

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Speaker 2: was a time where a big capital expenditures number was

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Speaker 2: what you wanted to see. Why the negative reaction, I.

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Speaker 7: Think the negative reaction is just because outside of the

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Speaker 7: caps people expected spotless earnings. I thinks Sticker Shop was

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Speaker 7: expected given what Google, Meta Microsoft did last ten days.

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Speaker 7: But what was not expected was slight yellow flags and

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Speaker 7: operating margins, and certainly people realizing that Amazon has to

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Speaker 7: spend a lot more given they are launching satellites to space, right,

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Speaker 7: they are building new whole foods and so on and

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Speaker 7: so forth.

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Speaker 2: You have a buy on Core, on the stock, and

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Speaker 2: I believe let me just check here on my Bloomberg terminal. Yeah,

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Speaker 2: two hundred and eighty five dollars price target. Right. There

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Speaker 2: are lots of pieces of data in there. Some people

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Speaker 2: looked at the operating income forecast for the current period

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Speaker 2: and thought that's a little worrying, bearing in mind AWS

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Speaker 2: is the majority of operating income. Some looked at the backlog.

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Speaker 2: Some looked at the AWS growth twenty four percent, fastest

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Speaker 2: pace of growth in almost three years. Where would you

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Speaker 2: look all of the above.

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Speaker 7: There are many positives in the report and in the outlook,

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Speaker 7: and the various moving parts in Amazon accident aws, improving

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Speaker 7: retail margins, better advertising growth as well as better efficiency

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Speaker 7: in the retail. Overall, I think what is spooking the

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Speaker 7: market here is there are more investments beyond AI that

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Speaker 7: this company is doing, unlike many other peers that are

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Speaker 7: just doubling down on simple, simply one thing. So the

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Speaker 7: wordy hear is next two to three years. How high

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Speaker 7: of an investment curve are we looking at for Amazon

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Speaker 7: and what level of ROI do they get beyond the

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Speaker 7: core AI investments. I think that's the worry here. But

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Speaker 7: all in we think this is a GENEAI winner, very

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Speaker 7: underappreciated and over time time retell.

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Speaker 3: What's diggins why it's a GENAI winner? Is it trainium, graviton?

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Speaker 3: Just seeing the triple digit percentage growth, the fact that

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Speaker 3: they've got that vertical integration, making their own chips, using

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Speaker 3: that for the compute that they offer in the efficiency

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Speaker 3: theres it gains. Then is it more that their own models,

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Speaker 3: Like we don't talk much about the own models that

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Speaker 3: they're producing. We talk so much about Google's, for example,

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Speaker 3: but not so much Amazons.

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Speaker 7: I know, I think Amazon is with all of the

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Speaker 7: ambo okay, they are vertically integrating in a way that

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Speaker 7: absolutely know the company on Earth is trying to replicate

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Speaker 7: at the scale at which Amazon is trying to do,

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Speaker 7: Vertically integrating cloud, vertically integrating retail, and having the diversity

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Speaker 7: of advertising. So I feel when all three pillars of

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Speaker 7: Amazon start to crank up higher operating margins, which we

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Speaker 7: will we will see over the next college six to

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Speaker 7: nine months, that's when the real potential of profitability of

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Speaker 7: this company will will manifest in the numbers. And that's

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Speaker 7: when That's why I believe the surface area of investments

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Speaker 7: as well as surface area of ROI on those investments

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Speaker 7: is so much wider at Amazon that is being underappreciated,

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Speaker 7: and that's that's where we feel this is a Jenny

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Speaker 7: I winner across the board.

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Speaker 3: It's interesting we have such short term memory loss sometimes

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Speaker 3: this was always a company that focused more on investing

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Speaker 3: in itself rather than producing profitability.

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Speaker 4: But push us forward.

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Speaker 3: As to how Annie Jasse continues to manage the cost basis,

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Speaker 3: because that was the headline that stole the show previous

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Speaker 3: to earning season was the amount of job cuts they're making.

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Speaker 4: Is that still what you need to be seeing from

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Speaker 4: Mandy Jesse.

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Speaker 7: I think there is room probably the company needs to

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Speaker 7: make after the over hiring of almost two and a

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Speaker 7: half years after the COVID, I think there is still

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Speaker 7: digesi period, but which probably one would argue that has

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Speaker 7: been a little bit more prolonged than what would have

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Speaker 7: one would have preferred to see. So I think they're

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Speaker 7: finally getting there, and I think a little bit of

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Speaker 7: extra cost cuts would be much more appreciated to make

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Speaker 7: room for more CAPEX.

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Speaker 2: CAPEX across the Hyperscals plus Meta is now at six

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Speaker 2: hundred and fifty billion dollars for the year for Microsoft.

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Speaker 2: That's based on consensus. The difference with Amazon is that

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Speaker 2: they might tip into negative free cash flow. We have

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Speaker 2: thirty seconds. How worried are you about that?

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Speaker 7: Not worried at all. This company has gone through negative

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Speaker 7: free cash flow cycles in the past and delivered ROI

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Speaker 7: unlike many other become and easier for the first time

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Speaker 7: going through this cycle. If you look at fifteen years,

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Speaker 7: Amazon has delivered r I C probably in a besting

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Speaker 7: class manner.

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Speaker 3: O Kakarni of Growth Capital Partners, thank you very much,

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Speaker 3: indeed for joining us today and coming up with all

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Speaker 3: more earning.

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Speaker 4: We're speaking of the Roadblocks CEO Dave Bazuki. As a

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Speaker 4: company season one hundred.

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Speaker 3: And forty four million daily active users. You don't even

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Speaker 3: want to hear how many hours people are spending on

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Speaker 3: this platform.

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Speaker 4: We'll break it down. This is Blue meg Tech.

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Speaker 3: Chackap Chairs of Roadblocks company on fire up ten percent

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Speaker 3: after they reported fourth quarter users and bookings at topped expectations.

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Speaker 4: Daily active users.

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Speaker 3: Jumped sixty nine percent to one hundred and forty four million.

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Speaker 3: It beat alas forecasts and pleased to say we're now

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Speaker 3: joined on the results by Dave Bazuki, CEO of Roadblocks.

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Speaker 3: Your engagement levels was jumping to a similar degree. I

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Speaker 3: think it was like sixty eight per What is is

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Speaker 3: this the games that are driving this day?

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Speaker 8: It's really the games, the platform and the creator. You know,

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Speaker 8: we are on a mission to get ten percent of

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Speaker 8: all global gaming content running on Roadblocks, and we're well

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Speaker 8: on our way. We had a banner year, as you

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Speaker 8: mentioned in twenty twenty five, we had fifty five percent

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Speaker 8: year on year bookings growth. And in addition, as we

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Speaker 8: started rolling out what we call the gold standard for safety,

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Speaker 8: we're age checking our users and we now have accurate

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Speaker 8: you know data on the eighteen and up segment, which

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Speaker 8: is growing at over fifty percent year on year. In addition,

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Speaker 8: around the world, countries like Japan are growing one hundred

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Speaker 8: and sixty percent year on year. Really, people are creating

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Speaker 8: new genres and types of games, whether it was dressed

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Speaker 8: to Impress a year ago or grow a garden. So

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Speaker 8: we're powered by both platform and an amazing creator community.

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Speaker 3: Yeah, you call Bruno Mars singing live on brain rot,

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Speaker 3: I mean tolve million people all using and.

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Speaker 4: Coming to watch that at the same time. The records

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Speaker 4: are interesting.

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Speaker 3: Given as you say, these safety measures have been put

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Speaker 3: in place, how has that impacted? Has that created any

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Speaker 3: friction or indeed, it seems as though you're leaning into

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Speaker 3: the opportunity of these safety measures.

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Speaker 8: I think leaning in is a good way to mention it.

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Speaker 8: I believe the last time we chatted we mentioned our

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Speaker 8: vision for the gold standard for safety. In addition to

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Speaker 8: filtering and monitoring all chat for critical harms and not

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Speaker 8: allowing image or video sharing, we have now are full

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Speaker 8: into our roleout of age estimation, which is understanding the

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Speaker 8: age of everyone on our platform and using that to

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Speaker 8: allow people to communicate with people of similar age. We

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Speaker 8: gave our teams an ambitious goal to have no friction

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Speaker 8: for this, and when you lean into something like this,

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Speaker 8: a lot of innovations pop up. On the side, our

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Speaker 8: matchmaking has gotten better. We continue to refine the way

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Speaker 8: we filter text and make trusted connections, so we're optimistic

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Speaker 8: we're going to go through this and ultimately come out

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Speaker 8: with minimal friction from this.

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Speaker 2: Dave. I fired up my new gaming PC last night,

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Speaker 2: Asa Nitro V fifteen, Intel I five and Video g

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Speaker 2: fours ID X forty fifty and I thought to myself,

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Speaker 2: what am I going to play? And for you guys

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Speaker 2: and everyone else, it's about pipeline, right. You rely on

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Speaker 2: these third parties to keep the pipeline going, but you

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Speaker 2: also have like the you know, the ambition on these

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Speaker 2: higher fidelity games. How do you guarantee the pipeline and

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Speaker 2: how are you going to manage the pipeline going forward?

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Speaker 2: So I have some more things to play.

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Speaker 8: The pipeline on Roadblocks is very, very healthy. We watched

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Speaker 8: the distribution, the variety, the diversity of the experiences that

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Speaker 8: our creators are growing, and over the last year we've

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Speaker 8: made amazing really advances, not just our technology platform, but

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Speaker 8: in search and discovery, so that the pipeline is robust.

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Speaker 8: Right now, we have a unique vision with our platform,

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Speaker 8: especially for eighteen and up expansion, that when a creator

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Speaker 8: makes an experience on roadblocks, it works at good performance

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Speaker 8: on a low end to gigabyte Android phone, for example,

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Speaker 8: but also can scale up and look beautiful on your

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Speaker 8: brand new gaming PC. This is a unique technology. It

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Speaker 8: requires a vertical stack going from cloud to game engine,

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Speaker 8: to discovery to the apps on everyone's desktop. It's why

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Speaker 8: we're optimistic that that fifty percent growth in eighteen and

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Speaker 8: up can get more and more of that part of

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Speaker 8: the global gaming market. I'll highlight in the US our

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Speaker 8: ambitions are more than ten percent, and in the US

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Speaker 8: a big majority of that fifty billion approximate gaming market

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Speaker 8: is eighteen and up. So what we see really good

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Speaker 8: trajectory in that direction.

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Speaker 2: Dave Advertising, we check with you regularly on it, and

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Speaker 2: you're consistent that it's not yet a meaningful contributor. Right

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Speaker 2: when will it be? Will it be? Or do investors

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Speaker 2: now start to change how they factor in ads?

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Speaker 1: For you?

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Speaker 2: Going forward?

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Speaker 8: I want to highlight the big picture, you know, in

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Speaker 8: twenty twenty five, I believe we gave guidance in the

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Speaker 8: load twenties and we ended up with fifty five percent

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Speaker 8: bookings growth. So I want to highlight the big picture

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Speaker 8: is we continue to exceed guidance and expectation on how

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Speaker 8: we grow. We're seeing great progress both on rewarded video

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Speaker 8: advertising and also developer sponsor tile advertising, which is creators

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Speaker 8: on roadblocks who are monetizing really well accelerating their own

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Speaker 8: growth by purchasing advertising. We do believe it'll be a

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Speaker 8: big segment. It will ultimately as we roll out Roadblocks moments,

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Speaker 8: which is I'm really used for discovery of video capture

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Speaker 8: of roadblocks, that'll be a part of it. So we're

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Speaker 8: continuously bullish, but not ready to really split it out yet.

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Speaker 3: Dave, briefly, how going to show you on the AI

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Speaker 3: platform and indeed the model that you have We've got

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Speaker 3: Cube foundation model that you've just unfailed, but Google's also

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Speaker 3: got Project Genie. How are you seeing that changing the

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Speaker 3: development of games and how do you stick to your

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Speaker 3: sort of more blocky esthetic that people love.

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Speaker 9: Well.

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Speaker 8: What we believe we will see over time as we

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Speaker 8: advance AI, our avatar system and our technology platform a

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Speaker 8: much bigger diversity of the types of experiences you see

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Speaker 8: on the platform. We've shared our notion of novel games,

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Speaker 8: which is games you'd never expected to see on Roadblocks

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Speaker 8: and genres like RPG or in sports, and really with AI,

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Speaker 8: we see that as an acceleration technology for both creation

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Speaker 8: for the way games look. We shared some video on

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Speaker 8: X this week around three D in the cloud up

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Speaker 8: sampling and also how models will be used for driving creation.

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Speaker 8: I'll highlight one key thing about Roadblocks. We are a

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Speaker 8: connection and a communication platform. We're a multiplayer platform where

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Speaker 8: you know, in sci fi terms, we're building the hollow

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Speaker 8: deck where people go together. Some of the technologies out

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Speaker 8: there that we're building as well, like world models, are

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Speaker 8: currently video single player technologies. We think the big long

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Speaker 8: term opportunity for us is synchronizing thousands of players in

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Speaker 8: the cloud, which is much different technology and stuff were

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Speaker 8: you know is actively part of how we build Roadblocks.

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Speaker 2: Dave Bazuki of Roadblocks, thank you very much. Coming up

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Speaker 2: on boom bag Tech, Affirm CEO Max Lefchin joins us

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Speaker 2: talk about his company's results. Stick Around It's next Spinbag Tech.

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Speaker 2: Shares of Affirm down about six percent. The buy Now

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Speaker 2: pay later. Company reported results that beat analyst estimates, though

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Speaker 2: some on the street say that the outlook part is

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Speaker 2: a little bit conservative. Fortunately, we can talk through it

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Speaker 2: with a firm CEO, Max left Chin. Actually, there's been

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Speaker 2: a lot this morning about the outlook the financial Strong

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Speaker 2: couarter gone. I actually just want to talk about what

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Speaker 2: you're doing, and I'd like to start, if I may,

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Speaker 2: with the affirm card, how's that coming along? And Max

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Speaker 2: with you? If if I may, what's the end game

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Speaker 2: with the affirm card?

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Speaker 10: You know, there is no endgame for there's so much

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Speaker 10: to do. I have a hard time saying we'll be

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Speaker 10: done when this feature. Ships are from card rocketed once again.

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Speaker 2: Yeah.

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Speaker 10: For a long time, I think it looked like a

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Speaker 10: gently super linear growth curve, and in our latest letter,

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Speaker 10: we finally showed.

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Speaker 2: That it's that's kind of what I mean, you know,

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Speaker 2: the trajectory's changed.

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Speaker 10: It's you know, we didn't do anything very specific to

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Speaker 10: make it go obviously exponential, but it is accelerating. And

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Speaker 10: it's just the great work of our product teams that

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Speaker 10: have been putting in new features, integrating all of our

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Speaker 10: zero percent deals into the card. The card grew, you know,

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Speaker 10: something like four times the rest of the business, or

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Speaker 10: you know, it's just a rocket ship that we built

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Speaker 10: a few years ago and it just keeps going. The

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Speaker 10: endgame is to get you to put away your credit

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Speaker 10: card forever and use a deviit card powered by a firm.

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Speaker 2: The other growth part of the story, because it is

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Speaker 2: a growth story, and whatever you feel about the end

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Speaker 2: list saying you're being conservative. Is international expansion a bit

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Speaker 2: so in my home country, in Caroline's home country, the UK,

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Speaker 2: it's a really interesting case study. How is that going?

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Speaker 2: But then what comes next after that?

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Speaker 10: Well, we just announced some exciting brands. We're live with Shopify,

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Speaker 10: our great partner in the US. Now in the UK

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Speaker 10: it's a real business now. So for a couple of quarters,

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Speaker 10: we said, look, we're we've crossed upon We're in London,

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Speaker 10: we're hiring where we're building. It's now a business, it's

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Speaker 10: making real revenue, it's generating some very significant sales lifts

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Speaker 10: for emerging partners. We have a whole slew of new

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Speaker 10: partnerships to go live with soon, so feeling great about

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Speaker 10: it and eyeing continental Europe next of course, and so

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Speaker 10: we're definitely not going to be a North American phenomenon only,

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Speaker 10: but we're still very, very committed and very focused on

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Speaker 10: our North American stronghold.

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Speaker 3: So as Ted Securities is truest is Bloomberg Intelligence Analysis right,

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Speaker 3: that you do guide conservatively and you just feel that

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Speaker 3: that's the right thing to do in this consumer context.

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Speaker 10: I think the guide is the guide, As our CFO

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Speaker 10: always reminds me to say, you know, I encourage folks

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Speaker 10: that hold our stock or eyeing our stock to see

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Speaker 10: how we've done in the past. Quarter after quarter. We

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Speaker 10: make promises and we deliver on them. So we take

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Speaker 10: our guidance very seriously. We intend to always do well

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Speaker 10: relative to what we said will do and better and

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Speaker 10: that's what it is. I mean, ultimately, the results speak

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Speaker 10: for themselves, and we are in it for a very

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Speaker 10: long term. So at some point people will figure out

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Speaker 10: exactly just how much more growth there is in this business.

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Speaker 3: Credit quality holding up clearly, and that's the litmus test

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Speaker 3: in many ways to success within delinquencies.

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Speaker 4: Are they on the rise? How are you seeing a

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Speaker 4: consumer right now?

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Speaker 6: Max?

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Speaker 10: You know, we have underwritten tens of millions of American

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Speaker 10: households in the order of seventy million twenty six million

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Speaker 10: actives just last twelve months alone, we reported we see

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Speaker 10: a pretty big swath of America. Our consumer is healthy.

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Speaker 10: They are paying us back their shopping. They had a

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Speaker 10: great holiday season. A lot of outside observers underestimated our

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Speaker 10: growth over the holidays. We proved them wrong yesterday. Once again,

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Speaker 10: American consumer as we see her, is doing just fine.

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Speaker 2: Max, I think this is the first opportunity we've had

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Speaker 2: to speak since the President's initiative to cap credit card

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Speaker 2: interest rates. You know, we start this conversation by you saying, well,

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Speaker 2: we want people's their credit card away. That you obviously

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Speaker 2: have some some bias in that narrative, but just your

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Speaker 2: viewpoint on it, please, and what's happened in the weeks

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Speaker 2: that followed. We just have thirty seconds. Sorry.

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Speaker 10: I think the most important thing in this conversation about

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Speaker 10: affordability is transparency. Like raide caps are a conversation for

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Speaker 10: the legislators, but the most important thing is people understand

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Speaker 10: what they're getting into. The reason affirm has been successful

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Speaker 10: is because of upfront pricing. If you know what you'll pay,

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Speaker 10: you'll be just fine.

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Speaker 3: Max slash Joan always great to have your transparency on

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Speaker 3: the show.

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Speaker 4: See you over firm. Thank you. Coming up, we.

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Speaker 3: Dive on this week's market moves, the lay shoe of

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Speaker 3: Alliance Bernstein.

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Speaker 4: That's next. This has been bad tech.

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Speaker 2: Welcome back to Bloomberg Tech. We're looking at the NASAK

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Speaker 2: one hundred right. It's kind of the go to index.

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Speaker 2: It has the mag seven, the kind of broadest and

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Speaker 2: diversified list to tech companies. And on the week, we're

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Speaker 2: headed for our biggest weekly drop since November. Carol pointed

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Speaker 2: that out earlier, actually a percentage point more, and then

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Speaker 2: as that one hundred beyond track for its biggest weekly

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Speaker 2: drop since April. In the moment, we're actually a little

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Speaker 2: bit higher in the session, and that's the reaction of

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Speaker 2: the supply chain to Amazon and Amazon's projection of spending

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Speaker 2: two hundred billion dollars capital expenditures in twenty twenty six.

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Speaker 2: Of course, the big beneficiary when you're spending hundreds of

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Speaker 2: billions of dollars on AI infrastructure and data center is

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Speaker 2: in video, and that is one of the best performers

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Speaker 2: right now in this session. If we move super fast,

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Speaker 2: we might be able to change the chart and show

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Speaker 2: you what that looks like. Boom and Video up seven percent,

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Speaker 2: Amazon down eight percent, actually way way more widespread than

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Speaker 2: that across memory chip equipment makers, Nuclear names, the whole lot, charrac.

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Speaker 3: Names, bloom its numbers extraordinary. Let's dissect this a bit

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Speaker 3: more ed because you've just been talking us through the

439
00:24:06,760 --> 00:24:10,400
Speaker 3: sheer scale of the Hyperscaler's plans. If you add in matter,

440
00:24:10,440 --> 00:24:12,920
Speaker 3: it's six hundred and fifty billion dollars. It really underscores

441
00:24:12,960 --> 00:24:14,960
Speaker 3: just how quickly the AI race is accelerating.

442
00:24:15,680 --> 00:24:18,280
Speaker 4: Let's talk more on what this wave of investment means

443
00:24:18,280 --> 00:24:19,080
Speaker 4: for markets.

444
00:24:18,800 --> 00:24:21,520
Speaker 3: For disruption across industries, the actual use of the models

445
00:24:21,520 --> 00:24:24,680
Speaker 3: that this compute brings. Hey, shoot is with us Ann Spensteen,

446
00:24:24,840 --> 00:24:26,680
Speaker 3: CIO of Thematic Innovation Equities.

447
00:24:27,280 --> 00:24:29,280
Speaker 4: You own the whole array.

448
00:24:29,359 --> 00:24:32,359
Speaker 3: You own the hyperscalers plus the infrastructure layer.

449
00:24:33,440 --> 00:24:34,960
Speaker 4: What from this week did you think?

450
00:24:35,000 --> 00:24:36,960
Speaker 3: Do you agree that six hundred and fifty billion is

451
00:24:37,000 --> 00:24:39,520
Speaker 3: what we should be seeing from these sorts of names.

452
00:24:40,040 --> 00:24:42,160
Speaker 9: I think what we're seeing, and we've been saying this

453
00:24:42,400 --> 00:24:44,320
Speaker 9: is this is the third year into if you think

454
00:24:44,359 --> 00:24:46,919
Speaker 9: about from the start of CHRAGYBTM where we are today,

455
00:24:46,960 --> 00:24:49,080
Speaker 9: this is a third year into the build, and I

456
00:24:49,119 --> 00:24:51,520
Speaker 9: would say this is the year that we should start

457
00:24:51,520 --> 00:24:55,000
Speaker 9: to see adoptions, and in fact, I think that's what's

458
00:24:55,040 --> 00:24:56,800
Speaker 9: causing a lot of disruption in the marketplace.

459
00:24:57,040 --> 00:24:58,200
Speaker 4: We're seeing rapid.

460
00:24:57,880 --> 00:25:01,080
Speaker 9: Model drafts and largers and new model, new versions of it,

461
00:25:01,359 --> 00:25:03,840
Speaker 9: and the speed of that is accelerating, and that is

462
00:25:03,840 --> 00:25:06,640
Speaker 9: something that we should be expecting to see at this point.

463
00:25:07,040 --> 00:25:10,200
Speaker 9: But what's also interesting is that what it also means,

464
00:25:10,280 --> 00:25:13,480
Speaker 9: and we said this, this is an interesting time the

465
00:25:13,640 --> 00:25:17,040
Speaker 9: large cap themselves. They're spending a lot of money because

466
00:25:17,640 --> 00:25:20,800
Speaker 9: it's as defensive as it is offensive. Right, it's for growth,

467
00:25:20,840 --> 00:25:24,360
Speaker 9: but it's also to defend your competitive mode. AI has

468
00:25:24,400 --> 00:25:27,320
Speaker 9: the ability to disrupt many models, and this time it's

469
00:25:27,359 --> 00:25:31,560
Speaker 9: interesting is AI has holds the potential to disrupt tech.

470
00:25:31,960 --> 00:25:35,440
Speaker 9: How we think about the way that the infrastructure layer

471
00:25:35,560 --> 00:25:38,320
Speaker 9: is and how we think about enterprise software, how the

472
00:25:38,359 --> 00:25:41,880
Speaker 9: traditional business model with high competitive mode, how that could

473
00:25:41,920 --> 00:25:45,280
Speaker 9: be changing going forward. And that's exactly what we're seeing.

474
00:25:45,359 --> 00:25:48,399
Speaker 9: So it's kind of hard for us to judge. Is

475
00:25:48,480 --> 00:25:50,359
Speaker 9: six hundred and fifty the right number or is it

476
00:25:50,400 --> 00:25:51,200
Speaker 9: a different number?

477
00:25:51,640 --> 00:25:53,560
Speaker 2: Yes? Can I jump in and ask where do you

478
00:25:53,600 --> 00:25:56,760
Speaker 2: look for the evidence? Then? So, for example, Amazon talked

479
00:25:56,840 --> 00:26:00,000
Speaker 2: up its backlog, which is very different from our pa

480
00:26:00,280 --> 00:26:03,000
Speaker 2: right in the world of software because it's not invoiced.

481
00:26:03,280 --> 00:26:06,360
Speaker 2: They talked about, you know, the operating income. A backlog

482
00:26:06,400 --> 00:26:09,120
Speaker 2: would suggest, oh my goodness, they've got hundreds of billions

483
00:26:09,119 --> 00:26:12,400
Speaker 2: of dollars of revenues waiting in the wings from their

484
00:26:12,400 --> 00:26:16,399
Speaker 2: AI offering. The market doesn't seem to believe that. Do

485
00:26:16,480 --> 00:26:17,680
Speaker 2: you believe that metric?

486
00:26:18,400 --> 00:26:21,080
Speaker 9: I think it's less about whether or not that is

487
00:26:21,280 --> 00:26:23,720
Speaker 9: indeed just that one metric that we focus on.

488
00:26:24,040 --> 00:26:26,159
Speaker 4: But rather, if you think about all.

489
00:26:26,080 --> 00:26:31,040
Speaker 9: These this is basically a rebuild of the digital infrastructural layer.

490
00:26:31,520 --> 00:26:33,800
Speaker 9: And that's why I said, what is six hundred and

491
00:26:33,800 --> 00:26:36,080
Speaker 9: fifty billion? Is that precisely the right number we should

492
00:26:36,080 --> 00:26:38,520
Speaker 9: be anchoring on, but just the fact that how it

493
00:26:38,560 --> 00:26:42,320
Speaker 9: could unlock the future of workload and when we think

494
00:26:42,320 --> 00:26:45,800
Speaker 9: about it, it's not just the hyper skelets per se,

495
00:26:46,160 --> 00:26:48,199
Speaker 9: but also what does it mean for the rest of

496
00:26:48,200 --> 00:26:51,399
Speaker 9: the economy. What could it unlock in terms of the

497
00:26:51,440 --> 00:26:55,320
Speaker 9: potential in productivity And you're actually seeing the early evidence

498
00:26:55,359 --> 00:26:58,120
Speaker 9: of that. You can see in the traditional retail industry.

499
00:26:58,359 --> 00:27:01,040
Speaker 9: What does the future hold for shopping and what does

500
00:27:01,119 --> 00:27:04,120
Speaker 9: agent mean for future of shopping? Or if you think

501
00:27:04,119 --> 00:27:07,679
Speaker 9: about the traditional manufacturing industry. We are in fact seeing

502
00:27:07,800 --> 00:27:12,600
Speaker 9: real productivity gain from using AI, and that's only the beginning.

503
00:27:13,080 --> 00:27:15,640
Speaker 9: And time and time again, I think if we look

504
00:27:15,680 --> 00:27:19,320
Speaker 9: at look back in history, when you have such disruptive

505
00:27:19,440 --> 00:27:24,080
Speaker 9: technology changes, what happens in a near term the way

506
00:27:24,119 --> 00:27:27,520
Speaker 9: that we do things gets disrupted, But then new business

507
00:27:27,560 --> 00:27:31,720
Speaker 9: model productivity gain actually do emerge. And that is the

508
00:27:31,800 --> 00:27:35,399
Speaker 9: power of innovation. It requires little imagination. So if you

509
00:27:35,440 --> 00:27:38,720
Speaker 9: look at this point in time, yes, it's a huge

510
00:27:38,800 --> 00:27:41,440
Speaker 9: number that we're spending, but you probably could look back

511
00:27:41,480 --> 00:27:44,840
Speaker 9: and back then when electricity was first invented, that probably

512
00:27:44,920 --> 00:27:47,400
Speaker 9: was a tremendous amount of money to be spent on

513
00:27:47,720 --> 00:27:48,200
Speaker 9: the grid.

514
00:27:48,680 --> 00:27:50,679
Speaker 3: What if this is the future of the grid, Well,

515
00:27:50,760 --> 00:27:52,800
Speaker 3: let's talk about that for the innovation that we're seeing

516
00:27:52,960 --> 00:27:53,400
Speaker 3: at the moment.

517
00:27:53,400 --> 00:27:54,880
Speaker 4: And I just want to bring to our viewers.

518
00:27:54,880 --> 00:27:58,480
Speaker 3: Of course, the latest that happened about midday yesterday Whenanthropic

519
00:27:58,640 --> 00:28:01,679
Speaker 3: released a new version of its AI model, claud Opens

520
00:28:01,680 --> 00:28:03,880
Speaker 3: four point six. It's designed, we know, to carry out

521
00:28:03,920 --> 00:28:07,280
Speaker 3: financial research other work related functions. The company says it

522
00:28:07,280 --> 00:28:11,080
Speaker 3: can scrutinize company data, regulatory filings, market information to come

523
00:28:11,160 --> 00:28:14,080
Speaker 3: up with really detailed financial analysis that would normally take

524
00:28:14,119 --> 00:28:18,520
Speaker 3: a person days to complete. This is after the market

525
00:28:18,640 --> 00:28:22,479
Speaker 3: kind of fell out of bed following their legal plug

526
00:28:22,520 --> 00:28:26,320
Speaker 3: in to Cowork. So how are you seeing these models

527
00:28:26,920 --> 00:28:29,280
Speaker 3: becoming an entry point into software? What did you think

528
00:28:29,320 --> 00:28:33,720
Speaker 3: about just the gargantuan selloff across data services and software names.

529
00:28:34,440 --> 00:28:37,120
Speaker 9: You know, it's in the time of such disruption, it's

530
00:28:37,280 --> 00:28:40,200
Speaker 9: very it's too early to call what's cheap?

531
00:28:40,480 --> 00:28:41,800
Speaker 4: Who is going to be the future.

532
00:28:41,520 --> 00:28:44,600
Speaker 9: Winner because this is only the beginning, And ultimately it

533
00:28:44,720 --> 00:28:48,400
Speaker 9: comes back to what is the real long term competitive mode?

534
00:28:48,440 --> 00:28:51,040
Speaker 9: And that's what the question really is at this point,

535
00:28:51,320 --> 00:28:54,960
Speaker 9: because you know, it's if you talk to the private companies,

536
00:28:55,240 --> 00:28:57,600
Speaker 9: you probably are seeing some of the private companies this

537
00:28:57,720 --> 00:28:59,520
Speaker 9: is the fastest way for a company to get to

538
00:28:59,560 --> 00:29:02,479
Speaker 9: one hundred million doll revenue. But my question would be,

539
00:29:03,000 --> 00:29:05,200
Speaker 9: what is the real way to look at it? Who

540
00:29:05,240 --> 00:29:07,640
Speaker 9: can hold on to that one hundred million dollar revenue

541
00:29:07,960 --> 00:29:10,600
Speaker 9: for a long period yees? And what we are seeing

542
00:29:10,680 --> 00:29:13,080
Speaker 9: right now, what's interesting is it's not in the near

543
00:29:13,160 --> 00:29:16,840
Speaker 9: term numbers that's going down. But the question that we're asking,

544
00:29:17,080 --> 00:29:20,040
Speaker 9: and I think all the mesters are asking, is well,

545
00:29:20,360 --> 00:29:23,280
Speaker 9: it brings in the probability of what is the terminal

546
00:29:23,320 --> 00:29:26,480
Speaker 9: revenue we should be paying, what's the terminal multiple we

547
00:29:26,520 --> 00:29:29,440
Speaker 9: should be paying for the revenue because the probability of

548
00:29:29,480 --> 00:29:32,440
Speaker 9: holding on to that revenue and the profit is probably

549
00:29:32,520 --> 00:29:35,960
Speaker 9: changing really fast, and that's why we're seeing the terminal multiple.

550
00:29:36,120 --> 00:29:38,400
Speaker 9: Actually it is coming down pretty fast, and that's the

551
00:29:38,440 --> 00:29:40,880
Speaker 9: disruption that we're seeing in the market today.

552
00:29:41,520 --> 00:29:44,800
Speaker 4: But with disruption and chaos, there's.

553
00:29:44,600 --> 00:29:48,040
Speaker 9: Always opportunities because on the other side of it is

554
00:29:48,400 --> 00:29:51,640
Speaker 9: while we are really concerned about I feel like six

555
00:29:51,680 --> 00:29:54,520
Speaker 9: months ago everyone is concerned about the ROI, and now

556
00:29:54,560 --> 00:29:57,640
Speaker 9: we're seeing models being dropped, and then in the meantime

557
00:29:57,680 --> 00:30:00,120
Speaker 9: there's a massive seale off in the market. So I

558
00:30:00,160 --> 00:30:03,160
Speaker 9: would say think there's also an opportunity as well, because

559
00:30:03,280 --> 00:30:06,200
Speaker 9: now we're probably a little more comfortable with the ROI.

560
00:30:06,560 --> 00:30:09,800
Speaker 9: And then the six hundred and fifty billion dollar question

561
00:30:09,960 --> 00:30:13,440
Speaker 9: for everybody is we're building a road to nowhere, And

562
00:30:13,480 --> 00:30:15,800
Speaker 9: I would say, well, maybe there's hope that we're building

563
00:30:15,800 --> 00:30:19,640
Speaker 9: a road to somewhere. So it actually creates huge opportunities

564
00:30:19,760 --> 00:30:23,240
Speaker 9: if you have long term horizon, and because there's dislocation

565
00:30:23,360 --> 00:30:23,880
Speaker 9: in the market.

566
00:30:25,120 --> 00:30:28,680
Speaker 2: Lay two of Alliance Bernstein, deeply pensive on what's happening

567
00:30:28,680 --> 00:30:30,640
Speaker 2: in the markets long term and short term. Thank you

568
00:30:30,680 --> 00:30:33,080
Speaker 2: so much. Like coming up, we're joined by Warner Music

569
00:30:33,120 --> 00:30:36,400
Speaker 2: Group CEO Robert Kinsel to break down the company's earnings

570
00:30:36,400 --> 00:30:39,320
Speaker 2: that conversation. Next, don't miss it. This is Bloomberg Tech.

571
00:30:45,840 --> 00:30:47,480
Speaker 4: He the upbeat music.

572
00:30:47,640 --> 00:30:50,440
Speaker 3: After record quarterly revenue in fiscal fourth quarter, Warner Music

573
00:30:50,480 --> 00:30:52,880
Speaker 3: Group rose another ten percent in its first quarter thanks

574
00:30:53,040 --> 00:30:56,560
Speaker 3: to increases in digital in artist services and expanding rights

575
00:30:56,560 --> 00:30:59,800
Speaker 3: and licensing revenue and leaning into AI. The shares are

576
00:30:59,880 --> 00:31:01,600
Speaker 3: up five percent on the day, as you can see.

577
00:31:01,680 --> 00:31:04,200
Speaker 3: Let's talk it through with the CEO, Robert Kensal.

578
00:31:04,400 --> 00:31:05,160
Speaker 4: Thank you very much.

579
00:31:05,080 --> 00:31:07,560
Speaker 3: Indeed for joining us today. Robert, and you talk about

580
00:31:07,600 --> 00:31:11,240
Speaker 3: the creative wins here. So is it the fourth factors

581
00:31:11,280 --> 00:31:13,400
Speaker 3: of Alex Warren, of Cardi b of ed sharing that

582
00:31:13,520 --> 00:31:15,440
Speaker 3: drive these sorts of revenues or where else are you

583
00:31:15,520 --> 00:31:16,560
Speaker 3: managing to pull the leavers?

584
00:31:18,560 --> 00:31:21,000
Speaker 11: First of all, thank you for having me. It's really

585
00:31:21,040 --> 00:31:23,360
Speaker 11: great to be here to talk about the success that

586
00:31:23,400 --> 00:31:28,280
Speaker 11: we're seeing with our strategy working. You're leading them with

587
00:31:28,280 --> 00:31:30,480
Speaker 11: the right way, which is artist development. Is that the

588
00:31:30,480 --> 00:31:32,840
Speaker 11: core of what we do and finding artists like the

589
00:31:32,880 --> 00:31:36,400
Speaker 11: ones you mentioned is how we succeed. But it is

590
00:31:36,400 --> 00:31:39,560
Speaker 11: not just that Our market share growth has been broad

591
00:31:39,560 --> 00:31:45,000
Speaker 11: based across regents, across business units. So both our catalog

592
00:31:45,080 --> 00:31:49,320
Speaker 11: division as well as our frontline divisions North America, America

593
00:31:49,400 --> 00:31:52,480
Speaker 11: Europe have been growing and gaining share, and that is

594
00:31:52,480 --> 00:31:56,560
Speaker 11: what underpinned our consistent results over the past three quarters

595
00:31:57,080 --> 00:32:02,120
Speaker 11: of driving sustained, sustained growth and toleration while we're cutting.

596
00:32:01,920 --> 00:32:04,000
Speaker 4: Costs, cutting costs.

597
00:32:04,840 --> 00:32:06,560
Speaker 3: How much you were able to cut cost with AI,

598
00:32:06,640 --> 00:32:09,840
Speaker 3: because Robert, here in lies your background, the fact that

599
00:32:09,920 --> 00:32:13,200
Speaker 3: you've worked always with a focus on digital, the intersection

600
00:32:13,280 --> 00:32:15,560
Speaker 3: of music with technology, and the fact that you have

601
00:32:15,640 --> 00:32:18,360
Speaker 3: led the charge striking deals with Suno, for example, putting

602
00:32:18,360 --> 00:32:19,960
Speaker 3: out blog posts as to why this can be a

603
00:32:20,000 --> 00:32:20,800
Speaker 3: win for the.

604
00:32:20,800 --> 00:32:21,680
Speaker 4: Artists you develop.

605
00:32:22,240 --> 00:32:25,080
Speaker 3: How much is that actually helping cut costs at this moment.

606
00:32:25,880 --> 00:32:28,600
Speaker 11: Yeah, So it's good to step back on AI because

607
00:32:28,600 --> 00:32:31,280
Speaker 11: the way we approach it is that it has to

608
00:32:31,360 --> 00:32:35,120
Speaker 11: deliver against our three core priorities. Probably number one is

609
00:32:35,160 --> 00:32:37,720
Speaker 11: growing our share. We just spoke about that and their

610
00:32:37,760 --> 00:32:40,920
Speaker 11: activities that we do within that using AI that help

611
00:32:41,000 --> 00:32:45,240
Speaker 11: us automate our marketing across our entire catalog of over

612
00:32:45,280 --> 00:32:48,880
Speaker 11: a million songs. It is humanly impossible to touch all

613
00:32:48,880 --> 00:32:52,080
Speaker 11: of those songs and promote them. With AI, we can

614
00:32:52,120 --> 00:32:54,880
Speaker 11: do that and we're well underway to delivering on that.

615
00:32:54,960 --> 00:32:59,080
Speaker 11: So it's a major major accomplishment for a large IP

616
00:32:59,200 --> 00:33:03,120
Speaker 11: owners such as Cells two. We have to increase we

617
00:33:03,200 --> 00:33:07,240
Speaker 11: have to increase the value of music, and AI is

618
00:33:07,280 --> 00:33:10,720
Speaker 11: helping us to do that by introducing new pricing tiers

619
00:33:11,280 --> 00:33:15,680
Speaker 11: on existing DSPs digital service providers, but also by having

620
00:33:15,680 --> 00:33:19,280
Speaker 11: new entrants such as Suno and Udio, And that is

621
00:33:19,360 --> 00:33:22,800
Speaker 11: where we focused initially, and we want to make sure

622
00:33:22,920 --> 00:33:25,920
Speaker 11: that now we're not only getting paid from consumption from

623
00:33:26,000 --> 00:33:29,040
Speaker 11: the spotifyes and youtubes of the world, but also from

624
00:33:29,080 --> 00:33:32,040
Speaker 11: creation from the SunOS and audios of the world, and

625
00:33:32,120 --> 00:33:34,840
Speaker 11: those two worlds over time will merge as well. And

626
00:33:34,880 --> 00:33:39,840
Speaker 11: then third is growing our efficiency. And on the efficiency front,

627
00:33:39,920 --> 00:33:44,400
Speaker 11: we're deploying AI across finance, across legal, across HR. These

628
00:33:44,440 --> 00:33:47,120
Speaker 11: are the three departments that we started with obviously, in

629
00:33:47,160 --> 00:33:49,520
Speaker 11: addition to market that I mentioned before, and all of

630
00:33:49,560 --> 00:33:52,640
Speaker 11: that is helping us be more effective handle more copyrights

631
00:33:52,680 --> 00:33:56,680
Speaker 11: and more artists at the same or lower employee base.

632
00:33:57,520 --> 00:33:59,240
Speaker 11: And at the same time grow revenues and profit.

633
00:34:00,680 --> 00:34:04,360
Speaker 2: Robert, we got some early insight into what your strategy

634
00:34:04,480 --> 00:34:07,520
Speaker 2: is when you joined us at Bloomberg screen Time right

635
00:34:07,680 --> 00:34:11,120
Speaker 2: in October, and you know, my interpretation of your time

636
00:34:11,160 --> 00:34:13,760
Speaker 2: on stage was that this was pretty early. Like Sono

637
00:34:13,920 --> 00:34:16,719
Speaker 2: is a case study now that there were a few

638
00:34:16,719 --> 00:34:20,400
Speaker 2: months on. Are there any examples of work you've deployed,

639
00:34:20,440 --> 00:34:23,600
Speaker 2: either internally or work you've done with Sono and the

640
00:34:23,640 --> 00:34:26,399
Speaker 2: four or five other companies that you've done deals with

641
00:34:27,320 --> 00:34:30,400
Speaker 2: that's new, you know, that's tangibly made an impact in

642
00:34:30,440 --> 00:34:31,280
Speaker 2: the core to gone.

643
00:34:32,239 --> 00:34:32,439
Speaker 9: Yeah.

644
00:34:32,480 --> 00:34:35,319
Speaker 11: So actually when I was with you guys, you know,

645
00:34:35,320 --> 00:34:38,359
Speaker 11: at your conference in October, we were actually heads down

646
00:34:38,400 --> 00:34:40,759
Speaker 11: on deals with those companies, so those were not even close,

647
00:34:41,160 --> 00:34:46,239
Speaker 11: so it was super early. I've published principles that we

648
00:34:46,320 --> 00:34:50,040
Speaker 11: as a company uphold to doing these deals, which is

649
00:34:51,040 --> 00:34:54,440
Speaker 11: the partners have to commit to licensed models. They have

650
00:34:54,560 --> 00:34:57,160
Speaker 11: to probably reflect the value of music, which means the

651
00:34:57,200 --> 00:35:00,680
Speaker 11: right commercial terms that we're really happy with. And three

652
00:35:00,800 --> 00:35:02,640
Speaker 11: that artists have to have the right to opt in

653
00:35:02,680 --> 00:35:05,200
Speaker 11: for the use of their name and likeness in uh,

654
00:35:05,400 --> 00:35:09,600
Speaker 11: you know, in derivative works. And we're in the process

655
00:35:10,120 --> 00:35:12,959
Speaker 11: of transitioning these partners to licensed models. So the answer

656
00:35:13,239 --> 00:35:16,520
Speaker 11: to your question is not yet, because we're extremely early

657
00:35:16,560 --> 00:35:19,760
Speaker 11: in that. But they're well underway. They're signing more partners

658
00:35:20,080 --> 00:35:22,120
Speaker 11: and they're working on their new models, and as soon

659
00:35:22,160 --> 00:35:24,880
Speaker 11: as they transition to license model, which is our condition

660
00:35:24,960 --> 00:35:28,480
Speaker 11: number one, then we will be able to start cooperating

661
00:35:28,560 --> 00:35:29,160
Speaker 11: much more deeply.

662
00:35:30,600 --> 00:35:34,200
Speaker 2: We just had the Grammys, right, let me just you know,

663
00:35:34,239 --> 00:35:36,800
Speaker 2: we just had the Grammys, and that puts the focus

664
00:35:36,840 --> 00:35:41,280
Speaker 2: back on the artists, the songwriters other side of the table.

665
00:35:41,800 --> 00:35:44,440
Speaker 2: How have they responded to your strategy and the work

666
00:35:44,480 --> 00:35:46,280
Speaker 2: you want to do with the AI companies.

667
00:35:47,560 --> 00:35:50,640
Speaker 11: It's been it's been fantastic. You know, We as a

668
00:35:50,680 --> 00:35:55,440
Speaker 11: company h take our role of guiding the development of

669
00:35:55,440 --> 00:35:58,440
Speaker 11: AI and music very seriously because we've learned from the past,

670
00:35:58,480 --> 00:36:01,160
Speaker 11: where where the music industry waited for far too long

671
00:36:01,239 --> 00:36:03,960
Speaker 11: during the file sharing era twenty five years ago. So

672
00:36:04,360 --> 00:36:08,640
Speaker 11: we believe in being early, you know, taking the reins

673
00:36:08,800 --> 00:36:12,440
Speaker 11: together with our partners and defining the future of music.

674
00:36:13,480 --> 00:36:16,680
Speaker 11: So it's and there are a lot of artists who

675
00:36:16,719 --> 00:36:18,960
Speaker 11: want to be part of that. They also have learned,

676
00:36:19,000 --> 00:36:21,239
Speaker 11: they studied the past, and they want to be part

677
00:36:21,239 --> 00:36:24,320
Speaker 11: of it. So we are having conversations both with our artists,

678
00:36:24,440 --> 00:36:27,440
Speaker 11: their lawyers, their managers, and there are many artists who

679
00:36:27,440 --> 00:36:29,359
Speaker 11: are reaching out and they just want to be part

680
00:36:29,400 --> 00:36:34,480
Speaker 11: of experimentation with us. So it's been a surprisingly positive response.

681
00:36:35,400 --> 00:36:37,279
Speaker 3: I mean, it was a positive day few with the

682
00:36:37,280 --> 00:36:39,360
Speaker 3: Grammys as well as some of your R and B wins.

683
00:36:39,360 --> 00:36:41,720
Speaker 4: For example, I'm.

684
00:36:41,080 --> 00:36:44,360
Speaker 3: Interested about the joint approach briefly that you're doing with

685
00:36:44,480 --> 00:36:47,440
Speaker 3: Bain because it feels as though you think the value

686
00:36:47,480 --> 00:36:49,040
Speaker 3: of music is going up if you're wanting to be

687
00:36:49,040 --> 00:36:50,560
Speaker 3: buying these back catalogs even more so.

688
00:36:51,920 --> 00:36:57,920
Speaker 11: Yeah, So we firmly believe that music is undervalued. It's undervalue.

689
00:36:57,960 --> 00:37:03,759
Speaker 11: It's roughly fifty cents of value of a video, and

690
00:37:04,000 --> 00:37:06,880
Speaker 11: it shouldn't be based on its consumption. It's just for

691
00:37:07,000 --> 00:37:07,880
Speaker 11: historical reasons.

692
00:37:08,040 --> 00:37:08,440
Speaker 9: So there's a.

693
00:37:08,440 --> 00:37:12,200
Speaker 11: Tremendous opportunity for value appreciation in the future. And we

694
00:37:12,280 --> 00:37:15,600
Speaker 11: believe that the industry is finally moving from just volume

695
00:37:15,600 --> 00:37:19,480
Speaker 11: based subscover based growth to volume based and price based growth,

696
00:37:19,840 --> 00:37:22,680
Speaker 11: and that's really important. We started on the strategy over

697
00:37:22,719 --> 00:37:25,480
Speaker 11: a year ago where we started to retool our partnerships

698
00:37:25,480 --> 00:37:29,720
Speaker 11: with our distribution partners to have certainty around our wholesoli

699
00:37:29,760 --> 00:37:34,800
Speaker 11: rate increases rather than hope and wait and welcome price increases,

700
00:37:34,840 --> 00:37:37,480
Speaker 11: which we always do welcome, but we're really focused on

701
00:37:37,560 --> 00:37:42,360
Speaker 11: creating certainty around rate increases. So in a phase of

702
00:37:42,400 --> 00:37:46,720
Speaker 11: that and with the added step change of value caused

703
00:37:46,719 --> 00:37:51,640
Speaker 11: by AI and additional tiers, companies experience investors like Bain

704
00:37:52,120 --> 00:37:55,800
Speaker 11: see this as something that has potential to really unlock

705
00:37:55,840 --> 00:37:58,279
Speaker 11: a lot of value in the industry, under putting their

706
00:37:58,280 --> 00:37:59,319
Speaker 11: money where their mouth is.

707
00:38:01,160 --> 00:38:03,640
Speaker 2: Robert Kinson, CEO of one of Music Group. Great to

708
00:38:03,640 --> 00:38:06,279
Speaker 2: have you back with us on Bloomberg Tech. Really appreciate it.

709
00:38:06,280 --> 00:38:09,240
Speaker 2: Thank you. Let's turn back to the earning story elsewhere.

710
00:38:09,280 --> 00:38:13,680
Speaker 2: Shares have Reddit actually now softer four tens percent, basically flat.

711
00:38:13,680 --> 00:38:16,360
Speaker 2: One point in the session have been up eight percent,

712
00:38:17,440 --> 00:38:19,040
Speaker 2: So we kind of fizzed out a little bit. The

713
00:38:19,080 --> 00:38:23,080
Speaker 2: company projected current quarters sales that did surpassable streets expectations

714
00:38:23,440 --> 00:38:26,400
Speaker 2: thanks to growing ads its advertising business. Get out to

715
00:38:26,440 --> 00:38:29,360
Speaker 2: bloombs Kirt Wagner, what's going on with the Reddit story here?

716
00:38:29,400 --> 00:38:32,000
Speaker 2: I just got an analyst note my inbox saying that Reddit's

717
00:38:32,000 --> 00:38:34,600
Speaker 2: on a roll, but the stock would suggest otherwise.

718
00:38:35,840 --> 00:38:39,600
Speaker 12: Yeah, when it started up this morning. That made sense

719
00:38:39,600 --> 00:38:42,279
Speaker 12: to me because, as you pointed out, the projections for

720
00:38:42,320 --> 00:38:44,560
Speaker 12: the current quarter were good, there was a big beat

721
00:38:44,600 --> 00:38:47,080
Speaker 12: in the holiday quarter. It feels like there's a lot

722
00:38:47,120 --> 00:38:49,920
Speaker 12: of momentum for this advertising business. I think they have

723
00:38:50,040 --> 00:38:52,680
Speaker 12: an AI story to tell too. They're obviously not building

724
00:38:52,719 --> 00:38:55,480
Speaker 12: these massive data centers like we're seeing from these hyperscalers.

725
00:38:55,480 --> 00:38:58,799
Speaker 12: They're not, I mean this massive Capex, but they have

726
00:38:59,520 --> 00:39:02,440
Speaker 12: this called Reddit Answers, which is basically an AI search

727
00:39:02,480 --> 00:39:05,640
Speaker 12: engine built into Reddit and years and years and years

728
00:39:05,719 --> 00:39:09,319
Speaker 12: of forums of people discussing things, and they are also

729
00:39:09,400 --> 00:39:11,200
Speaker 12: licensing that data, as you know, to some of these

730
00:39:11,239 --> 00:39:13,280
Speaker 12: AI players, So they have a bit of an AI

731
00:39:13,440 --> 00:39:16,640
Speaker 12: story that isn't quite as capital intensive as a lot

732
00:39:16,640 --> 00:39:18,919
Speaker 12: of these other big tech players coming down.

733
00:39:19,120 --> 00:39:20,359
Speaker 4: It's interesting, Analys said.

734
00:39:20,440 --> 00:39:24,600
Speaker 3: Many had reiterated that overweight some neutral, but pypasanla counter Fitzgerald.

735
00:39:24,960 --> 00:39:27,399
Speaker 3: We're also seeing bed cut their price targets, so maybe

736
00:39:27,440 --> 00:39:29,759
Speaker 3: there's a little bit of a view on how much

737
00:39:29,800 --> 00:39:32,719
Speaker 3: the what's already priced incut. What was really interesting I

738
00:39:32,760 --> 00:39:34,840
Speaker 3: thought was the international growth here and is that so

739
00:39:34,960 --> 00:39:37,120
Speaker 3: much to do with AI and the translation capability?

740
00:39:37,160 --> 00:39:40,319
Speaker 12: Now, yeah, I think they've been working to make sure

741
00:39:40,320 --> 00:39:42,960
Speaker 12: that it's accessible to people who don't just speak English.

742
00:39:43,040 --> 00:39:44,880
Speaker 12: This is a lot of these consumer products, as you

743
00:39:44,920 --> 00:39:48,160
Speaker 12: both know, know as they grow, they have to build

744
00:39:48,160 --> 00:39:50,520
Speaker 12: their product for all of these various markets, and that

745
00:39:50,560 --> 00:39:52,920
Speaker 12: does take time. I think that's part of it. One

746
00:39:52,920 --> 00:39:54,239
Speaker 12: of the things that's interesting in you'll see in some

747
00:39:54,280 --> 00:39:56,640
Speaker 12: of these analysts notes of this debate around logged in

748
00:39:56,760 --> 00:39:59,759
Speaker 12: versus logged out users. If you guys remember Twitter back

749
00:39:59,760 --> 00:40:02,120
Speaker 12: in the this was the big debate, you know, could

750
00:40:02,160 --> 00:40:04,600
Speaker 12: you show ads to someone showing up to Twitter who

751
00:40:04,640 --> 00:40:06,239
Speaker 12: doesn't have an account. I think Reddit's in a better

752
00:40:06,239 --> 00:40:09,200
Speaker 12: position because of the focus of these forums and being

753
00:40:09,239 --> 00:40:10,279
Speaker 12: topic based, and.

754
00:40:10,400 --> 00:40:12,640
Speaker 3: Gus kat Wagner all over social media is always we

755
00:40:12,719 --> 00:40:14,200
Speaker 3: thank you ed what we got.

756
00:40:14,239 --> 00:40:17,920
Speaker 2: Coming up, We've got the Boring company going full speed

757
00:40:18,040 --> 00:40:21,120
Speaker 2: on a tunneling project in Nashville, but there could be

758
00:40:21,120 --> 00:40:24,200
Speaker 2: some headwinds along the way. Bloomberg big take coming up.

759
00:40:24,480 --> 00:40:25,680
Speaker 2: This is Bloomberg Tech.

760
00:40:39,800 --> 00:40:42,880
Speaker 3: Tesler's evaluating multiple sites across the US to.

761
00:40:42,920 --> 00:40:44,000
Speaker 4: Manufacture solar cells.

762
00:40:44,000 --> 00:40:46,800
Speaker 3: It's part of Elion Musk's one hundred giga whatsolar ambition.

763
00:40:47,120 --> 00:40:49,480
Speaker 3: Its sort according to sources and the company is considering

764
00:40:49,520 --> 00:40:52,960
Speaker 3: expanding production at its Buffalo, New York factory, with Arizona

765
00:40:53,000 --> 00:40:56,520
Speaker 3: and Idaho also under consideration. That longer term, another scenario

766
00:40:56,520 --> 00:40:59,000
Speaker 3: would involve building a second facility in New York State

767
00:40:59,120 --> 00:41:03,160
Speaker 3: once source set. China currently dominates output of solar cells.

768
00:41:03,160 --> 00:41:05,319
Speaker 3: And on the back of your scoop, you've seen some

769
00:41:05,320 --> 00:41:06,680
Speaker 3: big share price moves.

770
00:41:07,480 --> 00:41:10,080
Speaker 2: Yeah, and his other companies are busy too. The Boring

771
00:41:10,160 --> 00:41:14,120
Speaker 2: Company is about to embark on its most ambitious tunneling

772
00:41:14,160 --> 00:41:19,680
Speaker 2: project yet, its first full fledge transit corridor underneath Nashville,

773
00:41:19,960 --> 00:41:23,239
Speaker 2: but critics worry the company is winging it. Bloombst Kyle

774
00:41:23,280 --> 00:41:26,040
Speaker 2: Porter is here with the details in this week's Bloomberg

775
00:41:26,080 --> 00:41:30,160
Speaker 2: Big Take. It is the most ambitious project that Boring

776
00:41:30,520 --> 00:41:35,840
Speaker 2: has undertaken, but people are worried. So balance those two things.

777
00:41:35,920 --> 00:41:38,120
Speaker 2: Why is it the most ambitious and what's the concern?

778
00:41:40,440 --> 00:41:44,520
Speaker 6: Well, it's the most ambitious on several levels. They are Boring,

779
00:41:44,560 --> 00:41:47,760
Speaker 6: that is, are looking to build two tenmile tunnels between

780
00:41:47,760 --> 00:41:50,360
Speaker 6: the airport and downtown Nashville, and they're looking to do

781
00:41:50,440 --> 00:41:53,839
Speaker 6: it through limestone, which is compared to other projects such

782
00:41:53,880 --> 00:41:57,040
Speaker 6: as the Las Vegas one. They're running through sandstone predominately

783
00:41:57,080 --> 00:41:59,080
Speaker 6: at that point, getting through limestone is very tricky and

784
00:41:59,120 --> 00:42:02,600
Speaker 6: you have the risk of things like sinkholes. It's also

785
00:42:02,640 --> 00:42:06,000
Speaker 6: it's a very heavy wet rock, Like actually transporting it

786
00:42:06,040 --> 00:42:08,520
Speaker 6: through out is going to be incredibly difficult.

787
00:42:09,640 --> 00:42:11,160
Speaker 4: That's some of the technical difficulty.

788
00:42:11,400 --> 00:42:14,040
Speaker 3: I mean, your big take was so eye catching simply

789
00:42:14,080 --> 00:42:17,080
Speaker 3: because of the headline, must Sporing Tunnel in Nashville has

790
00:42:17,239 --> 00:42:20,279
Speaker 3: mayor hoping? Now one dies just how realistic are they

791
00:42:20,280 --> 00:42:23,280
Speaker 3: worried that that's some sort of opportunity.

792
00:42:22,640 --> 00:42:25,520
Speaker 6: Costing Well, if you read the story, the city have

793
00:42:25,640 --> 00:42:28,480
Speaker 6: largely been cut out of this entire process. Having been

794
00:42:28,480 --> 00:42:30,759
Speaker 6: involved at the start, they felt that it wasn't the

795
00:42:30,840 --> 00:42:32,839
Speaker 6: right time. Depending on who you talk to, and people

796
00:42:32,880 --> 00:42:35,640
Speaker 6: around Boring say they just weren't interested. So they went

797
00:42:35,680 --> 00:42:37,799
Speaker 6: and it's the entire route now has been designed to

798
00:42:37,800 --> 00:42:40,000
Speaker 6: go on state land. So until you get to things

799
00:42:40,040 --> 00:42:43,520
Speaker 6: like fire safety and like really into the construction process

800
00:42:43,520 --> 00:42:45,759
Speaker 6: and looking at things like egress points where you know

801
00:42:45,960 --> 00:42:48,040
Speaker 6: emergency services could get in if there's a problem in

802
00:42:48,080 --> 00:42:51,759
Speaker 6: the tunnel, the city don't have much say. So you know,

803
00:42:52,000 --> 00:42:53,959
Speaker 6: the mayor, depending on your point of view, is either

804
00:42:54,080 --> 00:42:57,120
Speaker 6: being alarmist or is just expressing concern on behalf of

805
00:42:57,160 --> 00:42:58,240
Speaker 6: this constituents.

806
00:42:58,960 --> 00:43:02,319
Speaker 2: You've been reporting on Boring Deeply for a little while now,

807
00:43:02,320 --> 00:43:04,320
Speaker 2: and the timing of the big takes are interesting because

808
00:43:04,400 --> 00:43:06,600
Speaker 2: also the company is looking to the golf right. What

809
00:43:06,680 --> 00:43:10,480
Speaker 2: can you tell us about Dubai and their international expansion.

810
00:43:11,600 --> 00:43:15,400
Speaker 6: Dubai is the first successful contract signed for an international expansion.

811
00:43:15,520 --> 00:43:21,200
Speaker 6: They're looking at putting multiple exit points in to that network.

812
00:43:21,480 --> 00:43:24,799
Speaker 6: Our understanding is that they may have already sent a

813
00:43:24,800 --> 00:43:26,719
Speaker 6: test vehicle out there that we've not been able to

814
00:43:26,760 --> 00:43:29,680
Speaker 6: confirm that yet. Again, it's a very aggressive timeline for

815
00:43:29,719 --> 00:43:31,920
Speaker 6: getting these things done. If you look at the Las

816
00:43:32,000 --> 00:43:35,080
Speaker 6: Vegas project, I believe they started tunneling their pre COVID

817
00:43:35,280 --> 00:43:37,280
Speaker 6: that was supposed to be you know, sixty eight miles

818
00:43:37,280 --> 00:43:39,319
Speaker 6: worth of tunnel's doug by. Now I think they've got

819
00:43:39,320 --> 00:43:43,360
Speaker 6: five miles operational. So either they've dramatically improved the machine

820
00:43:43,360 --> 00:43:45,440
Speaker 6: and their processors, or it's not going to go as

821
00:43:45,520 --> 00:43:46,400
Speaker 6: quickly as they're saying.

822
00:43:46,840 --> 00:43:50,480
Speaker 3: In mex Car Porter Deeply research story, we urge people

823
00:43:50,480 --> 00:43:51,080
Speaker 3: to go and read it.

824
00:43:51,120 --> 00:43:53,399
Speaker 4: Meanwhile, that does it for this edition of Bloomberg Tech.

825
00:43:53,680 --> 00:43:57,480
Speaker 2: What Week ed Yeah, you know, it's like the mic

826
00:43:57,600 --> 00:44:01,440
Speaker 2: drop week for capital expenditures undred and eighty five billion Alphabet,

827
00:44:01,440 --> 00:44:05,680
Speaker 2: two hundred billion Amazon, the repercussions next week recap on

828
00:44:05,680 --> 00:44:07,319
Speaker 2: the pod. You know where to find it. It's there

829
00:44:07,360 --> 00:44:09,120
Speaker 2: on the screen. And this is Bloomberg Tech