WEBVTT - BI Weekend: Oracle, Cracker Barrel Earnings, FDA Probe 0:00:00.240 --> 0:00:11.480 Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence 0:00:11.560 --> 0:00:13.640 with Scarletfoo and Paul Sweeney. 0:00:13.720 --> 0:00:15.840 How do you think the FED is looking at tariffs? 0:00:15.960 --> 0:00:17.160 The uncertainty of terriffs. 0:00:17.280 --> 0:00:19.720 Let's take a look at the sectors and how they performed. 0:00:19.760 --> 0:00:22.440 A lot of investors getting whipsaled every day by news events, 0:00:22.520 --> 0:00:24.520 breaking market headlines. 0:00:24.000 --> 0:00:26.239 And corporate news from across the globe. 0:00:26.280 --> 0:00:28.800 Could we see a market disruption of market event? 0:00:28.960 --> 0:00:31.000 So people just too exuberant out there? 0:00:31.120 --> 0:00:33.640 You see some so called low quality stocks driving this 0:00:33.760 --> 0:00:34.520 short term rally. 0:00:34.560 --> 0:00:39.360 Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, 0:00:39.520 --> 0:00:41.440 YouTube and Bloomberg Originals. 0:00:42.400 --> 0:00:44.720 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:44.720 --> 0:00:47.239 business stories impacting Wall Street and the global markets. Each 0:00:47.280 --> 0:00:49.160 and every week, we provide end up research and data 0:00:49.200 --> 0:00:50.880 on some of the two thousand companies in one hundred 0:00:50.880 --> 0:00:53.680 and thirty industries our analysts cover worldwide. Today, we'll look 0:00:53.720 --> 0:00:56.520 at why the computer tech company Oracle reported disappointing cloud 0:00:56.760 --> 0:00:58.880 sales last quarter. Plus, we'll look at how the one 0:00:58.880 --> 0:01:02.120 trillion dollar conglomerate for Ruture Hathaways preparing for the retirement 0:01:02.160 --> 0:01:05.080 of CEO Warren Buffett. At first, we begin with a 0:01:05.080 --> 0:01:09.680 survey from Bloomberg Intelligence entitled AI's Cross Industry Disruption. It 0:01:09.760 --> 0:01:13.840 dives into how various industries are approaching AI implementation. It's 0:01:13.880 --> 0:01:16.280 also the largest study of c suite executives that BI 0:01:16.440 --> 0:01:19.520 has conducted. From more on this guest host Christine Keino 0:01:19.560 --> 0:01:22.720 and I were joined by Matthew Bloxham Bloomberg Intelligence tech Analysts. 0:01:22.920 --> 0:01:25.600 We first asked Matt to break down this BI survey. 0:01:26.080 --> 0:01:30.319 So this was a big survey we did, polling the 0:01:30.440 --> 0:01:33.639 views of six hundred and four c suite executives across 0:01:33.640 --> 0:01:36.319 the range of industries across the world. Where do you 0:01:36.400 --> 0:01:38.520 kind of get trying to get a sense on how 0:01:38.560 --> 0:01:42.720 corporates are assessing the current AI situation and what they 0:01:42.720 --> 0:01:45.320 think is going to do to their businesses over the 0:01:45.360 --> 0:01:47.360 next kind of two to three years. So we kind 0:01:47.360 --> 0:01:50.920 of looked at the motivations for AI investment, what it 0:01:50.960 --> 0:01:53.120 could do to headcount, well they're expecting in terms of 0:01:53.280 --> 0:01:56.320 revenue and profit uptick. And we had some kind of 0:01:56.320 --> 0:01:59.919 interesting results out of the survey, you know, not surprise, 0:02:00.360 --> 0:02:03.280 perhaps AI is very much at the top of the 0:02:03.280 --> 0:02:08.760 c suite agenda. Something like thirty six percent of those 0:02:08.840 --> 0:02:11.560 polls said it was their top strategic priority. In another 0:02:11.600 --> 0:02:14.640 forty seven percent said it was within the top three 0:02:16.360 --> 0:02:20.600 strategic objectives for them. When we looked and asked about 0:02:20.840 --> 0:02:26.040 the main objectives behind their AI strategies, what came out 0:02:26.120 --> 0:02:31.440 top was improving operational efficiency, which was number one with 0:02:31.680 --> 0:02:34.560 forty seven percent of the respondents, and in second place 0:02:34.919 --> 0:02:39.239 was boosting a revenue at twenty one percent. Interestingly, headcount 0:02:39.320 --> 0:02:42.560 cuts were quite low down the pecking order. Only thirteen 0:02:42.680 --> 0:02:46.520 percent of respondents put that as their top priority, and 0:02:46.600 --> 0:02:49.760 actually it was the highest ranked in terms of the 0:02:49.880 --> 0:02:54.120 least priority. So I think it's interesting that companies are 0:02:54.120 --> 0:02:57.880 looking to boost productivity, but they're not afraid to make 0:02:57.960 --> 0:03:02.400 investments both in technology and headcount in the near term 0:03:02.480 --> 0:03:05.600 to kind of release those opportunities. And actually, on a 0:03:05.639 --> 0:03:10.480 three year view, sixty two percent of respondents said they 0:03:10.520 --> 0:03:14.679 expect AI to lead to an increase in headcount over 0:03:14.720 --> 0:03:17.320 the next three years, an increase, not a decrease, and 0:03:17.360 --> 0:03:19.960 the average increase they're looking at is about four percent. 0:03:20.600 --> 0:03:23.320 So that kind of flies in the face a little 0:03:23.320 --> 0:03:24.320 bit of you know, a lot of the kind of 0:03:24.400 --> 0:03:29.480 headlines we see about job cuts. I think overall, corporate 0:03:29.600 --> 0:03:32.280 see the need to invest more in staff, you know, 0:03:32.320 --> 0:03:36.640 to rule out their AI strategies in the coming years. Yeah. 0:03:36.720 --> 0:03:39.080 Yeah, well, Matt, you mentioned thirty six percent of C 0:03:39.160 --> 0:03:42.000 suites now rank AA as their top priority. That number 0:03:42.000 --> 0:03:44.840 actually strikes me as a little low. I would have 0:03:44.880 --> 0:03:47.280 thought it would be at least half of the people's survey. 0:03:47.360 --> 0:03:49.280 But what do you think, is that something that's just 0:03:49.600 --> 0:03:52.560 set to grow in future surveys as really kind of 0:03:52.640 --> 0:03:56.560 AI becomes central to a lot of companies workflows these days. 0:03:57.840 --> 0:03:59.760 Yeah, I think so. I mean, you know, obviously, if 0:03:59.800 --> 0:04:01.640 you if you add the forty seven percent that set, 0:04:01.680 --> 0:04:03.720 it's in the top three. I mean, you know, an 0:04:03.720 --> 0:04:07.920 overall top three priority gives you the kind of majority 0:04:07.960 --> 0:04:11.440 of the respondents. And obviously companies do have to wrestle 0:04:11.480 --> 0:04:13.840 with lots of other issues too. You know that there 0:04:13.920 --> 0:04:17.039 is going on in the world beyond AI, and obviously 0:04:17.240 --> 0:04:21.440 trade policy is another big thing that's probably on the 0:04:21.800 --> 0:04:24.880 radar for a lot of these companies too. So yeah, 0:04:24.920 --> 0:04:27.440 you know, maybe it will kind of inch up, But 0:04:27.520 --> 0:04:30.240 I think you've given that aggregate, you know, age percent 0:04:30.279 --> 0:04:36.000 plus in the top three. Probably what you'd expect to see, Matthew. 0:04:35.640 --> 0:04:37.440 How about return on investment here? That's kind of what 0:04:37.480 --> 0:04:39.840 the street's starting to ask for now. We know these 0:04:39.880 --> 0:04:43.400 companies can spend big money on AI, but what's the 0:04:43.440 --> 0:04:44.400 return for shareholders? 0:04:45.000 --> 0:04:47.360 Yeah, I think that's still very opaque. And actually, when 0:04:48.000 --> 0:04:53.400 we asked the respondents to flag the biggest roadblocks they 0:04:53.400 --> 0:04:59.920 could see to AI deployment, the investment needed in AI, 0:05:00.640 --> 0:05:03.920 and the question marks around the return on investment, we're 0:05:03.960 --> 0:05:06.880 definitely up there amongst some of the most important concerns 0:05:07.720 --> 0:05:13.000 that respondents have, alongside data security and clean data. We 0:05:13.080 --> 0:05:16.680 didn't ask much of the most specific ROI expectations cause 0:05:16.680 --> 0:05:18.159 we just kind of get the sense that it's a 0:05:18.160 --> 0:05:22.840 bit too early to get an accurate read on that. 0:05:22.920 --> 0:05:25.479 I think most companies are still kind of at a 0:05:25.560 --> 0:05:28.680 relatively early stage of their AI trials. You know, lots 0:05:28.720 --> 0:05:31.680 of them have moved out of the kind of testing lms, 0:05:31.760 --> 0:05:34.200 they're into pilot phases, some of them are even moving 0:05:34.200 --> 0:05:36.760 into scale deployment. I think it's fair to say a 0:05:36.760 --> 0:05:38.840 lot of them are not really quite sure yet what 0:05:38.920 --> 0:05:41.279 the return is going to be and how quick it's 0:05:41.279 --> 0:05:44.000 going to come. And obviously it's kind of a bigger 0:05:44.440 --> 0:05:47.880 issue for the wider tech sector. And you mentioned Oracle 0:05:47.960 --> 0:05:50.600 as a kind of barometer for the kind of broader 0:05:51.040 --> 0:05:54.479 pulse on AI, and I think the twenty twenty six 0:05:54.600 --> 0:05:56.360 is going to be a really crucial year for kind 0:05:56.360 --> 0:05:59.919 of what corporates make of the midterm ROI. And you know, 0:06:00.080 --> 0:06:02.560 if they don't see a big ROI, then that's probably 0:06:02.560 --> 0:06:05.800 going to slow the pace of revenue growth, and that's 0:06:05.839 --> 0:06:07.479 going to have a knock on effect to the levels 0:06:07.480 --> 0:06:10.240 of investment we're seeing made by the likes of Oracle 0:06:10.520 --> 0:06:12.719 and Open Eye on the revenues that bringing in. 0:06:12.960 --> 0:06:15.799 All right, thanks to Matthew Bloxam Bloomberg Intelligence tech analyst. 0:06:16.240 --> 0:06:18.800 We move next to some news in the biotech space. 0:06:19.080 --> 0:06:21.040 This week, we heard that the Food and Drug Administration 0:06:21.120 --> 0:06:25.400 is investigating whether COVID nineteen vaccines caused deaths in adults. 0:06:25.520 --> 0:06:27.680 It's part of a safety review that earlier here to 0:06:27.800 --> 0:06:30.840 just be focused on children, and the investigation comes at 0:06:30.839 --> 0:06:33.680 a time when US Health and Human Services Secretary Robert F. 0:06:33.760 --> 0:06:37.560 Kennedy Junior is upbending long standing guidance for a wide 0:06:37.640 --> 0:06:40.760 range of vaccines. From more on this guest host Christina 0:06:40.800 --> 0:06:43.760 Quino and I were joined by Sam Fazzelli, Bloomberg Intelligence 0:06:43.800 --> 0:06:47.800 director of Research for Global Industries and a senior pharmaceuticals analyst. 0:06:48.120 --> 0:06:49.920 We first asked Sam to break down what we know 0:06:49.920 --> 0:06:51.400 about the FDA's investigation. 0:06:51.960 --> 0:06:54.080 We don't know anything. Right. Last week we heard that 0:06:54.080 --> 0:06:58.320 they've got data that shows that there were ten children's deaths. 0:06:58.440 --> 0:07:01.680 Where's the data? Show us? Right? They go and use 0:07:02.080 --> 0:07:05.000 this thing called VERSE, the Vaccine Adverse Events Reporting System, 0:07:05.360 --> 0:07:08.120 which is totally voluntary. I can go on there and 0:07:08.240 --> 0:07:12.400 say I had chicken nuggets just around the time as 0:07:12.480 --> 0:07:16.040 my COVID shot and I had that allergic reaction, and 0:07:16.120 --> 0:07:18.200 they go, oh okay, oh dear, So I can put 0:07:18.200 --> 0:07:21.240 that on there right in order to do an analysis 0:07:21.280 --> 0:07:23.400 of that database, which we as endless try and do, 0:07:23.440 --> 0:07:27.080 which is very complicated because you need all the case background, 0:07:27.280 --> 0:07:29.720 who was that patient, what happened to them? You need 0:07:29.760 --> 0:07:33.000 to do the work. Fine, I believe that they've done 0:07:33.000 --> 0:07:36.960 the work. Show us where's the transparency there here? I'm 0:07:36.960 --> 0:07:39.520 pretty sure I don't know for a fact that they're 0:07:39.600 --> 0:07:42.760 using the same system. Do you see people? I mean, 0:07:42.800 --> 0:07:45.280 of course, that's a ridiculous question for us falling over 0:07:45.480 --> 0:07:47.680 and dying in the streets after getting COVID shots all 0:07:47.720 --> 0:07:50.200 the time. There are the relevant there are issues that 0:07:50.280 --> 0:07:52.080 happen a lot of people to take COVID just these 0:07:52.160 --> 0:07:56.160 days are the elderly, which by definition have a higher 0:07:56.200 --> 0:08:00.640 probability of complications that in general. So we need to 0:08:00.760 --> 0:08:02.600 keep an eye on this. I want to see the 0:08:03.200 --> 0:08:07.240 data and I want it properly scrutinized. Let us do that. 0:08:08.480 --> 0:08:11.200 Yes, well, I mean, obviously, I guess it seems like 0:08:11.200 --> 0:08:15.560 it's in the earth that it is investigation. But I 0:08:15.560 --> 0:08:18.080 mean walk is to kind of the potential impact of this, 0:08:18.320 --> 0:08:22.480 right I Potentially you could affect public health policy, and 0:08:22.520 --> 0:08:26.960 then potentially that will have some bearing on how companies 0:08:27.440 --> 0:08:30.440 move forward, I especially the vaccine providers presumably. 0:08:30.960 --> 0:08:33.200 Yeah, I mean so two or three things can happen. 0:08:33.200 --> 0:08:35.160 The if you can say, well, actually we didn't find 0:08:35.160 --> 0:08:37.560 the link, because it just says that they're looking at it. 0:08:38.120 --> 0:08:39.720 Number two, they say we found the link, We're going 0:08:39.760 --> 0:08:42.520 to put a black box morning into COVID vaccines. Fine, 0:08:42.559 --> 0:08:46.679 that reduces people, that increases people's hesitancy potentially, Or they 0:08:46.679 --> 0:08:48.360 can go and say we want to take it off 0:08:48.400 --> 0:08:51.079 the market. I don't think they'll do that. But let's say, 0:08:51.160 --> 0:08:53.720 let's get there. There are two companies that are most 0:08:53.800 --> 0:08:56.640 exposed to this. Why is there? Of course has is 0:08:56.640 --> 0:08:58.880 one of the companies that sell the vaccine, but I mean, 0:08:58.880 --> 0:09:01.320 you know, there's a lot more going on, right. The 0:09:01.360 --> 0:09:04.040 ones that are much more leveraged to the vaccines are 0:09:04.080 --> 0:09:08.920 Moderna and BioNTech. What I find interesting is a Moderna 0:09:09.040 --> 0:09:11.360 who is much more leveraged to it because they're silly 0:09:11.480 --> 0:09:15.199 in themselves. They have a less of a cash cushion 0:09:15.280 --> 0:09:18.120 than BioNTech has. Let's say, the end of the year 0:09:18.160 --> 0:09:20.479 this year is seven billion dollars in the bank. Biontics 0:09:20.480 --> 0:09:23.640 are eighteen billion dollars in the bank, and yet that's 0:09:23.679 --> 0:09:25.600 the Biotic share price that gets hit post And I 0:09:25.640 --> 0:09:30.120 don't understand why Moderna is more exposed because that cash 0:09:30.160 --> 0:09:32.600 cushion is lower. So if your revenue the drops, then 0:09:32.600 --> 0:09:34.320 you're going to have an issue. Of course, they've been 0:09:34.440 --> 0:09:37.439 very good at cost management, so that's where I think 0:09:37.440 --> 0:09:41.000 this could end up if it goes really the wire 0:09:41.040 --> 0:09:43.600 and they go, right, we're not going to suggest this anymore, 0:09:43.600 --> 0:09:46.240 which would be I think a tragedy for the US. 0:09:46.400 --> 0:09:50.079 So Sam, we've got we've been ten months into this administration. 0:09:50.280 --> 0:09:53.280 We've got a US Health and Human Services Secretary, Robert F. Kennedy. 0:09:53.360 --> 0:09:56.320 We've been X number of months into his leadership. How 0:09:56.400 --> 0:10:00.320 is how are farmer companies and biotech companies trying to 0:10:00.400 --> 0:10:04.160 work with this new administration because there's a lot of 0:10:04.360 --> 0:10:05.920 one to argue, there's all, you know, a lot of 0:10:05.920 --> 0:10:06.520 headbutting there. 0:10:06.559 --> 0:10:10.000 Potentially it doesn't look like people are that worried about it. 0:10:10.120 --> 0:10:14.040 But I promise you if I went on our anonymous 0:10:14.160 --> 0:10:17.160 drug chat with clients, about two thousand people on it, 0:10:18.480 --> 0:10:22.080 and I asked, how worried are you, I tell you 0:10:22.280 --> 0:10:25.240 that no one's going to say zero. There are There's 0:10:25.280 --> 0:10:28.040 always this background and worry. Right. The thing is the 0:10:28.080 --> 0:10:30.199 sector is doing well. Only this week so far we've 0:10:30.200 --> 0:10:32.680 had close to two billion dollars of money raised from 0:10:32.720 --> 0:10:35.839 companies with good data that's driven the share pricess of 0:10:36.280 --> 0:10:39.920 this is between five and six companies. So the sectors thriving. 0:10:40.720 --> 0:10:43.200 We need to make sure the FDA is in a 0:10:43.240 --> 0:10:45.960 place that will have very clear guideline at of people 0:10:46.120 --> 0:10:48.600 know what they're dealing with and not get advice today 0:10:48.600 --> 0:10:50.560 that in six months they go, well, whatever we said, 0:10:50.600 --> 0:10:52.920 then we don't we have a different view now, right, 0:10:53.520 --> 0:10:56.640 So that is a problem and there is something to 0:10:56.679 --> 0:10:59.640 worry about there. Let's hope that twenty twenty six becomes 0:10:59.679 --> 0:11:04.120 a lot more stable for the FDA with logical, scientific 0:11:04.240 --> 0:11:05.119 based decisions. 0:11:06.360 --> 0:11:08.280 Yeah, well, Sam, you know, speaking of the sector is 0:11:08.320 --> 0:11:09.880 doing overall. But what do you think is going to 0:11:09.920 --> 0:11:13.880 be the key differentiator amongst the companies between the successes 0:11:13.960 --> 0:11:17.160 and I guess the less successful in twenty twenty six. 0:11:18.120 --> 0:11:20.920 It's always been the same clinical data. Get me a 0:11:21.000 --> 0:11:24.679 drug that's showing me clean data. Don't give me press 0:11:24.720 --> 0:11:27.240 releases with some cut off the data, and the next 0:11:27.240 --> 0:11:30.000 press release is a different cut of the data. Publish 0:11:30.160 --> 0:11:32.840 dator take it to medical conferences. The reason these companies 0:11:32.880 --> 0:11:35.240 are up, most of them and have been able to 0:11:35.320 --> 0:11:37.640 raise money is that that they've been very transparent with 0:11:37.679 --> 0:11:41.559 their data they presented. You can analyze it. Some more 0:11:41.600 --> 0:11:44.160 transparent or some of them are presenting a medical conferences 0:11:44.160 --> 0:11:47.079 like the ones we just had ash the American Societical Hematology. 0:11:47.440 --> 0:11:51.120 That is what drives this sector. Give me good clinical data. 0:11:51.120 --> 0:11:53.559 Of course, M and A is great because they come 0:11:53.600 --> 0:11:55.079 and you get a price and you decide to share. 0:11:55.120 --> 0:11:58.400 Price goes there. But it's clinical data that is that 0:11:58.480 --> 0:12:00.480 data that gets them to being taken out our. 0:12:00.400 --> 0:12:03.280 Thanks to Sam Fazzelli, Bloomberg Intelligence, Director of Research for 0:12:03.280 --> 0:12:07.120 Global Industries and senior pharmaceuticals analysts. Coming up, we'll look 0:12:07.160 --> 0:12:10.040 at why the restaurant and gift shop chain Cracker Barrel 0:12:10.240 --> 0:12:12.720 cut its sales outlook for the year. You're listening to 0:12:12.720 --> 0:12:16.200 Bloomberg Intelligence on Bloomberg Radio, providing in research and data 0:12:16.240 --> 0:12:18.520 on two thousand companies and one hundred and thirty industries. 0:12:18.720 --> 0:12:21.439 You can access Bloomberg Intelligence via Bigo on the terminal. 0:12:21.520 --> 0:12:23.840 I'm Paul Sweeney and this is Bloomberg. 0:12:28.160 --> 0:12:32.680 This is Bloomberg Intelligence with Scarlett Foo and Paul Sweeney 0:12:33.000 --> 0:12:34.480 on Bloomberg Radio. 0:12:34.880 --> 0:12:37.240 We move next to some earnings in the tech sector. 0:12:37.360 --> 0:12:40.120 This week, the computer tech company Oracle posted quarterly cloud 0:12:40.120 --> 0:12:43.280 sales that missed analyst expectations. This suggests that it will 0:12:43.280 --> 0:12:46.040 take longer than expected for the company's recent huge AI 0:12:46.120 --> 0:12:48.080 bookings to pay off. For more on all of this, 0:12:48.160 --> 0:12:50.160 guest's hosts Isabel Lee and I were joined by Anna 0:12:50.240 --> 0:12:53.480 rag Rana, Bloomberg Intelligence technology analysts. We first asked him 0:12:53.520 --> 0:12:57.079 to give us his take on Oracle's results so there were. 0:12:57.000 --> 0:12:58.840 A few thanks to keep in mind. You know, the 0:12:58.920 --> 0:13:02.920 number one thing is cloud infrastructure growth consensus was sixty 0:13:03.000 --> 0:13:05.559 nine percent. They came at sixty six. I know it's 0:13:05.600 --> 0:13:09.120 a very big number. However, in the cloud world, missing 0:13:09.160 --> 0:13:10.959 by even one percentage point. 0:13:11.160 --> 0:13:11.680 Is not good. 0:13:11.760 --> 0:13:13.679 So that's first thing. But you know, there's a very 0:13:13.679 --> 0:13:16.120 logical reason about it. Everybody can see the backlock, so 0:13:16.160 --> 0:13:18.240 it's not as if they don't have a business there. 0:13:18.520 --> 0:13:21.240 But converting that backlog into sales is an issue. Everybody 0:13:21.240 --> 0:13:23.880 knows that there is a capacity constraints out there, whether 0:13:23.920 --> 0:13:26.880 it's data center, whether it's networking, et cetera. Power is 0:13:26.880 --> 0:13:29.280 a very big issue for example. So that's one area 0:13:29.280 --> 0:13:31.160 of it. But although I would say the management did 0:13:31.160 --> 0:13:33.319 not harp on it as much as we would wanted 0:13:33.320 --> 0:13:37.120 them to be that to explain why the growth can 0:13:37.160 --> 0:13:39.960 improve going forward. So that's one factor. But I think 0:13:40.000 --> 0:13:42.400 the biggest question is something that we had discussed earlier 0:13:42.440 --> 0:13:45.679 also is everybody is questioning that out of their big backlock, 0:13:45.720 --> 0:13:48.480 which is over five hundred billion right now, three hundred 0:13:48.480 --> 0:13:51.520 plus billion of that comes from OpenAI. Now open ai 0:13:51.559 --> 0:13:54.840 currently or the order book is from open Ai. By 0:13:54.840 --> 0:13:57.040 the end of this year, open ai will have a 0:13:57.040 --> 0:14:00.400 revenue rund it of about twenty billion. So everybody is saying, okay, 0:14:00.480 --> 0:14:02.960 well tell me, if you have revenue of twenty billion, 0:14:03.600 --> 0:14:05.320 how are you going to spend three hundred billion just 0:14:05.360 --> 0:14:07.920 with Oracle? So there's a big question mark. But then 0:14:07.960 --> 0:14:10.080 your question is, well, why didn't this happen when they 0:14:10.160 --> 0:14:13.200 first announced it? Well, their bottle was at the top 0:14:13.240 --> 0:14:15.960 at that point, and right now Google's Gemini has caught up, 0:14:16.000 --> 0:14:19.080 So people don't know what will open AI's future look 0:14:19.160 --> 0:14:21.000 like two years from now, three years from now, and 0:14:21.040 --> 0:14:23.960 so forth. So there are multiple factors that are going 0:14:24.000 --> 0:14:27.000 into this equation. And not to mention that capex is 0:14:27.040 --> 0:14:29.840 going to go up by fifteen billion, so thirty five 0:14:29.880 --> 0:14:33.160 billion going to fifty billion. So it's a big, big, 0:14:33.600 --> 0:14:37.000 you know, change across four or five different vectors that 0:14:37.040 --> 0:14:38.160 are having an impact. 0:14:38.400 --> 0:14:41.680 So the cloud strategy of Oracle continues to evolve. What 0:14:41.760 --> 0:14:44.320 is the next major inflection point for you when you 0:14:44.360 --> 0:14:49.720 see these cloud companies really move towards more AI driven efforts. 0:14:50.200 --> 0:14:52.080 So the big thing is that five hundred billion of 0:14:52.120 --> 0:14:55.200 backlock needs to bleed into revenue. For that, they need 0:14:55.240 --> 0:14:58.280 to open new data center. But even to open new 0:14:58.320 --> 0:15:01.360 data center, they need more cash. So the big catalyst 0:15:01.400 --> 0:15:03.960 for them is they need to go out. Most likely 0:15:04.000 --> 0:15:06.840 they need to create a special purpose vehicle where they 0:15:06.840 --> 0:15:10.600 can raise funds with the help of private equity investors, 0:15:10.640 --> 0:15:14.120 private credit and basically you know, keep that off Oracle's 0:15:14.160 --> 0:15:18.160 balance sheet, and that will help pacify this fears that 0:15:18.200 --> 0:15:21.160 they actually have a way to finance this big order 0:15:21.200 --> 0:15:21.840 book that they have. 0:15:22.320 --> 0:15:24.680 All right, look, well you mentioned open AI. Can you 0:15:24.760 --> 0:15:27.400 re fresh my memory? Because I have no idea where 0:15:27.440 --> 0:15:29.960 do they get their money that they like? Where are 0:15:30.000 --> 0:15:32.480 they getting the money to? I don't do all this stuff. 0:15:33.160 --> 0:15:35.800 So the single biggest is the consumer app right now, 0:15:35.920 --> 0:15:38.240 That's where most of the money is coming in because 0:15:38.480 --> 0:15:40.400 you know, if you want the best model, you're going 0:15:40.440 --> 0:15:42.200 to pay twenty dollars a month. I mean, you can 0:15:42.200 --> 0:15:44.600 get the free version of it. But that's one area. 0:15:44.640 --> 0:15:46.920 They have over nine hundred million users right now, but 0:15:47.000 --> 0:15:49.080 only a small portion of them are paying customers. So 0:15:49.120 --> 0:15:52.600 that's one. Second is if you as a company, let's 0:15:52.600 --> 0:15:55.680 say you're you know, let's call a hypothetical bank and 0:15:55.720 --> 0:15:59.080 you're creating a chat pot which needs intelligence or in 0:15:59.280 --> 0:16:02.640 large language, more, you're going to use APIs from open 0:16:02.680 --> 0:16:06.520 Ai and that gets embedded intelligence into whatever system that 0:16:06.560 --> 0:16:10.120 you're creating, your chatboard, but that becomes smarter. They get 0:16:10.160 --> 0:16:12.520 paid from that. So those are the two I think 0:16:12.600 --> 0:16:15.800 big elements or the big sources of revenue for them. 0:16:16.080 --> 0:16:19.560 And there is a huge you could say, looking ahead, 0:16:20.000 --> 0:16:23.160 all the enterprises around the world will have some intelligence 0:16:23.160 --> 0:16:25.960 into their code applications and they're going to use model 0:16:26.000 --> 0:16:29.160 from somebody, whether it's Google, whether it's Entropic, whether it's 0:16:29.200 --> 0:16:29.640 open Ai. 0:16:29.920 --> 0:16:32.840 Our thanks to Ana rog Rana, Bloomberg Intelligence technology analyst. 0:16:33.120 --> 0:16:36.400 We move next to some news at Berkshire Hathaway. This week, 0:16:36.480 --> 0:16:39.240 the firm annows a handful of leadership changes, including the 0:16:39.280 --> 0:16:43.080 retirement of its longtime chief financial officer, Mark Hamberg. This 0:16:43.200 --> 0:16:45.720 comes as the one trillion dollar conglomerate prepares for the 0:16:45.760 --> 0:16:49.480 retirement of CEO and billionaire investor Warren Buffett. For more 0:16:49.520 --> 0:16:51.560 on this, co host Scarlo fil and I were joined 0:16:51.560 --> 0:16:54.960 by Matthew Palasola, Bloomberg Intelligence senior analysts covering the P 0:16:55.320 --> 0:16:58.400 and C insurance industry. Your first AaTh Matthew to talk 0:16:58.440 --> 0:17:00.840 to us about some of the turner on we're seeing 0:17:00.880 --> 0:17:01.680 at Berkshire. 0:17:02.120 --> 0:17:04.720 So the big news I think the bigger news of 0:17:04.760 --> 0:17:08.560 the announcements was Todd Colmbs, the one of the investment 0:17:08.560 --> 0:17:12.639 deputies and CEO of Geico, is moving to JP Morgan. 0:17:13.000 --> 0:17:15.400 So I don't know if that was a plan thing 0:17:15.920 --> 0:17:19.399 or what, but that seems like an, you know, kind 0:17:19.400 --> 0:17:22.920 of an unwelcome shake up in light of Buffett leaving 0:17:22.960 --> 0:17:26.159 at the end of the year. I would say his 0:17:26.640 --> 0:17:30.520 investment track record at Berkshire not very transparent. They don't 0:17:30.560 --> 0:17:33.400 really tell you what the investment managers are doing aside 0:17:33.400 --> 0:17:35.879 from Buffett, so you know, I think many of the 0:17:35.920 --> 0:17:38.439 big moves are made by Buffett anyway. And I actually 0:17:38.480 --> 0:17:43.480 do think that Geico had some issues with loss costs 0:17:43.480 --> 0:17:45.440 going up, so the cost of car accidents was going 0:17:45.520 --> 0:17:49.000 up a lot. Combs's reaction was to like cut a 0:17:49.000 --> 0:17:52.240 lot of costs and shed a lot of policies, which 0:17:52.280 --> 0:17:54.359 is actually the opposite of what I thought Berkshire would do. 0:17:54.400 --> 0:17:56.480 I thought they'd kind of ride it out and maybe 0:17:56.520 --> 0:17:59.800 gain some market share. And I do think Progressive handle 0:17:59.840 --> 0:18:02.760 that environment a little bit better, so I think it 0:18:02.800 --> 0:18:05.119 will be a manageable loss. But probably the biggest. 0:18:04.760 --> 0:18:07.439 News, yeah, Todd Coms. We should mention was already a 0:18:07.480 --> 0:18:11.439 JP Morgan board member, so he had a relationship with 0:18:11.480 --> 0:18:14.080 the bank and he's going to be advising Jamie Diamond 0:18:14.080 --> 0:18:18.160 and other senior JP Morgan leaders on strategic issues. Let's 0:18:18.200 --> 0:18:21.840 talk a little bit about the changes that involve a 0:18:21.880 --> 0:18:24.719 new General Council position over at Berkshire as well. So 0:18:25.080 --> 0:18:27.960 this is a brand new position that they're creating versus 0:18:28.040 --> 0:18:29.920 I guess in the past they just relied on the 0:18:30.080 --> 0:18:30.920 daid outside. 0:18:30.640 --> 0:18:34.520 Help outsourced it, I believe to a firm that was 0:18:34.720 --> 0:18:40.000 associated with Charlie Munger. You know, not a huge deal, 0:18:40.040 --> 0:18:41.840 I don't think. I mean, I think it makes sense 0:18:41.880 --> 0:18:44.199 for them to have their own GC. Why not I 0:18:44.200 --> 0:18:47.760 mean Berkshire Hathaway. I think really the outsourcing was in 0:18:47.800 --> 0:18:49.879 part due to it being you know, related to the 0:18:49.880 --> 0:18:53.639 company anyway. So I think it's important. Obviously they're going 0:18:53.680 --> 0:18:56.560 to face tons of legal issues across all of their companies, 0:18:56.600 --> 0:18:58.800 and I think, you know, probably each one has their 0:18:58.800 --> 0:19:01.359 own individual but it would be uh, probably makes a 0:19:01.400 --> 0:19:02.919 lot of sense to have this all roll up to 0:19:02.920 --> 0:19:03.640 someone at the top. 0:19:04.240 --> 0:19:07.240 What's the call, what's the sentiment out there on the street. 0:19:07.080 --> 0:19:09.080 It's tough because you can look at it and say, 0:19:09.520 --> 0:19:11.960 out of their core competencies, are they going to do 0:19:12.000 --> 0:19:15.880 any of that any better? Now, right, you've got Buffett 0:19:15.920 --> 0:19:18.000 going away. You've got a g Chain who is in 0:19:18.080 --> 0:19:22.120 charge of the insurance operations. He's he's getting old, he's 0:19:22.160 --> 0:19:24.280 been selling a lot of stocks and maybe he leaves 0:19:25.280 --> 0:19:28.080 and he was kind of the magic sauce behind a 0:19:28.119 --> 0:19:31.119 lot of the insurance business. So you know, you've kind 0:19:31.119 --> 0:19:35.440 of got these two titans of the company perhaps being 0:19:35.440 --> 0:19:37.120 gone and saying, well, how could they be good as 0:19:37.119 --> 0:19:40.080 good in investing or as good at the insurance business. 0:19:40.280 --> 0:19:42.280 And it would be tough to say that they would be. 0:19:42.320 --> 0:19:44.679 But when you have Able coming in, it was a 0:19:44.680 --> 0:19:47.320 positive sign of some shake up. And maybe you know 0:19:47.359 --> 0:19:50.720 his strength is he's not Buffett. Well, his weaknesses he's 0:19:50.760 --> 0:19:53.520 not Buffet also, right, but his strength is he doesn't 0:19:53.560 --> 0:19:55.359 have to do things the same way, and you know, 0:19:55.400 --> 0:19:58.199 perhaps he takes a different lookie capital allocation. So I 0:19:58.240 --> 0:20:00.720 think the street's hopeful that we see some more capital 0:20:00.800 --> 0:20:02.120 allocation come out of Berkshire. 0:20:02.200 --> 0:20:05.880 All right, thanks to Matthew Pallizola, Bloomberg Intelligence Senior insurance analyst. 0:20:06.200 --> 0:20:08.640 We move next to some news at the American restaurant 0:20:08.640 --> 0:20:11.480 and gift shop chain Cracker Barrel this week the change 0:20:11.520 --> 0:20:13.600