April 30, 2025 • 41 mins
Microsoft Corp. reported better-than-expected sales and profit, suggesting customer demand hasn’t been rattled by tariffs and wider economic uncertainty. Total revenue in the fiscal third quarter increased 13% to $70.1 billion, while adjusted profit was $3.46 a share, the company said in a statement Wednesday. Analysts on average estimated sales of $68.5 billion and adjusted per-share earnings of $3.21.
Meta Platforms Inc. posted first-quarter sales that beat Wall Street estimates, a sign that the company’s advertising business is so far weathering the Trump administration’s ongoing trade war. Sales were $42.3 billion in the first quarter, the maker of Facebook and Instagram said Wednesday. That beat analysts’ estimates for $41.4 billion for the quarter ended March 31. The company also said current-quarter revenue will be in line with analysts’ expectations, and that it will boost spending as it continues to invest in artificial intelligence.
Qualcomm Inc., the biggest maker of chips that run smartphones, gave a tepid revenue prediction for the current quarter, underscoring concerns that tariffs will hurt demand for its products. Revenue in the period ending in June will be $9.9 billion to $10.7 billion, the company said Wednesday in a statement. The midpoint of that range was slightly below the average analyst estimate of $10.33 billion. The outlook renews concern that the market for smartphones is suffering from a looming trade war.
For instant reaction and analysis to these results, plus other tech earnings, hosts Tim Stenovec and Carol Massar speak with Bloomberg Intelligence senior technology analysts Mandeep Singh and Kunjan Sobhani. Bloomberg Technology Co-Host Ed Ludlow also joins alongside Clockwise Capital Technology Analyst James Cakmak.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
This is a breaking news updated from Bloomberg instant reaction
and analysis from our three thousand journalists and analysts around
the world. We got a lot of companies that are
reporting right now. Meta platform shares up by three point
six percent. The company posted first quarter sales that beat
Wall Street estimates. Signed the company's advertising businesses so far
(00:30):
weathering the Trump Administration's ongoing trade war. We got with
us Amandeep Singh's Bloomberg Intelligence senior tech industry analysts. He
joins us here in the Bloomberg Interactive Brokers studio, Mandy,
But I want to start with Look, I want to
start with meta platforms. I think there was a little
bit of concern yesterday with the Snap earnings, not really
like for like when we think about the companies, but
if there's concerns about advertising and pullback, then naturally the
(00:52):
response is, wait, is this going to hit meta platforms?
Speaker 1 (00:55):
Did it? No?
Speaker 3 (00:56):
It did not end. Look, we knew one Q would
be solid, but the fact that they gave us a
two Q guide and that too was in line with
almost in line with consensus, tells you they have more
visibility about the impact of the pullback from Chinese advertisers
their deminimus rule that everyone has been talking about, and
(01:19):
they think it would have a very limited impact on
the business. Obviously there'll be more details.
Speaker 2 (01:25):
On their own. I mean, I'll pull back from like
a Sian, that's right.
Speaker 3 (01:28):
And so look, even though they have almost a ten
percent revenue exposure, the fact that you know it's an
auction model meant that they would have more of an
impact on the ad pricing, and this guidance suggests that
that ad pricing impact is fairly negligible.
Speaker 4 (01:47):
What does this tell you about?
Speaker 5 (01:49):
It's just interesting that we go into this earning season, right,
and you have companies maybe in the traditional kind of economy,
whether it's airlines and others, who are giving a couple
of different scenarios, and then bam, you have something like
a meta and we'll talk maybe Microsoft in just a moment.
Speaker 4 (02:04):
These are strong numbers.
Speaker 3 (02:05):
These are very strong.
Speaker 4 (02:06):
Can they do?
Speaker 1 (02:07):
Like?
Speaker 4 (02:07):
How do we make sense of that?
Speaker 3 (02:09):
Well? I think one these are the highest ROI ad platforms.
So if you are an online business, you don't have
a choice but to spend your ad dollars on Google
and on meta platforms.
Speaker 5 (02:24):
And if you're worried about the your economy or recession,
this is where you're going to do.
Speaker 3 (02:28):
This is where you are going to go to engage
with your customers, to show and add to your customers,
because every company is an online business and this is
the highest ROI now, you're absolutely right that Snap last
night didn't sound very confident about how to Q and
that that was the reason why they didn't guide for
the second quarter. So I am surprised by the fact
(02:50):
that they did guide, and it was really a very
healthy guide given the macro backdrop, and it sounds like
they are much more confident about their advertiser base, which
is predominantly small businesses. So when you think about meta platforms,
they have over ten million small businesses that advertise on
(03:12):
the platform.
Speaker 5 (03:12):
So explain that's what they don't.
Speaker 2 (03:16):
Is it a meta platform story? I mean, you told
us last week that Google is a very efficient way
to advertise, so you weren't surprised to see the numbers
that we saw from Alphabet last week. Is it the
same thing when it comes to meta platforms, like this
is just such a good way to advertise that even
if small businesses see a pullback they still see value
when it comes to spending money on this platform.
Speaker 3 (03:36):
Yeah, so in terms of the pecking order, you are
probably still gonna spend on Meta, but you may pull
back on Reddit, on Pinterest, on Snapchat, and we don't know.
We know snap didn't do very well. We don't know
about the other two. But in terms of pecking order,
Meta is the highest priority ad spend for any advertiser.
And I'm surprised SMBs are still continuing because I would have.
Speaker 4 (04:01):
Small and medium sized business.
Speaker 3 (04:02):
Small and medium sized businesses because the tariffs would have
caused a lot of uncertainty.
Speaker 5 (04:07):
And look, that's why I'm asking you. I'm trying to
understand an environment where so many companies are like, we're
not even going to give you an outlok or we're
going to give you two scenarios. And then you've got
a company like this that's willing to commit but also
plays to the small business community.
Speaker 4 (04:23):
I'm just trying to understand it does.
Speaker 3 (04:24):
And look, the advantage of having such a fragmented advertiser basis,
even if a few advertisers do pull back, you have
a majority of the other advertisers that may double down
given they have favorable conditions. So it sounds like in
this case, some retail advertisers may have pulled back, but
(04:45):
then you know, you have other pockets within the economy,
like financial services that may actually have double down. Thinking
the aslots are much cheaper right now compared to where
they were ninety days back, and so that is a
phenomenon that's always there with digitalized platforms that somebody else
may step up because as a much cheaper right now.
Speaker 4 (05:06):
You know.
Speaker 2 (05:06):
I'm looking at the press release and one thing that
I saw that kind of surprised me a little bit
was Mark Zuckerberg at the top said we're making good
progress on AI glasses and meta AI, which now has
almost a billion monthly actives. We'll get to the number
in a second, but that's what he chose to highlight
at the top. He didn't choose to highlight the strength
of the advertising business making a mistake. This is a
(05:28):
company because he's raising the Kapex.
Speaker 3 (05:30):
So the Capex guide ran from sixty to sixty five.
Speaker 4 (05:34):
So what does that tell you.
Speaker 3 (05:35):
Well, it tells me that they are really going big
in terms of setting up this AI data center infrastructure
for rolling out more AI on their family of apps,
and they see a lot of ROI when it comes
to the AI span.
Speaker 2 (05:51):
What does it mean that it has a billion, almost
a billion monthly actives? What's he talking about there?
Speaker 3 (05:56):
Well, so Meta Platforms has three point five billion monthly
actives across their family.
Speaker 2 (06:02):
WhatsApp, Instagram, Facebook, Message.
Speaker 3 (06:04):
So one billion of those, predominantly through WhatsApp, are using
meta AI. I don't think there is a lot of
Meta AI on Instagram or the Blue app yet, which
I was surprised by given how much they tout Meta AI.
But it's predominantly on WhatsApp.
Speaker 2 (06:21):
Right now, what are they using it for? On WhatsApp?
Are they using it like an LLM? Are they using
it like a chat GPT?
Speaker 3 (06:26):
Yeah, it is a form of search on WhatsApp where
you can sift through your messages. You can actually do
a lot of group kind of correspondences using METAA.
Speaker 2 (06:38):
So it's basically an assistant for the app.
Speaker 6 (06:40):
That's right.
Speaker 3 (06:41):
But still I would say I see it more on
WhatsApp than on their Instagram and Blue App.
Speaker 5 (06:48):
Yeah, all right, so metas still up about three point
four percent.
Speaker 2 (06:51):
Should we talk Microsoft?
Speaker 4 (06:52):
Let's talk at bit.
Speaker 5 (06:52):
About Microsoft, because this one was just kind of off
and running in a big way in the aftermarket. The
stock is up about five point six percent. Here again
some strong numbers.
Speaker 4 (07:03):
Let me just pull it up.
Speaker 5 (07:04):
Here, the company in terms of it posted strong revenue
growth Cloud United expansion. This one also seemed really strong.
Speaker 1 (07:15):
Yeah, so.
Speaker 3 (07:17):
Azure thirty three percent when everyone was thinking, oh, Google
had a slightly lower number on the cloud side, I mean,
thirty three percent is a very impressive number cloud revenue right,
cloud revenue. And again, this is the one company that
has benefited the most when it comes to AI infrastructure
(07:38):
and actually monetizing it. In the case of Meta, you
still don't see the monetization on AI.
Speaker 4 (07:44):
Meaning what specifically, so.
Speaker 3 (07:46):
The AI inferencing revenue. So that is what shows up
in the Azure growth number. And in that thirty three percent,
your AI contribution is north of fifteen percent right now,
So fifteen percent of that thirty three percent growth is
all AI revenue.
Speaker 2 (08:03):
Hold on, do we care about these numbers if we
don't have the guidance yet? Oh, Vester certainly do after
hours sending shares higher, but we're not going to get
guidance until the call.
Speaker 3 (08:12):
This is recurring revenue.
Speaker 2 (08:14):
So when you think about as long as people keep paying.
Speaker 3 (08:17):
Yeah, and enterprises don't really pull back, like.
Speaker 2 (08:20):
If they had side I will say if they have
fewer employees, they would pull back if they lay off employees, wouldn't.
Speaker 3 (08:25):
They Still you need AI infrastructure, you do, Okay? I
think of what they are doing with the AI infrastructure.
They're rolling out chat bots, AI agents. So even if
they are retrenching in terms of headcount, you still need
more AI agents because.
Speaker 2 (08:42):
Everything is awesome.
Speaker 5 (08:43):
One last question, so same thing my question to Meta,
like when I'm trying to understand what is going on
in a lot of other companies, obviously they're not these
big tech companies, Like, is this telling us a different
story in terms of what's going on in the economy
and the impact of some of the White House policies.
Speaker 3 (09:00):
Well, so companies are clearly prioritizing AI initiatives right now,
regardless of what is going on in the macroeconomy and
the tariff situation. Everyone is concerned, but no one has
pulled back on AI related projects, and clearly this is
an illustration of that. We will wait for the guide.
I mean these are one Q numbers, so we don't
(09:20):
know how they guide to for two Q, but one
QU numbers are strong from both companies.
Speaker 2 (09:25):
Okay, Man, Deep, you got to go. We appreciate you
sticking around and hang it with us. You appreciate it.
Not just Microsoft and meta platforms reporting Qualcom. In the
after hours, shares are bouncing around a little bit. The
company did give a tepid revenue prediction for the current quarter.
It underscored concerns about tariffs that will hurt demand for
its products. As soon as these numbers crossed, we did
(09:48):
see shares in the after hours move lower, down about
four point eight percent as we speak right now. Kunjohn
Sabani is Bloomberg Intelligence senior semiconductor analysts. He joins us
once again from San Francisco Bureau. John, your reaction to
the numbers tepid.
Speaker 6 (10:04):
Not surprising to us. In fact, the results and the
outlook turned out exactly how we had called in our preview.
We thought that actual reported quarter might see a beat,
likely due to strength in China Android and from the
results VRC also seeing some better than expected IoT, which
is really a positive sign. But that sort of inline
outlook with the comment that you know they're taking a
(10:27):
conservative approach, that's what we had expected, so not really
surprising anything what we have seen so far.
Speaker 5 (10:33):
They're also saying, the CEO, Christiano Aman, saying, as we
navigate the current macroeconomic and trade environment, we remain focused
on the critical factors we can control.
Speaker 4 (10:44):
Our leading technology.
Speaker 5 (10:45):
Roadmap, best in class product portfolio, strong customer relationships, and
operational efficiencies. It sounds a little bit like c spe
C sweet speak. But what you know they are saying
that there's some navigating through this macroeconomic andronment is that
in trade environment that's just all the stuff coming out
of DC.
Speaker 6 (11:05):
Well, yeah, and remember this smartphone market is sort of
the most susceptible to any uncertainty or a recessionary scenario
or a tariff impact given a totally consumer based and
both the key regions where they sell right, US and
China both are sort of directly or indirectly getting impacted
by tariff. The second thing you remember is this is
the year starting with even the spring iPhone launch, where
(11:27):
Apple started sourcing their internal modem and swapping out Qualcom.
You're going to expect to see this more in the
upcoming iPhone launch in fall. So they're already even if
you take out the tariffs and uncertainty. They already had
these headwinds of loss of revenue. It's significant billions of dollars,
not maybe this year, but starting to happen this year.
They really needed an offsetting positive catalyst. And when you
(11:51):
put in uncertain macron top of it, maybe impacting smartphone
growth overall, that's sort of not the best situation they
want to be in. Right now.
Speaker 2 (12:00):
We'll hear from Apple tomorrow after the bell, but shares
in the after hours down about two tenths of one percent.
Can we get any sort of preview from these numbers?
Given that Qualcomm does get twenty two percent of its
revenue from Apple, not.
Speaker 6 (12:15):
These specific numbers right the spring of phone launch. That's
a very small volume, so we can't expect or predict anything.
The real indication will come from the fall launch. Again,
the numbers there are very difficult to predict at this point.
The other point I want to add ad is right
there in this weird situation where if because of tariff's situations,
(12:36):
and if because of significant tariff on China, if Apple
loses share whether in China on US, that indirectly can
be actually good for Qualcom at the same time that
they're swapping qual Comb out. You know that share if
picked up by Android, that could be actually better for Qualcom,
not just on those revenue side, but also on the
margin side, because Android is a higher margin business for them.
Speaker 2 (12:57):
Okay, that's good to know. Anything else, Coonjohn, that you
can glean from this?
Speaker 5 (13:01):
Oh, go ahead, And I'm thinking, what's the number one question?
I know I always like to throw this out, but
what do you want to hear on the call? Or
what would you be asking?
Speaker 6 (13:09):
I'd be asking a very difficult question, is that. Look,
we know that the Apple share loss is coming. Estimates
have in build some of the loss, Like what is
the offsetting catalyst here? Where can you grow or minimize
this loss, especially in this current environment?
Speaker 5 (13:24):
All right, got to leave it there, Love it, Love
it Kunjohn Sabani. He is Bloomberg Intelligence Senior Semiconductor analys
joining us from our bureau in San Francisco. Couonjohn, thank
you so much. We'll look forward to his research hitting
the Bloomberg a little bit later on.
Speaker 4 (13:37):
We got to get to our other love.
Speaker 2 (13:38):
Yeah, let's bring an ed Love though he's actually here
in New York City. He's the co host of Bloomberg
Technology with more on the tech earnings that just crossed.
Microsoft posted strong revenue growth on cloud unit expansion, Meta
revenue beat estimates on advertising stability. Meta coming out and
giving a guide that please investors. Microsoft. We don't know
what they're guiding yet. We'll find out on the call.
(13:58):
Where do you want to start?
Speaker 7 (14:00):
Let's go and Meta, you know, just because it's actually
an easier story to understand. Meta makes money from advertising.
Anyone that's been on Instagram or Facebook increasingly other apps
will know that. And so the outlook for the current
period shows that in everything that's going on right now,
they're holding our own they're holding up. The ad market
is basically conviction driven, so if there is economic uncertainty,
(14:22):
advertisers are usually a little bit cautious and tepid. So
that's really interesting. Meta always gives a guidance or an
outlook for the current period. Last night, I think you
covered it right, Snapah did not, And what happens when
you don't. Your stock fall's fifteen percent. So that was interesting.
But I think there is something to understand in the
capital expenditures because people misunderstand what it is META does
(14:43):
with that money. So maybe we go there next, Well,
where do Yeah? So, Meta is not a cloud computing company.
It is a social media company that's working on AI
and AIS, product generative AI and AI to drive the
value of its ADS. But it does own and operate
its own data centers. They've dramatically raised the capex guidance
(15:04):
for this year. Yeah, sixty four to seventy two billion. Sorry,
I'm not look on.
Speaker 5 (15:07):
The sixty four to seventy two If they had seen
sixty to sixty five billion, the estimate was just below
sixty billion.
Speaker 7 (15:13):
So what does that mean? They're going to put more
money than they said they were into data centers, more
data centers, cutting edge chips in those data centers. More
likely they'll drive development in AI. But the single line
in the statement that is so critically important is the
majority will go into the core business. They will invest
in the things that support ADS.
Speaker 2 (15:32):
Well, that's okay, that's exactly where I wanted to go.
Because Mark Zuckerberg called out Meta AI, he called out
the hardware in the top of the press release, Mandy
smartly pointing out, well, that's because there raise capex, so
he wants to draw attention to the strength there look, look,
this is an advertising business, no question, yea. What is
going to go toward developing new products like products that
(15:52):
we can wear, products that we walk around with, versus
making the ads more effective to sell us things, which
is met core business.
Speaker 7 (16:00):
Yeah, it's a real quick We're making the distinction between hardware,
which is a consumer electronic one wears on their person,
and infrastructure, which is data status. And that's really important.
So right now, Meta AI is a generative AI function
that you can use through a standalone app as of
this week.
Speaker 2 (16:16):
Yeah, that's brand now, or you can use it.
Speaker 7 (16:18):
Through Facebook, WhatsApp, and Instagram. I use it a lot
through Instagram for whatever reason.
Speaker 2 (16:22):
Yeah, more so than you'd use chat GPT.
Speaker 7 (16:24):
But no, I use chat EPT more than any of
the others. But it's ane.
Speaker 2 (16:28):
So before I just want to pause you just to
see so everybody understands, what are you using AI on
Instagram for that you're not using ONGP.
Speaker 7 (16:35):
I find it analogous, right, because one of the strengths
of meta AI is you can say, meta AI, please
take this photograph of me and turn it into an
animated image where I am depicted amongst the team of
my favorite football team. Something like that, right, And it's
analogous with Instagram, but it does much of the same
things that chat GPT does. It answers questions up until
the date on which the data was trained. Now the
(16:57):
hardware component is that Meta doesn't make a smartphone. It
has dabbled in some other home devices, but the principal
way that you engage with the AI is through ray
ban metas, glasses you wear on your face that have
the computer electronics integrated with cameras and I use them
all the time. And you basically say hey, Meta, and
then it goes whoa, and then you ask it questions
(17:19):
and with audio it responds back. And this has been
a massive surprise to Meta. It started as a gimmick. Frankly,
and tying this to earnings, I think what Zucker saying
in the statement is hint, hint. I'm going to talk
a bit about this on the call because the sales
of that product have been better than expected. But they
also have to tell a story of well, what's your thing?
How are we going to interact with you in the future.
(17:40):
If people aren't using smartphone applications.
Speaker 5 (17:43):
As much I mean as you have used them, I mean,
is it a product that could be mass adopted.
Speaker 7 (17:48):
In your view, yes, in so far as the sales
have been surprising. They don't break out clear data, right,
they don't say, oh, well they might actually maybe they're
surprised uspect. They don't say, like, we have sold ten
million of these, and that would be helpful if they did.
Speaker 5 (18:01):
But as you play around with it, are you like
I could see a.
Speaker 7 (18:04):
Yes, but the sales, we know, the sales have invested
and expected. Now here's the investor Wall Street bit. For
a really long time, the unit that was responsible for
us as humans, our engagement with the first the metaverse
and our AI is Facebook Reality Labs. And for many
quarters it would lose billions of dollars and investors would say,
stop losing billions of dollars. And then they just stopped.
(18:25):
They started looking past it. And part of that was
that the hardware started getting out there and people could
see the distant future where we all wear these devices.
The metaverse is still a thing. I mean, if we
can go there, if you want. But at the end
of the day, it's a story of massive investment to
develop AI the software, and then catching up with the
company's self to say this is how we think all
(18:47):
of our billions of users around the world of our
apps will interact with that AI in the future.
Speaker 2 (18:53):
Okay, so let's stick on that AI theme here on
the Let's say I'm an analyst. I want to know great,
well and good that you're spending this money. It's all
well and good that you've made these developments when it
comes to hardware. Let's get back to ads. How does
that make the ads better that are targeted ed on
Instagram when he's using AI.
Speaker 7 (19:11):
So some of the some of the metrics.
Speaker 2 (19:13):
Certainly it's more engaging. You're spending more time on the platform,
so that's a positive.
Speaker 7 (19:17):
So people will look at metas mesas core data like
the daily active users and add impressions that gives us
a sense of how healthy and competitive that market is.
Listen out on the call. I would wager that Mark
Zuckerberg gives some different data to try and justify why
metas ads are better in a tough economic environment because
of the investments in AI. Go back to the earning statement,
(19:40):
we will invest the majority of capex into core business.
In other words, we're putting a lot into AI because
we think it will grow the value of our ads.
That's what I think will happen.
Speaker 4 (19:48):
This is what I feel like. We talked with man
Deep about this.
Speaker 5 (19:50):
What I do like, if you're going to spend money,
you're going to go to where you get the biggest
ROI right.
Speaker 7 (19:56):
In terms of think of it as a sheer competition
for eyeballs.
Speaker 5 (20:00):
Hey, two things we want to get to before you
have to run. Let's just talk Microsoft real quickly. I mean,
off the chart still up about six percent here.
Speaker 7 (20:08):
So analogous with Meta and Google is that if your
core business performs and you are committing to spending on AI,
investors will reward you. And that's very much the story here.
Thirty three percent top line growth for cloud and that's
what it comes down to, right Yep. I always have
this line. Microsoft, which I've had a relationship with since
I was a child and I learned to use a computer,
(20:28):
was always good at getting people to pay for software
that others will give away for free. That's a true story.
But they're showing that their core business is cloud computing
and Azure whether they the market number two again, it's
the same as Meta. Does your core business justify your
rights to spend on AI development through hardware or infrastructure
data centers. The Microsoft numbers tell that story very clearly.
Speaker 5 (20:50):
It did Mandy say that, actually, it's showing the monetization
of AI that I think in that thirty three percent,
almost half of it are close to half of it
was the result of yeah, red.
Speaker 7 (21:02):
Flip, and the criticism was they released Microsoft co Pilot,
and many people thought that was prematurely. If you're in
everyday tech worker, what am I going to use this for? Nonetheless,
the numbers show that people are paying for it, and
that's impressive.
Speaker 2 (21:16):
Hey, Ed, we're going to hear from Microsoft on the call.
We'll get some guidance there obviously, that will help people
get informed about how the company is thinking about the
current quarter, in the future, Apple tomorrow, Oh gosh.
Speaker 7 (21:29):
Yeah.
Speaker 2 (21:29):
Mark German said, I don't care about the numbers for
the most recent quarter. I just want to hear the
Q and A. I want to hear about tariffs. I
want to hear about the supply chain. I want to
hear Tim Cook's comments there you agree, Yeah.
Speaker 7 (21:42):
Tim Cook famously says periodically I'm not an economist, but
and then we'll give us something about.
Speaker 2 (21:47):
He's not an economist, but he's a supply chain expert.
Speaker 7 (21:49):
Yeah, like story is about totally the hardware companies can
think people that make tangible physical stuff. They're built from
components that move from A to B all over the world,
and there are cost indications. And there is no better
microcosm of what's happening right now in global trade than Apple.
And I get what German saying, but remember that Apple
is the master of managing the bottom line. So if
you are a value long term whatever you want to
(22:12):
call it, people do pay attention to that because Apple
is brilliant at boosting profit.
Speaker 2 (22:16):
You know, Apple has Markerman has reported over and over
again that Apple has struggled with AI, and we see
that with what has happened with Siri. Do you think
they should buy or would buy? Oh my goodness, standalone AI?
Speaker 7 (22:27):
Come for those listening are radio only. I was smirking
and nodding, going yeah, yeah, I mean Siri, you know
has been a bit of a flop.
Speaker 2 (22:33):
Oh say a bit of a flop, a huge flop.
Speaker 7 (22:36):
Yeah, And you know I have covered some of his
stories there. I lose track, but I think that there
was some discussion by Alphabet about working with Apple and
Gemini their model going forward, Apple's looking at third parties
to provide the underlying model that powers all of this.
And as Mark has reported, the consequence of the poor
(22:58):
rollout is they've now restructured that company at the top,
leadership changes, organizational changes to get back on track. I
still love my iPhone, but I do not use Siri ever.
Speaker 2 (23:09):
Yeah.
Speaker 1 (23:10):
Same.
Speaker 5 (23:10):
Hey, before you go, we did talk Apple and Trump
and tariffs. You've got a scoop when it comes to
Vian and.
Speaker 4 (23:17):
What they've been up to.
Speaker 7 (23:18):
Yes, So, prior to the US election in November, Rivian
arranged with a Chinese battery supply called Goshen to move
a supply of LFP batteries from outside of the United
States into the United States. And they paid for it upfront,
which is unusual for an automaker to do. You know,
you don't sort of say okay, I'm not going to
use these for a while, but I'll pay for them anyway.
(23:39):
And it did that to have a strategic stockpile as
a hedge, an insurance against the election. Then more recently
I found out Samsung SDI it's Korean supplier. They said, Samsung,
before these tariffs hit, we need you to move a
very large inventory of battery sales from Korea to the US.
Samsung did so they have this hedge against potential tariff impact.
But it's it's not really about money. It's anxiety that
(24:02):
at borders goods get stopped and then you're left short.
Speaker 5 (24:06):
This is why when we look through some of the
economic numbers, kind of the pull through in advance of tariffs,
you got to keep that in mind. Note in terms
of economic activity.
Speaker 2 (24:14):
Hey, yeah, real quick, we have it's been a while
since we've gotten to talk to you and since you've
been here in New York. On Rivian on everything happening
in the administration. Given Elon Musk's close proximity to the president,
has Rivian been a net gainer or a net loser?
Given in the.
Speaker 7 (24:31):
Story we just reported at and read the details, I
put a lot of detail in the report, they made
a shrewd move. The question that every AUTO CEO, I
know this, every CEO is asking is is the net
result that Elon must secure something that is specifically good
and beneficial to Tesla, a carved out exemption, or in
so doing, does Elon must get an exemption for Tesla
(24:52):
or some kind of benefit that has a wider positive
impact on those that make evs, and I think the
latter is where people are hanging their hat.
Speaker 5 (25:00):
Yeah, kind of a fascinating da where I think everybody's speculating.
It did feel like a little bit of the present
saying not necessarily goodbye to Elon, but kind of him
wrapping up certainly his tenure.
Speaker 2 (25:11):
Which data will reminded us. We all knew was coming,
given his status as a special government employee.
Speaker 4 (25:15):
Exactly right.
Speaker 2 (25:16):
It was just a surprise time.
Speaker 4 (25:17):
It was just a matter of time.
Speaker 5 (25:19):
Yeah, pretty wild and tough questions top of mind in
terms of the earnings that we've seen this dump.
Speaker 2 (25:24):
Oh yeah today.
Speaker 7 (25:25):
You know, like Alphabet, Google, they don't give guidance, they
don't give detail, they don't tell you about anything in
the economy. I would think that Meta and Microsoft would
go a lot further, specifically like industries, geographies, and we
would learn a lot about what they see in the world,
and so not just Apple. Those other names will give
us value, I think in the economic context.
Speaker 5 (25:44):
All right, good stuff, as always, Ed Ludlow, thank you
so much, so appreciated. Ed Ludlo, of course, his co
host of Bloomberg Technology catch him and Caroline Hyde. They
are on Bloomberg Television at eleven am Wall Street time
Monday through Friday. So am I assuming this coverage will
continue into tomorrow.
Speaker 2 (26:00):
In the meantime, I do want to bring in James Chockmack.
He's partner and chief investment officer at Clockwise Capital. He
joins us from Miami. He's got the Clockwise Core Equity
and Innovation ETF. It's down about eight percent so far
this year. It does include Apple, Microsoft, Amazon, and Nvidia
among its top holdings. And that's exactly James where I
want to start. Given what we just heard from Microsoft.
(26:21):
We got the numbers there from ed investors happy in
the after hours, the company will give guidance on that call.
What are your thoughts?
Speaker 1 (26:30):
Yeah, I think from a big pictures standpoint, you know,
we went into tonight kind of ranking the mega cap
earnings remaining as Microsoft as the least risky, moving to
Meta and then finally to Amazon is the riskiest of
the three, and I think so far as playing out
as such, Microsoft, you know, the big number there that
the Bogie wing he wanted to see was north of
(26:51):
thirty percent Azure revenue. You know, we were looking like
the momentum continues to be there. I think, you know,
when you look at the megacap earnings megacap companies, you know,
really what we try to focus on, which ones are
the most immune to tariffs, which ones have the most resiliency,
and which ones have evaluation that supports some level of support.
(27:15):
So I think microscot underscores all three of those. And
you know, we liked what we saw, and you know,
Meta that was a you know, not the best of outlooks,
but expectations had come down substantially, particularly following SNAPS results
last night. So the fact that they're even giving an
outlook isn't that positive? And that one has come in
(27:39):
a lot from evaluation standpoint. So I think.
Speaker 2 (27:42):
Standards like listen to like the fact that they even
give an outlook, isn't that positive. That's the environment we're in.
Speaker 4 (27:48):
This is what we're trying to get our head around.
Speaker 5 (27:50):
I mean, James, I'm looking at shares of Microsoft still
up about six point two percent. If I look at Meta,
it's up just shy of six percent. And I pulled
up Amazon, which in twenty four hours we're going to
be all over Amazon's earnings. It's up about two point
eight percent here in the aftermarket.
Speaker 4 (28:06):
But I'm trying to get my head around what these
companies are.
Speaker 5 (28:09):
Saying and doing versus kind of it feels like so
much uncertainty in the rest of the you know, public universe,
or so much uncertainty our companies not giving an outlook
or companies giving two outlooks. So do we set these
companies apart or does this say something more strongly about
what's going on in the US economy and the global economy.
Speaker 1 (28:32):
Yeah, we're not going to be too quick to judge,
you know, how these companies are doing over the very
short term about the broader macro implications. We still see
US as at a fifty to fifty market at best.
You know, yes, the results have been largely coming in
on par maybe slightly better than expectations, but you know,
we're not out of the woods by any means. You know,
(28:53):
you still have reinflation risk, recession risk. The behavioral changes
haven't even really hit the consumer yet. Yeah, that from
VISAS results this morning. So you know, you're seeing some
repositioning from a business standpoint. The businesses adapt, try to
adapt as best as possible, but it hasn't hit the consumer.
(29:15):
There's a lot of unknowns. The only thing I'd say
that isn't net positive is that you've been seeing the
FOMC members start to posture their rhetoric to a more
dubbish posture as we have the main meeting coming up.
So that could help provide some level of support to
the broader market, but it doesn't help in any way,
(29:38):
shape or form provide that much incremental confidence as it
relates to the earnings outlook for the balance of the year.
Speaker 2 (29:44):
James, one of the reasons we like talking to you
is not just because you are an analyst or have
an analyst background covering all of these companies, but also
because you put your money where your mouth is. With
the portfolio management of the ETF the clockwise core equity
and innovation, Apple's your top holding. Dollar General is your
second biggest holding. Explain that are you essentially trying to
(30:07):
grab every type of consumer out there. You've got the
high end consumer with Apple and then you've got everybody
at Dollar General.
Speaker 1 (30:16):
Well, the way we look at it is, you know,
a periods of maximum uncertainty require maximum adaptability. So what
we're trying to do is in a fifty to fifty
market play things down the middle. But that means is
we're taking a Barbelle approach where for every dollar of
beta of higher beta, you know, we're adding a dollar
of much lower beta. And that's where the Apple and
(30:38):
Dollar General kind of equal weightings come into play. But
a more extreme example that I'd point out is, you know,
we have the equal weight with micro strategy or Strategy
now as we do with Dollar General. So I wouldn't
read that much into Apple. I mean that has something
to do with the fact that it's such a big
weight in the index. But I think micro strategy is
(30:58):
a better example of you know, how we're how polarized.
You know, the bar bell is that we're playing.
Speaker 2 (31:06):
Wish to remind everybody is a levered play on bitcoin.
Speaker 1 (31:10):
Yes, I mean I we think that crypto single handle.
It's the number one asset class that I have confidence
and for twenty twenty five, I think it's Bitcoin is
going to be the single largest contributor to returns in
twenty twenty five. I can't say that the same about
any other sector.
Speaker 4 (31:26):
Is partial to really why.
Speaker 1 (31:29):
Yes, institutional adoption, building awareness, there's going to be crypto
related services. You had the fed, you know, remove barriers
as to what banks can do as it relates to crypto.
So I think that as the regulations come off, awareness builds,
(31:50):
institutions build. You know, Black Croc says that it should
be two percent of portfolios, you know, across the board.
You know, we completely we agree with that. All our
client portfolios have at least a two percent position in bitcoin.
And you know, as we look to the balance of
the year, and we just don't have confidence in really
(32:12):
any other sector to the same degree. You know, we're
we're we like tech, the cheaper tech, We like commodities,
you know, we like utilities, and we like staples. You know,
where the valuation makes sense. But crypto no hesitation and
its full steam ahead.
Speaker 4 (32:30):
Interesting.
Speaker 5 (32:31):
So so it sounds like you have been putting money
to work over the last month or two amid the volatility.
Speaker 4 (32:37):
Yes, yes, and then yeah.
Speaker 1 (32:41):
Yeah, yeah, we're putting money to work where when and
where we can. You know, we've been selling a lot
of the megacap names into any opportunity we have into strength,
you know, just to give you a sense. You know,
the top ten weights of the Nasdaq are about fifty
percent of the total index. We're about forty percent of that.
You know, we're at about twenty percent, so you know,
(33:04):
we are under exposed on megacap, so selling it to strength,
utilizing that cash to diversify into more value names like
Dollar General, which you pointed out to Tim and and
uh and keeping the pressure on on the crypto front
as as best as possible on any pullback that we see.
Speaker 5 (33:24):
But you did like I'm just looking. You've owned micro strategy,
Are you out completely?
Speaker 1 (33:30):
Oh no, we've been grossing it up every single time
it pulls back.
Speaker 4 (33:34):
Oh I'm sorry, so that one you've been moving it?
Speaker 1 (33:35):
Yeah, yeah, yeah, it's the it's the megacap names, you know,
the Microsoft's, Amazon's that as you know, those are all
significantly underweight relative to the index. And we think it's
proven to stay there until we have better clarity on
business spending and the consumer. We just don't know exactly
where we Amazon's going to be a big tail tomorrow.
(33:56):
You know, you can argue that the cloud services Google
was better than expected, Microsoft better than expected, So business
spending is there, but it certainly you're not seeing you know,
Sincis results would tell you a completely different story last night.
So so much uncertainty.
Speaker 5 (34:12):
So just going back meta reporting today, it's up about
six percent here in the after market. We just talked
about it. So revenue beating estimates on advertising stability. I'm
looking at Microsoft up about six percent here in the
after hours again, third quarter revenue topping estimates. Amazon has
moved up ahead of its earnings tomorrow after the close,
(34:33):
up about three and a half percent. Qual calms down
about nine percent here in the after market following its numbers.
It gave a soft revenue forecast in the face of
all the trade turmoils. So we're seeing anything here that's
of interest or this is again not the way you
want to play it right now?
Speaker 1 (34:52):
Yeah, I mean we we increase our Microsoft position the
moment the numbers came out, we haven't we you know,
we derisked it into the quarter. Now that the numbers
are out, we got we've got it up a couple percent.
Speaker 2 (35:09):
But does that story change potentially when we hear from
the company on its earnings call and they talk about
guidance or are you confidence and confident and guidance.
Speaker 1 (35:17):
Microsoft was the only one of that group that you know,
we liked into the quarter, which is why it was
weighted slightly more than both Meta and Amazon, but we
decided to take it back to where it was prior
to the quarter, just because we believe it's the most
insulated from all of the noise geopolitical and otherwise. While
(35:39):
Meta and Amazon, you know, we would wait for the
exact commentary on the call to be able to make
that decision.
Speaker 2 (35:46):
Okay, hey, how do you just a big picture? How
do you think the economy is doing, how do you
think the consumer is doing? How do you think they're
going to weather these tariffs?
Speaker 1 (35:56):
I don't know. I mean I can give you anecdotes,
you know, like I went to you know, get my
haircut yesterday and my barber was telling me that business
has been slowing dramatically.
Speaker 3 (36:05):
You know.
Speaker 1 (36:06):
You know, you hear from companies like Visa and they'll
tell you otherwise. But companies like Amazon come out and say,
you know, Amazon Andy Jassical was saying that, you know,
you're seeing trade down of purchases to lower ticket items.
So it's a mixed message. And the thing about it
is that we're really not going to get a sense
(36:26):
of from the from an economic data standpoint, nor from
a company standpoint. On the exact uh repercussions on the
on the consumer for another thirty to forty five days. So,
you know, it's a lot of question marks out there.
But I think that the bottom hasn't fallen out of
the consumer yet. The behavior has kept up, but how
(36:47):
long will it last? You know, we don't want to
wait around to see and find out. We rather, you know,
just be proactive and be balanced in the areas that
we have conviction in with the value areas that we
think can withstand a downturn, and increase hedges where we can,
because right now it's impossible to say or lean in
(37:08):
in either direction. We're just getting incremental data points. You know,
they'll build up to a full, more formulated story in
the next couple of weeks.
Speaker 5 (37:19):
Yeah, it's fascinating Bloomberg and I know other people talk
about it, but it's something like the beauty salon index,
but basically there Atwater.
Speaker 2 (37:26):
Sent me a message on Twitter about this today on
x It's William and Mary.
Speaker 5 (37:31):
I love that you wrote that because it's it's kind
of people's salons have been talking about how people are
trading down on services, they're not doing as much, they're
cutting back and so It's just kind of one of
those unofficial indicators of maybe what people are doing, kind
of conserving their spending because maybe they want to or
maybe because they have to, uh and in anticipation of
(37:53):
what's to come.
Speaker 4 (37:55):
Top question for any.
Speaker 1 (37:56):
Regardless of the economy. I had to I had to
get on my haircut because I'm going to the Grand
Prix this week.
Speaker 2 (38:02):
So that's that's uh, well, yeah, that's a necessity. Is
that a discretionary expense changer? Is that a business expense?
How do you look at that.
Speaker 1 (38:11):
I'm incredibly passionate about Formula one. Actually we own Formula
one uh in the fund f wank. We think that
that is a resilient business that's going to continue to grow.
But it's discretionary. But it's also something I'm incredibly passionate about,
passionate enough to actually own the underlying stock.
Speaker 4 (38:32):
Love it pretty cool stuff.
Speaker 5 (38:34):
Hey, just going back to the companies that have reported
after the close, as we mentioned Microsoft, you know rallying
soaring in the aftermarket, Meta is higher. We did talk
Qualcom taking a big hit down about nine percent in
the aftermarket. Pick a CEO, pick a company, what might
you want to ask them? Go anywhere you want.
Speaker 1 (38:56):
I mean, the biggest question mark we have is on
the consumer. So I go straight to Amazon, to Andy
Jesse and basically give us ask him to try to
give us more color than what we got from Visa.
You know, you know, what is the degree of trade
down and purchases? You know what, how has the patterns
changed from day to day, you know, over the course
(39:18):
of airpril you know, just we need we just need
more color on what's happening underneath the hood. And we're
just not sure about it. But you know, business spending,
you know, seems to be there for the most part,
but the consumer drives the economy, you know, or spending economy,
And any clarity you can provide on that would help
(39:39):
us ascertain exactly what we need to do going forward.
Speaker 2 (39:42):
So one of my questions, and one of my questions
to you James before you go, is you know, you
answered my question about the economy. What about when it
comes to a long term trade war standoff with China
sort of a stalemate here one ands, we've heard about
factory activity possibly slowing down there. I know that some
of the big box CEOs here are concerned about what
(40:04):
happens if we start to see empty shelves, how do
you look at that specifically?
Speaker 1 (40:11):
Yeah, I mean the empty shelves thing is a big deal,
you know. You know, in about two weeks time, you know,
we may come to a situation where people can't get
their goods. So that's a real risk, you know, when
we think about the broader tariff risks and whatnot and
the consequences of that. You know, we do think that
(40:31):
the tail risks in the market are much more prevalent
today than in many, many years. You know, we're looking at,
you know, issues with our national debt, you know, issues
with credit risk, credit downgrades. You know, the yields have
continued to rise. You know, you hear from the administration
that foreign investment continues to stay strong. But if you
(40:51):
look under the hood at the actual auctions, you see
foreign purchases of US treasury bonds falling as a percentage
of the total, with much more coming from direct buyers
who are based here in the US. So foreign demand
is following the dollar is falling. In the meantime, you
really have to watch Japan because Japan you have strengthening again,
(41:14):
you have rising interest rates there, and you could totally
have a Japanese carriage Try two point zero as well.
So tail risks in the market are more prevalent now
than ever, and it's certainly something that we're monitoring constantly.
So you're both short term risks with the recession and
long term months.
Speaker 5 (41:31):
Great perspective on the specifics of these companies and so
much more. James Chochmak, thank you so much, partner and
chief investment officer at Clockwise Capital, joining us here to
break down some of the earnings
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
This is a breaking news updated from Bloomberg instant reaction
and analysis from our three thousand journalists and analysts around
the world. We got a lot of companies that are
reporting right now. Meta platform shares up by three point
six percent. The company posted first quarter sales that beat
Wall Street estimates. Signed the company's advertising businesses so far
(00:30):
weathering the Trump Administration's ongoing trade war. We got with
us Amandeep Singh's Bloomberg Intelligence senior tech industry analysts. He
joins us here in the Bloomberg Interactive Brokers studio, Mandy,
But I want to start with Look, I want to
start with meta platforms. I think there was a little
bit of concern yesterday with the Snap earnings, not really
like for like when we think about the companies, but
if there's concerns about advertising and pullback, then naturally the
(00:52):
response is, wait, is this going to hit meta platforms?
Speaker 1 (00:55):
Did it? No?
Speaker 3 (00:56):
It did not end. Look, we knew one Q would
be solid, but the fact that they gave us a
two Q guide and that too was in line with
almost in line with consensus, tells you they have more
visibility about the impact of the pullback from Chinese advertisers
their deminimus rule that everyone has been talking about, and
(01:19):
they think it would have a very limited impact on
the business. Obviously there'll be more details.
Speaker 2 (01:25):
On their own. I mean, I'll pull back from like
a Sian, that's right.
Speaker 3 (01:28):
And so look, even though they have almost a ten
percent revenue exposure, the fact that you know it's an
auction model meant that they would have more of an
impact on the ad pricing, and this guidance suggests that
that ad pricing impact is fairly negligible.
Speaker 4 (01:47):
What does this tell you about?
Speaker 5 (01:49):
It's just interesting that we go into this earning season, right,
and you have companies maybe in the traditional kind of economy,
whether it's airlines and others, who are giving a couple
of different scenarios, and then bam, you have something like
a meta and we'll talk maybe Microsoft in just a moment.
Speaker 4 (02:04):
These are strong numbers.
Speaker 3 (02:05):
These are very strong.
Speaker 4 (02:06):
Can they do?
Speaker 1 (02:07):
Like?
Speaker 4 (02:07):
How do we make sense of that?
Speaker 3 (02:09):
Well? I think one these are the highest ROI ad platforms.
So if you are an online business, you don't have
a choice but to spend your ad dollars on Google
and on meta platforms.
Speaker 5 (02:24):
And if you're worried about the your economy or recession,
this is where you're going to do.
Speaker 3 (02:28):
This is where you are going to go to engage
with your customers, to show and add to your customers,
because every company is an online business and this is
the highest ROI now, you're absolutely right that Snap last
night didn't sound very confident about how to Q and
that that was the reason why they didn't guide for
the second quarter. So I am surprised by the fact
(02:50):
that they did guide, and it was really a very
healthy guide given the macro backdrop, and it sounds like
they are much more confident about their advertiser base, which
is predominantly small businesses. So when you think about meta platforms,
they have over ten million small businesses that advertise on
(03:12):
the platform.
Speaker 5 (03:12):
So explain that's what they don't.
Speaker 2 (03:16):
Is it a meta platform story? I mean, you told
us last week that Google is a very efficient way
to advertise, so you weren't surprised to see the numbers
that we saw from Alphabet last week. Is it the
same thing when it comes to meta platforms, like this
is just such a good way to advertise that even
if small businesses see a pullback they still see value
when it comes to spending money on this platform.
Speaker 3 (03:36):
Yeah, so in terms of the pecking order, you are
probably still gonna spend on Meta, but you may pull
back on Reddit, on Pinterest, on Snapchat, and we don't know.
We know snap didn't do very well. We don't know
about the other two. But in terms of pecking order,
Meta is the highest priority ad spend for any advertiser.
And I'm surprised SMBs are still continuing because I would have.
Speaker 4 (04:01):
Small and medium sized business.
Speaker 3 (04:02):
Small and medium sized businesses because the tariffs would have
caused a lot of uncertainty.
Speaker 5 (04:07):
And look, that's why I'm asking you. I'm trying to
understand an environment where so many companies are like, we're
not even going to give you an outlok or we're
going to give you two scenarios. And then you've got
a company like this that's willing to commit but also
plays to the small business community.
Speaker 4 (04:23):
I'm just trying to understand it does.
Speaker 3 (04:24):
And look, the advantage of having such a fragmented advertiser basis,
even if a few advertisers do pull back, you have
a majority of the other advertisers that may double down
given they have favorable conditions. So it sounds like in
this case, some retail advertisers may have pulled back, but
(04:45):
then you know, you have other pockets within the economy,
like financial services that may actually have double down. Thinking
the aslots are much cheaper right now compared to where
they were ninety days back, and so that is a
phenomenon that's always there with digitalized platforms that somebody else
may step up because as a much cheaper right now.
Speaker 4 (05:06):
You know.
Speaker 2 (05:06):
I'm looking at the press release and one thing that
I saw that kind of surprised me a little bit
was Mark Zuckerberg at the top said we're making good
progress on AI glasses and meta AI, which now has
almost a billion monthly actives. We'll get to the number
in a second, but that's what he chose to highlight
at the top. He didn't choose to highlight the strength
of the advertising business making a mistake. This is a
(05:28):
company because he's raising the Kapex.
Speaker 3 (05:30):
So the Capex guide ran from sixty to sixty five.
Speaker 4 (05:34):
So what does that tell you.
Speaker 3 (05:35):
Well, it tells me that they are really going big
in terms of setting up this AI data center infrastructure
for rolling out more AI on their family of apps,
and they see a lot of ROI when it comes
to the AI span.
Speaker 2 (05:51):
What does it mean that it has a billion, almost
a billion monthly actives? What's he talking about there?
Speaker 3 (05:56):
Well, so Meta Platforms has three point five billion monthly
actives across their family.
Speaker 2 (06:02):
WhatsApp, Instagram, Facebook, Message.
Speaker 3 (06:04):
So one billion of those, predominantly through WhatsApp, are using
meta AI. I don't think there is a lot of
Meta AI on Instagram or the Blue app yet, which
I was surprised by given how much they tout Meta AI.
But it's predominantly on WhatsApp.
Speaker 2 (06:21):
Right now, what are they using it for? On WhatsApp?
Are they using it like an LLM? Are they using
it like a chat GPT?
Speaker 3 (06:26):
Yeah, it is a form of search on WhatsApp where
you can sift through your messages. You can actually do
a lot of group kind of correspondences using METAA.
Speaker 2 (06:38):
So it's basically an assistant for the app.
Speaker 6 (06:40):
That's right.
Speaker 3 (06:41):
But still I would say I see it more on
WhatsApp than on their Instagram and Blue App.
Speaker 5 (06:48):
Yeah, all right, so metas still up about three point
four percent.
Speaker 2 (06:51):
Should we talk Microsoft?
Speaker 4 (06:52):
Let's talk at bit.
Speaker 5 (06:52):
About Microsoft, because this one was just kind of off
and running in a big way in the aftermarket. The
stock is up about five point six percent. Here again
some strong numbers.
Speaker 4 (07:03):
Let me just pull it up.
Speaker 5 (07:04):
Here, the company in terms of it posted strong revenue
growth Cloud United expansion. This one also seemed really strong.
Speaker 1 (07:15):
Yeah, so.
Speaker 3 (07:17):
Azure thirty three percent when everyone was thinking, oh, Google
had a slightly lower number on the cloud side, I mean,
thirty three percent is a very impressive number cloud revenue right,
cloud revenue. And again, this is the one company that
has benefited the most when it comes to AI infrastructure
(07:38):
and actually monetizing it. In the case of Meta, you
still don't see the monetization on AI.
Speaker 4 (07:44):
Meaning what specifically, so.
Speaker 3 (07:46):
The AI inferencing revenue. So that is what shows up
in the Azure growth number. And in that thirty three percent,
your AI contribution is north of fifteen percent right now,
So fifteen percent of that thirty three percent growth is
all AI revenue.
Speaker 2 (08:03):
Hold on, do we care about these numbers if we
don't have the guidance yet? Oh, Vester certainly do after
hours sending shares higher, but we're not going to get
guidance until the call.
Speaker 3 (08:12):
This is recurring revenue.
Speaker 2 (08:14):
So when you think about as long as people keep paying.
Speaker 3 (08:17):
Yeah, and enterprises don't really pull back, like.
Speaker 2 (08:20):
If they had side I will say if they have
fewer employees, they would pull back if they lay off employees, wouldn't.
Speaker 3 (08:25):
They Still you need AI infrastructure, you do, Okay? I
think of what they are doing with the AI infrastructure.
They're rolling out chat bots, AI agents. So even if
they are retrenching in terms of headcount, you still need
more AI agents because.
Speaker 2 (08:42):
Everything is awesome.
Speaker 5 (08:43):
One last question, so same thing my question to Meta,
like when I'm trying to understand what is going on
in a lot of other companies, obviously they're not these
big tech companies, Like, is this telling us a different
story in terms of what's going on in the economy
and the impact of some of the White House policies.
Speaker 3 (09:00):
Well, so companies are clearly prioritizing AI initiatives right now,
regardless of what is going on in the macroeconomy and
the tariff situation. Everyone is concerned, but no one has
pulled back on AI related projects, and clearly this is
an illustration of that. We will wait for the guide.
I mean these are one Q numbers, so we don't
(09:20):
know how they guide to for two Q, but one
QU numbers are strong from both companies.
Speaker 2 (09:25):
Okay, Man, Deep, you got to go. We appreciate you
sticking around and hang it with us. You appreciate it.
Not just Microsoft and meta platforms reporting Qualcom. In the
after hours, shares are bouncing around a little bit. The
company did give a tepid revenue prediction for the current quarter.
It underscored concerns about tariffs that will hurt demand for
its products. As soon as these numbers crossed, we did
(09:48):
see shares in the after hours move lower, down about
four point eight percent as we speak right now. Kunjohn
Sabani is Bloomberg Intelligence senior semiconductor analysts. He joins us
once again from San Francisco Bureau. John, your reaction to
the numbers tepid.
Speaker 6 (10:04):
Not surprising to us. In fact, the results and the
outlook turned out exactly how we had called in our preview.
We thought that actual reported quarter might see a beat,
likely due to strength in China Android and from the
results VRC also seeing some better than expected IoT, which
is really a positive sign. But that sort of inline
outlook with the comment that you know they're taking a
(10:27):
conservative approach, that's what we had expected, so not really
surprising anything what we have seen so far.
Speaker 5 (10:33):
They're also saying, the CEO, Christiano Aman, saying, as we
navigate the current macroeconomic and trade environment, we remain focused
on the critical factors we can control.
Speaker 4 (10:44):
Our leading technology.
Speaker 5 (10:45):
Roadmap, best in class product portfolio, strong customer relationships, and
operational efficiencies. It sounds a little bit like c spe
C sweet speak. But what you know they are saying
that there's some navigating through this macroeconomic andronment is that
in trade environment that's just all the stuff coming out
of DC.
Speaker 6 (11:05):
Well, yeah, and remember this smartphone market is sort of
the most susceptible to any uncertainty or a recessionary scenario
or a tariff impact given a totally consumer based and
both the key regions where they sell right, US and
China both are sort of directly or indirectly getting impacted
by tariff. The second thing you remember is this is
the year starting with even the spring iPhone launch, where
(11:27):
Apple started sourcing their internal modem and swapping out Qualcom.
You're going to expect to see this more in the
upcoming iPhone launch in fall. So they're already even if
you take out the tariffs and uncertainty. They already had
these headwinds of loss of revenue. It's significant billions of dollars,
not maybe this year, but starting to happen this year.
They really needed an offsetting positive catalyst. And when you
(11:51):
put in uncertain macron top of it, maybe impacting smartphone
growth overall, that's sort of not the best situation they
want to be in. Right now.
Speaker 2 (12:00):
We'll hear from Apple tomorrow after the bell, but shares
in the after hours down about two tenths of one percent.
Can we get any sort of preview from these numbers?
Given that Qualcomm does get twenty two percent of its
revenue from Apple, not.
Speaker 6 (12:15):
These specific numbers right the spring of phone launch. That's
a very small volume, so we can't expect or predict anything.
The real indication will come from the fall launch. Again,
the numbers there are very difficult to predict at this point.
The other point I want to add ad is right
there in this weird situation where if because of tariff's situations,
(12:36):
and if because of significant tariff on China, if Apple
loses share whether in China on US, that indirectly can
be actually good for Qualcom at the same time that
they're swapping qual Comb out. You know that share if
picked up by Android, that could be actually better for Qualcom,
not just on those revenue side, but also on the
margin side, because Android is a higher margin business for them.
Speaker 2 (12:57):
Okay, that's good to know. Anything else, Coonjohn, that you
can glean from this?
Speaker 5 (13:01):
Oh, go ahead, And I'm thinking, what's the number one question?
I know I always like to throw this out, but
what do you want to hear on the call? Or
what would you be asking?
Speaker 6 (13:09):
I'd be asking a very difficult question, is that. Look,
we know that the Apple share loss is coming. Estimates
have in build some of the loss, Like what is
the offsetting catalyst here? Where can you grow or minimize
this loss, especially in this current environment?
Speaker 5 (13:24):
All right, got to leave it there, Love it, Love
it Kunjohn Sabani. He is Bloomberg Intelligence Senior Semiconductor analys
joining us from our bureau in San Francisco. Couonjohn, thank
you so much. We'll look forward to his research hitting
the Bloomberg a little bit later on.
Speaker 4 (13:37):
We got to get to our other love.
Speaker 2 (13:38):
Yeah, let's bring an ed Love though he's actually here
in New York City. He's the co host of Bloomberg
Technology with more on the tech earnings that just crossed.
Microsoft posted strong revenue growth on cloud unit expansion, Meta
revenue beat estimates on advertising stability. Meta coming out and
giving a guide that please investors. Microsoft. We don't know
what they're guiding yet. We'll find out on the call.
(13:58):
Where do you want to start?
Speaker 7 (14:00):
Let's go and Meta, you know, just because it's actually
an easier story to understand. Meta makes money from advertising.
Anyone that's been on Instagram or Facebook increasingly other apps
will know that. And so the outlook for the current
period shows that in everything that's going on right now,
they're holding our own they're holding up. The ad market
is basically conviction driven, so if there is economic uncertainty,
(14:22):
advertisers are usually a little bit cautious and tepid. So
that's really interesting. Meta always gives a guidance or an
outlook for the current period. Last night, I think you
covered it right, Snapah did not, And what happens when
you don't. Your stock fall's fifteen percent. So that was interesting.
But I think there is something to understand in the
capital expenditures because people misunderstand what it is META does
(14:43):
with that money. So maybe we go there next, Well,
where do Yeah? So, Meta is not a cloud computing company.
It is a social media company that's working on AI
and AIS, product generative AI and AI to drive the
value of its ADS. But it does own and operate
its own data centers. They've dramatically raised the capex guidance
(15:04):
for this year. Yeah, sixty four to seventy two billion. Sorry,
I'm not look on.
Speaker 5 (15:07):
The sixty four to seventy two If they had seen
sixty to sixty five billion, the estimate was just below
sixty billion.
Speaker 7 (15:13):
So what does that mean? They're going to put more
money than they said they were into data centers, more
data centers, cutting edge chips in those data centers. More
likely they'll drive development in AI. But the single line
in the statement that is so critically important is the
majority will go into the core business. They will invest
in the things that support ADS.
Speaker 2 (15:32):
Well, that's okay, that's exactly where I wanted to go.
Because Mark Zuckerberg called out Meta AI, he called out
the hardware in the top of the press release, Mandy
smartly pointing out, well, that's because there raise capex, so
he wants to draw attention to the strength there look, look,
this is an advertising business, no question, yea. What is
going to go toward developing new products like products that
(15:52):
we can wear, products that we walk around with, versus
making the ads more effective to sell us things, which
is met core business.
Speaker 7 (16:00):
Yeah, it's a real quick We're making the distinction between hardware,
which is a consumer electronic one wears on their person,
and infrastructure, which is data status. And that's really important.
So right now, Meta AI is a generative AI function
that you can use through a standalone app as of
this week.
Speaker 2 (16:16):
Yeah, that's brand now, or you can use it.
Speaker 7 (16:18):
Through Facebook, WhatsApp, and Instagram. I use it a lot
through Instagram for whatever reason.
Speaker 2 (16:22):
Yeah, more so than you'd use chat GPT.
Speaker 7 (16:24):
But no, I use chat EPT more than any of
the others. But it's ane.
Speaker 2 (16:28):
So before I just want to pause you just to
see so everybody understands, what are you using AI on
Instagram for that you're not using ONGP.
Speaker 7 (16:35):
I find it analogous, right, because one of the strengths
of meta AI is you can say, meta AI, please
take this photograph of me and turn it into an
animated image where I am depicted amongst the team of
my favorite football team. Something like that, right, And it's
analogous with Instagram, but it does much of the same
things that chat GPT does. It answers questions up until
the date on which the data was trained. Now the
(16:57):
hardware component is that Meta doesn't make a smartphone. It
has dabbled in some other home devices, but the principal
way that you engage with the AI is through ray
ban metas, glasses you wear on your face that have
the computer electronics integrated with cameras and I use them
all the time. And you basically say hey, Meta, and
then it goes whoa, and then you ask it questions
(17:19):
and with audio it responds back. And this has been
a massive surprise to Meta. It started as a gimmick. Frankly,
and tying this to earnings, I think what Zucker saying
in the statement is hint, hint. I'm going to talk
a bit about this on the call because the sales
of that product have been better than expected. But they
also have to tell a story of well, what's your thing?
How are we going to interact with you in the future.
(17:40):
If people aren't using smartphone applications.
Speaker 5 (17:43):
As much I mean as you have used them, I mean,
is it a product that could be mass adopted.
Speaker 7 (17:48):
In your view, yes, in so far as the sales
have been surprising. They don't break out clear data, right,
they don't say, oh, well they might actually maybe they're
surprised uspect. They don't say, like, we have sold ten
million of these, and that would be helpful if they did.
Speaker 5 (18:01):
But as you play around with it, are you like
I could see a.
Speaker 7 (18:04):
Yes, but the sales, we know, the sales have invested
and expected. Now here's the investor Wall Street bit. For
a really long time, the unit that was responsible for
us as humans, our engagement with the first the metaverse
and our AI is Facebook Reality Labs. And for many
quarters it would lose billions of dollars and investors would say,
stop losing billions of dollars. And then they just stopped.
(18:25):
They started looking past it. And part of that was
that the hardware started getting out there and people could
see the distant future where we all wear these devices.
The metaverse is still a thing. I mean, if we
can go there, if you want. But at the end
of the day, it's a story of massive investment to
develop AI the software, and then catching up with the
company's self to say this is how we think all
(18:47):
of our billions of users around the world of our
apps will interact with that AI in the future.
Speaker 2 (18:53):
Okay, so let's stick on that AI theme here on
the Let's say I'm an analyst. I want to know great,
well and good that you're spending this money. It's all
well and good that you've made these developments when it
comes to hardware. Let's get back to ads. How does
that make the ads better that are targeted ed on
Instagram when he's using AI.
Speaker 7 (19:11):
So some of the some of the metrics.
Speaker 2 (19:13):
Certainly it's more engaging. You're spending more time on the platform,
so that's a positive.
Speaker 7 (19:17):
So people will look at metas mesas core data like
the daily active users and add impressions that gives us
a sense of how healthy and competitive that market is.
Listen out on the call. I would wager that Mark
Zuckerberg gives some different data to try and justify why
metas ads are better in a tough economic environment because
of the investments in AI. Go back to the earning statement,
(19:40):
we will invest the majority of capex into core business.
In other words, we're putting a lot into AI because
we think it will grow the value of our ads.
That's what I think will happen.
Speaker 4 (19:48):
This is what I feel like. We talked with man
Deep about this.
Speaker 5 (19:50):
What I do like, if you're going to spend money,
you're going to go to where you get the biggest
ROI right.
Speaker 7 (19:56):
In terms of think of it as a sheer competition
for eyeballs.
Speaker 5 (20:00):
Hey, two things we want to get to before you
have to run. Let's just talk Microsoft real quickly. I mean,
off the chart still up about six percent here.
Speaker 7 (20:08):
So analogous with Meta and Google is that if your
core business performs and you are committing to spending on AI,
investors will reward you. And that's very much the story here.
Thirty three percent top line growth for cloud and that's
what it comes down to, right Yep. I always have
this line. Microsoft, which I've had a relationship with since
I was a child and I learned to use a computer,
(20:28):
was always good at getting people to pay for software
that others will give away for free. That's a true story.
But they're showing that their core business is cloud computing
and Azure whether they the market number two again, it's
the same as Meta. Does your core business justify your
rights to spend on AI development through hardware or infrastructure
data centers. The Microsoft numbers tell that story very clearly.
Speaker 5 (20:50):
It did Mandy say that, actually, it's showing the monetization
of AI that I think in that thirty three percent,
almost half of it are close to half of it
was the result of yeah, red.
Speaker 7 (21:02):
Flip, and the criticism was they released Microsoft co Pilot,
and many people thought that was prematurely. If you're in
everyday tech worker, what am I going to use this for? Nonetheless,
the numbers show that people are paying for it, and
that's impressive.
Speaker 2 (21:16):
Hey, Ed, we're going to hear from Microsoft on the call.
We'll get some guidance there obviously, that will help people
get informed about how the company is thinking about the
current quarter, in the future, Apple tomorrow, Oh gosh.
Speaker 7 (21:29):
Yeah.
Speaker 2 (21:29):
Mark German said, I don't care about the numbers for
the most recent quarter. I just want to hear the
Q and A. I want to hear about tariffs. I
want to hear about the supply chain. I want to
hear Tim Cook's comments there you agree, Yeah.
Speaker 7 (21:42):
Tim Cook famously says periodically I'm not an economist, but
and then we'll give us something about.
Speaker 2 (21:47):
He's not an economist, but he's a supply chain expert.
Speaker 7 (21:49):
Yeah, like story is about totally the hardware companies can
think people that make tangible physical stuff. They're built from
components that move from A to B all over the world,
and there are cost indications. And there is no better
microcosm of what's happening right now in global trade than Apple.
And I get what German saying, but remember that Apple
is the master of managing the bottom line. So if
you are a value long term whatever you want to
(22:12):
call it, people do pay attention to that because Apple
is brilliant at boosting profit.
Speaker 2 (22:16):
You know, Apple has Markerman has reported over and over
again that Apple has struggled with AI, and we see
that with what has happened with Siri. Do you think
they should buy or would buy? Oh my goodness, standalone AI?
Speaker 7 (22:27):
Come for those listening are radio only. I was smirking
and nodding, going yeah, yeah, I mean Siri, you know
has been a bit of a flop.
Speaker 2 (22:33):
Oh say a bit of a flop, a huge flop.
Speaker 7 (22:36):
Yeah, And you know I have covered some of his
stories there. I lose track, but I think that there
was some discussion by Alphabet about working with Apple and
Gemini their model going forward, Apple's looking at third parties
to provide the underlying model that powers all of this.
And as Mark has reported, the consequence of the poor
(22:58):
rollout is they've now restructured that company at the top,
leadership changes, organizational changes to get back on track. I
still love my iPhone, but I do not use Siri ever.
Speaker 2 (23:09):
Yeah.
Speaker 1 (23:10):
Same.
Speaker 5 (23:10):
Hey, before you go, we did talk Apple and Trump
and tariffs. You've got a scoop when it comes to
Vian and.
Speaker 4 (23:17):
What they've been up to.
Speaker 7 (23:18):
Yes, So, prior to the US election in November, Rivian
arranged with a Chinese battery supply called Goshen to move
a supply of LFP batteries from outside of the United
States into the United States. And they paid for it upfront,
which is unusual for an automaker to do. You know,
you don't sort of say okay, I'm not going to
use these for a while, but I'll pay for them anyway.
(23:39):
And it did that to have a strategic stockpile as
a hedge, an insurance against the election. Then more recently
I found out Samsung SDI it's Korean supplier. They said, Samsung,
before these tariffs hit, we need you to move a
very large inventory of battery sales from Korea to the US.
Samsung did so they have this hedge against potential tariff impact.
But it's it's not really about money. It's anxiety that
(24:02):
at borders goods get stopped and then you're left short.
Speaker 5 (24:06):
This is why when we look through some of the
economic numbers, kind of the pull through in advance of tariffs,
you got to keep that in mind. Note in terms
of economic activity.
Speaker 2 (24:14):
Hey, yeah, real quick, we have it's been a while
since we've gotten to talk to you and since you've
been here in New York. On Rivian on everything happening
in the administration. Given Elon Musk's close proximity to the president,
has Rivian been a net gainer or a net loser?
Given in the.
Speaker 7 (24:31):
Story we just reported at and read the details, I
put a lot of detail in the report, they made
a shrewd move. The question that every AUTO CEO, I
know this, every CEO is asking is is the net
result that Elon must secure something that is specifically good
and beneficial to Tesla, a carved out exemption, or in
so doing, does Elon must get an exemption for Tesla
(24:52):
or some kind of benefit that has a wider positive
impact on those that make evs, and I think the
latter is where people are hanging their hat.
Speaker 5 (25:00):
Yeah, kind of a fascinating da where I think everybody's speculating.
It did feel like a little bit of the present
saying not necessarily goodbye to Elon, but kind of him
wrapping up certainly his tenure.
Speaker 2 (25:11):
Which data will reminded us. We all knew was coming,
given his status as a special government employee.
Speaker 4 (25:15):
Exactly right.
Speaker 2 (25:16):
It was just a surprise time.
Speaker 4 (25:17):
It was just a matter of time.
Speaker 5 (25:19):
Yeah, pretty wild and tough questions top of mind in
terms of the earnings that we've seen this dump.
Speaker 2 (25:24):
Oh yeah today.
Speaker 7 (25:25):
You know, like Alphabet, Google, they don't give guidance, they
don't give detail, they don't tell you about anything in
the economy. I would think that Meta and Microsoft would
go a lot further, specifically like industries, geographies, and we
would learn a lot about what they see in the world,
and so not just Apple. Those other names will give
us value, I think in the economic context.
Speaker 5 (25:44):
All right, good stuff, as always, Ed Ludlow, thank you
so much, so appreciated. Ed Ludlo, of course, his co
host of Bloomberg Technology catch him and Caroline Hyde. They
are on Bloomberg Television at eleven am Wall Street time
Monday through Friday. So am I assuming this coverage will
continue into tomorrow.
Speaker 2 (26:00):
In the meantime, I do want to bring in James Chockmack.
He's partner and chief investment officer at Clockwise Capital. He
joins us from Miami. He's got the Clockwise Core Equity
and Innovation ETF. It's down about eight percent so far
this year. It does include Apple, Microsoft, Amazon, and Nvidia
among its top holdings. And that's exactly James where I
want to start. Given what we just heard from Microsoft.
(26:21):
We got the numbers there from ed investors happy in
the after hours, the company will give guidance on that call.
What are your thoughts?
Speaker 1 (26:30):
Yeah, I think from a big pictures standpoint, you know,
we went into tonight kind of ranking the mega cap
earnings remaining as Microsoft as the least risky, moving to
Meta and then finally to Amazon is the riskiest of
the three, and I think so far as playing out
as such, Microsoft, you know, the big number there that
the Bogie wing he wanted to see was north of
(26:51):
thirty percent Azure revenue. You know, we were looking like
the momentum continues to be there. I think, you know,
when you look at the megacap earnings megacap companies, you know,
really what we try to focus on, which ones are
the most immune to tariffs, which ones have the most resiliency,
and which ones have evaluation that supports some level of support.
(27:15):
So I think microscot underscores all three of those. And
you know, we liked what we saw, and you know,
Meta that was a you know, not the best of outlooks,
but expectations had come down substantially, particularly following SNAPS results
last night. So the fact that they're even giving an
outlook isn't that positive? And that one has come in
(27:39):
a lot from evaluation standpoint. So I think.
Speaker 2 (27:42):
Standards like listen to like the fact that they even
give an outlook, isn't that positive. That's the environment we're in.
Speaker 4 (27:48):
This is what we're trying to get our head around.
Speaker 5 (27:50):
I mean, James, I'm looking at shares of Microsoft still
up about six point two percent. If I look at Meta,
it's up just shy of six percent. And I pulled
up Amazon, which in twenty four hours we're going to
be all over Amazon's earnings. It's up about two point
eight percent here in the aftermarket.
Speaker 4 (28:06):
But I'm trying to get my head around what these
companies are.
Speaker 5 (28:09):
Saying and doing versus kind of it feels like so
much uncertainty in the rest of the you know, public universe,
or so much uncertainty our companies not giving an outlook
or companies giving two outlooks. So do we set these
companies apart or does this say something more strongly about
what's going on in the US economy and the global economy.
Speaker 1 (28:32):
Yeah, we're not going to be too quick to judge,
you know, how these companies are doing over the very
short term about the broader macro implications. We still see
US as at a fifty to fifty market at best.
You know, yes, the results have been largely coming in
on par maybe slightly better than expectations, but you know,
we're not out of the woods by any means. You know,
(28:53):
you still have reinflation risk, recession risk. The behavioral changes
haven't even really hit the consumer yet. Yeah, that from
VISAS results this morning. So you know, you're seeing some
repositioning from a business standpoint. The businesses adapt, try to
adapt as best as possible, but it hasn't hit the consumer.
(29:15):
There's a lot of unknowns. The only thing I'd say
that isn't net positive is that you've been seeing the
FOMC members start to posture their rhetoric to a more
dubbish posture as we have the main meeting coming up.
So that could help provide some level of support to
the broader market, but it doesn't help in any way,
(29:38):
shape or form provide that much incremental confidence as it
relates to the earnings outlook for the balance of the year.
Speaker 2 (29:44):
James, one of the reasons we like talking to you
is not just because you are an analyst or have
an analyst background covering all of these companies, but also
because you put your money where your mouth is. With
the portfolio management of the ETF the clockwise core equity
and innovation, Apple's your top holding. Dollar General is your
second biggest holding. Explain that are you essentially trying to
(30:07):
grab every type of consumer out there. You've got the
high end consumer with Apple and then you've got everybody
at Dollar General.
Speaker 1 (30:16):
Well, the way we look at it is, you know,
a periods of maximum uncertainty require maximum adaptability. So what
we're trying to do is in a fifty to fifty
market play things down the middle. But that means is
we're taking a Barbelle approach where for every dollar of
beta of higher beta, you know, we're adding a dollar
of much lower beta. And that's where the Apple and
(30:38):
Dollar General kind of equal weightings come into play. But
a more extreme example that I'd point out is, you know,
we have the equal weight with micro strategy or Strategy
now as we do with Dollar General. So I wouldn't
read that much into Apple. I mean that has something
to do with the fact that it's such a big
weight in the index. But I think micro strategy is
(30:58):
a better example of you know, how we're how polarized.
You know, the bar bell is that we're playing.
Speaker 2 (31:06):
Wish to remind everybody is a levered play on bitcoin.
Speaker 1 (31:10):
Yes, I mean I we think that crypto single handle.
It's the number one asset class that I have confidence
and for twenty twenty five, I think it's Bitcoin is
going to be the single largest contributor to returns in
twenty twenty five. I can't say that the same about
any other sector.
Speaker 4 (31:26):
Is partial to really why.
Speaker 1 (31:29):
Yes, institutional adoption, building awareness, there's going to be crypto
related services. You had the fed, you know, remove barriers
as to what banks can do as it relates to crypto.
So I think that as the regulations come off, awareness builds,
(31:50):
institutions build. You know, Black Croc says that it should
be two percent of portfolios, you know, across the board.
You know, we completely we agree with that. All our
client portfolios have at least a two percent position in bitcoin.
And you know, as we look to the balance of
the year, and we just don't have confidence in really
(32:12):
any other sector to the same degree. You know, we're
we're we like tech, the cheaper tech, We like commodities,
you know, we like utilities, and we like staples. You know,
where the valuation makes sense. But crypto no hesitation and
its full steam ahead.
Speaker 4 (32:30):
Interesting.
Speaker 5 (32:31):
So so it sounds like you have been putting money
to work over the last month or two amid the volatility.
Speaker 4 (32:37):
Yes, yes, and then yeah.
Speaker 1 (32:41):
Yeah, yeah, we're putting money to work where when and
where we can. You know, we've been selling a lot
of the megacap names into any opportunity we have into strength,
you know, just to give you a sense. You know,
the top ten weights of the Nasdaq are about fifty
percent of the total index. We're about forty percent of that.
You know, we're at about twenty percent, so you know,
(33:04):
we are under exposed on megacap, so selling it to strength,
utilizing that cash to diversify into more value names like
Dollar General, which you pointed out to Tim and and
uh and keeping the pressure on on the crypto front
as as best as possible on any pullback that we see.
Speaker 5 (33:24):
But you did like I'm just looking. You've owned micro strategy,
Are you out completely?
Speaker 1 (33:30):
Oh no, we've been grossing it up every single time
it pulls back.
Speaker 4 (33:34):
Oh I'm sorry, so that one you've been moving it?
Speaker 1 (33:35):
Yeah, yeah, yeah, it's the it's the megacap names, you know,
the Microsoft's, Amazon's that as you know, those are all
significantly underweight relative to the index. And we think it's
proven to stay there until we have better clarity on
business spending and the consumer. We just don't know exactly
where we Amazon's going to be a big tail tomorrow.
(33:56):
You know, you can argue that the cloud services Google
was better than expected, Microsoft better than expected, So business
spending is there, but it certainly you're not seeing you know,
Sincis results would tell you a completely different story last night.
So so much uncertainty.
Speaker 5 (34:12):
So just going back meta reporting today, it's up about
six percent here in the after market. We just talked
about it. So revenue beating estimates on advertising stability. I'm
looking at Microsoft up about six percent here in the
after hours again, third quarter revenue topping estimates. Amazon has
moved up ahead of its earnings tomorrow after the close,
(34:33):
up about three and a half percent. Qual calms down
about nine percent here in the after market following its numbers.
It gave a soft revenue forecast in the face of
all the trade turmoils. So we're seeing anything here that's
of interest or this is again not the way you
want to play it right now?
Speaker 1 (34:52):
Yeah, I mean we we increase our Microsoft position the
moment the numbers came out, we haven't we you know,
we derisked it into the quarter. Now that the numbers
are out, we got we've got it up a couple percent.
Speaker 2 (35:09):
But does that story change potentially when we hear from
the company on its earnings call and they talk about
guidance or are you confidence and confident and guidance.
Speaker 1 (35:17):
Microsoft was the only one of that group that you know,
we liked into the quarter, which is why it was
weighted slightly more than both Meta and Amazon, but we
decided to take it back to where it was prior
to the quarter, just because we believe it's the most
insulated from all of the noise geopolitical and otherwise. While
(35:39):
Meta and Amazon, you know, we would wait for the
exact commentary on the call to be able to make
that decision.
Speaker 2 (35:46):
Okay, hey, how do you just a big picture? How
do you think the economy is doing, how do you
think the consumer is doing? How do you think they're
going to weather these tariffs?
Speaker 1 (35:56):
I don't know. I mean I can give you anecdotes,
you know, like I went to you know, get my
haircut yesterday and my barber was telling me that business
has been slowing dramatically.
Speaker 3 (36:05):
You know.
Speaker 1 (36:06):
You know, you hear from companies like Visa and they'll
tell you otherwise. But companies like Amazon come out and say,
you know, Amazon Andy Jassical was saying that, you know,
you're seeing trade down of purchases to lower ticket items.
So it's a mixed message. And the thing about it
is that we're really not going to get a sense
(36:26):
of from the from an economic data standpoint, nor from
a company standpoint. On the exact uh repercussions on the
on the consumer for another thirty to forty five days. So,
you know, it's a lot of question marks out there.
But I think that the bottom hasn't fallen out of
the consumer yet. The behavior has kept up, but how
(36:47):
long will it last? You know, we don't want to
wait around to see and find out. We rather, you know,
just be proactive and be balanced in the areas that
we have conviction in with the value areas that we
think can withstand a downturn, and increase hedges where we can,
because right now it's impossible to say or lean in
(37:08):
in either direction. We're just getting incremental data points. You know,
they'll build up to a full, more formulated story in
the next couple of weeks.
Speaker 5 (37:19):
Yeah, it's fascinating Bloomberg and I know other people talk
about it, but it's something like the beauty salon index,
but basically there Atwater.
Speaker 2 (37:26):
Sent me a message on Twitter about this today on
x It's William and Mary.
Speaker 5 (37:31):
I love that you wrote that because it's it's kind
of people's salons have been talking about how people are
trading down on services, they're not doing as much, they're
cutting back and so It's just kind of one of
those unofficial indicators of maybe what people are doing, kind
of conserving their spending because maybe they want to or
maybe because they have to, uh and in anticipation of
(37:53):
what's to come.
Speaker 4 (37:55):
Top question for any.
Speaker 1 (37:56):
Regardless of the economy. I had to I had to
get on my haircut because I'm going to the Grand
Prix this week.
Speaker 2 (38:02):
So that's that's uh, well, yeah, that's a necessity. Is
that a discretionary expense changer? Is that a business expense?
How do you look at that.
Speaker 1 (38:11):
I'm incredibly passionate about Formula one. Actually we own Formula
one uh in the fund f wank. We think that
that is a resilient business that's going to continue to grow.
But it's discretionary. But it's also something I'm incredibly passionate about,
passionate enough to actually own the underlying stock.
Speaker 4 (38:32):
Love it pretty cool stuff.
Speaker 5 (38:34):
Hey, just going back to the companies that have reported
after the close, as we mentioned Microsoft, you know rallying
soaring in the aftermarket, Meta is higher. We did talk
Qualcom taking a big hit down about nine percent in
the aftermarket. Pick a CEO, pick a company, what might
you want to ask them? Go anywhere you want.
Speaker 1 (38:56):
I mean, the biggest question mark we have is on
the consumer. So I go straight to Amazon, to Andy
Jesse and basically give us ask him to try to
give us more color than what we got from Visa.
You know, you know, what is the degree of trade
down and purchases? You know what, how has the patterns
changed from day to day, you know, over the course
(39:18):
of airpril you know, just we need we just need
more color on what's happening underneath the hood. And we're
just not sure about it. But you know, business spending,
you know, seems to be there for the most part,
but the consumer drives the economy, you know, or spending economy,
And any clarity you can provide on that would help
(39:39):
us ascertain exactly what we need to do going forward.
Speaker 2 (39:42):
So one of my questions, and one of my questions
to you James before you go, is you know, you
answered my question about the economy. What about when it
comes to a long term trade war standoff with China
sort of a stalemate here one ands, we've heard about
factory activity possibly slowing down there. I know that some
of the big box CEOs here are concerned about what
(40:04):
happens if we start to see empty shelves, how do
you look at that specifically?
Speaker 1 (40:11):
Yeah, I mean the empty shelves thing is a big deal,
you know. You know, in about two weeks time, you know,
we may come to a situation where people can't get
their goods. So that's a real risk, you know, when
we think about the broader tariff risks and whatnot and
the consequences of that. You know, we do think that
(40:31):
the tail risks in the market are much more prevalent
today than in many, many years. You know, we're looking at,
you know, issues with our national debt, you know, issues
with credit risk, credit downgrades. You know, the yields have
continued to rise. You know, you hear from the administration
that foreign investment continues to stay strong. But if you
(40:51):
look under the hood at the actual auctions, you see
foreign purchases of US treasury bonds falling as a percentage
of the total, with much more coming from direct buyers
who are based here in the US. So foreign demand
is following the dollar is falling. In the meantime, you
really have to watch Japan because Japan you have strengthening again,
(41:14):
you have rising interest rates there, and you could totally
have a Japanese carriage Try two point zero as well.
So tail risks in the market are more prevalent now
than ever, and it's certainly something that we're monitoring constantly.
So you're both short term risks with the recession and
long term months.
Speaker 5 (41:31):
Great perspective on the specifics of these companies and so
much more. James Chochmak, thank you so much, partner and
chief investment officer at Clockwise Capital, joining us here to
break down some of the earnings
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Tim Stenovec
Carol Massar
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