July 24, 2025 • 36 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
President Donald Trump and Federal Reserve Chairman Jerome Powell clashed over the central bank’s renovation project during a tour of the construction site on Thursday.
The pair spoke to reporters during a visit to oversee the restoration work being done at the central bank’s headquarters, with the president and the central bank leader almost immediately arguing over the cost of the project.
Powell pushed back on Trump’s claims that the costs had hit $3.1 billion, shaking his head while the president spoke about the overruns. Powell then told the president his revised claim included a building that had already been completed.
Trump, asked by a reporter what he would do if a manager on one of his construction projects had gone over budget, replied bluntly.
“Generally speaking, what would I do?” Trump said. “I’d fire ‘em.”
The president also nodded to his months-long criticism over the central bank’s decision to hold rates steady, which Powell has justified by citing concerns over the potential inflationary impacts of the president’s tariff hikes.
“Well, I’d love him to lower interest rates. Other than that, what can I tell you?” Trump said.
Powell laughed as Trump knocked him on the arm. The president added that he did not “want to be personal.”
Today's show features:
- Bloomberg News Federal Reserve Reporter Jonnelle Marte on President Donald Trump's visit to the Federal Reserve and Chairman Jerome Powell
- Jay Goldberg, Senior Analyst, Semiconductors & Electronics with Seaport Research Partners on Intel’s quarterly earnings
- Laura Martin, Senior Analyst at Needham & Company with a recap of Alphabet’s earnings and a look ahead to Apple's upcoming results
- Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, on Tesla’s earnings and outlook
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business
Week Daily reporting from the magazine that helps global leaders
stay ahead with insight on the people, companies, and trends
shaping today's complex economy. Plus global business, finance and tech
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:32):
I want to go now to just some updates that
we heard from the President. Another redhead crossing the terminal,
all these headlines coming together now. The President says, firing
Jay Powell's unnecessary, the President saying the FED will do
the right thing. And the President was asked specifically about
other names that he has in mind for the next
FED chair. He says, I have a name in mind,
maybe three names in mind. He did joke that with
(00:54):
Senator Tim Scott that he would be a good pick.
But he's not going to leave the Senate, the President said,
and reiterated there's no pressure for Powell to resign.
Speaker 3 (01:02):
All right, let's head back to the nation's capital and
to Bluemberg News. Federal Reserve reporter Janelle Marte joining us.
Interesting to watch the last hour the tour between the
President and the Fed. Jair J. Powell obviously some back
and forth in terms of the cost of the construction
being done at the US Central Bank. Jump in. Tell
(01:25):
us what you take away from watching the interaction and
some of the commentary that we got from President Trump
that followed.
Speaker 4 (01:33):
So it appears that the President, you know, he did
have an opportunity here to really hammer the FED, perhaps
even more so on what's going on with their renovation.
And you know, he's been very critical of them on
social media, as you've noted, and he didn't necessarily do that.
He kind of made some comments about how I sort
(01:54):
of understand what happened, and you know, these things get
more expensive over time. And of course he did say
I would have done things a little bit differently, offered
his input on and maybe he would have avoided some
of these costs. But the bottom line seems to be
that he was not He did not escalate the confrontation.
If anything, it felt like a little bit of a
(02:16):
de escalation here, and it was really another opportunity for
him to bring back the message that he has been sending,
which is that he wants to see lower interest rates.
He would love to see lower interest rates.
Speaker 1 (02:29):
And you know, it.
Speaker 4 (02:30):
Is a reminder that this is a White House that
is trying to exert more influence over these kinds of
decisions that are typically viewed as independent central bank decisions.
Speaker 3 (02:42):
What do you make of any central bank head or
the head of the US Federal Reserve. And I just
think about every press conference that we see J. Powell
or any forum that he's in, you know, certainly very
careful and thoughtful about what he says, because he knows
what he says can certainly impact financial markets. And I'm
just curious about the back and forth of the FED share.
(03:06):
Certainly caught off guard, safe to say, right with that
new estimate on the costs and then kind of correcting
the president or saying, well, wait a minute, let me
tell you what that's about. It was a little tense.
So what do you I don't know, what's the thought
in terms of the FED share kind of pushing back there.
Speaker 4 (03:25):
Yeah, of course, it was a unique image to see
them side by side. Usually they're not interacting too much
in person, and has as we've noted before, it's really
uncommon for the President to even go to the fad
right for this. We hadn't seen it since two thousand
and six, so definitely a big image to see them together.
(03:45):
And I guess not all too surprising to hear Powell
push back. I mean, he's very much focused on numbers
and the data, and if he hears a number that
he's not familiar with, he wanted to see. You know,
they handed him the paper and then he clarified, Okay,
that includes another renovation that's all already done, that was
done several years earlier. So I mean, I think that's
what we have seen from Powell. You know, he's really
(04:08):
likely to say and his message has been that he's
focused on doing his job, focused on the economy. But
of course if he here's a number that doesn't sound
right to him, he will speak up.
Speaker 2 (04:20):
I can only think about what happens next week. Of course,
we've been in this quiet period, so we haven't heard
from a lot of FED officials ahead of the meeting
that starts on Tuesday. We hear from FED Chair Jay
Powell on Wednesday, that's the thirtieth and I'm wondering if
you're going to get any answers, or we're going to
get any answers in Washington from the FED chair because
(04:41):
I know that reporters who cover the FED are getting
their questions ready to ask him about this tour and
ask him about the latest criticism.
Speaker 4 (04:48):
So next week, for sure, we are anticipating that he
will be asked about the tour and the renovations. And
you know themselves what you know, they've they've gone out
of their way to show the press around to provide
more information online about this renovation because it has become
a big line of attack for Republicans that want to
(05:10):
maybe push Powell out or put more pressure on the FED.
So it's going to come up next week, and we
still are largely not expecting for the FED to lower
rates at this meeting, according to what investors are counting on.
Despite we are seeing at least two FED officials to
FED governors that were appointed by Trump saying that they
(05:30):
would support a rate cut at this meeting. So you know,
it's an interesting time. We could have a one or
two FED governors dissenting, but largely speaking, we're probably going
to see fetcher Powell really kind of keep his options open,
maybe more of the same calling for more economic data
(05:51):
before they make a big move on rates.
Speaker 3 (05:53):
You cover the FED. Are you hearing anything about all
of this pressure and constant attention on FED your J
Powell what it might be doing to him.
Speaker 4 (06:03):
I can't speak to exactly what it is doing to him.
It is something that people are watching, is dismounting pressure
on the FED. It's not something that we have seen
in recent times. But of course it's not the first
time that we've seen a president come after the FED
like this or I don't want to say like this,
but come after the FED and try to influence what
(06:23):
they do. But clearly Powell has just kind of held
his ground and been astaunched the defender of the independence
of the FED.
Speaker 3 (06:33):
So bad to say if there's going to be oh, sorry,
go ahead, I was just.
Speaker 5 (06:35):
Going to say, so. Is that it for criticism of J. Powell?
Speaker 2 (06:38):
Do you think they kind of got to meet in
person and things softened between them in person? Do we
see the president lay off him a little bit?
Speaker 4 (06:46):
I can't speak for Trump, but I mean, I guess
that would be surprising given how much he has said
and how critical he has been. I mean, I don't
anticipate that this will mean that he's going to stop
calling for lower rates.
Speaker 3 (06:59):
Yeah, I would take me coming out of this in
a big way.
Speaker 5 (07:04):
The handing of the papers sty Iconic Exchange.
Speaker 3 (07:06):
There's gonna be something that comes out of this. Jane,
Thank you so much. Janelle Marte covers the FED Here
for Bloomberg News. Joining us from DC.
Speaker 1 (07:15):
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Speaker 2 (07:29):
Intel gave a stronger than anticipated revenue forecast for the
current period. It offered investors a glimmer of hope this
as they wait for a turnaround under new CEO lit Bhutan.
Third quarter sales twelve point six billion to thirteen point
six billion dollars, the company said in a statement on Thursday.
Analyst on average it projected a number at the low
end of that range in the after hours and ahead
(07:51):
of that call, starting the stock moving higher by about
one and a half percent. The company also mentioned layoffs
that will reduce staff by fifteen percent. I want to
bring in Jay Goldberg. He's back with us. He's senior
analysts semiconductors and Electronics at Seaport Research Partners. He joins
us from San Francisco.
Speaker 5 (08:09):
Jay, you've got to.
Speaker 2 (08:10):
Sell writing on Intel an eighteen dollars price target updated
just in the last week or so. Does this print
change your view at all?
Speaker 6 (08:18):
No, it doesn't.
Speaker 7 (08:19):
And first I want to preface this by saying it
pains me to say this because I want Intel. I
really want Intel to succeed. America needs Intel to exceed.
But they got a lot of work to do for them,
and the real the thing that matters most is progress
on their foundry and that's going to be that's still
a ways out, and so in the interim, we're just
looking at product and you know, this quarter looks like
product it a little bit better than expected. Data center
(08:41):
to looked a little bit better than expected, but unclear
how how they got there.
Speaker 6 (08:44):
I'm going to listen to the call and.
Speaker 7 (08:45):
See what they what they say about PC outlook, I
don't have a lot of confidence that they can sustain
that for the year.
Speaker 2 (08:52):
When you say America needs Intel to succeed, I think
of what the administration before this administration did with the
Chip Chips Act, and I'm also looking at what this
administration has promised when it comes to its own industrial policy,
is the US Is the US doing enough or should
the US do anything to help Intel succeed at this point?
(09:12):
Or is this a lost cause?
Speaker 6 (09:15):
I think Intel is saveable.
Speaker 7 (09:17):
I think Intel certainly has the technology to do advanced
semiconductor manufacturing. You look at their next process called fourteen A.
It looks very promising and very competitive and just a
question of the economics more than anything else. Can they
get it out the door in time? You know, there
are a lot of smart people at Intel. They really
know their stuff, and so if they can get the
economics to work on that next process, it looks much
(09:39):
better for them. And so I don't know, you know,
I'm not a policy guy. I don't know what the
what the right approaches. I think there are things the
government can do to make it easier. Lots of things
have been suggested, but I think ultimately Intel can succeed commercially.
Speaker 6 (09:54):
With their with their foundry business. They it can do.
Speaker 7 (09:58):
They can do it without government support and suport though
wouldn't hurt interesting?
Speaker 3 (10:03):
Okay, is there something that could come up? Jay on
the call, especially when it comes to the foundery business.
Our cud John Sabanni is saying the same thing that
this is, this is crucial to their success going forward.
Is there something that they could say that would make
you have a little bit more hope for their outlook.
Speaker 7 (10:24):
I'm really curious to see what they say about their
data center business right They don't have a coherent, complete
AI strategy right now, and they're aware of that, and
I'm really interested to hear what the lip Bhutan has
to say. He's certainly very smart and knowledgeable and well connected.
They need more than they have because they just really
today don't have anything that sort of that could conceivably
(10:46):
compete against n Video, and they probably won't for a while.
And so which way are they going to go on that?
Are they going to try and compete with Nvidia long term?
Are they going to just try and make the best
of it. They still have a good CPU core franchise,
So I want to know how that is playing out
in the marketplace where you're seeing so much share, so
much wallet share is.
Speaker 6 (11:01):
Going to in Vidia.
Speaker 7 (11:03):
What's Intel going to do in that world where where
now in Vidia is the dominant player in the data
center and Intel is sort of playing second fiddle, which
is a role they haven't, you know, that's new to them.
They used to be the dominant one basically fit into
the order.
Speaker 2 (11:16):
Sorry, is there room in the market for a second fiddle?
Is their demand for second fiddle? Or does does nobody
want that? Because in VideA they want to get the
best or what's viewed as the best from Nvidia.
Speaker 7 (11:27):
So there are two sides of that want. On the
GPU side, which is what in Vidia makes. I think
the market absolutely wants a second wants an alternative that's
not Intel today right Probably the closest they have, closest
alternative that they have is the internal silicon that's coming
out of the hyperscalers and AMD.
Speaker 6 (11:44):
Intel's not even in that race right now.
Speaker 7 (11:46):
Separate from that, there's a conversation about CPUs, which is
Intel's core product historically, and they still have good CPUs
and there's a lot of money they can make if
they can figure out the right way to position those
CPUs in the AI data center.
Speaker 6 (12:01):
And I think that's that's where I'd like to see
them put the most effort.
Speaker 3 (12:04):
It does feel like they've done a lot, though, and
they did talk about Jay that they see this restructuring
substantially complete. By the fourth quarter of twenty twenty five,
so the fourth quarter of this year. I mean, he's
getting things done. I don't know, like how much longer
do you think, you know they're going to need in
(12:26):
order to really get this company back on a course
that keeps them around for a lot longer and keeps
them or gets them back to being a significant competitor
here in the chip space and the evolution of where
we are.
Speaker 6 (12:41):
Yeah, I mean until at heart, the problem is cultural.
They used to be.
Speaker 7 (12:45):
The dominant player and now they're not anymore, and they
need to reorganize not just the number of people, but
sort of how everyone thinks about the problems facing them.
And that's hard to do, and I think I think
Lipou is a can bring that about. He's done it
in the past. But that kind of change takes a while.
And I know that the headline figures they're going to
cut fifteen percent of the workforce. I saw somewhere else
(13:06):
that they're actually talking about at the management layer, they're
cutting fifty percent.
Speaker 4 (13:09):
Wow.
Speaker 7 (13:10):
And again this pains me to say because I have
a lot of friends who work at Intel. But the
company needed that, right. There's that middle management function has
just gotten too bloated, and so yeah, I agree, this is.
Speaker 6 (13:21):
A positive step, that's a step in the right direction.
Speaker 7 (13:23):
And I apologize to my friends who are losing their
jobs because of it, but this company needed to do this.
Speaker 2 (13:29):
Hey, I wanted to shift gears a little bit because
we're going to have in Nvidia report at the end
of August, so just about a month away, August twenty
seventh is when we will see earnings from that company.
You have a CELL rating on in Nvidia one hundred
dollars price target. We've spoken to you about it in
the past. You are the only analyst on the Bloomberg
(13:50):
terminal that has a CELL rating on in Vidia. Right now,
the stocks at about one hundred and seventy three dollars
and seventy cents. Give us your thesis here, especially in
a year where in Vidia stock has up close to
thirty percent.
Speaker 7 (14:05):
So my thesis has always been that in Vidia is
a good company and makes good products. For me, it
was much more question of can they outperform the rest
of the industry. I don't think they can now the
way we're structured at Seaport, I don't have I have
a CEL rating. I can't I don't have an out
underperform rating, but that's really how I thought about it.
Speaker 6 (14:24):
In video, they're going to underperform companies.
Speaker 7 (14:26):
Like Broadcom, who are powering all the Hyperscalar Silicon. I
think they're, you know, people underweight their story, and I
think they have a lot of traction here. Am D
is showing signs of life in GPUs. They have a
competitive product now and they're they're firing well, and so
in video is going to keep growing. But I think
that the stock is going to underperform the broader sector.
(14:48):
And you know, I know it's been up a lot
for the year, but it's actually unperformed Broadcom, and I
think AMD underperform my sector in that time.
Speaker 6 (14:57):
So I think that this in Vidia suffer.
Speaker 7 (15:00):
It's gotten so big so quickly, it's hard to keep
the hits rolling, and I think that's the issue. Good company,
but they can't keep growing like they have been forever.
Speaker 3 (15:10):
All Right, we need to run. We're so glad we
could touch base with you again. Jay Goldberg, he of course,
is a senior analyst semiconductor and Electronics at Seaport Research Partners.
We've talked with him before. He's got a Cell rating
on Intel, a lot of headlines, and I'm just going
to pull up once again what we're seeing in terms
of Intel here after the close. Now just up about
(15:31):
six tenths of a percent, So we saw a much
stronger rally earlier in the session. This is after the
company gave an upbeat sales forecast, after PC demand picks up.
But there's a lot more and we're waiting that call
with analysts and investors. We'll track those headlines for you.
Speaker 1 (15:45):
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Speaker 3 (16:03):
Well shares of Alphabet they are hired today off their
best levels. They were up as much as four percent
right now, a gain of just shy of two percent.
The Max seven stock that has been one of the
largest market caps out there, said demand for our AI
products boosted quarterly sales and now requires an extreme increase
in capital spending, so heightening pressure on the company to
justify the cost of keeping up tim inn Ai Race.
Speaker 2 (16:26):
We're delighted to have with someone who's closely followed for
her coverage of the media, entertainment and internet space with
us from Los Angeles. Laura Martin, senior analyst over at
Anitam and Company. I want to start with alphabet where
we're going to talk about a lot with you over
the next few minutes. You've got a buy rating on
the stock of two hundred and twenty dollars, a share
price target trading at at one ninety three as we speak.
(16:46):
It bounced around after market yesterday, it's gaining today. What's
important to you from this latest quarterly update?
Speaker 8 (16:53):
The single most important number to offset the bears is
the search number. So search revenue up twelve percent vent
was well above the whisper number of ten percent growth
and above the Wall Street consensus number of nine percent growth.
And they also had four percent click volume, which basically
is the same as last year. And that's up from
(17:14):
two percent you click through rate in the first quarter,
which is positive because people of the bare case here
is that generative AI answers lower than the economics of
Google Search, which is the big money engine here. So
the single most important number was that search grew AD
revenue twelve percent, which was three hundred basis points above
consensus view.
Speaker 9 (17:35):
The second most important number is cloud.
Speaker 8 (17:38):
Right, there's still out of capacity with cloud, but their
cloud business grew thirty two percent and a twenty percent margin,
So that's fantastic, So they're really pricing up now that
they have capacity constraints. And the third most important numbers
YouTube YouTube grew thirteen percent of revenue, and we think
it's worth seventy three dollars a share here if it
was separately tradable and not confined within the alphabet conglomerate.
(18:01):
But I would say those are the three most important
segments that people are talking about. But the barecase really
is highly focused on the search revenue gropth and.
Speaker 2 (18:10):
That's exactly where I want to go right now. Going
into this print. There was so much concern about cannibalization
of traditional Google search.
Speaker 5 (18:19):
Why aren't we seeing that?
Speaker 8 (18:21):
So what they're saying is that what happens when you
have those answers, when you put in a Google search
and then you get an answer, is that people are
spending ten times more time, ten percent more time asking
the next question, asking the next question, and that the
shortfalling clicks per query is made up by the fact
(18:41):
that people spend ten percent longer, which then lets Google
serve more queries or more ads. So that's what they're saying,
is that the demonetization is about equal.
Speaker 9 (18:51):
That's their words, about equal.
Speaker 8 (18:54):
But I think part of it is the extra time
people spend using the answer format is offsetting the actual
you know, the downdraft in the economics per query.
Speaker 3 (19:08):
Hey, the extra spend the up again CAPEX. Initially everyone
was saying, well, that's why the stock traded down in
the aftermarket. It made some folks, or at least some
investors it felt like initially nervous. What is your take
on that. I think our own man Deep Singh was saying, well, listen,
it sounds like they are getting the demand and they're
spending to meet that demand.
Speaker 9 (19:26):
Yeah, I mean I would say that.
Speaker 8 (19:27):
I would say the other thing that's going on is
that I think one of the reasons the stock was
a little volatile is the operating income grew fourteen percent,
The top line grew fourteen percent, thirteen fourteen percent, and
it sort of looked like there was minimal operating leverage.
But what they told us on the call that was
buried in the financial statements is those costs included one
four point four billion dollar fine legislative fine, regulatory fine.
(19:53):
So if you subtract that just to look at costs,
the most important point we would make that I think
largely is being it doesn't have to do with revenue,
has to do with the fact that by integrating generative
AI into every aspect of their business, they've got really
accelerating revenue, which everyone's focused on.
Speaker 9 (20:11):
But their costs are going down. Okay, that's not fair.
Speaker 8 (20:15):
Their costs are just not going up as fast. There's
a lot more operating leverage here if you exclude the fine.
So I think that's why I think once they said
there was this big fine and the costs, people realize
that jenerative AI is really lowering or increasing the productivity here,
and so the operating leverage is at margin expansion is
faster than people think at a time when revenue is
(20:37):
also accelerating. Over consensus view.
Speaker 3 (20:39):
One thing I loved in your research, and you put
this right up top, Laura, as you said, we like
google strong strategic position as number one in search, number
one in streaming YouTube number two in mobile, Android, number
three in claud, number one in autonomous driving. Weimo, which
Tim and I are both in love with. And you
say lms make data more valuable and Google's data is
best in class. Again, your view is alphabet in many
(21:03):
ways the one to beat. And why hasn't the stock
been I don't know, doing more this year?
Speaker 9 (21:10):
You know, I.
Speaker 8 (21:10):
Think I think Google, So I would say their execution
has been very haphazard.
Speaker 10 (21:17):
It's not.
Speaker 8 (21:18):
And Wall Street really prefers leaders that lead from the front,
like Meta, like Mark Zuckerberg. We like, you know, visible, clear,
visionary leaders, and that's not what's going on here at Google.
But you know, Google just sort of despite itself, really
does have the human capital and culture and financial resources
(21:42):
to fund what will be a retooling of American business,
which is the generative AI backbone infrastructure that they're building.
And they're leading by executing within their own They're showing
what's possible by executing implementing generative AI and everything they do,
every product they have, and every cost.
Speaker 10 (22:03):
Center they have.
Speaker 8 (22:04):
So this is what's about to happen to America over
the next decade is companies that follow Google's lead will
have increasing margins and accelerating revenue. And if you don't,
which requires a cloud. By the way, you can't do
this without cloud. If you don't, you will go out
of business. Because, in my opinion, because the guys, the
(22:25):
companies that use generative AI to increase productivity and margins
and increase revenue will get higher multiples from Wall Street.
Speaker 2 (22:33):
I know you said search, search, streaming, search, cloud, and
YouTube are the three most important numbers, but we'd be
remiss if we didn't ask you about Weimo and the
expansion that the company said is coming in the quote
near future.
Speaker 5 (22:49):
Here's what they said.
Speaker 2 (22:49):
Alphabet hopes to expand weymo to all cities in the
near future. How do you look at this as an
analyst on this company's stock, as an analyst for the
company and material contribution.
Speaker 9 (23:02):
So you guys love.
Speaker 8 (23:03):
The service you just said, so, so I don't like
it in this sense that right now, I think the
most strategy is what you say no to. And what
Google should be saying no to is anything that isn't
generative AI related. Because this is a race and a war,
and they are spending a fortune on jenerative AI. Good
for them, but WEIMO is another huge sunk cost or
(23:28):
financial commitment, and I would like them figure out a
way to do wei Mo. They are ahead, they are
number one in autonomous driving. I would like them to
keep the data because I think data in the real
world plus the virtual world, is worth.
Speaker 9 (23:41):
More than either world standalone.
Speaker 8 (23:45):
So I like the data aspect of WEIMO, but I
do not like the capital commitments, which compete right now
with the generative AI capital.
Speaker 2 (23:53):
What are the capital commitments? They haven't been totally clear
about that. What do you GI view them as well?
Speaker 8 (23:58):
They sit in other bets, and I think other bets
I'm forgetting, but it like it loses typically three to
five billion dollars a quarter, so it's like twenty billion
a year, and a lot of that is Waymo, and
it's their healthcare initiatives, and so I just think that
that money. You know, they just upped cap X by
ten billion. I would like to see them take it
out of other bets. But the primary other bet is WEYMO,
(24:19):
So I think they're unwilling to relinquish their pole position
because now Tesla's coming after them. So I think I
think they are number one in all of these strategic segments.
Because they get there early, and so they're early to weimo.
I just wish it wasn't as capital intensive, the losses
weren't as big at a time when Google should be
spending all of its focus and resources on jennertor Ai or.
Speaker 3 (24:43):
We really, really really like Weymo. I'm just going to
tell you, really, I even close my eyes in a Weymo.
That's uncomfortable, as I know. Hey, listen, we've got about
three minutes left. There's so many different places we would
love to go with you, but you pick because you've
got Apple reporting ne week, Meta reporting next week, Amazon
reporting next week, Disney in early August, Netflix already out,
(25:06):
and then there's the Late Night Wars. What's interesting to
you right now that you think the Bloomberg audience and
investors really need to be paying attention and it could
be something else beyond that.
Speaker 8 (25:15):
Let's do Apple because it used to be the biggest
company in the world now, I guess in the videos,
but what I would say about Apple, we have a
hold here on Apple, whereas we have a buy on
on Alphabet Google. You know, I think I think Apple
isn't really a box because when you listen for sure,
when we hear Meta, who's spending hundreds of millions of
(25:36):
dollars per person to create a super intelligence generative AI group.
And yesterday there was no sentence on the Google earnings
called it didn't have AI in it.
Speaker 9 (25:47):
So you know, these companies are really talking.
Speaker 8 (25:50):
Amazon will also because that's being run Amazon now is
being run by the AWS you know founder. Essentially, he
talks a lot generative AI a lot. So the you know,
the one that's not the same is Apple, and people
really want to see what's happening with their generative AI
strategy and how is it. How is Apple either sixteen iOS,
(26:15):
sixteen iOS, seventeen iOS eighteen going to keep up with Android,
which is Google, who last night told us they're integrating
jenerave I tools into everything, including androids. So I do
think there's a bigger threat to Apple's only business, which
is this iPhone business. We think it's a single product
company with upsells to other devices. We think the anchor
tenant there is the iPhone. So we really want to
(26:37):
hear how they think they can compete when they are
saying nothing about jenerative AI and they're spending twelve billion
dollars on Capex, which is the same number at Apple
for the last three years when we just every single
quarter we show up on the Amazon call, the meta
call that Google called, they're raising capex by ten billion
dollars at a time or with.
Speaker 2 (26:58):
Order thirty seven seconds on Apple, as Tim Cook the
right leader to guide them through the AI era.
Speaker 9 (27:04):
Oh, so harsh. I'm going to go with no, but
so harsh. No, I don't think so. I think we
need a wartime CEO.
Speaker 8 (27:12):
And I think Tim Cook is great at a lot
of things, but I don't think he's been He's not
proven great at this this technological disruption called generator.
Speaker 3 (27:22):
They I got someone else in mind that you think
should lead it ten seconds, it's.
Speaker 9 (27:25):
An impossible job. So no, I have no idea in
mine for who could replace him.
Speaker 3 (27:29):
You you rock come back soon, and I think you
are coming back soon, which we're looking forward to already.
Laura be well. Laurd Martin, senior alsee at Niedeman Company,
knows this space like no other. So glad we could
get some time.
Speaker 1 (27:41):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five. He's during
listen on Apple Karplay and Android otto with the Bloomberg
Business app, or watch us.
Speaker 3 (27:53):
Live on YouTube.
Speaker 8 (27:55):
Well.
Speaker 2 (27:55):
Speaking of the President, the President denied he was seeking
to ruin the business empire of his own one time ally,
Elon Musk, as retribution for their dispute over the President's
signature tax law. President Trump posted on social media earlier
today that he wants Musk and all business in the
US to quote thrive and that their success is good
for the country. This carol on a day when Tesla
(28:17):
sheriffes are just absolutely tanking. Elon Musk did warnan of
difficult times ahead for the company and that it will
be in a transition period for the next year.
Speaker 10 (28:25):
That's right.
Speaker 3 (28:25):
More The stockdown about nine percent as we speak, all right.
Ross Gerber was here with us yesterday getting us ready
for Tesla earnings, and on the day that they were reporting,
he joins us again today to tie up the headlines
from Elon's call last night with investors. He's a longtime
investor in Tesla and owner of Tesla Cars. He's the
president ce of Gerber Kawasaki Wealth and Investment Management, and
(28:46):
he has about three point six billion in acids under management.
Ross so glad you could give us a little bit
more time today, So thank you, thank you. Just about
twenty four hours since Tesla earnings, not quite but almost,
we've had Elon's call with investors. What is or remains
your investment thesis on Elon and Tesla? Could you seem
to certainly have pulled back and are a lot more cautious.
Speaker 11 (29:08):
I think probably my biggest issue is that what I
believe is best for Tesla isn't actually the strategy being
employed by Elon. And what I think is best for
Tesla is to be focused on selling great evs that
can drive themselves, versus completely pivoting into this robot and
robotaxi business because they're struggling to sell cars. Because what
(29:31):
we're seeing now, which I suspected to be true earlier,
is that the deterioration of the EV business is really
really bad for Tesla, and it essentially is an EV business,
and so hoping that robotaxi robotics is going to be
a revenue stream or let alone profitable anytime soon is
(29:52):
really just not going to happen. And so, as Elon said,
Tesla's in for some pretty tough quarters ahead, and with
the ending of the tax credits and all this kind
of stuff.
Speaker 10 (30:02):
I mean, this is all bad news.
Speaker 2 (30:03):
When you say it's not gonna happen anytime soon.
Speaker 5 (30:05):
What do you mean by that? Give us your own
timeline here.
Speaker 11 (30:08):
Well, you know, we follow WEIMO very closely, and we
think that Tesla is two years behind Weimo as far
as the development of their robotaxi And now Weimo is
scaling and being quite successful at charging you know, the
right amount for rides and generating enough revenue that it's meaningful.
So I think it's at least two years right, So
(30:29):
where Tesla is at for them to generate any revenue
at all meaningful ability will take a couple of years.
And then from a profitability standpoint, we don't even know
if that business is going to be profitable with all
of the competition that's coming into the robotaxi business.
Speaker 3 (30:46):
So you said yesterday you reminded us that you've been
selling shares of tests. I think there are reports to
in June that you sold about sixty million dollars worth
of Tesla's shares, and you cited the waiting confidence as
you're laying out here in the company's future. Are you
selling more. What's your exposure at this point.
Speaker 11 (31:03):
Yeah, you know, we still have you know, on my
last thirteen haf we had over two hundred thousand shares.
You know, right now we're we're holding a little less
than two hundred thousand shares, so we continue to sell
the stock. We have a lot of diehard Tesla clients
that you have huge gains because we bought the stock
at you know, like two dollars and so, you know,
people aren't that excited to pay taxes. And there's still
(31:26):
this possibility that Elon could change course and really do
the things necessary to fix Tesla, because fundamentally Tesla is
a great company. Most if not all of Tesla's problems
are self created because of the CEO, Elon Musk. It's
not that Tesla's core business has some big problem. It's
actually the opposite, that CEO is the problem, which is
(31:49):
super unique.
Speaker 10 (31:49):
So so that's what why I'm loath to just be
like completely out of Tesla.
Speaker 11 (31:54):
But on the other side of the coin, with the
valuation where it's at, and basically we think they're not
going to be profitable next year, you know, the stock
needs to move meaningfully lower.
Speaker 10 (32:05):
In my mind before I would buy it.
Speaker 5 (32:07):
Hello, what's meaningful?
Speaker 11 (32:09):
Well, you know, I don't know if any of the
analyst estimates for next year are right. I think they're
all vastly overstated. But even if you did three dollars
of earnings next year at fifty times earnings, which is
in vidios multiple, you'd be at one hundred and fifty dollars.
And then you put some premium on the Elon Musk
Robot premium. Maybe you put on fifty one hundred dollars,
(32:31):
so you're at you know, two hundred to two hundred
and fifty dollars a shares where I think Tesla should be.
Speaker 2 (32:35):
Okay, two hundred to two hundred and fifty dollars a
share right now at three hundred and three eight dollars
a share down eight point eight percent today.
Speaker 5 (32:41):
Hey, Ross.
Speaker 2 (32:41):
In the past, when we've spoken to you've been really
critical of Tesla's board. You've been critical of it on
social media as well. The board does include folks such
as Kimball Musk, It includes James Murdoch. Most recently, it
added Chipotle's Jack Hartung to the board. Are you any
less critical of the board now? Think the board is
doing its job? No, I mean I think there is
(33:03):
no board.
Speaker 11 (33:04):
I think the board is Elon Musk, and so the
board is just you know, it's like a weekend at Bernie's.
You know, it's like a bunch of bodies that they
put out a desk and Elon tells them what to
do and they do it. This jack guy they just
put on probably had no idea what it's getting himself into.
And he's in deep now, you know. So I don't
actually think the board of directors cares about anybody but
(33:26):
Elon Musk, and I think investors in Tesla know that
at this point, and that's why we're ultimately sellers is
nobody actually represents retail investors, which own you know, still
own eighty seven percent of Tesla. So it's really a
unique situation. And I expect Tesla to buy Xai at
some point for probably two hundred billion dollars some outrageous price,
(33:48):
and I think that's the next thing that will happen.
So you know, there's no question that the merging of
these businesses seems to be on the horizon.
Speaker 3 (33:59):
Hey, before you go, definitely want you to get have
you weigh in ross on what President Trump put out
on social that he denied he was seeking to ruin
Elon Musk's business empire as retribution for the dispute over
the president's signature tax law. What's your reading, Army? Might
this be helpful to Elon and tell us that we
(34:19):
just got about a minute minute ten?
Speaker 11 (34:22):
No, you know, Trump, Trump's just being the bigger man
here and trying to, you know, act like he doesn't
have a tiff with Elon, you know, because he's so
mature or something. But the truth of the matter is
he's already done what needs to be done to destroy
Tesla by taking away all the subsidies and making evs
much more expensive.
Speaker 10 (34:40):
And so you know, he doesn't have to say anything anymore.
Speaker 11 (34:43):
Let's Elon's dug his own grave and he's going to
have to figure out a way out of it.
Speaker 10 (34:48):
So so you know, Trump, Trump doesn't have.
Speaker 11 (34:51):
Any reason to look bad or grind an axe, you know,
And he's playing Trump's playing Elon like he has the
whole time.
Speaker 3 (34:57):
Thirty seconds. We have talked with you about your cyber truck,
talked about others you know that you have owned. Would
you buy another Tesla? Do you still like the cars?
Just quickly I do, you know, this is.
Speaker 10 (35:10):
The whole issue.
Speaker 11 (35:12):
You know, I've looked at so many other cars to buy,
and I want an electric car, and I want a
great electric car. And I still think Tesla makes the
best cars and Rivian. I have a Rivian two, so
I think they're a close second, and they make a
great vehicle as well.
Speaker 10 (35:27):
But I just haven't been compelled by any of the other.
Speaker 11 (35:29):
Vehicles EV vehicles out there, and so you know, I
still kind of like my cyber truck, and I know,
you know, I can't sell it anyways. But Tesla makes
great vehicles, and it's a great time to buy an
EV before the discounts go away.
Speaker 3 (35:43):
US Gerbert, You're incredible of Gerbert Kawasaki.
Speaker 1 (35:46):
Well, this is the Bloomberg Business Week Daily podcast, available
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Listen live weekday afternoons from two to five pm Eastern
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(36:06):
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(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:32):
I want to go now to just some updates that
we heard from the President. Another redhead crossing the terminal,
all these headlines coming together now. The President says, firing
Jay Powell's unnecessary, the President saying the FED will do
the right thing. And the President was asked specifically about
other names that he has in mind for the next
FED chair. He says, I have a name in mind,
maybe three names in mind. He did joke that with
(00:54):
Senator Tim Scott that he would be a good pick.
But he's not going to leave the Senate, the President said,
and reiterated there's no pressure for Powell to resign.
Speaker 3 (01:02):
All right, let's head back to the nation's capital and
to Bluemberg News. Federal Reserve reporter Janelle Marte joining us.
Interesting to watch the last hour the tour between the
President and the Fed. Jair J. Powell obviously some back
and forth in terms of the cost of the construction
being done at the US Central Bank. Jump in. Tell
(01:25):
us what you take away from watching the interaction and
some of the commentary that we got from President Trump
that followed.
Speaker 4 (01:33):
So it appears that the President, you know, he did
have an opportunity here to really hammer the FED, perhaps
even more so on what's going on with their renovation.
And you know, he's been very critical of them on
social media, as you've noted, and he didn't necessarily do that.
He kind of made some comments about how I sort
(01:54):
of understand what happened, and you know, these things get
more expensive over time. And of course he did say
I would have done things a little bit differently, offered
his input on and maybe he would have avoided some
of these costs. But the bottom line seems to be
that he was not He did not escalate the confrontation.
If anything, it felt like a little bit of a
(02:16):
de escalation here, and it was really another opportunity for
him to bring back the message that he has been sending,
which is that he wants to see lower interest rates.
He would love to see lower interest rates.
Speaker 1 (02:29):
And you know, it.
Speaker 4 (02:30):
Is a reminder that this is a White House that
is trying to exert more influence over these kinds of
decisions that are typically viewed as independent central bank decisions.
Speaker 3 (02:42):
What do you make of any central bank head or
the head of the US Federal Reserve. And I just
think about every press conference that we see J. Powell
or any forum that he's in, you know, certainly very
careful and thoughtful about what he says, because he knows
what he says can certainly impact financial markets. And I'm
just curious about the back and forth of the FED share.
(03:06):
Certainly caught off guard, safe to say, right with that
new estimate on the costs and then kind of correcting
the president or saying, well, wait a minute, let me
tell you what that's about. It was a little tense.
So what do you I don't know, what's the thought
in terms of the FED share kind of pushing back there.
Speaker 4 (03:25):
Yeah, of course, it was a unique image to see
them side by side. Usually they're not interacting too much
in person, and has as we've noted before, it's really
uncommon for the President to even go to the fad
right for this. We hadn't seen it since two thousand
and six, so definitely a big image to see them together.
(03:45):
And I guess not all too surprising to hear Powell
push back. I mean, he's very much focused on numbers
and the data, and if he hears a number that
he's not familiar with, he wanted to see. You know,
they handed him the paper and then he clarified, Okay,
that includes another renovation that's all already done, that was
done several years earlier. So I mean, I think that's
what we have seen from Powell. You know, he's really
(04:08):
likely to say and his message has been that he's
focused on doing his job, focused on the economy. But
of course if he here's a number that doesn't sound
right to him, he will speak up.
Speaker 2 (04:20):
I can only think about what happens next week. Of course,
we've been in this quiet period, so we haven't heard
from a lot of FED officials ahead of the meeting
that starts on Tuesday. We hear from FED Chair Jay
Powell on Wednesday, that's the thirtieth and I'm wondering if
you're going to get any answers, or we're going to
get any answers in Washington from the FED chair because
(04:41):
I know that reporters who cover the FED are getting
their questions ready to ask him about this tour and
ask him about the latest criticism.
Speaker 4 (04:48):
So next week, for sure, we are anticipating that he
will be asked about the tour and the renovations. And
you know themselves what you know, they've they've gone out
of their way to show the press around to provide
more information online about this renovation because it has become
a big line of attack for Republicans that want to
(05:10):
maybe push Powell out or put more pressure on the FED.
So it's going to come up next week, and we
still are largely not expecting for the FED to lower
rates at this meeting, according to what investors are counting on.
Despite we are seeing at least two FED officials to
FED governors that were appointed by Trump saying that they
(05:30):
would support a rate cut at this meeting. So you know,
it's an interesting time. We could have a one or
two FED governors dissenting, but largely speaking, we're probably going
to see fetcher Powell really kind of keep his options open,
maybe more of the same calling for more economic data
(05:51):
before they make a big move on rates.
Speaker 3 (05:53):
You cover the FED. Are you hearing anything about all
of this pressure and constant attention on FED your J
Powell what it might be doing to him.
Speaker 4 (06:03):
I can't speak to exactly what it is doing to him.
It is something that people are watching, is dismounting pressure
on the FED. It's not something that we have seen
in recent times. But of course it's not the first
time that we've seen a president come after the FED
like this or I don't want to say like this,
but come after the FED and try to influence what
(06:23):
they do. But clearly Powell has just kind of held
his ground and been astaunched the defender of the independence
of the FED.
Speaker 3 (06:33):
So bad to say if there's going to be oh, sorry,
go ahead, I was just.
Speaker 5 (06:35):
Going to say, so. Is that it for criticism of J. Powell?
Speaker 2 (06:38):
Do you think they kind of got to meet in
person and things softened between them in person? Do we
see the president lay off him a little bit?
Speaker 4 (06:46):
I can't speak for Trump, but I mean, I guess
that would be surprising given how much he has said
and how critical he has been. I mean, I don't
anticipate that this will mean that he's going to stop
calling for lower rates.
Speaker 3 (06:59):
Yeah, I would take me coming out of this in
a big way.
Speaker 5 (07:04):
The handing of the papers sty Iconic Exchange.
Speaker 3 (07:06):
There's gonna be something that comes out of this. Jane,
Thank you so much. Janelle Marte covers the FED Here
for Bloomberg News. Joining us from DC.
Speaker 1 (07:15):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (07:29):
Intel gave a stronger than anticipated revenue forecast for the
current period. It offered investors a glimmer of hope this
as they wait for a turnaround under new CEO lit Bhutan.
Third quarter sales twelve point six billion to thirteen point
six billion dollars, the company said in a statement on Thursday.
Analyst on average it projected a number at the low
end of that range in the after hours and ahead
(07:51):
of that call, starting the stock moving higher by about
one and a half percent. The company also mentioned layoffs
that will reduce staff by fifteen percent. I want to
bring in Jay Goldberg. He's back with us. He's senior
analysts semiconductors and Electronics at Seaport Research Partners. He joins
us from San Francisco.
Speaker 5 (08:09):
Jay, you've got to.
Speaker 2 (08:10):
Sell writing on Intel an eighteen dollars price target updated
just in the last week or so. Does this print
change your view at all?
Speaker 6 (08:18):
No, it doesn't.
Speaker 7 (08:19):
And first I want to preface this by saying it
pains me to say this because I want Intel. I
really want Intel to succeed. America needs Intel to exceed.
But they got a lot of work to do for them,
and the real the thing that matters most is progress
on their foundry and that's going to be that's still
a ways out, and so in the interim, we're just
looking at product and you know, this quarter looks like
product it a little bit better than expected. Data center
(08:41):
to looked a little bit better than expected, but unclear
how how they got there.
Speaker 6 (08:44):
I'm going to listen to the call and.
Speaker 7 (08:45):
See what they what they say about PC outlook, I
don't have a lot of confidence that they can sustain
that for the year.
Speaker 2 (08:52):
When you say America needs Intel to succeed, I think
of what the administration before this administration did with the
Chip Chips Act, and I'm also looking at what this
administration has promised when it comes to its own industrial policy,
is the US Is the US doing enough or should
the US do anything to help Intel succeed at this point?
(09:12):
Or is this a lost cause?
Speaker 6 (09:15):
I think Intel is saveable.
Speaker 7 (09:17):
I think Intel certainly has the technology to do advanced
semiconductor manufacturing. You look at their next process called fourteen A.
It looks very promising and very competitive and just a
question of the economics more than anything else. Can they
get it out the door in time? You know, there
are a lot of smart people at Intel. They really
know their stuff, and so if they can get the
economics to work on that next process, it looks much
(09:39):
better for them. And so I don't know, you know,
I'm not a policy guy. I don't know what the
what the right approaches. I think there are things the
government can do to make it easier. Lots of things
have been suggested, but I think ultimately Intel can succeed commercially.
Speaker 6 (09:54):
With their with their foundry business. They it can do.
Speaker 7 (09:58):
They can do it without government support and suport though
wouldn't hurt interesting?
Speaker 3 (10:03):
Okay, is there something that could come up? Jay on
the call, especially when it comes to the foundery business.
Our cud John Sabanni is saying the same thing that
this is, this is crucial to their success going forward.
Is there something that they could say that would make
you have a little bit more hope for their outlook.
Speaker 7 (10:24):
I'm really curious to see what they say about their
data center business right They don't have a coherent, complete
AI strategy right now, and they're aware of that, and
I'm really interested to hear what the lip Bhutan has
to say. He's certainly very smart and knowledgeable and well connected.
They need more than they have because they just really
today don't have anything that sort of that could conceivably
(10:46):
compete against n Video, and they probably won't for a while.
And so which way are they going to go on that?
Are they going to try and compete with Nvidia long term?
Are they going to just try and make the best
of it. They still have a good CPU core franchise,
So I want to know how that is playing out
in the marketplace where you're seeing so much share, so
much wallet share is.
Speaker 6 (11:01):
Going to in Vidia.
Speaker 7 (11:03):
What's Intel going to do in that world where where
now in Vidia is the dominant player in the data
center and Intel is sort of playing second fiddle, which
is a role they haven't, you know, that's new to them.
They used to be the dominant one basically fit into
the order.
Speaker 2 (11:16):
Sorry, is there room in the market for a second fiddle?
Is their demand for second fiddle? Or does does nobody
want that? Because in VideA they want to get the
best or what's viewed as the best from Nvidia.
Speaker 7 (11:27):
So there are two sides of that want. On the
GPU side, which is what in Vidia makes. I think
the market absolutely wants a second wants an alternative that's
not Intel today right Probably the closest they have, closest
alternative that they have is the internal silicon that's coming
out of the hyperscalers and AMD.
Speaker 6 (11:44):
Intel's not even in that race right now.
Speaker 7 (11:46):
Separate from that, there's a conversation about CPUs, which is
Intel's core product historically, and they still have good CPUs
and there's a lot of money they can make if
they can figure out the right way to position those
CPUs in the AI data center.
Speaker 6 (12:01):
And I think that's that's where I'd like to see
them put the most effort.
Speaker 3 (12:04):
It does feel like they've done a lot, though, and
they did talk about Jay that they see this restructuring
substantially complete. By the fourth quarter of twenty twenty five,
so the fourth quarter of this year. I mean, he's
getting things done. I don't know, like how much longer
do you think, you know they're going to need in
(12:26):
order to really get this company back on a course
that keeps them around for a lot longer and keeps
them or gets them back to being a significant competitor
here in the chip space and the evolution of where
we are.
Speaker 6 (12:41):
Yeah, I mean until at heart, the problem is cultural.
They used to be.
Speaker 7 (12:45):
The dominant player and now they're not anymore, and they
need to reorganize not just the number of people, but
sort of how everyone thinks about the problems facing them.
And that's hard to do, and I think I think
Lipou is a can bring that about. He's done it
in the past. But that kind of change takes a while.
And I know that the headline figures they're going to
cut fifteen percent of the workforce. I saw somewhere else
(13:06):
that they're actually talking about at the management layer, they're
cutting fifty percent.
Speaker 4 (13:09):
Wow.
Speaker 7 (13:10):
And again this pains me to say because I have
a lot of friends who work at Intel. But the
company needed that, right. There's that middle management function has
just gotten too bloated, and so yeah, I agree, this is.
Speaker 6 (13:21):
A positive step, that's a step in the right direction.
Speaker 7 (13:23):
And I apologize to my friends who are losing their
jobs because of it, but this company needed to do this.
Speaker 2 (13:29):
Hey, I wanted to shift gears a little bit because
we're going to have in Nvidia report at the end
of August, so just about a month away, August twenty
seventh is when we will see earnings from that company.
You have a CELL rating on in Nvidia one hundred
dollars price target. We've spoken to you about it in
the past. You are the only analyst on the Bloomberg
(13:50):
terminal that has a CELL rating on in Vidia. Right now,
the stocks at about one hundred and seventy three dollars
and seventy cents. Give us your thesis here, especially in
a year where in Vidia stock has up close to
thirty percent.
Speaker 7 (14:05):
So my thesis has always been that in Vidia is
a good company and makes good products. For me, it
was much more question of can they outperform the rest
of the industry. I don't think they can now the
way we're structured at Seaport, I don't have I have
a CEL rating. I can't I don't have an out
underperform rating, but that's really how I thought about it.
Speaker 6 (14:24):
In video, they're going to underperform companies.
Speaker 7 (14:26):
Like Broadcom, who are powering all the Hyperscalar Silicon. I
think they're, you know, people underweight their story, and I
think they have a lot of traction here. Am D
is showing signs of life in GPUs. They have a
competitive product now and they're they're firing well, and so
in video is going to keep growing. But I think
that the stock is going to underperform the broader sector.
(14:48):
And you know, I know it's been up a lot
for the year, but it's actually unperformed Broadcom, and I
think AMD underperform my sector in that time.
Speaker 6 (14:57):
So I think that this in Vidia suffer.
Speaker 7 (15:00):
It's gotten so big so quickly, it's hard to keep
the hits rolling, and I think that's the issue. Good company,
but they can't keep growing like they have been forever.
Speaker 3 (15:10):
All Right, we need to run. We're so glad we
could touch base with you again. Jay Goldberg, he of course,
is a senior analyst semiconductor and Electronics at Seaport Research Partners.
We've talked with him before. He's got a Cell rating
on Intel, a lot of headlines, and I'm just going
to pull up once again what we're seeing in terms
of Intel here after the close. Now just up about
(15:31):
six tenths of a percent, So we saw a much
stronger rally earlier in the session. This is after the
company gave an upbeat sales forecast, after PC demand picks up.
But there's a lot more and we're waiting that call
with analysts and investors. We'll track those headlines for you.
Speaker 1 (15:45):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Applecarflay and
Android Auto with the Bloomberg Business App. You can also
listen live on Amazon Alexa from our flagship New York station,
Just say Alexa play Bloomberg eleven thirty.
Speaker 3 (16:03):
Well shares of Alphabet they are hired today off their
best levels. They were up as much as four percent
right now, a gain of just shy of two percent.
The Max seven stock that has been one of the
largest market caps out there, said demand for our AI
products boosted quarterly sales and now requires an extreme increase
in capital spending, so heightening pressure on the company to
justify the cost of keeping up tim inn Ai Race.
Speaker 2 (16:26):
We're delighted to have with someone who's closely followed for
her coverage of the media, entertainment and internet space with
us from Los Angeles. Laura Martin, senior analyst over at
Anitam and Company. I want to start with alphabet where
we're going to talk about a lot with you over
the next few minutes. You've got a buy rating on
the stock of two hundred and twenty dollars, a share
price target trading at at one ninety three as we speak.
(16:46):
It bounced around after market yesterday, it's gaining today. What's
important to you from this latest quarterly update?
Speaker 8 (16:53):
The single most important number to offset the bears is
the search number. So search revenue up twelve percent vent
was well above the whisper number of ten percent growth
and above the Wall Street consensus number of nine percent growth.
And they also had four percent click volume, which basically
is the same as last year. And that's up from
(17:14):
two percent you click through rate in the first quarter,
which is positive because people of the bare case here
is that generative AI answers lower than the economics of
Google Search, which is the big money engine here. So
the single most important number was that search grew AD
revenue twelve percent, which was three hundred basis points above
consensus view.
Speaker 9 (17:35):
The second most important number is cloud.
Speaker 8 (17:38):
Right, there's still out of capacity with cloud, but their
cloud business grew thirty two percent and a twenty percent margin,
So that's fantastic, So they're really pricing up now that
they have capacity constraints. And the third most important numbers
YouTube YouTube grew thirteen percent of revenue, and we think
it's worth seventy three dollars a share here if it
was separately tradable and not confined within the alphabet conglomerate.
(18:01):
But I would say those are the three most important
segments that people are talking about. But the barecase really
is highly focused on the search revenue gropth and.
Speaker 2 (18:10):
That's exactly where I want to go right now. Going
into this print. There was so much concern about cannibalization
of traditional Google search.
Speaker 5 (18:19):
Why aren't we seeing that?
Speaker 8 (18:21):
So what they're saying is that what happens when you
have those answers, when you put in a Google search
and then you get an answer, is that people are
spending ten times more time, ten percent more time asking
the next question, asking the next question, and that the
shortfalling clicks per query is made up by the fact
(18:41):
that people spend ten percent longer, which then lets Google
serve more queries or more ads. So that's what they're saying,
is that the demonetization is about equal.
Speaker 9 (18:51):
That's their words, about equal.
Speaker 8 (18:54):
But I think part of it is the extra time
people spend using the answer format is offsetting the actual
you know, the downdraft in the economics per query.
Speaker 3 (19:08):
Hey, the extra spend the up again CAPEX. Initially everyone
was saying, well, that's why the stock traded down in
the aftermarket. It made some folks, or at least some
investors it felt like initially nervous. What is your take
on that. I think our own man Deep Singh was saying, well, listen,
it sounds like they are getting the demand and they're
spending to meet that demand.
Speaker 9 (19:26):
Yeah, I mean I would say that.
Speaker 8 (19:27):
I would say the other thing that's going on is
that I think one of the reasons the stock was
a little volatile is the operating income grew fourteen percent,
The top line grew fourteen percent, thirteen fourteen percent, and
it sort of looked like there was minimal operating leverage.
But what they told us on the call that was
buried in the financial statements is those costs included one
four point four billion dollar fine legislative fine, regulatory fine.
(19:53):
So if you subtract that just to look at costs,
the most important point we would make that I think
largely is being it doesn't have to do with revenue,
has to do with the fact that by integrating generative
AI into every aspect of their business, they've got really
accelerating revenue, which everyone's focused on.
Speaker 9 (20:11):
But their costs are going down. Okay, that's not fair.
Speaker 8 (20:15):
Their costs are just not going up as fast. There's
a lot more operating leverage here if you exclude the fine.
So I think that's why I think once they said
there was this big fine and the costs, people realize
that jenerative AI is really lowering or increasing the productivity here,
and so the operating leverage is at margin expansion is
faster than people think at a time when revenue is
(20:37):
also accelerating. Over consensus view.
Speaker 3 (20:39):
One thing I loved in your research, and you put
this right up top, Laura, as you said, we like
google strong strategic position as number one in search, number
one in streaming YouTube number two in mobile, Android, number
three in claud, number one in autonomous driving. Weimo, which
Tim and I are both in love with. And you
say lms make data more valuable and Google's data is
best in class. Again, your view is alphabet in many
(21:03):
ways the one to beat. And why hasn't the stock
been I don't know, doing more this year?
Speaker 9 (21:10):
You know, I.
Speaker 8 (21:10):
Think I think Google, So I would say their execution
has been very haphazard.
Speaker 10 (21:17):
It's not.
Speaker 8 (21:18):
And Wall Street really prefers leaders that lead from the front,
like Meta, like Mark Zuckerberg. We like, you know, visible, clear,
visionary leaders, and that's not what's going on here at Google.
But you know, Google just sort of despite itself, really
does have the human capital and culture and financial resources
(21:42):
to fund what will be a retooling of American business,
which is the generative AI backbone infrastructure that they're building.
And they're leading by executing within their own They're showing
what's possible by executing implementing generative AI and everything they do,
every product they have, and every cost.
Speaker 10 (22:03):
Center they have.
Speaker 8 (22:04):
So this is what's about to happen to America over
the next decade is companies that follow Google's lead will
have increasing margins and accelerating revenue. And if you don't,
which requires a cloud. By the way, you can't do
this without cloud. If you don't, you will go out
of business. Because, in my opinion, because the guys, the
(22:25):
companies that use generative AI to increase productivity and margins
and increase revenue will get higher multiples from Wall Street.
Speaker 2 (22:33):
I know you said search, search, streaming, search, cloud, and
YouTube are the three most important numbers, but we'd be
remiss if we didn't ask you about Weimo and the
expansion that the company said is coming in the quote
near future.
Speaker 5 (22:49):
Here's what they said.
Speaker 2 (22:49):
Alphabet hopes to expand weymo to all cities in the
near future. How do you look at this as an
analyst on this company's stock, as an analyst for the
company and material contribution.
Speaker 9 (23:02):
So you guys love.
Speaker 8 (23:03):
The service you just said, so, so I don't like
it in this sense that right now, I think the
most strategy is what you say no to. And what
Google should be saying no to is anything that isn't
generative AI related. Because this is a race and a war,
and they are spending a fortune on jenerative AI. Good
for them, but WEIMO is another huge sunk cost or
(23:28):
financial commitment, and I would like them figure out a
way to do wei Mo. They are ahead, they are
number one in autonomous driving. I would like them to
keep the data because I think data in the real
world plus the virtual world, is worth.
Speaker 9 (23:41):
More than either world standalone.
Speaker 8 (23:45):
So I like the data aspect of WEIMO, but I
do not like the capital commitments, which compete right now
with the generative AI capital.
Speaker 2 (23:53):
What are the capital commitments? They haven't been totally clear
about that. What do you GI view them as well?
Speaker 8 (23:58):
They sit in other bets, and I think other bets
I'm forgetting, but it like it loses typically three to
five billion dollars a quarter, so it's like twenty billion
a year, and a lot of that is Waymo, and
it's their healthcare initiatives, and so I just think that
that money. You know, they just upped cap X by
ten billion. I would like to see them take it
out of other bets. But the primary other bet is WEYMO,
(24:19):
So I think they're unwilling to relinquish their pole position
because now Tesla's coming after them. So I think I
think they are number one in all of these strategic segments.
Because they get there early, and so they're early to weimo.
I just wish it wasn't as capital intensive, the losses
weren't as big at a time when Google should be
spending all of its focus and resources on jennertor Ai or.
Speaker 3 (24:43):
We really, really really like Weymo. I'm just going to
tell you, really, I even close my eyes in a Weymo.
That's uncomfortable, as I know. Hey, listen, we've got about
three minutes left. There's so many different places we would
love to go with you, but you pick because you've
got Apple reporting ne week, Meta reporting next week, Amazon
reporting next week, Disney in early August, Netflix already out,
(25:06):
and then there's the Late Night Wars. What's interesting to
you right now that you think the Bloomberg audience and
investors really need to be paying attention and it could
be something else beyond that.
Speaker 8 (25:15):
Let's do Apple because it used to be the biggest
company in the world now, I guess in the videos,
but what I would say about Apple, we have a
hold here on Apple, whereas we have a buy on
on Alphabet Google. You know, I think I think Apple
isn't really a box because when you listen for sure,
when we hear Meta, who's spending hundreds of millions of
(25:36):
dollars per person to create a super intelligence generative AI group.
And yesterday there was no sentence on the Google earnings
called it didn't have AI in it.
Speaker 9 (25:47):
So you know, these companies are really talking.
Speaker 8 (25:50):
Amazon will also because that's being run Amazon now is
being run by the AWS you know founder. Essentially, he
talks a lot generative AI a lot. So the you know,
the one that's not the same is Apple, and people
really want to see what's happening with their generative AI
strategy and how is it. How is Apple either sixteen iOS,
(26:15):
sixteen iOS, seventeen iOS eighteen going to keep up with Android,
which is Google, who last night told us they're integrating
jenerave I tools into everything, including androids. So I do
think there's a bigger threat to Apple's only business, which
is this iPhone business. We think it's a single product
company with upsells to other devices. We think the anchor
tenant there is the iPhone. So we really want to
(26:37):
hear how they think they can compete when they are
saying nothing about jenerative AI and they're spending twelve billion
dollars on Capex, which is the same number at Apple
for the last three years when we just every single
quarter we show up on the Amazon call, the meta
call that Google called, they're raising capex by ten billion
dollars at a time or with.
Speaker 2 (26:58):
Order thirty seven seconds on Apple, as Tim Cook the
right leader to guide them through the AI era.
Speaker 9 (27:04):
Oh, so harsh. I'm going to go with no, but
so harsh. No, I don't think so. I think we
need a wartime CEO.
Speaker 8 (27:12):
And I think Tim Cook is great at a lot
of things, but I don't think he's been He's not
proven great at this this technological disruption called generator.
Speaker 3 (27:22):
They I got someone else in mind that you think
should lead it ten seconds, it's.
Speaker 9 (27:25):
An impossible job. So no, I have no idea in
mine for who could replace him.
Speaker 3 (27:29):
You you rock come back soon, and I think you
are coming back soon, which we're looking forward to already.
Laura be well. Laurd Martin, senior alsee at Niedeman Company,
knows this space like no other. So glad we could
get some time.
Speaker 1 (27:41):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five. He's during
listen on Apple Karplay and Android otto with the Bloomberg
Business app, or watch us.
Speaker 3 (27:53):
Live on YouTube.
Speaker 8 (27:55):
Well.
Speaker 2 (27:55):
Speaking of the President, the President denied he was seeking
to ruin the business empire of his own one time ally,
Elon Musk, as retribution for their dispute over the President's
signature tax law. President Trump posted on social media earlier
today that he wants Musk and all business in the
US to quote thrive and that their success is good
for the country. This carol on a day when Tesla
(28:17):
sheriffes are just absolutely tanking. Elon Musk did warnan of
difficult times ahead for the company and that it will
be in a transition period for the next year.
Speaker 10 (28:25):
That's right.
Speaker 3 (28:25):
More The stockdown about nine percent as we speak, all right.
Ross Gerber was here with us yesterday getting us ready
for Tesla earnings, and on the day that they were reporting,
he joins us again today to tie up the headlines
from Elon's call last night with investors. He's a longtime
investor in Tesla and owner of Tesla Cars. He's the
president ce of Gerber Kawasaki Wealth and Investment Management, and
(28:46):
he has about three point six billion in acids under management.
Ross so glad you could give us a little bit
more time today, So thank you, thank you. Just about
twenty four hours since Tesla earnings, not quite but almost,
we've had Elon's call with investors. What is or remains
your investment thesis on Elon and Tesla? Could you seem
to certainly have pulled back and are a lot more cautious.
Speaker 11 (29:08):
I think probably my biggest issue is that what I
believe is best for Tesla isn't actually the strategy being
employed by Elon. And what I think is best for
Tesla is to be focused on selling great evs that
can drive themselves, versus completely pivoting into this robot and
robotaxi business because they're struggling to sell cars. Because what
(29:31):
we're seeing now, which I suspected to be true earlier,
is that the deterioration of the EV business is really
really bad for Tesla, and it essentially is an EV business,
and so hoping that robotaxi robotics is going to be
a revenue stream or let alone profitable anytime soon is
(29:52):
really just not going to happen. And so, as Elon said,
Tesla's in for some pretty tough quarters ahead, and with
the ending of the tax credits and all this kind
of stuff.
Speaker 10 (30:02):
I mean, this is all bad news.
Speaker 2 (30:03):
When you say it's not gonna happen anytime soon.
Speaker 5 (30:05):
What do you mean by that? Give us your own
timeline here.
Speaker 11 (30:08):
Well, you know, we follow WEIMO very closely, and we
think that Tesla is two years behind Weimo as far
as the development of their robotaxi And now Weimo is
scaling and being quite successful at charging you know, the
right amount for rides and generating enough revenue that it's meaningful.
So I think it's at least two years right, So
(30:29):
where Tesla is at for them to generate any revenue
at all meaningful ability will take a couple of years.
And then from a profitability standpoint, we don't even know
if that business is going to be profitable with all
of the competition that's coming into the robotaxi business.
Speaker 3 (30:46):
So you said yesterday you reminded us that you've been
selling shares of tests. I think there are reports to
in June that you sold about sixty million dollars worth
of Tesla's shares, and you cited the waiting confidence as
you're laying out here in the company's future. Are you
selling more. What's your exposure at this point.
Speaker 11 (31:03):
Yeah, you know, we still have you know, on my
last thirteen haf we had over two hundred thousand shares.
You know, right now we're we're holding a little less
than two hundred thousand shares, so we continue to sell
the stock. We have a lot of diehard Tesla clients
that you have huge gains because we bought the stock
at you know, like two dollars and so, you know,
people aren't that excited to pay taxes. And there's still
(31:26):
this possibility that Elon could change course and really do
the things necessary to fix Tesla, because fundamentally Tesla is
a great company. Most if not all of Tesla's problems
are self created because of the CEO, Elon Musk. It's
not that Tesla's core business has some big problem. It's
actually the opposite, that CEO is the problem, which is
(31:49):
super unique.
Speaker 10 (31:49):
So so that's what why I'm loath to just be
like completely out of Tesla.
Speaker 11 (31:54):
But on the other side of the coin, with the
valuation where it's at, and basically we think they're not
going to be profitable next year, you know, the stock
needs to move meaningfully lower.
Speaker 10 (32:05):
In my mind before I would buy it.
Speaker 5 (32:07):
Hello, what's meaningful?
Speaker 11 (32:09):
Well, you know, I don't know if any of the
analyst estimates for next year are right. I think they're
all vastly overstated. But even if you did three dollars
of earnings next year at fifty times earnings, which is
in vidios multiple, you'd be at one hundred and fifty dollars.
And then you put some premium on the Elon Musk
Robot premium. Maybe you put on fifty one hundred dollars,
(32:31):
so you're at you know, two hundred to two hundred
and fifty dollars a shares where I think Tesla should be.
Speaker 2 (32:35):
Okay, two hundred to two hundred and fifty dollars a
share right now at three hundred and three eight dollars
a share down eight point eight percent today.
Speaker 5 (32:41):
Hey, Ross.
Speaker 2 (32:41):
In the past, when we've spoken to you've been really
critical of Tesla's board. You've been critical of it on
social media as well. The board does include folks such
as Kimball Musk, It includes James Murdoch. Most recently, it
added Chipotle's Jack Hartung to the board. Are you any
less critical of the board now? Think the board is
doing its job? No, I mean I think there is
(33:03):
no board.
Speaker 11 (33:04):
I think the board is Elon Musk, and so the
board is just you know, it's like a weekend at Bernie's.
You know, it's like a bunch of bodies that they
put out a desk and Elon tells them what to
do and they do it. This jack guy they just
put on probably had no idea what it's getting himself into.
And he's in deep now, you know. So I don't
actually think the board of directors cares about anybody but
(33:26):
Elon Musk, and I think investors in Tesla know that
at this point, and that's why we're ultimately sellers is
nobody actually represents retail investors, which own you know, still
own eighty seven percent of Tesla. So it's really a
unique situation. And I expect Tesla to buy Xai at
some point for probably two hundred billion dollars some outrageous price,
(33:48):
and I think that's the next thing that will happen.
So you know, there's no question that the merging of
these businesses seems to be on the horizon.
Speaker 3 (33:59):
Hey, before you go, definitely want you to get have
you weigh in ross on what President Trump put out
on social that he denied he was seeking to ruin
Elon Musk's business empire as retribution for the dispute over
the president's signature tax law. What's your reading, Army? Might
this be helpful to Elon and tell us that we
(34:19):
just got about a minute minute ten?
Speaker 11 (34:22):
No, you know, Trump, Trump's just being the bigger man
here and trying to, you know, act like he doesn't
have a tiff with Elon, you know, because he's so
mature or something. But the truth of the matter is
he's already done what needs to be done to destroy
Tesla by taking away all the subsidies and making evs
much more expensive.
Speaker 10 (34:40):
And so you know, he doesn't have to say anything anymore.
Speaker 11 (34:43):
Let's Elon's dug his own grave and he's going to
have to figure out a way out of it.
Speaker 10 (34:48):
So so you know, Trump, Trump doesn't have.
Speaker 11 (34:51):
Any reason to look bad or grind an axe, you know,
And he's playing Trump's playing Elon like he has the
whole time.
Speaker 3 (34:57):
Thirty seconds. We have talked with you about your cyber truck,
talked about others you know that you have owned. Would
you buy another Tesla? Do you still like the cars?
Just quickly I do, you know, this is.
Speaker 10 (35:10):
The whole issue.
Speaker 11 (35:12):
You know, I've looked at so many other cars to buy,
and I want an electric car, and I want a
great electric car. And I still think Tesla makes the
best cars and Rivian. I have a Rivian two, so
I think they're a close second, and they make a
great vehicle as well.
Speaker 10 (35:27):
But I just haven't been compelled by any of the other.
Speaker 11 (35:29):
Vehicles EV vehicles out there, and so you know, I
still kind of like my cyber truck, and I know,
you know, I can't sell it anyways. But Tesla makes
great vehicles, and it's a great time to buy an
EV before the discounts go away.
Speaker 3 (35:43):
US Gerbert, You're incredible of Gerbert Kawasaki.
Speaker 1 (35:46):
Well, this is the Bloomberg Business Week Daily podcast, available
on Apple, Spotify, and anywhere else you get your podcasts.
Listen live weekday afternoons from two to five pm Eastern
on Bloomberg dot Com, the iHeartRadio app, tune In, and
the Bloomberg Business App. You can also watch us live
(36:06):
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