December 10, 2025 • 20 mins
Watch Scarlet and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Kristine Aquino
--Ed Ludlow, BTech Co-Anchor, discusses Meta Platforms’ Mark Zuckerberg getting personally involved in day-to-day work and pivoting the company's focus to an artificial intelligence model it can make money off of. He also talks about SpaceX moving ahead with plans for an IPO.
- Matthew Bloxham, Bloomberg Intelligence Tech Analyst, discusses Bloomberg Intelligence’s survey on AI’s cross industry disruption. AI is no longer a side project, with C-suites across nine industries racing to wire it into their business cores and 36% making it their top priority, driven more by fear of disruption than promise of growth or head-count cuts, a Bloomberg Intelligence survey finds.
-Diana Rosero Pena, Bloomberg Intelligence Consumer Staples Analyst, discusses Chewy earnings. Chewy Inc.’s third-quarter earnings exceeded Wall Street estimates, as its loyalty program and subscription service helped drive faster active customer growth. The results suggest that even budget-pressed shoppers are staying committed to their pets and gravitating toward Chewy’s services, which include the Autoship subscription program and telehealth.
-Michael Halen, Bloomberg Intelligence Senior Restaurant and Foodservice Analyst, recaps Cracker Barrel earnings. Cracker Barrel Old Country Store Inc. expects sales to fall faster than it previously forecast, showing the country-themed restaurant chain is still struggling following backlash to its failed logo change earlier this year.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Apple Coarclay and Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:23):
I'm gonna start with the Meta news because it looks
like mister Zuckerberg really is putting himself personally on the
line here for some of their AI businesses. Ed Lodo
joins us Bloomberg b Tech co host. He's out there
in San Francisco where I think they have some technology people.
And what's the news coming out of Meta today? Can
you tell us what that is and kind of if
(00:44):
it's important or not.
Speaker 3 (00:46):
Yeah, our reporting is very detailed. Which site sources that
Mark Zuckerberg is getting much more hands on on the
minut sha of generations generation model releases, AI model releases.
But the bigger picture is that Meta, which has kind
of been the stulwork of open source AI models, is
(01:10):
realizing that it may not be the viable path. So
there is a specific model that they're due to release
called Avocado, and at one time that had been due
to be an open source model. What we're reporting citing sources,
it's now likely to be a closed source model. Alexander Wang,
who leads this kind of AI lab team that marks
Zakovolk's put together, is a great advocate for closed source.
(01:31):
And what you need to know is that in the
earlier days, when models were much smaller and Meta kind
of wanted workshopping among industry and academics.
Speaker 4 (01:40):
Worldwide, it worked.
Speaker 3 (01:42):
But the problem now is that these models are so
big the resources required to utilize them are so severe
that it's just not realistic to have an open source
policy universally. Because you need money and private industry has money.
You have to make it a kind of for profit
exercise in order for the economics of training and then
running the models to work. And that's what our story details.
(02:04):
It's really is a must read. What I would say
is that Meta in its earning school in July did
kind of tell us this was coming. They're committed to
open source, but they're going to have to start looking
at the reality of what it takes to build and
train a model and then put it out into the
real world in terms of who can use it all.
Speaker 5 (02:20):
Right, ed, you've been very busy.
Speaker 6 (02:21):
I know you've been writing about SpaceX as well, so
I'm going to ask you about that.
Speaker 5 (02:25):
Tell us about this IPO.
Speaker 6 (02:27):
I mean, it seems like it's going to be trying
to rival the Aramco IPO that we saw a few
years ago one point five trill and evaluation. What's the
single biggest justification for that?
Speaker 4 (02:37):
Yeah, I mean, we're reporting that it's happening.
Speaker 7 (02:39):
You know.
Speaker 3 (02:39):
My understanding from sources is the work as well underway.
They're speaking to the bankers, they've told the investors, they're
hiring for the internal roles that you need when you
do a big IPO, and the targets the middle of
next year.
Speaker 4 (02:51):
You know.
Speaker 3 (02:51):
The valuation is what everyone's talking about. One point five
trillion dollars. We confirmed that the company's latest valuation in
the private markets through a tender settled at more than
eight hundred billion, So that is kind of like a
stepping stone to an IPO. But what I understand is
they need some cash for a specific project. We can
get into it if you want. That cash is probably
(03:12):
well north of thirty billion dollars, maybe forty billion dollars,
and that would exceed what Aramco raised in twenty nineteen,
So from a dollar raised perspective, it would make it
the biggest IPO of all time, which is exciting.
Speaker 2 (03:24):
It surely is. I mean, particularly for the bankers on that.
What's the total valuation? Do we know the total valuation
of SpaceX these days, because I've heard some just monster numbers.
Speaker 3 (03:34):
So Elon Musk has been pushing back on X recently
about reports of SpaceX's valuation. What we have reported, and
this is we stand by that reporting, of course, is
SpaceX has gone through a tender, a secondary offering. That
is a mechanism where the company allows existing employees and
(03:55):
some insiders early investors to sell the shares they already have.
As part of that, SpaceX actually buys back some stock,
but they don't raise any new equity, They don't raise
any funds for.
Speaker 4 (04:06):
The company's treasury.
Speaker 3 (04:08):
But you still need a price for those shares, and
that determines the valuation. That price was settled at four
hundred and twenty one dollars a share, and that gives
evaluation north of eight hundred billion dollars.
Speaker 4 (04:20):
And that's settled.
Speaker 3 (04:21):
But again SpaceX does this twice a year typically, you know, tenders, buybacks,
et cetera. But in this case, this would be the
big one to kind of get fair market value ahead
of an IPO.
Speaker 7 (04:34):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (04:41):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 7 (04:55):
We had a client earlier.
Speaker 2 (04:56):
Christine was referencing some funuciary trust is referenced on I'm
waiting for the BI survey on AI and like what
b I SERVI on AI? Matt Blocksham Joints is he's
a tech analyst for Bloomberg Intelligence. Hey, Matt, talk to
us about this BI survey on AI. What is it
and what's what's it telling you?
Speaker 8 (05:13):
Yeah?
Speaker 6 (05:14):
Sure.
Speaker 8 (05:14):
So this was a big survey we did, polling the
views of six hundred and four C suite executives across
the range of industries across the world, really kind of
get trying to get a sense on how corporates are
assessing the current AI situation and what they think is
going to do to their businesses over the next kind
(05:34):
of two to three years. So we kind of looked
at the motivations for AI investment, what it could do
to headcount, what they're expecting in terms of revenue and
profit uptick, and you we had some kind of interesting
results out the survey. You know, not surprisingly, perhaps AI
is very much at the top of the c suite agenda.
(05:55):
Something like thirty six percent of those polls said it
was their top strategic priority. In another forty seven percent
said it was within the top three strategic objectives for them.
When we looked and asked about the main objectives behind
their AI strategies, what came out top was improving operational efficiency,
(06:19):
which was number one with forty seven percent of the respondents,
and in second place was boosting a revenue at twenty
one percent. Interestingly, headcount cuts were quite low down the
packing order. Only thirteen percent of respondents put that as
their top priority, and actually it was the highest ranked
in terms of the least priority. So I think it's
(06:41):
interesting that companies are looking to boost productivity, but they're
not afraid to make investments both in technology and headcount
in the near term to kind of release those opportunities.
And actually on a three year view, sixty two percent
of respondents they expect AI to lead to an increase
(07:03):
in headcount over the next three years, an increase, not
a decrease, and the average increase they're looking at is
about four percent. So that kind of flies in the
face of a little bit of you know, a lot of
the kind of headlines we see about job cuts. I
think overall, corporate see the need to invest more in staff,
you know, to roll out their AI strategies in the
(07:25):
coming years. Yeah.
Speaker 6 (07:26):
Yeah, Well, Matt, you mentioned thirty six percent of c
suites now rank AA as their top priority. That number
actually strikes me as a little low. I would have
thought it would be at least half of the people's survey.
But what do you think, is that something that's just
set to grow in future surveys as really kind of
AI becomes central to a lot of companies workflows these days.
Speaker 8 (07:47):
Yeah, I think so. I mean, like, you know, obviously,
if you add the forty seven percent that said it's
in the top three, I mean, you know, an overall
top three priority gives you the kind of vast majority
of the respondents. So obviously companies do have to wrestle
with lots of other issues too. You know that there
is going on in the world beyond AI, and obviously
trade policy is another big thing that's probably on the
(08:11):
radar for a lot of these companies too. So yeah,
you know, maybe it will kind of inch up, but
I think you've given that aggregate, you know, age percent
plus in the top three probably what you'd expect to see.
Speaker 2 (08:25):
Matthew, how about return on investment here? That's kind of
what the streets starting to ask for now. We know
these companies can spend big money on AI, but what's
the return for shareholders?
Speaker 8 (08:35):
Yeah, I think that's still very opaque. And actually, when
we asked the respondents to flag the biggest roadblocks they
could see to AI deployment, the investment needed in AI,
and the question marks around the return on investment, we're
definitely up there amongst some of the most important concerns
(08:58):
that respondents have, along side data security and clean data.
We didn't ask much of the most specific ROI expectations.
We just kind of get the sensor. It's a bit
too early to get an accurate read on that. I
think most companies are still kind of at a relatively
early stage of their AI trials, you know, lots of
(09:19):
them have moved out of the kind of testing lms.
They're into pilot phases, some of them are even moving
into scale deployment. I think it's fair to say a
lot of them are not really quite sure yet what
the return is going to be and how quick it's
going to come. And obviously it's kind of a bigger
issue for the wider tech sector. And you mentioned Oracle
as a kind of barometer for the kind of broader
(09:42):
pulse on AI, and I think the twenty twenty six
is going to be a really crucial year for kind
of what corporates make of the midterm ROI. And you know,
if they don't see a big ROI, then that's probably
going to slow the pace of revenue growth and that's
going to have a knock on effect to the levels
of investment we're seeing. But I likes of Oracle and
open eye on the revenues that bringing in.
Speaker 7 (10:04):
Stay with us more from Bloomberg Intelligence coming up after this.
Speaker 1 (10:11):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. Listen on demand wherever you
get your podcasts or watch us live on YouTube.
Speaker 7 (10:25):
Let's switch gears.
Speaker 2 (10:26):
Going back to earnings here, earnings continue to kind of
trickle out a little bit, particularly from the retail oriented
companies that packet foods companies. One of them is Chewy.
Let's break that down with Diana sat Open. Yes, she
is an analyst covering the retail space consumer product space
for Bloomberg Intelligence.
Speaker 7 (10:42):
What are good friends at Chewy dot com doing?
Speaker 5 (10:45):
They're doing fairly well.
Speaker 9 (10:47):
You know, they actually reported sales and profitability that beat
analysts expectations, you know, for their outlook, it seems that
they're a little bit conservative that actually, you know, level
up some of the gains earlier this morning for the stock.
But again it seems that there's a lot of tailwinds
(11:08):
going forward.
Speaker 6 (11:09):
Yeah, what's reaving that more conservative outlook that you mentioned, Diana,
Is it something related to you concerns about consumer demand
moving forward?
Speaker 5 (11:18):
That is absolutely the case.
Speaker 9 (11:20):
They're seeing household formation, which is adoption versus surrendering a
little bit subdued compared to historical averages, and they think
that that's going to overflow into twenty twenty six.
Speaker 5 (11:35):
We're not necessarily agreeing with that.
Speaker 9 (11:37):
We think at we're a little bit more optimistic in
terms of, you know, the pace of adoptions going forward.
So this is going to make the industry a little
bit more interesting.
Speaker 2 (11:48):
This is it people recall definitely one of the pandemic
stocks that just surged to a high of at one
hundred and eighteen hundred nineteen dollars a share back in
early twenty twenty one and then came down to a
more normal level here. So going forward, what's the growth
drivers for Chewy? Is it taking share from the mom
and pop pet stores, is it we're just macro.
Speaker 7 (12:09):
Stuff, household formation and things like that.
Speaker 9 (12:12):
Well, there's gonna be a couple of things. They're focusing
on verticals besides merchandise, which is you know, they're doing
a lot of bad care. They're expanding into that. They
are currently have fourteen buildings on that they're expanding into
eighteen by the end of the year. So you know,
(12:32):
you have healthcare, you have sponsor ads in the website,
you have you know, the membership program, you have a
Chewy Plus. So all of those things were probably going
to be teilwinds for the company going forward. They're focusing
on like gaining mid to high single digit sales growth
(12:54):
over the next few years, which is I think it's
a normal forecast, but right now they're you know, growing
two times the size of the industry.
Speaker 5 (13:04):
So yeah, it's interesting.
Speaker 6 (13:06):
Is this a trend that you're seeing moving forward for
a lot of these kind of consumer based companies shifting
back a little bit to that in store sort of
experience because that seems to be a strategy that's worked
for other retailers outside of the space as well.
Speaker 3 (13:20):
Yes.
Speaker 9 (13:20):
So, you know, the pet industry, it's very sticky in
terms of demand. So once these companies get the pet
parent at the start of the you know, pet ownership,
they are going to have them for the rest of
the life of the pet. So you know, that is
obviously a very interesting dynamic compared to other retailers. But
(13:44):
in terms of, you know, the in store experience, this
is something that pet Co is also doing. They're leveraging
their fourteen hundred stores to also increase that traffic and penetration.
So definitely interesting times.
Speaker 2 (13:58):
So Walmart, Amazon, how does Chewi compete against those players
that have big, big e commerce platforms.
Speaker 5 (14:06):
So based off of them, they compete on price.
Speaker 9 (14:10):
We a couple of years ago, we did a price
and study with Amazon, but Walmart and Chewy and other
retailers and Chewy and Amazon, we're pretty close in terms
of pricing where Amazon. Where Chewy beats Walmart and Amazon
is that their customer service. They you know, if you
call them and you have any questions about the food
(14:32):
that you're going to feed your dog, they're very knowledgeable
compared to you know, Amazon customer service.
Speaker 5 (14:38):
So that is like the edge that they have.
Speaker 6 (14:40):
Oh, very interesting.
Speaker 10 (14:42):
Now.
Speaker 6 (14:42):
Another bright spot, of course is autoship, right, which is basically,
if you're a pet owner, this is the thing that
you sign up for like my cat's food each month,
and then it just keeps charging me every month and
then I get surprice delivery of cat food that I
was not maybe expecting. But so obviously that's a bright
spot for Chewy. What's the outlook for that part of
(15:04):
the business. Is that something that could be sustainable?
Speaker 5 (15:06):
Yes, absolutely so.
Speaker 9 (15:08):
Right now, eighty four percent of their revenue comes from authorship,
which allows them to have a lot of scale and
allows them to be very profitable. So that is obviously
they have been growing since I started covering this company.
It was like in the seventies and now it's eighty four,
so it's probably going to get to the nineties soon.
Speaker 6 (15:26):
It's very convenient because you sign up for it and
then you forget about it.
Speaker 7 (15:30):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (15:37):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am easterne on Apple, Corplay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (15:51):
Krakerbo reported some numbers today, some disappointing guidance stufs kind
of flat on the day, but the stock has been
down pretty significantly this year. They had that whole low
go change that was a real problem for them, and
they're starting to see in their traffic.
Speaker 7 (16:03):
Pretty big time. Stocks down about fifty percent year to date.
Speaker 2 (16:06):
Michael Halen joints his senior restaurant and food service analyst
for Bloomberg Intelligence. Michael, what did the company report today
and what's management saying about kind of the future plans here?
Speaker 10 (16:18):
Yeah, so, you know, guidance was cut and this was
their fiscal first quarter, so it's it's always tough to
have a guidance, revenue and ebitdoc cut after your first report,
but they hadn't seen a bounce yet in their traffic
post logo change controversy and everything that that went along
(16:41):
with it, you know. On the positive side, they said,
you know, traffic has now steadied at this down ten
to eleven percent level, which is translating into a you know,
a down a mid single digit.
Speaker 7 (16:54):
Same store sales.
Speaker 10 (16:55):
You know, So if you're if you're a glass half
full investor, you're saying that, you know, after the stabilization
comes in improvement. You know, their new guidance has a
pretty wide range. So the low end of the range
is assuming no improvement through year end, which we think
could be sounds pretty conservative to us, you know, and
(17:16):
then on the higher end they would see a gradual
slow improvement in traffic going forward. So what are they
going to do? You know, it's going to be a
continue to be about improving the operations, right that's been
you know, a key tenant under under CEO Julie Messino.
(17:36):
It's also going to be food innovation. It's going to
be Southern favorites, it's going to be twists on old classics.
It's going to be bringing back items that people love
they want to see return to the menu. But I
think what really stood out is their willingness to listen
more closely to their customers. I think that's a big
(17:59):
key point of focus for them moving forward after the
controversy that they suffered.
Speaker 6 (18:05):
Well, Michael, So in terms of what are they going
to do right, it seems as a cutting capex is
a part of the plan. Is that something that you
think wood single discipline or does it actually risk slowing
to turn around even more?
Speaker 10 (18:19):
Well, they're going to still refresh the stores. What they're
cutting back on is a more extensive remodel, which was
in tandem with the logo change, which was something that
was angering customers.
Speaker 4 (18:34):
Right.
Speaker 10 (18:34):
So I think the capex change is probably you know,
the lowered capex is probably smart. But they're going to
continue to refresh their stores. They're going to continue to
give them a fresh coat of pain, improve floors where
they need to clean up the bathrooms, things of that
nature that nobody's going to get up in arms over.
Speaker 2 (18:56):
I'm actually surprised in hindsight that maybe this manager team
kept theirs there. I mean, this was a real self
inflicted wound there. What's the shareholder's been saying. Has it
been any pushback other than selling the shares?
Speaker 10 (19:09):
Yeah, So listen, Julie Messino the you know that you
make a great point, Paul and Julie Messino. The reason
why I believe she's still there is that she was
doing a great job until until this controversy hit. You know,
this is a chain that had been bleeding traffic for years, right,
They've been really struggling for a long time to bring
(19:30):
in younger consumers, right, and she had shown pretty good
success over the twelve months leading into the logo change.
Same Star sales at the restaurants were up five percent
in the August quarter. So I think that's why, you know,
the proxy fight kind of failed, the attempt to remove
(19:53):
her from the board failed, And why she still has
her job right now is that they this chain was
a mess prior to her arrival, and she was showing
some pretty good progress up until August.
Speaker 1 (20:05):
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Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Apple Coarclay and Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:23):
I'm gonna start with the Meta news because it looks
like mister Zuckerberg really is putting himself personally on the
line here for some of their AI businesses. Ed Lodo
joins us Bloomberg b Tech co host. He's out there
in San Francisco where I think they have some technology people.
And what's the news coming out of Meta today? Can
you tell us what that is and kind of if
(00:44):
it's important or not.
Speaker 3 (00:46):
Yeah, our reporting is very detailed. Which site sources that
Mark Zuckerberg is getting much more hands on on the
minut sha of generations generation model releases, AI model releases.
But the bigger picture is that Meta, which has kind
of been the stulwork of open source AI models, is
(01:10):
realizing that it may not be the viable path. So
there is a specific model that they're due to release
called Avocado, and at one time that had been due
to be an open source model. What we're reporting citing sources,
it's now likely to be a closed source model. Alexander Wang,
who leads this kind of AI lab team that marks
Zakovolk's put together, is a great advocate for closed source.
(01:31):
And what you need to know is that in the
earlier days, when models were much smaller and Meta kind
of wanted workshopping among industry and academics.
Speaker 4 (01:40):
Worldwide, it worked.
Speaker 3 (01:42):
But the problem now is that these models are so
big the resources required to utilize them are so severe
that it's just not realistic to have an open source
policy universally. Because you need money and private industry has money.
You have to make it a kind of for profit
exercise in order for the economics of training and then
running the models to work. And that's what our story details.
(02:04):
It's really is a must read. What I would say
is that Meta in its earning school in July did
kind of tell us this was coming. They're committed to
open source, but they're going to have to start looking
at the reality of what it takes to build and
train a model and then put it out into the
real world in terms of who can use it all.
Speaker 5 (02:20):
Right, ed, you've been very busy.
Speaker 6 (02:21):
I know you've been writing about SpaceX as well, so
I'm going to ask you about that.
Speaker 5 (02:25):
Tell us about this IPO.
Speaker 6 (02:27):
I mean, it seems like it's going to be trying
to rival the Aramco IPO that we saw a few
years ago one point five trill and evaluation. What's the
single biggest justification for that?
Speaker 4 (02:37):
Yeah, I mean, we're reporting that it's happening.
Speaker 7 (02:39):
You know.
Speaker 3 (02:39):
My understanding from sources is the work as well underway.
They're speaking to the bankers, they've told the investors, they're
hiring for the internal roles that you need when you
do a big IPO, and the targets the middle of
next year.
Speaker 4 (02:51):
You know.
Speaker 3 (02:51):
The valuation is what everyone's talking about. One point five
trillion dollars. We confirmed that the company's latest valuation in
the private markets through a tender settled at more than
eight hundred billion, So that is kind of like a
stepping stone to an IPO. But what I understand is
they need some cash for a specific project. We can
get into it if you want. That cash is probably
(03:12):
well north of thirty billion dollars, maybe forty billion dollars,
and that would exceed what Aramco raised in twenty nineteen,
So from a dollar raised perspective, it would make it
the biggest IPO of all time, which is exciting.
Speaker 2 (03:24):
It surely is. I mean, particularly for the bankers on that.
What's the total valuation? Do we know the total valuation
of SpaceX these days, because I've heard some just monster numbers.
Speaker 3 (03:34):
So Elon Musk has been pushing back on X recently
about reports of SpaceX's valuation. What we have reported, and
this is we stand by that reporting, of course, is
SpaceX has gone through a tender, a secondary offering. That
is a mechanism where the company allows existing employees and
(03:55):
some insiders early investors to sell the shares they already have.
As part of that, SpaceX actually buys back some stock,
but they don't raise any new equity, They don't raise
any funds for.
Speaker 4 (04:06):
The company's treasury.
Speaker 3 (04:08):
But you still need a price for those shares, and
that determines the valuation. That price was settled at four
hundred and twenty one dollars a share, and that gives
evaluation north of eight hundred billion dollars.
Speaker 4 (04:20):
And that's settled.
Speaker 3 (04:21):
But again SpaceX does this twice a year typically, you know, tenders, buybacks,
et cetera. But in this case, this would be the
big one to kind of get fair market value ahead
of an IPO.
Speaker 7 (04:34):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (04:41):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 7 (04:55):
We had a client earlier.
Speaker 2 (04:56):
Christine was referencing some funuciary trust is referenced on I'm
waiting for the BI survey on AI and like what
b I SERVI on AI? Matt Blocksham Joints is he's
a tech analyst for Bloomberg Intelligence. Hey, Matt, talk to
us about this BI survey on AI. What is it
and what's what's it telling you?
Speaker 8 (05:13):
Yeah?
Speaker 6 (05:14):
Sure.
Speaker 8 (05:14):
So this was a big survey we did, polling the
views of six hundred and four C suite executives across
the range of industries across the world, really kind of
get trying to get a sense on how corporates are
assessing the current AI situation and what they think is
going to do to their businesses over the next kind
(05:34):
of two to three years. So we kind of looked
at the motivations for AI investment, what it could do
to headcount, what they're expecting in terms of revenue and
profit uptick, and you we had some kind of interesting
results out the survey. You know, not surprisingly, perhaps AI
is very much at the top of the c suite agenda.
(05:55):
Something like thirty six percent of those polls said it
was their top strategic priority. In another forty seven percent
said it was within the top three strategic objectives for them.
When we looked and asked about the main objectives behind
their AI strategies, what came out top was improving operational efficiency,
(06:19):
which was number one with forty seven percent of the respondents,
and in second place was boosting a revenue at twenty
one percent. Interestingly, headcount cuts were quite low down the
packing order. Only thirteen percent of respondents put that as
their top priority, and actually it was the highest ranked
in terms of the least priority. So I think it's
(06:41):
interesting that companies are looking to boost productivity, but they're
not afraid to make investments both in technology and headcount
in the near term to kind of release those opportunities.
And actually on a three year view, sixty two percent
of respondents they expect AI to lead to an increase
(07:03):
in headcount over the next three years, an increase, not
a decrease, and the average increase they're looking at is
about four percent. So that kind of flies in the
face of a little bit of you know, a lot of
the kind of headlines we see about job cuts. I
think overall, corporate see the need to invest more in staff,
you know, to roll out their AI strategies in the
(07:25):
coming years. Yeah.
Speaker 6 (07:26):
Yeah, Well, Matt, you mentioned thirty six percent of c
suites now rank AA as their top priority. That number
actually strikes me as a little low. I would have
thought it would be at least half of the people's survey.
But what do you think, is that something that's just
set to grow in future surveys as really kind of
AI becomes central to a lot of companies workflows these days.
Speaker 8 (07:47):
Yeah, I think so. I mean, like, you know, obviously,
if you add the forty seven percent that said it's
in the top three, I mean, you know, an overall
top three priority gives you the kind of vast majority
of the respondents. So obviously companies do have to wrestle
with lots of other issues too. You know that there
is going on in the world beyond AI, and obviously
trade policy is another big thing that's probably on the
(08:11):
radar for a lot of these companies too. So yeah,
you know, maybe it will kind of inch up, but
I think you've given that aggregate, you know, age percent
plus in the top three probably what you'd expect to see.
Speaker 2 (08:25):
Matthew, how about return on investment here? That's kind of
what the streets starting to ask for now. We know
these companies can spend big money on AI, but what's
the return for shareholders?
Speaker 8 (08:35):
Yeah, I think that's still very opaque. And actually, when
we asked the respondents to flag the biggest roadblocks they
could see to AI deployment, the investment needed in AI,
and the question marks around the return on investment, we're
definitely up there amongst some of the most important concerns
(08:58):
that respondents have, along side data security and clean data.
We didn't ask much of the most specific ROI expectations.
We just kind of get the sensor. It's a bit
too early to get an accurate read on that. I
think most companies are still kind of at a relatively
early stage of their AI trials, you know, lots of
(09:19):
them have moved out of the kind of testing lms.
They're into pilot phases, some of them are even moving
into scale deployment. I think it's fair to say a
lot of them are not really quite sure yet what
the return is going to be and how quick it's
going to come. And obviously it's kind of a bigger
issue for the wider tech sector. And you mentioned Oracle
as a kind of barometer for the kind of broader
(09:42):
pulse on AI, and I think the twenty twenty six
is going to be a really crucial year for kind
of what corporates make of the midterm ROI. And you know,
if they don't see a big ROI, then that's probably
going to slow the pace of revenue growth and that's
going to have a knock on effect to the levels
of investment we're seeing. But I likes of Oracle and
open eye on the revenues that bringing in.
Speaker 7 (10:04):
Stay with us more from Bloomberg Intelligence coming up after this.
Speaker 1 (10:11):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. Listen on demand wherever you
get your podcasts or watch us live on YouTube.
Speaker 7 (10:25):
Let's switch gears.
Speaker 2 (10:26):
Going back to earnings here, earnings continue to kind of
trickle out a little bit, particularly from the retail oriented
companies that packet foods companies. One of them is Chewy.
Let's break that down with Diana sat Open. Yes, she
is an analyst covering the retail space consumer product space
for Bloomberg Intelligence.
Speaker 7 (10:42):
What are good friends at Chewy dot com doing?
Speaker 5 (10:45):
They're doing fairly well.
Speaker 9 (10:47):
You know, they actually reported sales and profitability that beat
analysts expectations, you know, for their outlook, it seems that
they're a little bit conservative that actually, you know, level
up some of the gains earlier this morning for the stock.
But again it seems that there's a lot of tailwinds
(11:08):
going forward.
Speaker 6 (11:09):
Yeah, what's reaving that more conservative outlook that you mentioned, Diana,
Is it something related to you concerns about consumer demand
moving forward?
Speaker 5 (11:18):
That is absolutely the case.
Speaker 9 (11:20):
They're seeing household formation, which is adoption versus surrendering a
little bit subdued compared to historical averages, and they think
that that's going to overflow into twenty twenty six.
Speaker 5 (11:35):
We're not necessarily agreeing with that.
Speaker 9 (11:37):
We think at we're a little bit more optimistic in
terms of, you know, the pace of adoptions going forward.
So this is going to make the industry a little
bit more interesting.
Speaker 2 (11:48):
This is it people recall definitely one of the pandemic
stocks that just surged to a high of at one
hundred and eighteen hundred nineteen dollars a share back in
early twenty twenty one and then came down to a
more normal level here. So going forward, what's the growth
drivers for Chewy? Is it taking share from the mom
and pop pet stores, is it we're just macro.
Speaker 7 (12:09):
Stuff, household formation and things like that.
Speaker 9 (12:12):
Well, there's gonna be a couple of things. They're focusing
on verticals besides merchandise, which is you know, they're doing
a lot of bad care. They're expanding into that. They
are currently have fourteen buildings on that they're expanding into
eighteen by the end of the year. So you know,
(12:32):
you have healthcare, you have sponsor ads in the website,
you have you know, the membership program, you have a
Chewy Plus. So all of those things were probably going
to be teilwinds for the company going forward. They're focusing
on like gaining mid to high single digit sales growth
(12:54):
over the next few years, which is I think it's
a normal forecast, but right now they're you know, growing
two times the size of the industry.
Speaker 5 (13:04):
So yeah, it's interesting.
Speaker 6 (13:06):
Is this a trend that you're seeing moving forward for
a lot of these kind of consumer based companies shifting
back a little bit to that in store sort of
experience because that seems to be a strategy that's worked
for other retailers outside of the space as well.
Speaker 3 (13:20):
Yes.
Speaker 9 (13:20):
So, you know, the pet industry, it's very sticky in
terms of demand. So once these companies get the pet
parent at the start of the you know, pet ownership,
they are going to have them for the rest of
the life of the pet. So you know, that is
obviously a very interesting dynamic compared to other retailers. But
(13:44):
in terms of, you know, the in store experience, this
is something that pet Co is also doing. They're leveraging
their fourteen hundred stores to also increase that traffic and penetration.
So definitely interesting times.
Speaker 2 (13:58):
So Walmart, Amazon, how does Chewi compete against those players
that have big, big e commerce platforms.
Speaker 5 (14:06):
So based off of them, they compete on price.
Speaker 9 (14:10):
We a couple of years ago, we did a price
and study with Amazon, but Walmart and Chewy and other
retailers and Chewy and Amazon, we're pretty close in terms
of pricing where Amazon. Where Chewy beats Walmart and Amazon
is that their customer service. They you know, if you
call them and you have any questions about the food
(14:32):
that you're going to feed your dog, they're very knowledgeable
compared to you know, Amazon customer service.
Speaker 5 (14:38):
So that is like the edge that they have.
Speaker 6 (14:40):
Oh, very interesting.
Speaker 10 (14:42):
Now.
Speaker 6 (14:42):
Another bright spot, of course is autoship, right, which is basically,
if you're a pet owner, this is the thing that
you sign up for like my cat's food each month,
and then it just keeps charging me every month and
then I get surprice delivery of cat food that I
was not maybe expecting. But so obviously that's a bright
spot for Chewy. What's the outlook for that part of
(15:04):
the business. Is that something that could be sustainable?
Speaker 5 (15:06):
Yes, absolutely so.
Speaker 9 (15:08):
Right now, eighty four percent of their revenue comes from authorship,
which allows them to have a lot of scale and
allows them to be very profitable. So that is obviously
they have been growing since I started covering this company.
It was like in the seventies and now it's eighty four,
so it's probably going to get to the nineties soon.
Speaker 6 (15:26):
It's very convenient because you sign up for it and
then you forget about it.
Speaker 7 (15:30):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (15:37):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am easterne on Apple, Corplay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (15:51):
Krakerbo reported some numbers today, some disappointing guidance stufs kind
of flat on the day, but the stock has been
down pretty significantly this year. They had that whole low
go change that was a real problem for them, and
they're starting to see in their traffic.
Speaker 7 (16:03):
Pretty big time. Stocks down about fifty percent year to date.
Speaker 2 (16:06):
Michael Halen joints his senior restaurant and food service analyst
for Bloomberg Intelligence. Michael, what did the company report today
and what's management saying about kind of the future plans here?
Speaker 10 (16:18):
Yeah, so, you know, guidance was cut and this was
their fiscal first quarter, so it's it's always tough to
have a guidance, revenue and ebitdoc cut after your first report,
but they hadn't seen a bounce yet in their traffic
post logo change controversy and everything that that went along
(16:41):
with it, you know. On the positive side, they said,
you know, traffic has now steadied at this down ten
to eleven percent level, which is translating into a you know,
a down a mid single digit.
Speaker 7 (16:54):
Same store sales.
Speaker 10 (16:55):
You know, So if you're if you're a glass half
full investor, you're saying that, you know, after the stabilization
comes in improvement. You know, their new guidance has a
pretty wide range. So the low end of the range
is assuming no improvement through year end, which we think
could be sounds pretty conservative to us, you know, and
(17:16):
then on the higher end they would see a gradual
slow improvement in traffic going forward. So what are they
going to do? You know, it's going to be a
continue to be about improving the operations, right that's been
you know, a key tenant under under CEO Julie Messino.
(17:36):
It's also going to be food innovation. It's going to
be Southern favorites, it's going to be twists on old classics.
It's going to be bringing back items that people love
they want to see return to the menu. But I
think what really stood out is their willingness to listen
more closely to their customers. I think that's a big
(17:59):
key point of focus for them moving forward after the
controversy that they suffered.
Speaker 6 (18:05):
Well, Michael, So in terms of what are they going
to do right, it seems as a cutting capex is
a part of the plan. Is that something that you
think wood single discipline or does it actually risk slowing
to turn around even more?
Speaker 10 (18:19):
Well, they're going to still refresh the stores. What they're
cutting back on is a more extensive remodel, which was
in tandem with the logo change, which was something that
was angering customers.
Speaker 4 (18:34):
Right.
Speaker 10 (18:34):
So I think the capex change is probably you know,
the lowered capex is probably smart. But they're going to
continue to refresh their stores. They're going to continue to
give them a fresh coat of pain, improve floors where
they need to clean up the bathrooms, things of that
nature that nobody's going to get up in arms over.
Speaker 2 (18:56):
I'm actually surprised in hindsight that maybe this manager team
kept theirs there. I mean, this was a real self
inflicted wound there. What's the shareholder's been saying. Has it
been any pushback other than selling the shares?
Speaker 10 (19:09):
Yeah, So listen, Julie Messino the you know that you
make a great point, Paul and Julie Messino. The reason
why I believe she's still there is that she was
doing a great job until until this controversy hit. You know,
this is a chain that had been bleeding traffic for years, right,
They've been really struggling for a long time to bring
(19:30):
in younger consumers, right, and she had shown pretty good
success over the twelve months leading into the logo change.
Same Star sales at the restaurants were up five percent
in the August quarter. So I think that's why, you know,
the proxy fight kind of failed, the attempt to remove
(19:53):
her from the board failed, And why she still has
her job right now is that they this chain was
a mess prior to her arrival, and she was showing
some pretty good progress up until August.
Speaker 1 (20:05):
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each
weekday ten am to noon Eastern on Bloomberg dot Com,
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