May 1, 2025 • 43 mins
Bloomberg’s Caroline Hyde and Ed Ludlow discuss Microsoft’s and Meta’s earnings beats. Plus, Carolina Milanesi, President and Principal Analyst at Creative Strategies, explains what investors are waiting to hear from Apple when the iPhone maker reports results. Andy McLoughlin, Managing Partner at Uncork Capital, also joins to talk about the firm's new $300 million fund and its search for the next big AI startup.
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Speaker 1 (00:00):
From the heart of where innovation, money and power collide
in Silicon Valley and beyond. This is Bloomberg Technology with
Caroline Hyde and Ed Lovelow.
Speaker 2 (00:26):
Live from New York.
Speaker 3 (00:27):
This is Bloomberg Technology coming up. Microsoft surges on the
back of strong quarterly sales and profit growth despite economic uncertainty.
Speaker 4 (00:35):
Glass Meta also jumping on the company's ad sales laying
investor fears about the impact.
Speaker 3 (00:39):
Of tariffs, and Apple takes an epic flow from a
federal judge on its app store sales commissions as the
tech giant gives up.
Speaker 2 (00:47):
For its own earnings later today.
Speaker 3 (00:49):
But first we check in on these markets which are
in risk on mode.
Speaker 2 (00:53):
We're up more than two percent.
Speaker 3 (00:54):
On the nasat one hundred, best day in all of
a week at the moment. As we see those earnings
news flow into the sentiment, we're seeing Bitcoin also up
to two point four percent. Interesting news that Morgan Stanley's e
Trade might be offering bitcoin more broadly crypto to its
retail investor base.
Speaker 2 (01:09):
That's a big one.
Speaker 3 (01:10):
But then dive underneath the hood, what's going on in
the microha.
Speaker 4 (01:12):
Yeah, big technology earnings performance and metters the place to
start right This is a big gain and the story
really simple. Outlook of the core business for the current period,
strong raising the guidance for the range and capital expenditures,
commitment to advanced compute access across the company. But there
is a nuance there that also the higher cost of
doing business because of tariffs is having an impact. Great
(01:33):
discussion ahead and then Microsoft waf look at the gain
thirty three percent top line growth on Azure Cloud. Also
discussion about the commitment to spend on data center, but
there is some evidence that all of the prior investment
is now materializing in the spend on their cloud business.
Speaker 5 (01:48):
Let's get some more Microsoft's results.
Speaker 4 (01:50):
Ted Mortenson, managing director at Baird thirty three percent top
line Azure growth is four percent beyond what the street said.
But within that there's a sixteen percent content ttribution from AI.
Those too many are just numbers, but they do seem
to be evidence that the investment to date is now
start as translate to top line game.
Speaker 6 (02:10):
You nailed and thanks for having me. The bottom line
of if you look at that, that's actually thirty five
percent in constant currency, and what Amy Hood alluded to
is most of that upside is just the Global two
thousand migrating to cloud, and right now on Azora they
can't even keep up with demand. On Jenni, that guide
of thirty four to thirty five percent was way above
(02:31):
the street.
Speaker 3 (02:33):
Let's talk about unable to satisfy current demand. There's an
interesting is it caution coming from Microsoft that, look, they're
willing to be underserving in terms of supply because they
are starting to normalize their spend in terms of capital expenditure.
Speaker 6 (02:50):
I think they're trying their best to provision a lot
of this next generation equipment, specifically Navidio GPUs. There is
just so much much demand. If you even look at
some of the metrics that open ai put out last
week of having a run rate of one hundred and
seventy four billion in revenues, the demand is just outstripping demand. Supply,
(03:13):
plane and simple, and their provision of new data centers
with this next generation GENAI stack infrastructure is just agents
can't keep up with demand. And that's a very good
problem to have.
Speaker 2 (03:26):
Yeah, so can we strip away that noise?
Speaker 3 (03:28):
We had note after note, analysis after analysis that in
some way Microsoft was curtailing data centers, whether it be
through leases or renegotiation, is that happening or is this
the ebb and flow of doing business TEED.
Speaker 6 (03:41):
I think on the call they tried to get to
the root cause of this misinformation. I think you got
a lot from the Cell side that fiscal twenty six
capex will moderate, it can't go at the same level
at twenty four to twenty five when they were building
long term assets, and they define long term assets as
data with the shelf life of about fifteen years. Those
(04:03):
are shells and the other shells that they're building, you know,
they have to be hooked up to utilities. And I
think the big thing that the Street was kind of
missing is time to power. They are somewhat restricted on
these next generation data centers just getting the power capacity
needed to fuel the GENAI loads. So fiscal twenty six
(04:27):
will moderate, it's normal. It can't grow at fifty percent
plus forever. And I think where the Street maybe got
it wrong with some of the analysts on the ED side,
that we're picking up some weakness and you know, quite frankly,
that's a good data check, but probably not put in
the right context if you understand core technology and what's
(04:49):
happening in a gentaki.
Speaker 4 (04:53):
Ted my relationship with Microsoft is I grew up learning
how to use computer on their operating system and more
recently I'm a gay. Two pieces of news out today.
One Xbox price is going up because not just on
the hardware, by the way.
Speaker 5 (05:06):
On the titles themselves, because of tariffs.
Speaker 4 (05:09):
But I always go to the Bloomberg terminal look at
the split of cloud and just like software revenues, they're
still quite good at selling software that you can otherwise
get for free somewhere else.
Speaker 5 (05:18):
Is that fair?
Speaker 6 (05:20):
That's fair? And I think you know you look at
you look at Microsoft, and they have a huge advantage
as well as Oracle in relationship to the other cloud titans,
whether it be a Meta, Google or Amazon. They already
have the enterprise customer. So when you control the enterprise
customer to begin with from previous revisions of whether it
(05:42):
be you know, Excel, Word Outlook. And now you know
you have a CEO Sat Nadela, which is a visionary
in tech that should be at the top of the
list of CEOs that actually get the migration to jenn Ai.
Now you can leve entire base through Jeni. And what's
(06:04):
different on Microsoft that I think they brought this up
on previous calls is Microsoft has a Jeni steck that
they've created over the last of multiple years that's extremely
it's written once, it's unbelievably scalable, and when you leverage
apps on top of that, you've got a model that
(06:26):
if you can.
Speaker 5 (06:26):
Touch okay, you let me jump in real quick.
Speaker 4 (06:29):
While this is all happening, Microsoft are being contributor. The
nastack's now pushing to two percent s and P five
hundreds pushing higher. A big part of that, I know
Microsoft's not sort of where it was at the open,
but it was on track for its biggest gain since
twenty twenty. And I think that for all the sort
of negative sentiment around the world about cloud computing and tariffs,
it's pretty astonishing moment in time in the earnings context.
Speaker 5 (06:50):
Isn't it. Yeah?
Speaker 3 (06:51):
And I think therein lies what's phenomenal about this guidance
tad is the fact that we got it and what
is it that we're starting to see. Is it that
come despite macroeconomic headwinds. Just see the shift, whether it
be to on prem to the cloud, whether it's movement
from non GENI to Jeni, is just so mission critical
that they have to stick with Microsoft right.
Speaker 7 (07:11):
Now, that's the right question.
Speaker 6 (07:14):
I mean there's two aspects. All those Global two thousand
has to migrate to cloud to lower cost, and that's
that's what you do in a recessionary or a decreased
growth environment. More importantly, what Microsoft said on their call
last night was a little bit eye opening on the
guide of Azora being up thirty four to thirty four,
(07:35):
thirty four to thirty five percent next quarter. Yeah, christ
and you're bringing the cost down on these models two
X and their tokens, the Geni agent tokens are off
almost fifty percent. So the street had this huge debate
on ROIC return on invested capital. Well, Microsoft's reducing costs
(07:56):
of Jeni for broad adoption. And if you're sure, if
you're in the s and P five hundred, if you're
not migrating to Jenny I, you put your whole model
at risk from operating margin perspective.
Speaker 3 (08:09):
Ted Mortenson, bed Managing Director, fantastic to have your voice today,
Thank you. Let's just shift to meta now because shares
are also jumping following really resilient ad sales in the
face of Taris sick.
Speaker 8 (08:19):
Listen, we've had a strong start to the year. Our
community keeps growing, with more than three point four billion
people now using at least one of our apps each day.
Our business is also performing very well, and I think
we're well positioned.
Speaker 5 (08:38):
To navigate the macroeconomic uncertainty.
Speaker 3 (08:42):
Mark Zuckerberg talking about the ability to navigate. Let's get
up to Evercore. I I scene managing director Mark Mahaney
now and I pick up where.
Speaker 2 (08:49):
Ted left us.
Speaker 3 (08:51):
The return on investing capital is this bearing dividends? Is
the integration of generative AI throughout the ad offering vindicating
that spending that actually they are for this year because
of tower of costs.
Speaker 9 (09:04):
Well, Carolina give you a couple of points on this,
you know one, I think a meta is proving to
show that at the app layer, the application layer, that
you can get a good ROAI return on you know,
AI spend. I thought the way Zuckerbird laid out their
earnings call last night, the five areas of focus for
AI for the company, and then the returns they're getting
(09:24):
kind of within each areas of those focus and one
of the they're used the applying AI.
Speaker 7 (09:30):
To improve their ads platform.
Speaker 9 (09:31):
Well, the application of AIS allowed conversion rates to rise
about five percent, which is a big number for an
ad platform.
Speaker 7 (09:38):
That's that huge.
Speaker 9 (09:39):
On the user side, they're trying to improve engagement, They're
trying to make the content more personalized, more relevant. Well,
they were able to show that the application of AIS
led to a seven percent six percent increase in time
spent on both Instagram and on on Facebook. So yeah,
I think they're proving that they can use AI to
improve the service and actually anetize it like you can
(10:01):
get a return on other AI spent. I want to
be careful though, I think extrapolating from Meta to other
companies it's a tricky thing to do.
Speaker 7 (10:07):
One very few companies have spent as.
Speaker 9 (10:09):
Much money and as effectively as Meta has, and then
Meta's advertising platforms just more resilient. I'm not at all
sure that these companies are out of the weeds, are
out of the danger right on when it comes to
the impact of tariffs.
Speaker 4 (10:20):
So their argument, right is that the time spent metrics
or evidence of the resiliency and like tough economic environment.
I felt like this story evolved over the course of
this statement, hitting to the end of the call, and
this is the quote from Susan Leon. Why so the
Capex range gets raised, and we're all thinking commitment to AI,
even though they said it goes to the cause of business.
Then Susan gets asked about tariffs and this is the answer.
(10:44):
The higher cost we expect to incur for infrastructure hardware
this year really comes from suppliers who source from countries
around the world. Goes on to explain uncertainty relating to
trade negotiations. We're working on mitigations. The Capex range got
raise because it's more expensive for them to build the
data centers.
Speaker 7 (11:01):
Mark ed you just you nailed it. I think that's
absolutely true.
Speaker 5 (11:06):
I mean today, keep going, mom, thank you.
Speaker 7 (11:09):
I think there are two reasons.
Speaker 9 (11:10):
One is that I think they are getting more aggressive offensive.
They've seen the return that they're getting on their aisvan
and they're leaning into it more. The second reason, however,
is that costs a rising. And I don't know if
you noticed this, d but she was very careful never
to use the.
Speaker 7 (11:22):
T word I eat tariffs.
Speaker 9 (11:23):
I didn't use it's a political Yeah, it's a political
statement these days, and nobody wants to get involved in politics,
so so she was very careful about how.
Speaker 7 (11:31):
She answered that. But yes, the costs of tariffs.
Speaker 9 (11:34):
Are attacks their inflationary, and if you're buying a lot
of infrastructure hardware like Meta clearly is and some of
the other hyperscalers, by the way, your costs are going up.
So my guess is that Amazon may have to raise
its CAPEX, and Google's going to come back to us
and having to raise its capex, and Microsoft next year
will probably have to raise its CAPEX numbers because the
infrastructure costs a rising.
Speaker 4 (11:54):
Look, Susan Lee was employee number forty at Meta. She's
a CFO, but she gets the business, and what she
was explaining was that the compute needs are across the business.
In other words, we're not just doing this for the
training of a frontier model. They've got people in marketing,
they've got people in the ad development business that are demanding.
Speaker 5 (12:11):
For access to the computes.
Speaker 4 (12:13):
Do you have conviction that Susan Lee is getting that
right in the numbers that she gave you last night.
Speaker 7 (12:19):
Yeah, I think so.
Speaker 9 (12:21):
Look, we've had three years now of the of really
aggressive deployment of AI too to boost the ads business,
to boost to boost the platform for advertisers and for users,
but also to roll out some new things like Meta
AI and then meta AI devices maybe ray band, meta
ray bans maybe, and also to boost the WhatsApp business.
(12:44):
And so I think they've shown that they can get
a good return on this. I mean they're good cutthroad
capitalists like a couple of these other companies, and I
think they're making rational business decisions. They're probably leaning a
little bit more heavily than other companies, but it's paying
off for them. I think you'll see other companies look
at what Meta has done, and I think they're going to.
Speaker 7 (12:59):
Lean into AI as well.
Speaker 9 (13:00):
I know we kind of drifted away from the AI
revolution earlier this year. I think we're going to come
back to it. I think Meta's going to give us
good reasons to do that.
Speaker 3 (13:07):
Yeah, they're bringing out Meta AI app as a standalone.
We've seen also the levers being pulled in terms of
advertising when it comes to threads. How does that filter
into WhatsApp and other offerings more broadly marked But you
said you can't read across from Meta into perhaps other
social media companies like Snap because Meta ends up being
like the port of safety in that respect, But read
across to Amazon in terms of cloud, and indeed you
(13:30):
say that Amazon might have to raise their spending on
infrastructure spending in that respect, But where else does AWS
takers in terms of growth?
Speaker 9 (13:38):
Well, I just think if it's if it's if the
infrastructure hardware is more expensive for Meta, it's more expensive
for everybody, And so that's going to be the case
with Amazon too. I think they're going to they may
well have. I mean, I think the direction of AWS capex.
Speaker 7 (13:51):
Is going to go up in unless you know, but
things could.
Speaker 9 (13:55):
Change quickly in this tariff environment, folks. For now, those
hardware costs are going higher, and so that's going to
probably be reflected in rising capex spending. And then just
a point on Meta, I think their model is more resilient. Also,
we haven't really seen the dramatic economic dislocation. Our checks
start indicated that you started to see some adverticals really
(14:16):
softened in the month of April. We still have the
whole year ahead of us. So I'm you know, I
don't think. I don't think metas out of the woods.
My only point is that relative to almost every other
AD platform, they're more insulated, they're more resilient than anybody else.
But you know, even if there's a sharp economic downturn,
They're not going to be immune to it.
Speaker 3 (14:36):
And market's the Chinese retailers that pull back an ad spending.
What about Amazon's e commerce business, I.
Speaker 7 (14:44):
Think that's going to be tbd. I think the March
quarter is going to be fine.
Speaker 9 (14:47):
Google gave us a fine March quarter, Metais did, and
I think Amazon will too. We haven't seen any sharp
fall off yet in consumer spend, but prices are rising.
They're going to be rising materially. Those dolls are going
to be more expensive on Amazon, and and so exactly
how Amazon handles that, whether they're going to eat margins
or defend market share. And my guess is that knowing Amazon,
(15:08):
they're going to defend their market share, so they're gonna
they're gonna be willing to uh to take a hit
hit to margins. So that could be a downside to
the stock. So it depends prices arising on Amazon. That's
not a good thing for the Amazon ecosystem.
Speaker 4 (15:21):
Mark Behiney, ever, COSI senior managing director, could have you
back on the show, Thank.
Speaker 7 (15:25):
You very much.
Speaker 4 (15:26):
Now coming up, Qualcomm becomes the latest chip maker to
offer a cautious sales outlook in the face of trade uncertainty.
We'll have more in the company's earnings next. This is
Bloomberg Technology breaking news that's moving markets. Bloomberg reporting the
(15:50):
US is weighing a potential easing of restriction on Nvidia
sales to the United HOURRA memorates. That's according to sources,
who say President Trump could announce the start of work
on a bilateral chip deal during his upcoming trip to
the Gulf. Nothing has been decided officially, according to our sources.
They emphasize that the debate over chip trade rules for
the UAE and other countries remains ongoing in Washington, but
(16:13):
the stock spiking on that report to a session high
of five percent. Competition for Nvidia closes a home. Investors
are going to be playing close attention to Amazon's AI
business when the company releases its earnings later today. A
key part of its AI growth strategy is Trainium, the
company's custom design chip. I've got a tour of the
AWS facility where they're made and designed. Have a look
(16:35):
at this. This is aws Anda Perna Labs in Austin, Texas.
Amazon does all of its custom AI chip design in
the US. Most of it happens here. Amazon bought and
a Perna ten years ago. Today, the team designs and
tests custom hardware and software that power AWS data centers worldwide.
We looked at Trainium, Amazon's AI chip for training and
(16:55):
inference and a Perna doesn't just design the chip, They
oversee computer electric called mechanical, thermal, and software engineering for
the entire server. AWS sales reps focus a lot on
price for performance to win business for the chip. So
today Trainium two delivers up to four x the performance
of Gen one that required reducing component count, improving power,
(17:16):
calling and networking across the server. In Austin, there's a
quiet lab for chip validation testing from the wafer level
to boards.
Speaker 5 (17:23):
Then there's the noisy.
Speaker 4 (17:24):
Room where full servers are stress tested. Trainium still in
its infancy, but it helps reduce Amazon's reliance on AI
chip leader Nvidia. It could also give AWS more control
of its own destiny in the market that Nvidia dominates.
Next up is Trainium two at scale. Project Rainier, built
with Anthropic will run hundreds of thousands of these chips,
(17:45):
and that project goes live this year.
Speaker 3 (17:47):
Let's deal with chips and in fact the work perform
on the nast that one hundred is qual Con this
after the biggest maker of chips for smartphones gave a
soft revenue prediction for the current quarter. A mid concerns that, look,
taras could hurt demand for more. Let's bring in Bloem
megs Ian King. I feel for Cristiano and Qualcom because
they've beat on the previous quarter.
Speaker 2 (18:06):
But it really is that sort of middling guide.
Speaker 10 (18:09):
Yeah, I know, you're absolutely right. The guide at the
top end wasn't bad, right, I mean, it's really all
they've done is say what everybody else said, which is, hey,
we had a really good quarter. Things are going okay
for us. Look but we were doing better than even
what we said. Well, you know, maybe we're not so
sure about what's going forward and these things are beyond
our control. Everybody else said the same thing, but they're
(18:32):
getting beaten up a lot harder.
Speaker 4 (18:33):
Ian very quickly Qualcomm Android in China, what was the story?
Speaker 10 (18:38):
Yeah, I mean this is really important. This is a
massive market for them, so in a way they're a
test case. Like more than forty percent of their business
comes from China. They said it went well.
Speaker 3 (18:48):
Well, we keep an eye on China and the business
they're Blouem magazine can keeping it short for us as well.
Speaker 2 (18:53):
We love it.
Speaker 3 (18:53):
Meanwhile, Roadblocks reporting earnings before the bell, and a large
of them expect to jump in active users for the
first quarter, fitting from efforts maybe to attract new players
and keep as they grow older and using the service longer.
So as you see up four percent intelligence, Senior analyst
Manly singers, hey with us, and this is a company
that is managing to steer us for growth again in
(19:14):
spite of macro uncertainty.
Speaker 2 (19:15):
They've got the users there.
Speaker 11 (19:16):
Yeah, I mean, I think Roadblocks is a defensive name,
like a Netflix is where people still need entertainment, and
you know, in this case they cater to the younger demographic,
the thirteen year olds and look now older older as well,
and they have that native content. So when you think
about you know why TikTok did so well because they
(19:38):
had the creators. Gaming creators are on Roadblocks. This is
the platform where they create the content and in this case,
they have a very successful model in terms of payouts
that they give to those creators. So it's all user
generated content. They don't have to spend a lot in
terms of getting branded content and you know, paying content costs,
(19:58):
and look, it's a very small company when it comes
to the hours spent on the platforms eighty billion plus
hours annually. Compare that to Netflix one hundred billion around,
and they monetize very less compared to all the other
platforms that are out there. So from that perspective, I
would say there is so much room to monetize that
(20:18):
hours spent on roadblocks. I mean, there's still a five
billion dollar revenue run rate company at the end.
Speaker 4 (20:23):
Of the day through advertising and licensing. Blueberg Intelligence Senior
and Lissman Deep saying thank you very much.
Speaker 3 (20:36):
Let's check in on the shares of Tesla because with
a chair, Robin Dunham has been denying reports from the
Wall Street Journal that allege the company was looking to
replace Elon Musk as its CEO.
Speaker 2 (20:47):
We're currently at one point seven percent. A strong denial.
Is that smoke without father away.
Speaker 4 (20:51):
Yeah, that is the critical question. All you need to
do is go to Tesla's regulatory filings form ten K
and they spell it out very clearly, this idea about
key man risk. Every single regulatory filing has that Elon Musk.
They are highly dependent on his services. They acknowledge that
he spends time at all these other companies. I know
(21:12):
that succession planning is always in the background of the
Tesla board.
Speaker 5 (21:17):
That's the role of corporate governance exactly.
Speaker 4 (21:19):
I think what's interesting is I continue to hear that
Elon Musk also plans to spend a lot more time
on XAI.
Speaker 5 (21:26):
Right, that's a.
Speaker 4 (21:27):
Really big project for him, a priority because he wants
it to be competitive against open Ai for obvious historical
reasons and anthropic But this is a clear denial by
Tesla posted on x to the official Tesla account, citing
the chair of the report that the board was looking
to find a replacement, not clear of succession or a
reaction to the state of this year.
Speaker 3 (21:47):
I mean, don't you think it'd be a failure of
corporate governance if at some point they weren't thinking who
on earth could if forced to lead a business such
as test.
Speaker 4 (21:55):
What people forget is that beyond Elon must there are
many other generals of the company running the place data
and the company is still the leader in many of
the fields it's in.
Speaker 3 (22:03):
He's a good delegator, right, Welcome back to Blue Meg Technology.
Speaker 2 (22:13):
I'm karent hid an Eli.
Speaker 5 (22:14):
I'm Med Lovelow right next to you.
Speaker 4 (22:15):
Let's talk about some of the biggest movers in markets,
and it continues to be Microsoft.
Speaker 5 (22:19):
Actually from a sort of points.
Speaker 4 (22:21):
Perspective and percentage perspective, the story is simple top line
growth on its cloud unit of thirty three percent beyond
what the streets saw, the evidence that all that spending
on AI development is translating into sales, and that is
a pretty clear image on your screen. Away from kind
of the earnings context, there is also litigation and antitrust
(22:41):
consideration into other names. Right we are, of course talking
about Alphabet, the parent of Google and Apple. We're going
to get into detO on those stories. But I think
interesting that Apple basically flat.
Speaker 5 (22:52):
We acknowledge that.
Speaker 4 (22:53):
It's treading water, probably ahead of earnings after the bell
carrier Alphabet.
Speaker 5 (22:57):
I don't know, I don't draw a cause or link.
Speaker 3 (22:59):
There's see that and see maybe it's the meta numbers
and what that feeds into advertising resiliency. But we also,
of course got a very strong pushback from Peachi, of course,
the leader of Alphabet and Google, against any sort of
de facto breakup of the company. As we consider remedies
toward is deemed a monopoly place within search. Leon Niyhlan's
here to break it all down in court. Finally, Snapitchai
(23:21):
getting up there and saying, look, any of these remedies,
whether it's sharing our data or that it's actually spinning
off Chrome, you're breaking us apart and it's too much.
Speaker 12 (23:30):
Yes, So he took this doan yesterday in the Justice
Department's trial. This is the three week trial that's supposed
to determine what the remedy is for Google's illegal online
monopoly in search. The Justice Department has proposed, as you mentioned,
that Google be required to spin off the Chrome browser,
and also that it be required to share a lot
(23:50):
of the data that it collects about users and the
web with rivals. And Sandar Pashai pushed back on that
remedy in particular pretty hard. He said, you know that
while not an actual breakup, would be the facto breakup
of the company, because it would allow all of their
rivals to effectively reverse engineer their technology and use all
(24:12):
of the sort of things that Google has built up
over the past several years to gain its sort of
share in in search.
Speaker 4 (24:19):
Lee I said that Apple stock was flat because it's
treading water ahead of the market closed when it does earnings,
maybe there's downward.
Speaker 5 (24:25):
Pressure from a critical court decision.
Speaker 4 (24:28):
A federal judge ruled the Apple violated court orders by
not opening up the app store to third parties. You've
been tracking that story as well. What are the need
to know details about it?
Speaker 5 (24:39):
Yeah, so this.
Speaker 12 (24:40):
Goes back to the long running litigation between Apple and
Epic Games, maker of Fortnite, which sued the company back
in twenty twenty over its app store, and even though
it lost most of the counts in that case, the
judge did find that Apple's app store a violated California
state law against over antitrust and ordered Apple to make
(25:02):
some changes to its app store policies, in particular allowing
developers to link out, i e. Make it easier for
users to buy digital goods and services on their own
websites as opposed to within Apple's ecosystem. Apple didn't really
love this, introduced some new policies in January of last
(25:23):
year that it was still going to charge a twenty
seven percent commission on things that people purchased outside of
the app Store if they took advantage of these links well,
Epic complained. The judge held a series of hearings both
last year and this year and found that the changes
that Apple made were deliberately anti competitive. She said in
(25:43):
a very blistering opinion that was released late last evening.
She said, you know, every single time Apple had a choice,
it chose the most anti competitive option. And on top
of that, she found that some of the executives who
testified at the hearing lied on the stand, and she
recommended that the federal government open a investigation into whether
(26:03):
they should be held liable for criminal contempt.
Speaker 3 (26:06):
Right, I mean on fire was Gonzales Rogers saying that
if they thought that this court would tolerate such insubordination,
it was a gross miscalculation. Apple comes back earlier and says,
we strongly disagree with this decision and we're going to
appeal it.
Speaker 2 (26:22):
So what next?
Speaker 12 (26:24):
Yes, so Apple is going to appeal. She said in
her decision that Apple needed to make immediate changes. They
are likely going to try and appeal that to the
Ninth Circuit to put that on hold at least through
the appeals.
Speaker 2 (26:36):
In this we'll see if the Ninth.
Speaker 12 (26:37):
Circuit agrees, because they have already reviewed this case one
time and found earlier that her decision, you know, was solid,
so they could put this on hold while Apple appeals.
If they do, you know, it's going to go through
the appeal process and we will not probably have a
decision until sometime mid to early next year. Or they
could say, you know, this should have gone into effect
(26:58):
last year and so so they could let it go
into a factor while Apple appeals.
Speaker 5 (27:04):
Bloomberth Leon Eilan out of DC, Thank you very much.
Speaker 4 (27:07):
Let's get more on Apple, but specifically what investors expect
from its earnings report later today.
Speaker 5 (27:12):
That's bringing Carolyn A. Milanates.
Speaker 4 (27:13):
She's the president and principal analyst of creative Strategies. Bloomberg's
Mark German, who let's just be honest, is that is
probably the leading correspondent and journalists covering Apple in the world, says,
don't look back at.
Speaker 5 (27:26):
The quarter gone or the numbers.
Speaker 4 (27:29):
It's really about the long term and what Apple communicates
on how it adjust supply chains in the face of
trade policy presently, what is your thesis on that.
Speaker 13 (27:40):
I agree with Mark, It's really about what Apple is
able to do from a manufacturing perspective, supply chain perspective
to make sure that they are not subjected to whatever
the administration decides to do. On the tarist side, we
know that they are planning to shift their production to
(28:01):
India as far as iPhones that are coming to the US,
but that doesn't happen overnight, So anything that they're able
to disclose, and obviously Apple always keeps their car very
close to their chests and things like this, but the
street needs reassurance that they have a plan and it's
the same Fai.
Speaker 4 (28:21):
Actually, Apple is historically the master of the bottom line, right,
profit and margins, irrespective of what's happening around the world.
But it's likely I think you and I discussed this
the last time you're on the show. India long term
flying handsets out of that nation into the United States.
(28:41):
It all costs money moving something from place A to
place B.
Speaker 5 (28:47):
How do you see them explaining.
Speaker 4 (28:49):
Their ability to protect themselves from those costs.
Speaker 13 (28:54):
There's a couple of things. One is that this is
team's cook, bread and butter. He is an operational guy.
He has been entrench in supply chain organization for a
very long time.
Speaker 5 (29:07):
Is also a very good diplomat.
Speaker 13 (29:09):
So I think that while moving supply chain and production
to India is one of the core things that they
can do. Is also very good at dealing with politics,
whether it is at home or in China. So I
think these are the other thing that we'll see happening.
But we also have to remember that Apple is becoming
(29:30):
more dependent on revenue coming from services, and so we
might see some give from a price perspective on the
actual phones and other devices, thinking that they can recoup
some of that from the services side.
Speaker 3 (29:46):
Now it might be a good diplomat, but many might
feel that potentially they have dropped the ball from.
Speaker 2 (29:50):
An AI perspective.
Speaker 3 (29:51):
Carolina, and I've got one note land in my inbox
coming up from Linked Secuities.
Speaker 2 (29:56):
I think that Apple is struggling to stay relevant. Is
that to much of.
Speaker 3 (30:00):
An assumption to be making right now? Because of Syrian
and the lackluster rollout of Jenny.
Speaker 7 (30:05):
I look at the end of.
Speaker 13 (30:08):
The day, I think that what people are picking up
is the fact that Apple made promises from an AI
perspective and they're not delivering quite yet. That's a reality.
Speaker 5 (30:17):
What is a reality as well, is.
Speaker 13 (30:19):
That consumers are still not going into a store asking
for something that is AI driven, and they're still very
much focused on hardware when they're looking specifically as smartphones.
So there is some grace when it comes to the
opportunity that Apple has. But it is interesting to see
the exignment around the statement the pitch I made yesterday
(30:42):
of the day before, around Jemy and I get into
Apple before the end of the year.
Speaker 3 (30:46):
Yes, so that cross pollination. Look, maybe that's AI winning
out for Apple longer term. They don't always do it first,
but my goodness, they are not doing it best in
the longer term, Karentina, Do people have the bandwidth to
hold on to that view?
Speaker 2 (31:00):
I think so.
Speaker 13 (31:01):
I think that there's going to be two realities. One
is the Apple and sire and what Apple Intelligence itself
is going to deliver it to consumer is much more personal.
Speaker 2 (31:11):
But what people are.
Speaker 13 (31:12):
Really excited about now is the more general AI and
that's where Jemmy and I, CHAGBT and the other providers
come in. And to your point, Apple does usually come
in later in the market with a solution that then
pleases consumers because of the way that they package it together.
Speaker 4 (31:32):
You're both making historic references to BlackBerry and the smartphone market.
I think what's the one area where Apple is is
indisputably King.
Speaker 2 (31:44):
Oh, I think it's simplicity.
Speaker 13 (31:47):
To be honest with you, is the fact that at
the end of the day, when talking about packaging things together,
that when they deliver it to consumer, the you know,
the simplicity they used to deliver that solution is what
is an I've seen consumers to stay wherever they are.
And the other one is obviously marketing.
Speaker 2 (32:05):
They're good at that. We have to see how much
they can dial.
Speaker 3 (32:07):
Up that services side of the equation throughout Carolina Milanaisy.
So it's great to have your president and principal analyst
at creative Strategies coming up. Uncourt Capital it raises three
hundred million dollars if it searches for the next big
AI startup. When you speaking with a managing partner, Andy McLoughlin,
that's next, there is a Bloomberg technology.
Speaker 4 (32:34):
Uncourt Capital has just raised three hundred million dollars that
will be spread across two funds. The early stage investment
firm who made a name backing the likes of Poshmark, Postmates,
event Bright, and Fitbit, are looking for its next big startup,
focusing on AI for more. Andy McLaughlin, Uncourt Capital managing
partner joins us. Now, Caroline and I have noticed something.
Speaker 5 (32:55):
Let's start here.
Speaker 4 (32:56):
Every day, literally the daily cadence, we are delivering news
about a new fund that's closed. What is the big
picture macro driver of that activity, Andy, and in your case,
specific to you.
Speaker 14 (33:09):
That's a great question, know, and I think it really
comes down to LPs so investors in funds looking for
ways to deploy capital into managers who have a knack
and a history and a track record of having found
kind of breakout companies before they were obvious. And I
think as seed investors, that's what we have to be
well class at. We have to be able to see
(33:30):
around the corner and see the things that most other
people can't see.
Speaker 3 (33:34):
Is Andy, almost the seed and the very early stage,
the harbor and the storm at the moment, is that
where you're getting the interest from LPs.
Speaker 5 (33:43):
I think that's right.
Speaker 14 (33:44):
I mean, when you invest as earlier as we do,
and this is often inception stage or very short afterwards,
you are insulated from the global macro a little bit.
And of course there are going to be knock on
effects from the tariffs that will affect maybe some of
our later stage portfolio companies who are thinking about maybe
going out for an IPO in the next year or so.
But I think for the very very early stage, I mean,
it's just given people the steely determination to put their
(34:07):
heads down and to just build.
Speaker 3 (34:11):
I think more broadly, we're thinking about, therefore, where it
is impacting your later stage investments, the follow one investment
that you've given and goodness, I mean, you've been found
in two thousand and four as a VC company, so
you've got long term bits mets coming to fruition. What
are you thinking about the exit market right now? Because Annie,
I'm correct me if I'm wrong here, but a lot
(34:31):
of the exits you've had at Uncork have kind.
Speaker 2 (34:33):
Of been M and A. You haven't had that many
Landmark IPOs.
Speaker 5 (34:37):
Yeah, I mean the IPOs that we talk about.
Speaker 14 (34:39):
Obviously, Fitbit was the first send Grid Poshmark Postmates had
filed for IPO before they were taken out. And I think,
you know, there's been lots of talk in the industry
over the last even like two weeks around you know,
if IPO is on't happening, and if M and A
is still slower, that we're beginning to see kind of
the dripp grip of deals happening again. Actually, a lot
(34:59):
of liquid is probably going to come from the secondary markets,
and I think as early stage investors we have to
be thinking always about how we can begin to realize
liquidity for our investors, because honestly, if we don't give
them capital back, they won't give us more in the future.
Speaker 4 (35:12):
Okay, so let's show the portfolio names you highlighted again.
What do they have in common? When you think about okay,
you want to look at the next great startup at
the early stage.
Speaker 5 (35:21):
But as I read out at the beginning in AI, yeah.
Speaker 14 (35:25):
I mean I think firstly on AI, you know, AI
is pervasive today and it will only become more pervasive.
I think, you know, people are still talking about AI
native startups. I think you wind the clock forward not
very long, and all of a sudden, you know, talking
about AI is going to be talking about cloud where
it's just assumed that you're building using AI. And in
(35:46):
terms of the companies that you highlighted, I think that
really the two things are that you know, these were
early bets on founders that had a particular point of
view on how things should be done. And secondly, they
were opening new markets. I mean people Obviously now think
about Uber Eats and they think about door dash, but
Postmates was the very first on demand food delivery app
in North America.
Speaker 5 (36:08):
That was the first.
Speaker 14 (36:09):
Consumer grade wearable that could track steps and fitness. So,
although you know, these are different types of businesses, different
business models, that kind of one thing kind of runs
through all of them.
Speaker 4 (36:18):
And there's some data that's been doing the rounds on
X and it's about early stage investing and how the
pool is dominated by few players and rec and Sequoia
Vinoden over at Costler. What's that like for you in
that environment where there's a high concentration of activity from
just say half a dozen to a dozen slightly larger firms.
Speaker 14 (36:42):
Yeah, I mean we typically see those as the firms
that will follow on from us. I mean, yes, they
all have seed programs, Yes they're all doing seed investing,
but you know, when you're trying to deploy a multi
billion dollar fund, you can't be slinging two, three, four
million dollar checks all day long.
Speaker 5 (36:56):
So you know, we see them as partners.
Speaker 14 (36:57):
And I think one of the things that we love
about seed investing is that we have our place in
the ecosystem. We can be very collaborative with our co
investors at our stage and then work with the names
that you've mentioned later.
Speaker 5 (37:06):
And I think as I as I.
Speaker 14 (37:07):
Talked before about our challenging opportunity is we have to
be able to pick things before they're obvious.
Speaker 5 (37:13):
As soon as they're obvious.
Speaker 14 (37:15):
A Koestler or an Andresen or a Sequoya will sweep
in and pay big money for it. So for us,
it's all about spotting the things that aren't right aren't
there yet.
Speaker 2 (37:24):
Andy, it's been great speaking with you.
Speaker 3 (37:26):
Thanks Anamclaughlin, Thank you veryone called Capital great to have you. Meanwhile,
let's you stick in the world of VC. Because Washington
actually hosted business leaders and vcs and lawmakers for the
Hill and Valley Forum, the focus on tech and national
security numbers. Amri Horden spoke with Lux Capital managing partner
Josh Wolfe why the rest of the world should not
rely on Chinese AI models.
Speaker 15 (37:46):
The first thing starts with the chips, so we said, okay,
we have to restrict chips unto China. And unfortunately, one
of the great lessons of innovation is that necessity is
the mother of invention.
Speaker 7 (37:55):
So we restrict them.
Speaker 15 (37:55):
They're still going to find ways to route around. Now,
whether deepseek was trained through in a technical tre earn
these diffusion models where they sort of copied some of
the other foundation models and built on them, doesn't matter.
What matters is really efficiently unpresumably less GPUs, meaning they
don't need as many chips. They were able to do
things that some of our best models couldn't do, and
so that was a wake up call to say, is
the future of AI going to be smaller models? Is
(38:18):
the future of AI going to be different chip architecture and.
Speaker 5 (38:21):
How are we going to compete on that?
Speaker 6 (38:23):
Now?
Speaker 15 (38:23):
My own personal view is that open source is going
to be closed source. That these large companies open AI
Andthropic and others that have raised tens of billions of dollars,
most of which have a crue to Jensen and Nvidia
to s he sells the chips that in the future,
what's going to happen is the companies that have the
longitudinal silos of data, meaning people that have a lot
of big data. Big data which everybody was talking about
(38:45):
ten years ago didn't materialize to a lot, are the
ones that we'll be able to use free, open source
models on their proprietary data. So that might be Farmer
companies with their clinical trial data. It might be Bloomberg
with their repository financial information. It might be Meta with
their WhatsApp chat's and Instagram and Facebook posts.
Speaker 7 (39:01):
It might be Elon and Tesla and.
Speaker 5 (39:03):
X with all the Twitter posts.
Speaker 15 (39:04):
So those are the people that I think are going
to be advantaged, and that's what we should be focusing on.
How do we compete with China, not on the chip side,
not on the model side, but on the applications and
the use of the data to actually do stuff.
Speaker 5 (39:15):
On the chip side.
Speaker 16 (39:16):
Though, Jensen wang I caught up in them very quickly
when he was coming into the conference and I asked
him about how far behind is China? And he said,
is China behind? He thinks they're very very close. So
how do we make sure that they don't surpass America?
Speaker 15 (39:32):
Well, I think it's going to be about the use cases.
So number one, we don't want the rest of the
world using Chinese models, because Chinese models will approach an
assymp tote of truth but not truth. There will be
no search about Tenement Square and Hinjang and the Wigers
and these kinds of things and So we want the
world using open models that are made by companies like ours,
like hugging Face, that are the open source repository for
(39:52):
all the best AI models. That to me is something
that trends closer to truth. And those are the kinds
of systems that you want people using AI for. They're
going to come up with their own ship systems. They're
going to come up with less good but much more
number numerous of them, and they're going to find ways
to beat us in that domain. They're going to come
up with their own models again to their own policy
prescriptions and what Chi Jinping wants. The key is how
(40:14):
do we get our kids using it early? How do
we become advantaged as individual humans using AI to be
more productive?
Speaker 4 (40:20):
That was Josh Wolf, managing partner of Lux Capital, speaking
with Amrie Horden.
Speaker 2 (40:32):
Time Now for Talking Tech and First Up.
Speaker 3 (40:34):
Robin Hood saw retail investors that flocked to the financial
service platform as for.
Speaker 2 (40:38):
President Trump's tarifs.
Speaker 3 (40:39):
Really world market companies saw net revenue jump fifty percent
from a year earlier to nine hundred and twenty seven million,
but crypto revenue fell behind, maybe reflected in the stock move.
CEO of lad TENEV spoke with Bloomberg earlier about their
strength in April.
Speaker 17 (40:53):
April's continued to be incredibly strong across the board. I
talked about futures already, but you know, equities and options
are adder near multi year highs and net deposits has
continued to be remarkably strong.
Speaker 3 (41:11):
Plus, Instacart has acquired US grocery e commerce platform win Shop,
the latest acquisition as to the delivery companies growing numbers
of software businesses, which now powers over six hundred brand sites.
Speaker 2 (41:21):
Turns. The size of the deal were not disclosed.
Speaker 3 (41:24):
And Visa says it's enabling AI agents that will help
browse products and make purchases for consumers, cutting the time
and energy customers spend on shopping. We spoke with Visa
CEO Ryan Mcinernie exclusively, who have this to say about
the program.
Speaker 18 (41:39):
What we've announced is a set of tools that give
agents the capabilities to go make payments on your behalf.
Think of that as AI enabled Visa credentials, and also
the rules and the capabilities that will provide trust, trust
that consumers will have in their agents, trust that merchants
are going to have that they're going to get paid
(41:59):
and trust that financial institutions will have that you've actually
empowered your agent to make those purchases on your behalf.
Speaker 3 (42:06):
And you can watch more of that conversation with the
Visa CEO online at Bloomberg dot com.
Speaker 4 (42:11):
Ed that does it for this edition of Bloomberg Technology.
But let's recap the kind of biggest stories in markets.
Microsoft and Meta resilience and strength and growth of their
core businesses while.
Speaker 5 (42:22):
Committing to spend on AI.
Speaker 4 (42:23):
In Vidia now pairing some of its gains after a
Bloomberg exclusive that the US is weighing easing chip export
cubs for Nvidia to the United Arab Emirates. Will continue
to track that story carry throughout the day.
Speaker 3 (42:35):
But we've got so many more earnings to come after
the bell. The all important Apple down three ten percent.
We get that epic loss when it comes to that
fight in the courts regarding the app store, But what
will they say in terms of pull forward from consumers?
Amazon up too and a half percent? Will they deliver
eight percent growth and revenue? And Reddit at more than
four percent? Maybe a read across from Meta there. Do
not forget to check out our podcasts, though you can
(42:56):
find on on the terminal, as well as online on Apple, Spotify,
and iHeart Broombag technology.
Speaker 8 (43:03):
I
From the heart of where innovation, money and power collide
in Silicon Valley and beyond. This is Bloomberg Technology with
Caroline Hyde and Ed Lovelow.
Speaker 2 (00:26):
Live from New York.
Speaker 3 (00:27):
This is Bloomberg Technology coming up. Microsoft surges on the
back of strong quarterly sales and profit growth despite economic uncertainty.
Speaker 4 (00:35):
Glass Meta also jumping on the company's ad sales laying
investor fears about the impact.
Speaker 3 (00:39):
Of tariffs, and Apple takes an epic flow from a
federal judge on its app store sales commissions as the
tech giant gives up.
Speaker 2 (00:47):
For its own earnings later today.
Speaker 3 (00:49):
But first we check in on these markets which are
in risk on mode.
Speaker 2 (00:53):
We're up more than two percent.
Speaker 3 (00:54):
On the nasat one hundred, best day in all of
a week at the moment. As we see those earnings
news flow into the sentiment, we're seeing Bitcoin also up
to two point four percent. Interesting news that Morgan Stanley's e
Trade might be offering bitcoin more broadly crypto to its
retail investor base.
Speaker 2 (01:09):
That's a big one.
Speaker 3 (01:10):
But then dive underneath the hood, what's going on in
the microha.
Speaker 4 (01:12):
Yeah, big technology earnings performance and metters the place to
start right This is a big gain and the story
really simple. Outlook of the core business for the current period,
strong raising the guidance for the range and capital expenditures,
commitment to advanced compute access across the company. But there
is a nuance there that also the higher cost of
doing business because of tariffs is having an impact. Great
(01:33):
discussion ahead and then Microsoft waf look at the gain
thirty three percent top line growth on Azure Cloud. Also
discussion about the commitment to spend on data center, but
there is some evidence that all of the prior investment
is now materializing in the spend on their cloud business.
Speaker 5 (01:48):
Let's get some more Microsoft's results.
Speaker 4 (01:50):
Ted Mortenson, managing director at Baird thirty three percent top
line Azure growth is four percent beyond what the street said.
But within that there's a sixteen percent content ttribution from AI.
Those too many are just numbers, but they do seem
to be evidence that the investment to date is now
start as translate to top line game.
Speaker 6 (02:10):
You nailed and thanks for having me. The bottom line
of if you look at that, that's actually thirty five
percent in constant currency, and what Amy Hood alluded to
is most of that upside is just the Global two
thousand migrating to cloud, and right now on Azora they
can't even keep up with demand. On Jenni, that guide
of thirty four to thirty five percent was way above
(02:31):
the street.
Speaker 3 (02:33):
Let's talk about unable to satisfy current demand. There's an
interesting is it caution coming from Microsoft that, look, they're
willing to be underserving in terms of supply because they
are starting to normalize their spend in terms of capital expenditure.
Speaker 6 (02:50):
I think they're trying their best to provision a lot
of this next generation equipment, specifically Navidio GPUs. There is
just so much much demand. If you even look at
some of the metrics that open ai put out last
week of having a run rate of one hundred and
seventy four billion in revenues, the demand is just outstripping demand. Supply,
(03:13):
plane and simple, and their provision of new data centers
with this next generation GENAI stack infrastructure is just agents
can't keep up with demand. And that's a very good
problem to have.
Speaker 2 (03:26):
Yeah, so can we strip away that noise?
Speaker 3 (03:28):
We had note after note, analysis after analysis that in
some way Microsoft was curtailing data centers, whether it be
through leases or renegotiation, is that happening or is this
the ebb and flow of doing business TEED.
Speaker 6 (03:41):
I think on the call they tried to get to
the root cause of this misinformation. I think you got
a lot from the Cell side that fiscal twenty six
capex will moderate, it can't go at the same level
at twenty four to twenty five when they were building
long term assets, and they define long term assets as
data with the shelf life of about fifteen years. Those
(04:03):
are shells and the other shells that they're building, you know,
they have to be hooked up to utilities. And I
think the big thing that the Street was kind of
missing is time to power. They are somewhat restricted on
these next generation data centers just getting the power capacity
needed to fuel the GENAI loads. So fiscal twenty six
(04:27):
will moderate, it's normal. It can't grow at fifty percent
plus forever. And I think where the Street maybe got
it wrong with some of the analysts on the ED side,
that we're picking up some weakness and you know, quite frankly,
that's a good data check, but probably not put in
the right context if you understand core technology and what's
(04:49):
happening in a gentaki.
Speaker 4 (04:53):
Ted my relationship with Microsoft is I grew up learning
how to use computer on their operating system and more
recently I'm a gay. Two pieces of news out today.
One Xbox price is going up because not just on
the hardware, by the way.
Speaker 5 (05:06):
On the titles themselves, because of tariffs.
Speaker 4 (05:09):
But I always go to the Bloomberg terminal look at
the split of cloud and just like software revenues, they're
still quite good at selling software that you can otherwise
get for free somewhere else.
Speaker 5 (05:18):
Is that fair?
Speaker 6 (05:20):
That's fair? And I think you know you look at
you look at Microsoft, and they have a huge advantage
as well as Oracle in relationship to the other cloud titans,
whether it be a Meta, Google or Amazon. They already
have the enterprise customer. So when you control the enterprise
customer to begin with from previous revisions of whether it
(05:42):
be you know, Excel, Word Outlook. And now you know
you have a CEO Sat Nadela, which is a visionary
in tech that should be at the top of the
list of CEOs that actually get the migration to jenn Ai.
Now you can leve entire base through Jeni. And what's
(06:04):
different on Microsoft that I think they brought this up
on previous calls is Microsoft has a Jeni steck that
they've created over the last of multiple years that's extremely
it's written once, it's unbelievably scalable, and when you leverage
apps on top of that, you've got a model that
(06:26):
if you can.
Speaker 5 (06:26):
Touch okay, you let me jump in real quick.
Speaker 4 (06:29):
While this is all happening, Microsoft are being contributor. The
nastack's now pushing to two percent s and P five
hundreds pushing higher. A big part of that, I know
Microsoft's not sort of where it was at the open,
but it was on track for its biggest gain since
twenty twenty. And I think that for all the sort
of negative sentiment around the world about cloud computing and tariffs,
it's pretty astonishing moment in time in the earnings context.
Speaker 5 (06:50):
Isn't it. Yeah?
Speaker 3 (06:51):
And I think therein lies what's phenomenal about this guidance
tad is the fact that we got it and what
is it that we're starting to see. Is it that
come despite macroeconomic headwinds. Just see the shift, whether it
be to on prem to the cloud, whether it's movement
from non GENI to Jeni, is just so mission critical
that they have to stick with Microsoft right.
Speaker 7 (07:11):
Now, that's the right question.
Speaker 6 (07:14):
I mean there's two aspects. All those Global two thousand
has to migrate to cloud to lower cost, and that's
that's what you do in a recessionary or a decreased
growth environment. More importantly, what Microsoft said on their call
last night was a little bit eye opening on the
guide of Azora being up thirty four to thirty four,
(07:35):
thirty four to thirty five percent next quarter. Yeah, christ
and you're bringing the cost down on these models two
X and their tokens, the Geni agent tokens are off
almost fifty percent. So the street had this huge debate
on ROIC return on invested capital. Well, Microsoft's reducing costs
(07:56):
of Jeni for broad adoption. And if you're sure, if
you're in the s and P five hundred, if you're
not migrating to Jenny I, you put your whole model
at risk from operating margin perspective.
Speaker 3 (08:09):
Ted Mortenson, bed Managing Director, fantastic to have your voice today,
Thank you. Let's just shift to meta now because shares
are also jumping following really resilient ad sales in the
face of Taris sick.
Speaker 8 (08:19):
Listen, we've had a strong start to the year. Our
community keeps growing, with more than three point four billion
people now using at least one of our apps each day.
Our business is also performing very well, and I think
we're well positioned.
Speaker 5 (08:38):
To navigate the macroeconomic uncertainty.
Speaker 3 (08:42):
Mark Zuckerberg talking about the ability to navigate. Let's get
up to Evercore. I I scene managing director Mark Mahaney
now and I pick up where.
Speaker 2 (08:49):
Ted left us.
Speaker 3 (08:51):
The return on investing capital is this bearing dividends? Is
the integration of generative AI throughout the ad offering vindicating
that spending that actually they are for this year because
of tower of costs.
Speaker 9 (09:04):
Well, Carolina give you a couple of points on this,
you know one, I think a meta is proving to
show that at the app layer, the application layer, that
you can get a good ROAI return on you know,
AI spend. I thought the way Zuckerbird laid out their
earnings call last night, the five areas of focus for
AI for the company, and then the returns they're getting
(09:24):
kind of within each areas of those focus and one
of the they're used the applying AI.
Speaker 7 (09:30):
To improve their ads platform.
Speaker 9 (09:31):
Well, the application of AIS allowed conversion rates to rise
about five percent, which is a big number for an
ad platform.
Speaker 7 (09:38):
That's that huge.
Speaker 9 (09:39):
On the user side, they're trying to improve engagement, They're
trying to make the content more personalized, more relevant. Well,
they were able to show that the application of AIS
led to a seven percent six percent increase in time
spent on both Instagram and on on Facebook. So yeah,
I think they're proving that they can use AI to
improve the service and actually anetize it like you can
(10:01):
get a return on other AI spent. I want to
be careful though, I think extrapolating from Meta to other
companies it's a tricky thing to do.
Speaker 7 (10:07):
One very few companies have spent as.
Speaker 9 (10:09):
Much money and as effectively as Meta has, and then
Meta's advertising platforms just more resilient. I'm not at all
sure that these companies are out of the weeds, are
out of the danger right on when it comes to
the impact of tariffs.
Speaker 4 (10:20):
So their argument, right is that the time spent metrics
or evidence of the resiliency and like tough economic environment.
I felt like this story evolved over the course of
this statement, hitting to the end of the call, and
this is the quote from Susan Leon. Why so the
Capex range gets raised, and we're all thinking commitment to AI,
even though they said it goes to the cause of business.
Then Susan gets asked about tariffs and this is the answer.
(10:44):
The higher cost we expect to incur for infrastructure hardware
this year really comes from suppliers who source from countries
around the world. Goes on to explain uncertainty relating to
trade negotiations. We're working on mitigations. The Capex range got
raise because it's more expensive for them to build the
data centers.
Speaker 7 (11:01):
Mark ed you just you nailed it. I think that's
absolutely true.
Speaker 5 (11:06):
I mean today, keep going, mom, thank you.
Speaker 7 (11:09):
I think there are two reasons.
Speaker 9 (11:10):
One is that I think they are getting more aggressive offensive.
They've seen the return that they're getting on their aisvan
and they're leaning into it more. The second reason, however,
is that costs a rising. And I don't know if
you noticed this, d but she was very careful never
to use the.
Speaker 7 (11:22):
T word I eat tariffs.
Speaker 9 (11:23):
I didn't use it's a political Yeah, it's a political
statement these days, and nobody wants to get involved in politics,
so so she was very careful about how.
Speaker 7 (11:31):
She answered that. But yes, the costs of tariffs.
Speaker 9 (11:34):
Are attacks their inflationary, and if you're buying a lot
of infrastructure hardware like Meta clearly is and some of
the other hyperscalers, by the way, your costs are going up.
So my guess is that Amazon may have to raise
its CAPEX, and Google's going to come back to us
and having to raise its capex, and Microsoft next year
will probably have to raise its CAPEX numbers because the
infrastructure costs a rising.
Speaker 4 (11:54):
Look, Susan Lee was employee number forty at Meta. She's
a CFO, but she gets the business, and what she
was explaining was that the compute needs are across the business.
In other words, we're not just doing this for the
training of a frontier model. They've got people in marketing,
they've got people in the ad development business that are demanding.
Speaker 5 (12:11):
For access to the computes.
Speaker 4 (12:13):
Do you have conviction that Susan Lee is getting that
right in the numbers that she gave you last night.
Speaker 7 (12:19):
Yeah, I think so.
Speaker 9 (12:21):
Look, we've had three years now of the of really
aggressive deployment of AI too to boost the ads business,
to boost to boost the platform for advertisers and for users,
but also to roll out some new things like Meta
AI and then meta AI devices maybe ray band, meta
ray bans maybe, and also to boost the WhatsApp business.
(12:44):
And so I think they've shown that they can get
a good return on this. I mean they're good cutthroad
capitalists like a couple of these other companies, and I
think they're making rational business decisions. They're probably leaning a
little bit more heavily than other companies, but it's paying
off for them. I think you'll see other companies look
at what Meta has done, and I think they're going to.
Speaker 7 (12:59):
Lean into AI as well.
Speaker 9 (13:00):
I know we kind of drifted away from the AI
revolution earlier this year. I think we're going to come
back to it. I think Meta's going to give us
good reasons to do that.
Speaker 3 (13:07):
Yeah, they're bringing out Meta AI app as a standalone.
We've seen also the levers being pulled in terms of
advertising when it comes to threads. How does that filter
into WhatsApp and other offerings more broadly marked But you
said you can't read across from Meta into perhaps other
social media companies like Snap because Meta ends up being
like the port of safety in that respect, But read
across to Amazon in terms of cloud, and indeed you
(13:30):
say that Amazon might have to raise their spending on
infrastructure spending in that respect, But where else does AWS
takers in terms of growth?
Speaker 9 (13:38):
Well, I just think if it's if it's if the
infrastructure hardware is more expensive for Meta, it's more expensive
for everybody, And so that's going to be the case
with Amazon too. I think they're going to they may
well have. I mean, I think the direction of AWS capex.
Speaker 7 (13:51):
Is going to go up in unless you know, but
things could.
Speaker 9 (13:55):
Change quickly in this tariff environment, folks. For now, those
hardware costs are going higher, and so that's going to
probably be reflected in rising capex spending. And then just
a point on Meta, I think their model is more resilient. Also,
we haven't really seen the dramatic economic dislocation. Our checks
start indicated that you started to see some adverticals really
(14:16):
softened in the month of April. We still have the
whole year ahead of us. So I'm you know, I
don't think. I don't think metas out of the woods.
My only point is that relative to almost every other
AD platform, they're more insulated, they're more resilient than anybody else.
But you know, even if there's a sharp economic downturn,
They're not going to be immune to it.
Speaker 3 (14:36):
And market's the Chinese retailers that pull back an ad spending.
What about Amazon's e commerce business, I.
Speaker 7 (14:44):
Think that's going to be tbd. I think the March
quarter is going to be fine.
Speaker 9 (14:47):
Google gave us a fine March quarter, Metais did, and
I think Amazon will too. We haven't seen any sharp
fall off yet in consumer spend, but prices are rising.
They're going to be rising materially. Those dolls are going
to be more expensive on Amazon, and and so exactly
how Amazon handles that, whether they're going to eat margins
or defend market share. And my guess is that knowing Amazon,
(15:08):
they're going to defend their market share, so they're gonna
they're gonna be willing to uh to take a hit
hit to margins. So that could be a downside to
the stock. So it depends prices arising on Amazon. That's
not a good thing for the Amazon ecosystem.
Speaker 4 (15:21):
Mark Behiney, ever, COSI senior managing director, could have you
back on the show, Thank.
Speaker 7 (15:25):
You very much.
Speaker 4 (15:26):
Now coming up, Qualcomm becomes the latest chip maker to
offer a cautious sales outlook in the face of trade uncertainty.
We'll have more in the company's earnings next. This is
Bloomberg Technology breaking news that's moving markets. Bloomberg reporting the
(15:50):
US is weighing a potential easing of restriction on Nvidia
sales to the United HOURRA memorates. That's according to sources,
who say President Trump could announce the start of work
on a bilateral chip deal during his upcoming trip to
the Gulf. Nothing has been decided officially, according to our sources.
They emphasize that the debate over chip trade rules for
the UAE and other countries remains ongoing in Washington, but
(16:13):
the stock spiking on that report to a session high
of five percent. Competition for Nvidia closes a home. Investors
are going to be playing close attention to Amazon's AI
business when the company releases its earnings later today. A
key part of its AI growth strategy is Trainium, the
company's custom design chip. I've got a tour of the
AWS facility where they're made and designed. Have a look
(16:35):
at this. This is aws Anda Perna Labs in Austin, Texas.
Amazon does all of its custom AI chip design in
the US. Most of it happens here. Amazon bought and
a Perna ten years ago. Today, the team designs and
tests custom hardware and software that power AWS data centers worldwide.
We looked at Trainium, Amazon's AI chip for training and
(16:55):
inference and a Perna doesn't just design the chip, They
oversee computer electric called mechanical, thermal, and software engineering for
the entire server. AWS sales reps focus a lot on
price for performance to win business for the chip. So
today Trainium two delivers up to four x the performance
of Gen one that required reducing component count, improving power,
(17:16):
calling and networking across the server. In Austin, there's a
quiet lab for chip validation testing from the wafer level
to boards.
Speaker 5 (17:23):
Then there's the noisy.
Speaker 4 (17:24):
Room where full servers are stress tested. Trainium still in
its infancy, but it helps reduce Amazon's reliance on AI
chip leader Nvidia. It could also give AWS more control
of its own destiny in the market that Nvidia dominates.
Next up is Trainium two at scale. Project Rainier, built
with Anthropic will run hundreds of thousands of these chips,
(17:45):
and that project goes live this year.
Speaker 3 (17:47):
Let's deal with chips and in fact the work perform
on the nast that one hundred is qual Con this
after the biggest maker of chips for smartphones gave a
soft revenue prediction for the current quarter. A mid concerns that, look,
taras could hurt demand for more. Let's bring in Bloem
megs Ian King. I feel for Cristiano and Qualcom because
they've beat on the previous quarter.
Speaker 2 (18:06):
But it really is that sort of middling guide.
Speaker 10 (18:09):
Yeah, I know, you're absolutely right. The guide at the
top end wasn't bad, right, I mean, it's really all
they've done is say what everybody else said, which is, hey,
we had a really good quarter. Things are going okay
for us. Look but we were doing better than even
what we said. Well, you know, maybe we're not so
sure about what's going forward and these things are beyond
our control. Everybody else said the same thing, but they're
(18:32):
getting beaten up a lot harder.
Speaker 4 (18:33):
Ian very quickly Qualcomm Android in China, what was the story?
Speaker 10 (18:38):
Yeah, I mean this is really important. This is a
massive market for them, so in a way they're a
test case. Like more than forty percent of their business
comes from China. They said it went well.
Speaker 3 (18:48):
Well, we keep an eye on China and the business
they're Blouem magazine can keeping it short for us as well.
Speaker 2 (18:53):
We love it.
Speaker 3 (18:53):
Meanwhile, Roadblocks reporting earnings before the bell, and a large
of them expect to jump in active users for the
first quarter, fitting from efforts maybe to attract new players
and keep as they grow older and using the service longer.
So as you see up four percent intelligence, Senior analyst
Manly singers, hey with us, and this is a company
that is managing to steer us for growth again in
(19:14):
spite of macro uncertainty.
Speaker 2 (19:15):
They've got the users there.
Speaker 11 (19:16):
Yeah, I mean, I think Roadblocks is a defensive name,
like a Netflix is where people still need entertainment, and
you know, in this case they cater to the younger demographic,
the thirteen year olds and look now older older as well,
and they have that native content. So when you think
about you know why TikTok did so well because they
(19:38):
had the creators. Gaming creators are on Roadblocks. This is
the platform where they create the content and in this case,
they have a very successful model in terms of payouts
that they give to those creators. So it's all user
generated content. They don't have to spend a lot in
terms of getting branded content and you know, paying content costs,
(19:58):
and look, it's a very small company when it comes
to the hours spent on the platforms eighty billion plus
hours annually. Compare that to Netflix one hundred billion around,
and they monetize very less compared to all the other
platforms that are out there. So from that perspective, I
would say there is so much room to monetize that
(20:18):
hours spent on roadblocks. I mean, there's still a five
billion dollar revenue run rate company at the end.
Speaker 4 (20:23):
Of the day through advertising and licensing. Blueberg Intelligence Senior
and Lissman Deep saying thank you very much.
Speaker 3 (20:36):
Let's check in on the shares of Tesla because with
a chair, Robin Dunham has been denying reports from the
Wall Street Journal that allege the company was looking to
replace Elon Musk as its CEO.
Speaker 2 (20:47):
We're currently at one point seven percent. A strong denial.
Is that smoke without father away.
Speaker 4 (20:51):
Yeah, that is the critical question. All you need to
do is go to Tesla's regulatory filings form ten K
and they spell it out very clearly, this idea about
key man risk. Every single regulatory filing has that Elon Musk.
They are highly dependent on his services. They acknowledge that
he spends time at all these other companies. I know
(21:12):
that succession planning is always in the background of the
Tesla board.
Speaker 5 (21:17):
That's the role of corporate governance exactly.
Speaker 4 (21:19):
I think what's interesting is I continue to hear that
Elon Musk also plans to spend a lot more time
on XAI.
Speaker 5 (21:26):
Right, that's a.
Speaker 4 (21:27):
Really big project for him, a priority because he wants
it to be competitive against open Ai for obvious historical
reasons and anthropic But this is a clear denial by
Tesla posted on x to the official Tesla account, citing
the chair of the report that the board was looking
to find a replacement, not clear of succession or a
reaction to the state of this year.
Speaker 3 (21:47):
I mean, don't you think it'd be a failure of
corporate governance if at some point they weren't thinking who
on earth could if forced to lead a business such
as test.
Speaker 4 (21:55):
What people forget is that beyond Elon must there are
many other generals of the company running the place data
and the company is still the leader in many of
the fields it's in.
Speaker 3 (22:03):
He's a good delegator, right, Welcome back to Blue Meg Technology.
Speaker 2 (22:13):
I'm karent hid an Eli.
Speaker 5 (22:14):
I'm Med Lovelow right next to you.
Speaker 4 (22:15):
Let's talk about some of the biggest movers in markets,
and it continues to be Microsoft.
Speaker 5 (22:19):
Actually from a sort of points.
Speaker 4 (22:21):
Perspective and percentage perspective, the story is simple top line
growth on its cloud unit of thirty three percent beyond
what the streets saw, the evidence that all that spending
on AI development is translating into sales, and that is
a pretty clear image on your screen. Away from kind
of the earnings context, there is also litigation and antitrust
(22:41):
consideration into other names. Right we are, of course talking
about Alphabet, the parent of Google and Apple. We're going
to get into detO on those stories. But I think
interesting that Apple basically flat.
Speaker 5 (22:52):
We acknowledge that.
Speaker 4 (22:53):
It's treading water, probably ahead of earnings after the bell
carrier Alphabet.
Speaker 5 (22:57):
I don't know, I don't draw a cause or link.
Speaker 3 (22:59):
There's see that and see maybe it's the meta numbers
and what that feeds into advertising resiliency. But we also,
of course got a very strong pushback from Peachi, of course,
the leader of Alphabet and Google, against any sort of
de facto breakup of the company. As we consider remedies
toward is deemed a monopoly place within search. Leon Niyhlan's
here to break it all down in court. Finally, Snapitchai
(23:21):
getting up there and saying, look, any of these remedies,
whether it's sharing our data or that it's actually spinning
off Chrome, you're breaking us apart and it's too much.
Speaker 12 (23:30):
Yes, So he took this doan yesterday in the Justice
Department's trial. This is the three week trial that's supposed
to determine what the remedy is for Google's illegal online
monopoly in search. The Justice Department has proposed, as you mentioned,
that Google be required to spin off the Chrome browser,
and also that it be required to share a lot
(23:50):
of the data that it collects about users and the
web with rivals. And Sandar Pashai pushed back on that
remedy in particular pretty hard. He said, you know that
while not an actual breakup, would be the facto breakup
of the company, because it would allow all of their
rivals to effectively reverse engineer their technology and use all
(24:12):
of the sort of things that Google has built up
over the past several years to gain its sort of
share in in search.
Speaker 4 (24:19):
Lee I said that Apple stock was flat because it's
treading water ahead of the market closed when it does earnings,
maybe there's downward.
Speaker 5 (24:25):
Pressure from a critical court decision.
Speaker 4 (24:28):
A federal judge ruled the Apple violated court orders by
not opening up the app store to third parties. You've
been tracking that story as well. What are the need
to know details about it?
Speaker 5 (24:39):
Yeah, so this.
Speaker 12 (24:40):
Goes back to the long running litigation between Apple and
Epic Games, maker of Fortnite, which sued the company back
in twenty twenty over its app store, and even though
it lost most of the counts in that case, the
judge did find that Apple's app store a violated California
state law against over antitrust and ordered Apple to make
(25:02):
some changes to its app store policies, in particular allowing
developers to link out, i e. Make it easier for
users to buy digital goods and services on their own
websites as opposed to within Apple's ecosystem. Apple didn't really
love this, introduced some new policies in January of last
(25:23):
year that it was still going to charge a twenty
seven percent commission on things that people purchased outside of
the app Store if they took advantage of these links well,
Epic complained. The judge held a series of hearings both
last year and this year and found that the changes
that Apple made were deliberately anti competitive. She said in
(25:43):
a very blistering opinion that was released late last evening.
She said, you know, every single time Apple had a choice,
it chose the most anti competitive option. And on top
of that, she found that some of the executives who
testified at the hearing lied on the stand, and she
recommended that the federal government open a investigation into whether
(26:03):
they should be held liable for criminal contempt.
Speaker 3 (26:06):
Right, I mean on fire was Gonzales Rogers saying that
if they thought that this court would tolerate such insubordination,
it was a gross miscalculation. Apple comes back earlier and says,
we strongly disagree with this decision and we're going to
appeal it.
Speaker 2 (26:22):
So what next?
Speaker 12 (26:24):
Yes, so Apple is going to appeal. She said in
her decision that Apple needed to make immediate changes. They
are likely going to try and appeal that to the
Ninth Circuit to put that on hold at least through
the appeals.
Speaker 2 (26:36):
In this we'll see if the Ninth.
Speaker 12 (26:37):
Circuit agrees, because they have already reviewed this case one
time and found earlier that her decision, you know, was solid,
so they could put this on hold while Apple appeals.
If they do, you know, it's going to go through
the appeal process and we will not probably have a
decision until sometime mid to early next year. Or they
could say, you know, this should have gone into effect
(26:58):
last year and so so they could let it go
into a factor while Apple appeals.
Speaker 5 (27:04):
Bloomberth Leon Eilan out of DC, Thank you very much.
Speaker 4 (27:07):
Let's get more on Apple, but specifically what investors expect
from its earnings report later today.
Speaker 5 (27:12):
That's bringing Carolyn A. Milanates.
Speaker 4 (27:13):
She's the president and principal analyst of creative Strategies. Bloomberg's
Mark German, who let's just be honest, is that is
probably the leading correspondent and journalists covering Apple in the world, says,
don't look back at.
Speaker 5 (27:26):
The quarter gone or the numbers.
Speaker 4 (27:29):
It's really about the long term and what Apple communicates
on how it adjust supply chains in the face of
trade policy presently, what is your thesis on that.
Speaker 13 (27:40):
I agree with Mark, It's really about what Apple is
able to do from a manufacturing perspective, supply chain perspective
to make sure that they are not subjected to whatever
the administration decides to do. On the tarist side, we
know that they are planning to shift their production to
(28:01):
India as far as iPhones that are coming to the US,
but that doesn't happen overnight, So anything that they're able
to disclose, and obviously Apple always keeps their car very
close to their chests and things like this, but the
street needs reassurance that they have a plan and it's
the same Fai.
Speaker 4 (28:21):
Actually, Apple is historically the master of the bottom line, right,
profit and margins, irrespective of what's happening around the world.
But it's likely I think you and I discussed this
the last time you're on the show. India long term
flying handsets out of that nation into the United States.
(28:41):
It all costs money moving something from place A to
place B.
Speaker 5 (28:47):
How do you see them explaining.
Speaker 4 (28:49):
Their ability to protect themselves from those costs.
Speaker 13 (28:54):
There's a couple of things. One is that this is
team's cook, bread and butter. He is an operational guy.
He has been entrench in supply chain organization for a
very long time.
Speaker 5 (29:07):
Is also a very good diplomat.
Speaker 13 (29:09):
So I think that while moving supply chain and production
to India is one of the core things that they
can do. Is also very good at dealing with politics,
whether it is at home or in China. So I
think these are the other thing that we'll see happening.
But we also have to remember that Apple is becoming
(29:30):
more dependent on revenue coming from services, and so we
might see some give from a price perspective on the
actual phones and other devices, thinking that they can recoup
some of that from the services side.
Speaker 3 (29:46):
Now it might be a good diplomat, but many might
feel that potentially they have dropped the ball from.
Speaker 2 (29:50):
An AI perspective.
Speaker 3 (29:51):
Carolina, and I've got one note land in my inbox
coming up from Linked Secuities.
Speaker 2 (29:56):
I think that Apple is struggling to stay relevant. Is
that to much of.
Speaker 3 (30:00):
An assumption to be making right now? Because of Syrian
and the lackluster rollout of Jenny.
Speaker 7 (30:05):
I look at the end of.
Speaker 13 (30:08):
The day, I think that what people are picking up
is the fact that Apple made promises from an AI
perspective and they're not delivering quite yet. That's a reality.
Speaker 5 (30:17):
What is a reality as well, is.
Speaker 13 (30:19):
That consumers are still not going into a store asking
for something that is AI driven, and they're still very
much focused on hardware when they're looking specifically as smartphones.
So there is some grace when it comes to the
opportunity that Apple has. But it is interesting to see
the exignment around the statement the pitch I made yesterday
(30:42):
of the day before, around Jemy and I get into
Apple before the end of the year.
Speaker 3 (30:46):
Yes, so that cross pollination. Look, maybe that's AI winning
out for Apple longer term. They don't always do it first,
but my goodness, they are not doing it best in
the longer term, Karentina, Do people have the bandwidth to
hold on to that view?
Speaker 2 (31:00):
I think so.
Speaker 13 (31:01):
I think that there's going to be two realities. One
is the Apple and sire and what Apple Intelligence itself
is going to deliver it to consumer is much more personal.
Speaker 2 (31:11):
But what people are.
Speaker 13 (31:12):
Really excited about now is the more general AI and
that's where Jemmy and I, CHAGBT and the other providers
come in. And to your point, Apple does usually come
in later in the market with a solution that then
pleases consumers because of the way that they package it together.
Speaker 4 (31:32):
You're both making historic references to BlackBerry and the smartphone market.
I think what's the one area where Apple is is
indisputably King.
Speaker 2 (31:44):
Oh, I think it's simplicity.
Speaker 13 (31:47):
To be honest with you, is the fact that at
the end of the day, when talking about packaging things together,
that when they deliver it to consumer, the you know,
the simplicity they used to deliver that solution is what
is an I've seen consumers to stay wherever they are.
And the other one is obviously marketing.
Speaker 2 (32:05):
They're good at that. We have to see how much
they can dial.
Speaker 3 (32:07):
Up that services side of the equation throughout Carolina Milanaisy.
So it's great to have your president and principal analyst
at creative Strategies coming up. Uncourt Capital it raises three
hundred million dollars if it searches for the next big
AI startup. When you speaking with a managing partner, Andy McLoughlin,
that's next, there is a Bloomberg technology.
Speaker 4 (32:34):
Uncourt Capital has just raised three hundred million dollars that
will be spread across two funds. The early stage investment
firm who made a name backing the likes of Poshmark, Postmates,
event Bright, and Fitbit, are looking for its next big startup,
focusing on AI for more. Andy McLaughlin, Uncourt Capital managing
partner joins us. Now, Caroline and I have noticed something.
Speaker 5 (32:55):
Let's start here.
Speaker 4 (32:56):
Every day, literally the daily cadence, we are delivering news
about a new fund that's closed. What is the big
picture macro driver of that activity, Andy, and in your case,
specific to you.
Speaker 14 (33:09):
That's a great question, know, and I think it really
comes down to LPs so investors in funds looking for
ways to deploy capital into managers who have a knack
and a history and a track record of having found
kind of breakout companies before they were obvious. And I
think as seed investors, that's what we have to be
well class at. We have to be able to see
(33:30):
around the corner and see the things that most other
people can't see.
Speaker 3 (33:34):
Is Andy, almost the seed and the very early stage,
the harbor and the storm at the moment, is that
where you're getting the interest from LPs.
Speaker 5 (33:43):
I think that's right.
Speaker 14 (33:44):
I mean, when you invest as earlier as we do,
and this is often inception stage or very short afterwards,
you are insulated from the global macro a little bit.
And of course there are going to be knock on
effects from the tariffs that will affect maybe some of
our later stage portfolio companies who are thinking about maybe
going out for an IPO in the next year or so.
But I think for the very very early stage, I mean,
it's just given people the steely determination to put their
(34:07):
heads down and to just build.
Speaker 3 (34:11):
I think more broadly, we're thinking about, therefore, where it
is impacting your later stage investments, the follow one investment
that you've given and goodness, I mean, you've been found
in two thousand and four as a VC company, so
you've got long term bits mets coming to fruition. What
are you thinking about the exit market right now? Because Annie,
I'm correct me if I'm wrong here, but a lot
(34:31):
of the exits you've had at Uncork have kind.
Speaker 2 (34:33):
Of been M and A. You haven't had that many
Landmark IPOs.
Speaker 5 (34:37):
Yeah, I mean the IPOs that we talk about.
Speaker 14 (34:39):
Obviously, Fitbit was the first send Grid Poshmark Postmates had
filed for IPO before they were taken out. And I think,
you know, there's been lots of talk in the industry
over the last even like two weeks around you know,
if IPO is on't happening, and if M and A
is still slower, that we're beginning to see kind of
the dripp grip of deals happening again. Actually, a lot
(34:59):
of liquid is probably going to come from the secondary markets,
and I think as early stage investors we have to
be thinking always about how we can begin to realize
liquidity for our investors, because honestly, if we don't give
them capital back, they won't give us more in the future.
Speaker 4 (35:12):
Okay, so let's show the portfolio names you highlighted again.
What do they have in common? When you think about okay,
you want to look at the next great startup at
the early stage.
Speaker 5 (35:21):
But as I read out at the beginning in AI, yeah.
Speaker 14 (35:25):
I mean I think firstly on AI, you know, AI
is pervasive today and it will only become more pervasive.
I think, you know, people are still talking about AI
native startups. I think you wind the clock forward not
very long, and all of a sudden, you know, talking
about AI is going to be talking about cloud where
it's just assumed that you're building using AI. And in
(35:46):
terms of the companies that you highlighted, I think that
really the two things are that you know, these were
early bets on founders that had a particular point of
view on how things should be done. And secondly, they
were opening new markets. I mean people Obviously now think
about Uber Eats and they think about door dash, but
Postmates was the very first on demand food delivery app
in North America.
Speaker 5 (36:08):
That was the first.
Speaker 14 (36:09):
Consumer grade wearable that could track steps and fitness. So,
although you know, these are different types of businesses, different
business models, that kind of one thing kind of runs
through all of them.
Speaker 4 (36:18):
And there's some data that's been doing the rounds on
X and it's about early stage investing and how the
pool is dominated by few players and rec and Sequoia
Vinoden over at Costler. What's that like for you in
that environment where there's a high concentration of activity from
just say half a dozen to a dozen slightly larger firms.
Speaker 14 (36:42):
Yeah, I mean we typically see those as the firms
that will follow on from us. I mean, yes, they
all have seed programs, Yes they're all doing seed investing,
but you know, when you're trying to deploy a multi
billion dollar fund, you can't be slinging two, three, four
million dollar checks all day long.
Speaker 5 (36:56):
So you know, we see them as partners.
Speaker 14 (36:57):
And I think one of the things that we love
about seed investing is that we have our place in
the ecosystem. We can be very collaborative with our co
investors at our stage and then work with the names
that you've mentioned later.
Speaker 5 (37:06):
And I think as I as I.
Speaker 14 (37:07):
Talked before about our challenging opportunity is we have to
be able to pick things before they're obvious.
Speaker 5 (37:13):
As soon as they're obvious.
Speaker 14 (37:15):
A Koestler or an Andresen or a Sequoya will sweep
in and pay big money for it. So for us,
it's all about spotting the things that aren't right aren't
there yet.
Speaker 2 (37:24):
Andy, it's been great speaking with you.
Speaker 3 (37:26):
Thanks Anamclaughlin, Thank you veryone called Capital great to have you. Meanwhile,
let's you stick in the world of VC. Because Washington
actually hosted business leaders and vcs and lawmakers for the
Hill and Valley Forum, the focus on tech and national
security numbers. Amri Horden spoke with Lux Capital managing partner
Josh Wolfe why the rest of the world should not
rely on Chinese AI models.
Speaker 15 (37:46):
The first thing starts with the chips, so we said, okay,
we have to restrict chips unto China. And unfortunately, one
of the great lessons of innovation is that necessity is
the mother of invention.
Speaker 7 (37:55):
So we restrict them.
Speaker 15 (37:55):
They're still going to find ways to route around. Now,
whether deepseek was trained through in a technical tre earn
these diffusion models where they sort of copied some of
the other foundation models and built on them, doesn't matter.
What matters is really efficiently unpresumably less GPUs, meaning they
don't need as many chips. They were able to do
things that some of our best models couldn't do, and
so that was a wake up call to say, is
the future of AI going to be smaller models? Is
(38:18):
the future of AI going to be different chip architecture and.
Speaker 5 (38:21):
How are we going to compete on that?
Speaker 6 (38:23):
Now?
Speaker 15 (38:23):
My own personal view is that open source is going
to be closed source. That these large companies open AI
Andthropic and others that have raised tens of billions of dollars,
most of which have a crue to Jensen and Nvidia
to s he sells the chips that in the future,
what's going to happen is the companies that have the
longitudinal silos of data, meaning people that have a lot
of big data. Big data which everybody was talking about
(38:45):
ten years ago didn't materialize to a lot, are the
ones that we'll be able to use free, open source
models on their proprietary data. So that might be Farmer
companies with their clinical trial data. It might be Bloomberg
with their repository financial information. It might be Meta with
their WhatsApp chat's and Instagram and Facebook posts.
Speaker 7 (39:01):
It might be Elon and Tesla and.
Speaker 5 (39:03):
X with all the Twitter posts.
Speaker 15 (39:04):
So those are the people that I think are going
to be advantaged, and that's what we should be focusing on.
How do we compete with China, not on the chip side,
not on the model side, but on the applications and
the use of the data to actually do stuff.
Speaker 5 (39:15):
On the chip side.
Speaker 16 (39:16):
Though, Jensen wang I caught up in them very quickly
when he was coming into the conference and I asked
him about how far behind is China? And he said,
is China behind? He thinks they're very very close. So
how do we make sure that they don't surpass America?
Speaker 15 (39:32):
Well, I think it's going to be about the use cases.
So number one, we don't want the rest of the
world using Chinese models, because Chinese models will approach an
assymp tote of truth but not truth. There will be
no search about Tenement Square and Hinjang and the Wigers
and these kinds of things and So we want the
world using open models that are made by companies like ours,
like hugging Face, that are the open source repository for
(39:52):
all the best AI models. That to me is something
that trends closer to truth. And those are the kinds
of systems that you want people using AI for. They're
going to come up with their own ship systems. They're
going to come up with less good but much more
number numerous of them, and they're going to find ways
to beat us in that domain. They're going to come
up with their own models again to their own policy
prescriptions and what Chi Jinping wants. The key is how
(40:14):
do we get our kids using it early? How do
we become advantaged as individual humans using AI to be
more productive?
Speaker 4 (40:20):
That was Josh Wolf, managing partner of Lux Capital, speaking
with Amrie Horden.
Speaker 2 (40:32):
Time Now for Talking Tech and First Up.
Speaker 3 (40:34):
Robin Hood saw retail investors that flocked to the financial
service platform as for.
Speaker 2 (40:38):
President Trump's tarifs.
Speaker 3 (40:39):
Really world market companies saw net revenue jump fifty percent
from a year earlier to nine hundred and twenty seven million,
but crypto revenue fell behind, maybe reflected in the stock move.
CEO of lad TENEV spoke with Bloomberg earlier about their
strength in April.
Speaker 17 (40:53):
April's continued to be incredibly strong across the board. I
talked about futures already, but you know, equities and options
are adder near multi year highs and net deposits has
continued to be remarkably strong.
Speaker 3 (41:11):
Plus, Instacart has acquired US grocery e commerce platform win Shop,
the latest acquisition as to the delivery companies growing numbers
of software businesses, which now powers over six hundred brand sites.
Speaker 2 (41:21):
Turns. The size of the deal were not disclosed.
Speaker 3 (41:24):
And Visa says it's enabling AI agents that will help
browse products and make purchases for consumers, cutting the time
and energy customers spend on shopping. We spoke with Visa
CEO Ryan Mcinernie exclusively, who have this to say about
the program.
Speaker 18 (41:39):
What we've announced is a set of tools that give
agents the capabilities to go make payments on your behalf.
Think of that as AI enabled Visa credentials, and also
the rules and the capabilities that will provide trust, trust
that consumers will have in their agents, trust that merchants
are going to have that they're going to get paid
(41:59):
and trust that financial institutions will have that you've actually
empowered your agent to make those purchases on your behalf.
Speaker 3 (42:06):
And you can watch more of that conversation with the
Visa CEO online at Bloomberg dot com.
Speaker 4 (42:11):
Ed that does it for this edition of Bloomberg Technology.
But let's recap the kind of biggest stories in markets.
Microsoft and Meta resilience and strength and growth of their
core businesses while.
Speaker 5 (42:22):
Committing to spend on AI.
Speaker 4 (42:23):
In Vidia now pairing some of its gains after a
Bloomberg exclusive that the US is weighing easing chip export
cubs for Nvidia to the United Arab Emirates. Will continue
to track that story carry throughout the day.
Speaker 3 (42:35):
But we've got so many more earnings to come after
the bell. The all important Apple down three ten percent.
We get that epic loss when it comes to that
fight in the courts regarding the app store, But what
will they say in terms of pull forward from consumers?
Amazon up too and a half percent? Will they deliver
eight percent growth and revenue? And Reddit at more than
four percent? Maybe a read across from Meta there. Do
not forget to check out our podcasts, though you can
(42:56):
find on on the terminal, as well as online on Apple, Spotify,
and iHeart Broombag technology.
Speaker 8 (43:03):
I
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