S&P Closes Near Record, Cisco's AI Outlook Disappoints, More

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Bloomberg News Now 5 min 5 speakers 6 chapters transcribed 1 month ago

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Why is AI entering a consequential phase of scale, safety, and sovereignty?

Caroline Hepker 0:00

AI is entering its most consequential phase where scale, safety and sovereignty will determine who leads and who lags. Join Bloomberg Tech in London on November 2nd and 3rd as global leaders across business, finance and policy examine the defining trade-offs shaping the future of AI. Thank you to our presenting sponsor, Salesforce, and supporting sponsors, IDA Ireland and Schneider Electric. Learn more at BloombergLive.com slash TechLondon.

Doug Krisner 0:31

News when you want it with Bloomberg News Now, I'm Doug Krisner. The stock market rose to within striking distance of a record high today after a subdued reading on retail inflation. We had the S&P 500 picking up two-tenths of one percent, while a rally in chipmakers sent the Philadelphia Semiconductor Index up two and a half percent. Dan Suzuki is a global investment strategist at iCapital.

Dan Suzuki 0:54

I mean, it's very rare that all the sources of liquidity are rowing in the same direction. I mean, we have basically supportive monetary policy, fiscal policy, banking, lending standards, and animal spirits are very much intact.

What did Dan Suzuki say about the current liquidity environment and its sustainability?

Dan Suzuki 1:07

So everything's good. It's just the question is you look forward, you know, are those going to last and what could cause that to change?

Doug Krisner 1:13

That is iCapital's Dan Suzuki speaking earlier to Bloomberg Businessweek Daily. Now, in terms of retail inflation, core consumer prices rose in July by two-tenths of one percent compared to June. And then if you look at it on an annual basis, the core CPI rose last month by two and a half percent. Now, these figures may give the Fed more room to weigh inflationary pressures against the recent slowdown that we have seen in hiring prices. Money markets are pricing in less than a 50% chance of a Fed rate hike at the September meeting. To earnings news next, after the bell, Cisco Systems issued a forecast for revenue in the current quarter above the average analyst estimate. Now, this reflects Cisco's success in supplying a larger share of the AI data center market with the company's networking gear.

Doug Krisner 2:02

We got reaction from David Bonson, founder and CIO at the Bonson Group.

How are July core CPI numbers affecting the Fed’s rate‑hike outlook?

Unknown 2:06

Even when the dot-com crash happened, they continued to be the leader in the area that mattered most to technology infrastructure, which was network servers and routers. And then when you got into the last 10 and 15 years, they became that leader in the cybersecurity side as well.

Doug Krisner 2:22

That is David Bonson, founder of the Bonson Group, speaking earlier to Bloomberg. Now, despite that positive forecast, shares in Cisco are down in late trading by 4%. Cerebra Systems reported a surprising decline in AI hardware revenue. Now, this suggests the company is making inconsistent progress in selling computers with its novel chip design. Sales tumbled 23% from last year to $54.1 million. Now, the company's cloud division was the bright spot, with revenue nearly quadrupling to $126 million. We got reaction from Paul Meeks. He is head of tech research at Freedom Capital Markets.

Why did Cisco’s AI data‑center revenue forecast disappoint investors?

Unknown 3:02

Here's a company that only went public a couple of months ago. And the first quarter out of the box, this is the second one, the first quarter out of the box, they had a big disappointment in profitability. The stock plunged. And now there's another miscue. Maybe it's just investor relations, public relations. But you shouldn't be disappointing folks back to back in your first two quarters, a public company.

Doug Krisner 3:27

He is Paul Meeks from Freedom Capital Markets, speaking earlier to Bloomberg. Now, the results show a mixed picture for Cerebrus as it tries to challenge NVIDIA while, at the same time, building a bigger AI cloud business. Shares in Cerebrus are down 15% in late New York trading. Los Angeles Lakers owner Mark Walter is selling a majority stake in the team to a group led by Bob Iger and Josh Kushner.

What caused Cerebrus’s AI hardware revenue to tumble and its stock to fall?

Doug Krisner 3:52

This deal represents a longtime dream of Iger, the former CEO of Disney. Together with Kushner, the two had been seeking to acquire an NBA expansion team in Los Angeles, but they pivoted. And we are told this deal values the Lakers at around $12.5 billion, marking the highest ever valuation for any sports team.