Chapter 1: What is the main topic discussed in this episode?
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This is Bloomberg Tech coming up. Tech earnings bonanza. Apple, Amazon, also Reddit and Twilio will break them all down with experts and their C-suite. Plus, NVIDIA CEO Jensen Wang still hopes to sell its Blackwell chips to customers in China. We'll discuss that and a flurry of Korean deals.
And we sit down with CoreWeave CEO Michael Entredge to talk AI infrastructure after a failed takeover bid for Core Scientific. But first, we check in on these markets, which... are not quite at a record high. But we're back up and to the right when it comes on the day. We're looking at the AI bubble back in focus, but AI boom really what's driving these stocks higher over the course of the week.
We shrug off government shutdown. We're putting to one side geopolitical risks. We're up 2.6% on the NASDAQ 100 for this week alone. Let's move into what's happened on an individual basis. And the key story of the day is Amazon. Look, we are at a new record high. We're up almost 11% for this particular company. And this is as they show that AWS cloud growth is back on top.
It's a bitter pill for many to swallow who have lost their roles at this particular company. Remember, we started the week talking about 14,000 jobs to go. Let's dig into all of that at the moment because I'm pleased to say Brad Erickson is here with us. RBC Capital Markets. He's, of course, a key internet analyst there. And you've still got an outperform rating on the stock.
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Chapter 2: What are the latest earnings results for Amazon and how did investors respond?
You see it hitting 300. Brad, just talk us through what you liked in the numbers.
Yeah, I think obviously the reacceleration to 20% on AWS in Q3 was like the headline critical metric they had to do. They did it. And so that really got the stock going. And then I think as you think about going forward, they're getting this capacity deployed faster than we would have thought maybe a quarter ago.
And they gave some nice detail around some of the power, the gigawatts that they've been able to deploy and some forward commentary there. And it just comes down to kind of simple math. They're not saying they're going to accelerate necessarily on AWS, but if you do the math, it implies that they probably will. And that means there's probably a lot of upside to street numbers.
And so that was the point we were making in our note.
I mean, 3.8 gigawatts is massive when you think about each gigawatt, potentially up to a million homes. That's how much they put on in the last 12 months. What are you making of the vertical integration here as well? The fact that they're saying that their Tranium chips are already a multi-billion dollar company. How much does that build to future revenues?
Yeah, you know, Tranium, to go with your second part first, Tranium 2 is largely being used for Anthropic, which is kind of the major enterprise player in the generative AI space.
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Chapter 3: What are the implications of Nvidia's Blackwell chip sales in China?
They're going to continue to grow a lot. They're going to double the number of chips at the Rainier site by the end of the year. So it's exciting. That is going to continue to scale up and drive a ton of revenue growth, and it is material to next year, and this is a $130 billion business, so it gives you a sense. In terms of just taking vertically integrating, it's massively important.
The power grid is not set up for these data centers, and they have massive needs, massive cooling needs, massive water needs. And so it has and will always likely continue to make sense for these guys to make sure they can do that on their own or at least become less tied to third parties. So I think it's the right thing to do.
Andy, Jesse's time and time again been like supply is the issue here, not demand, Brad. What's interesting is that generative AI gets rippled through the entire business. We're looking at Rufus, of course, which is helping us decide what we're going to be buying on Amazon if we needed any more help on that. That's saying they can add another $10 billion.
It's interesting to then dovetail that with what came at the beginning of the week. Look, corporate jobs are going at Amazon. And in many ways, Andy Jassy steered us to that four months ago. Is that inevitable when they're looking to bring generative AI as a way to catalyze the business?
Yeah, I mean, kind of two parts of that, right? Rufus is really intended to sort of, you know, add a, we'll call it a tailwind to your shopping experience and your conversions. So literally get you to buy more stuff. So that's that part of it. The headcount thing is tricky because you're right.
Like initially, you kind of follow the fact pattern and then what we know of some other companies and the efficiencies they're getting. Clearly, generative AI, it is very likely that it is contributing to job losses right now. And some companies are overtly saying it.
Last night, Andy Jassy, the CEO, said that largely it was kind of a function of over-hiring middle management, trying to sort of flatten the organization a little bit more, so not related to generative AI. But I think by all intent and purposes, you have to think that trend is going to continue. And yeah, it's a little concerning from a deflationary standpoint, I would say.
But, you know, that's what we know so far.
Brad Erickson of RBC Capital Markets, really appreciate your analysis this morning. Thank you very much indeed. Happy Halloween. Meanwhile, let's talk about Apple, which is looking a little uglier than it did earlier in terms of stock price. But earnings came out yesterday and the iPhone maker said that sales rose nearly 8% in its fiscal fourth quarter. It predicted a jump in holiday sales.
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Chapter 4: How is AWS cloud growth impacting Amazon's stock performance?
I wasn't, and the reason is because, as I talked to you in the past, hardware refresh, when the actual hardware looks different, always drive upgrades. People still want to rely on the device that is in their pocket 24-7, but make it look different. And this year, we got that with the Air.
which is not the main seller for Apple, but it doesn't matter, is getting people back in the stores to see the rest of the portfolio. It was really interesting yesterday that Cook mentioned that supply issues on the 16 model, not just on the 17. And that is a good reminder that a new model every September brings people back in stores and upgrade to previous models as well.
It's not just the latest. It's the portfolio with maybe some price adjustment and some carrier promotions that drive that upgrade. Fewer upgrades going on in China, though. What did you make of the pullback, the surprising pullback in that particular region? I think part of it is the economic situation in China. We have seen kind of hot and cold from a consumer perspective.
The timing was later in the quarter. So it takes a little bit longer from a supply chain perspective. We also need to remember the supply chain has moved away from China. So there is some adjustment to make as well because of the U.S. and the production shifting to India. But the most important thing is what Tim Cook said, which is signals towards the end of the quarter was positive.
People were going back into the stores. But the big quarter for China is always Q1.
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Chapter 5: What insights did RBC Capital Markets provide about Amazon's future?
That is Chinese New Year. By then, there's hope that the supply constraint that Apple has had, especially in the higher models, which is usually where China gravitates towards, will be resolved. And that's where the big quarter should come in. And if it doesn't, that's when I'm going to start worrying. But for now, I'm not worried. And then digest the eSIM situation as well.
I spy a Cowboy Carter memorabilia behind you. I love that tour too. Let's just talk about the services side. The music side is part of that. But services really is what drove the strength at the moment. Can that be reliable going forward when we think about the regulatory pressure on the app store, for example? I think it can because more and more Israeli content and is also advertising.
We've seen Apple close the deal with F1. So they'll start streaming F1, which is becoming more and more popular in the U.S. and across the globe. With the demographic that Apple is really, really keen in keeping and growing, which is Gen Zers. and younger millennials.
So I think that that is real, the opportunity for Apple is on the content side, is the engagement side, and that also over time will come into play with Apple Vision Pro. I mean, very briefly, what about the AI side? Well, we have been promised an improved Siri coming in 2026. And as we discussed before, Apple has some time to figure this out.
I think that most of us have figured out what AI can do for us in a productivity setting, but not yet on a personal way. And I think that's where Siri is going to play the most. Carolina Milanese, always great catching up with you, President and Principal Analyst at Creative Strategies. Happy weekend. Meanwhile, coming up, the parade of earnings. It continues.
Going to be talking to Twilio's CEO about their results next. This is Bloomberg Tech.
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Chapter 6: How are corporate layoffs at Amazon related to generative AI?
Jen Wong, Reddit COO there, talking of relationships with LLMs. NVIDIA CEO Jensen Wang says he's still hopeful that the company would be able to supply Blackwell-type chips, at least, to China, quote, someday. This is the company caps off a huge week, hitting a $5 trillion market cap. Blue magazine King, who covers its semiconductor space, has been on this relentlessly. What a week, Ian.
And look, this is pushing back at some of the anxiety that brewed yesterday that China just wasn't on the table when it came to a discussion between Trump and Xi.
Yeah, I mean, there's been so many twists and turns in this one just in the space of this week. Jensen's been obviously making his case in Washington. Now he's making his case in person in Asia where the president is. President Trump mentioned this Blackwell chip, said raise the possibility, raise everybody's hopes, and then kind of took it away a little bit.
So we don't really know where we are now other than hoping that, you know, because it's being discussed that there is more possibility of NVIDIA doing more business in China.
Certainly more business in South Korea. I just want to bring what our own Sherry Ann was able to say and catch up with the CEO of Jensen Huang while in a new scrum in South Korea. Just take a listen, Ian.
What's the potential of sovereign programs that you mentioned, especially across Asia?
Well, here in Korea, Korea has a chance to be one of the world's major AI hubs. And today's announcement, along with President Lee's passion and enthusiasm and drive, and all of my CEO friends here who are dedicated to create this journey for Korea, this is a perfect example of sovereign AI.
CEO friends being Samsung, Hyundai, SK Group. There was a lot going on, but some sovereign AI too for them in Korea.
Yeah, no, he's trying to make Korea into yet another example of this push that he sees of let's deploy AI everywhere. Let's get it in government organizations. Let's get it in corporate situations. And Korea obviously has a vibrant tech economy, companies like Samsung. So he's seeing this as another perhaps exemplary kind of position and country for this push that he's making around the world.
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Chapter 7: What factors contributed to Apple's recent earnings and stock fluctuations?
It's important to us that they are. We are hopeful that they will continue to invest in their business and their ability to execute and deliver infrastructure. And, you know, we continue to work with them on a go-forward basis just as we have for the past five years. Look, they were a Bitcoin miner turned AI supplier. You two were that. Look, there are some others out there as well.
TerraWolf and the like. Would you look to acquire any of those? So I've always talked about acquisitions as strategic and opportunistic. My view is... Acquisitions like Marimo or Weights and Biases, Monolith, those are strategic acquisitions. They move the company and broaden our software solutions. The acquisition of an infrastructure provider is an opportunistic acquisition. acquisition.
We're currently building data centers within CoreWeave from the ground up to solve this problem of adding additional control over the infrastructure. So, you know, we've got a data center in Pennsylvania and Lancaster that we're building. We have a data center in New Jersey and Kenilworth that we are building. And so,
You know, we're always, you know, reviewing the opportunities that exist within those two buckets, the strategic and the opportunistic bucket. And we're open to looking at things that move our company forward. But once again, it's got to be at the right price. Right price. Do you have to raise more capital to keep on building out your data center offering? So, yes.
You know, CoreWeave has been at the tip of the spear of raising capital for the AI build-out, right? Like, we were the first ones to do the GPU-based backed lending products. And our growth... continues to rage along.
I mean, it's just amazing how fast we're growing, how much interest there is for continued build out of our product, of our software solution and delivery to a broader and broader base of clients. And so, you know, we'll continue to raise capital to support that activity just as we have. And the reward is big enough.
You know, the guild lawyers of this world at DAO Davidson still saying the capital structure doesn't make him happy because the amount of 5% you get back on a 9% investment. Are you managing to rectify that? First of all, I just fundamentally don't agree with his analysis, so we can start there.
But more importantly, we have built a business that generates great returns and provides the infrastructure that the world needs to build and deliver artificial intelligence. We think we have a great business plan. We have a very large and diversified shareholder base that agrees with us, and we're going to continue to expand on the business that we've built.
And look, you're diversifying the customer base. I think Meta, it's interesting how Meta is getting a bit beaten up for the amount that they're plowing into AI data centers, whereas we're congratulating the likes of Amazon and indeed Google. What do you make of these anxieties around AI infrastructure build-out? You know, it's interesting.
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