Chapter 1: What is the main topic discussed in this episode?
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Coming up, Amazon shares drop after announcing plans to spend $200 billion this year on data centers, chips, and other equipment. Meanwhile, Bitcoin rebounds, having plummeted on Thursday when it neared the $60,000 level. And we break down more tech earnings with the CEOs of Roblox, Affirm, and the Warner Music Group.
But first we check in on what is a tentative bounce back after what has been a punishing week. Remember the Nasdaq is on track for its worst week Ed in three months since the beginning of November. But now we see a little bit of a reprieve a little bit of dip buying we're up a percentage point if you're looking at the big indexes.
And I know you're going to drill into the individual movers that push and pull but crypto Up almost 9%, but only about eradicating half of yesterday's losses. We're still only at 68,000. What a remarkable beginning to the year for this asset class that in many ways people feel is not a store of value. But what are you looking at? The analysts are calling it sticker shock.
Amazon pledging to spend $200 billion capital expenditures on AI infrastructure. The stock down more than 8% right now, on track for its biggest drop since April of last year. Operating income in the current period, $21 billion at the high end below consensus. So the concern is, Is the trade-off worth it here? There is a big backlog for AWS and AI business.
By the way, it's one of the few names on the NASDAQ 100 that's down because in reaction to that capital expenditures pledge, you see everyone from the GPU providers, NVIDIA is now up more than 6% in response,
memory names infrastructure names energy names all higher because the capital expenditures for all of the hyperscalers and aggregate plus meta is growing we're going to get to that with an analyst just a few minutes time in the world of cryptocurrencies traders are buying the dip cara outlined it bitcoin's rebounding after plummeting on thursday erasing all the gains since donald trump's 2024 election falling close to 60 000 us dollars popping back up again bluebird digital finance reporter emily nicole joins us with the latest difficult
Emily, what's going on? Your guess is as good as mine, to be honest. We've been watching Bitcoin over the last 24 hours, and it's really been a rollercoaster. As you said, it dipped about 13% yesterday. Now I think we're up about 10%, so we're recovering some of that. But it's really just been a rollercoaster week. It's been hard to kind of guess at...
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Chapter 2: Why did Amazon's shares drop after their $200 billion spending announcement?
No new debt was being created. And so people are trying to stretch for, you know, where can we see some some some like staying power within this rally. Where is there a bottom? Where is there stability? And that might be where we're now starting to see a sort of bottom. Maybe that 60,000 mark was it. And for strategy as well, maybe it's kind of starting to see a way out of that.
It's interesting, even with the headlines coming from China as they tighten curbs on crypto and unstable coin issuance, still managing to catch some buying of the dip today.
Chapter 3: What factors contributed to Bitcoin's recent rebound?
Bloomberg's Emily Nicole. What a busy week. Thanks for joining us. Meanwhile, let's talk Waymo now. Using DeepMind's Genie 3 AI model to create realistic worlds for a new Waymo world model.
So according to the company in a blog post today, the self-driving tech developer argues this collaboration with another segment of Google's tech ecosystem is going to help the expansion of Waymo's self-driving services across many more markets. Ed.
Chapter 4: How are tech earnings being impacted by current market conditions?
Let's get back to Amazon. Big mover, big story. The stock lower as the company announced it's set to spend $200 billion this year on data centers, chips and equipment, supercharging its bets on AI. Rohit Kulkarni is managing director, senior analyst for Internet and capital markets research at Roth Capital Partners. They call it sticker shock, right?
The reaction to the big capital expenditures number. But there was a time where a big capital expenditures number was what you wanted to see. Why the negative reaction? I think the negative reaction is just because outside of the CapEx, people expected spotless earnings. I think CapEx sticker shock was expected given what Google, Meta, Microsoft did last 10 days.
But what was not expected was performance. slight yellow flags in operating margins and certainly people realizing that Amazon has to spend a lot more given they are launching satellites to space, they are building new whole foods and so on and so forth. You have a buy on call on the stock, and I believe, let me just check here on my Bloomberg terminal. Yeah, $285 price target, right?
There are lots of pieces of data in there. Some people looked at the operating income forecast for the current period and thought, that's a little worrying, bearing in mind AWS is the majority of operating income. Some looked at the backlog. Some looked at the AWS growth 24%, fastest pace of growth in almost three years. Where would you look? All of the above.
There were many positives in the report and in the outlook and the various moving parts in Amazon, accelerating AWS, improving retail margins, better advertising growth, as well as better efficiency in retail overall. I think what is spooking the market here is there are more investments beyond AI that this company is doing. Unlike many other peers, there are just
doubling down on simple, simply one thing. So the worry here is next two, three years, how high of an investment curve are we looking at for Amazon and what level of ROI do they get beyond the core AI investments? I think that's the worry here. But all in, we think this is a Gen AI winner, very underappreciated and over time, time will tell. Let's dig into why it's a Gen-AI winner.
Is it Tranium, Graviton, just seeing the triple-digit percentage growth, the fact that they've got that vertical integration, making their own chips, using that for the compute that they offer and the efficiency that it gains them? Is it more that their own models, like we don't talk much about the own models that they're producing.
We talk so much about Google's, for example, but not so much Amazon's. I know. I think Amazon is with all of the above. Again, they are vertically integrating in a way that absolutely no other company on earth is trying to replicate at the scale at which Amazon is trying to do. Vertically integrating cloud, vertically integrating retail, and having the diversity of advertising. So I feel...
When all three pillars of Amazon start to crank up higher operating margins, which we will see over the next six to nine months, that's when the real potential of profitability of this company will manifest in the numbers. And that's why I believe the surface area of investments as well as surface area of ROI on those investments is so much wider at Amazon that is being underappreciated.
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Chapter 5: What does Amazon's capital expenditure mean for its future?
I think there is still digestion period, but which probably one would argue that has been a little bit more prolonged than what one would have preferred to see. So I think they're finally getting there. And I think a little bit of extra cost cuts would be much more appreciated to make room for more CapEx. CapEx across the hyperscalers plus meta is now at $650 billion for the year.
For Microsoft, that's based on consensus. The difference with Amazon is that they might tip into negative free cash flow. We have 30 seconds. How worried are you about that? I'm not worried at all. This company has gone through negative free cash flow cycles in the past and delivered ROI unlike many other companies that are for the first time going through this cycle.
If you look at 15 years, Amazon has delivered ROI, ROIC probably in a best in class manner. Rohit Kulkarni of Roath Capital Partners, thank you very much indeed for joining us today. And coming up, we talk more earnings. We're speaking with the Roblox CEO, Dave Bazzucchi, as the company sees 144 million daily active users.
You don't even want to hear how many hours people are spending on this platform. We'll break it down. This is Bloomberg Tech. I'm Carol Masser. And I'm Tim Stenevek, inviting you to join us for the Bloomberg Businessweek Daily Podcast. Now, every day we are bringing you reporting from the magazine that helps global leaders stay ahead.
We've got insight on the people, the companies and trends that are shaping today's complex economy. That's right, Tim. We're all over global business, finance, tech news, all as it is happening in real time. And we've got complete coverage of the U.S.
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Chapter 6: How is the market reacting to Amazon's AI infrastructure investments?
market close. Got to say, basically, if it impacts financial markets, if it impacts companies, if it's impacting trends and narratives that are out there, we are on it. We also have a lot of fun doing it. Bloomberg Businessweek also brings you the analysis behind the headlines through conversations with our expert guests. And we are doing this all live each weekday.
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I'm Carol Masser. And I'm Tim Stenevex. Subscribe today wherever you get your podcasts. Check out shares of Roblox. Company on fire up 10% after they reported fourth quarter users and bookings that topped expectations. Daily active users jumped 69% to 144 million. It beat analyst forecasts. I'm pleased to say we're now joined on the results by Dave Bazzucchi, CEO of Roblox.
Your engagement levels were jumping to a similar degree. I think it was like 68%. Is this the games that are driving this, Dave? It's really the games, the platform, and the creator. We are on a mission to get 10% of all global gaming content running on Roblox, and we're well on our way. We had a banner year, as you mentioned, in 2025. We had 55% year on year bookings growth.
And in addition, as we started rolling out what we call the gold standard for safety, we're age checking our users and we now have accurate data on the 18 and up segment, which is growing at over 50% year on year. In addition, around the world, countries like Japan are growing 160% year on year.
Really, people are creating new genres and types of games, whether it was dress to impress a year ago or grow a garden. So we're powered by both platform and an amazing creator community. Yeah, you've got Bruno Mars singing live on brain rot. I mean, 12 million people all using and coming to watch that at the same time.
The records are interesting given, as you say, these safety measures have been put in place. How has that impacted? Has that created any friction? Or indeed, it seems as though you're leaning into the opportunity of these safety measures. I think leaning in is a good way to mention it. I believe the last time we chatted, we mentioned our vision for the gold standard for safety.
In addition to filtering and monitoring all chat for critical harms, and not allowing image or video sharing, we have now are full into our rollout of age estimation, which is understanding the age of everyone on our platform and using that to allow people to communicate with people of similar age. We gave our teams an ambitious goal to have no friction for this.
When you lean into something like this, a lot of innovations pop up on the side. Our matchmaking has gotten better. We continue to refine the way we filter text and make trusted connections. We're optimistic we're going to go through this and ultimately come out with minimal friction from this. Dave, I fired up my new gaming PC last night, Acer Nitro V15, Intel i5, Nvidia GeForce RDX 4050.
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Chapter 7: What insights do analysts provide on Amazon's performance?
Or if you think about the traditional manufacturing industry, we are in fact seeing real productivity gain from using AI, and that's only the beginning. Time and time again, I think if we look back in history, when you have such disruptive technology changes, what happens in the near term, some of the way that we do things gets disrupted, but then new business model, productivity gain,
actually do emerge, and that is the power of innovation. It requires a little imagination. So if you look at this point in time, yes, it's a huge number that we're spending. But you probably could look back, and back then when electricity was first invented, that probably was a tremendous amount of money to be spent on the grid. What if this is the future of the grid?
Well, let's talk about, therefore, the innovation that we're seeing at the moment. And I just want to bring to our viewers, of course, the latest that happened about midday yesterday when Anthropic released a new version of its AI model, Claude Opus 4.6. It's designed, we know, to carry out financial research, other work-related functions.
The company says it can scrutinize company data, regulatory filings, market information to come up with really detailed financial analysis that would normally take a person
days to complete this is after the market kind of fell out of bed following their legal plug-in to co-work so how are you seeing these models becoming an entry point into software what did you think about just the gargantuan sell-off across data services and software names You know it's in the time of such disruption. It's very it's too early to call what's cheap.
Who is going to be the future winner because this is only the beginning and ultimately comes back to what is the real long term competitive mode. And that's what the question really is at this point because you know it's if you talk to the private companies you probably are seeing some of the private companies. This is the fastest way for a company to get to 100 million of revenue. Yeah.
But my question would be, what is the real way to look at it? Who can hold on to that $100 million revenue for a long period of time? Stickiness, yeah. And what we are seeing right now, what's interesting is, it's not in the near-term numbers that's going down. But the question that we are asking, and I think all the investors are asking is,
Well, it brings in the probability of what is the terminal revenue we should be paying? What's the terminal multiple we should be paying for the revenue? Because the probability of holding on to that revenue and the profit is probably changing really fast. And that's why we're seeing the terminal multiple actually is coming down pretty fast.
And that's the disruption that we're seeing in the market today.
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