# Google Sales Miss Reignites AI Fears, Microsoft Eyes $25B Debt Offering

An episode of [Bloomberg Tech](https://invisiblenetwork.ai/podcast/1611767434), 29 Oct 2026, 41 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/41764a4f-fc64-4e11-89ba-ae7c0030ab5e/53d82149-77f5-4ca9-b738-b4f2012919f6/audio.mp3?utm_source=Podcast&in_playlist=9caafc41-289c-4115-995d-ae7c0030ab75

Bloomberg’s Ed Ludlow breaks down Alphabet's weak search and ad sales which raised new fears that AI is eating into Google's core business and caused a record market cap wipeout. Plus, Bloomberg reports Microsoft is looking to tap the bond market for the first time since 2017, seeking at least $25 billion to support spending as AI cloud growth soars. And, DoorDash makes a $17 billion bet on groceries with plans to buy Instacart. See omnystudio.com/listener for privacy information.

## Transcript

[0:05] Speaker 1: Bloomberg Tech is live from the heart of Silicon Valley
[0:09] Speaker 1: with Ed Ludlow in San Francisco. This is Bloomberg Tech.
[0:16] Speaker 1: Coming up, Alphabet suffers a record market cap wipeout as
[0:19] Speaker 1: weak search and ad sales raise new fears that AI
[0:23] Speaker 1: is eating into Google's core business. Plus, Microsoft taps the
[0:26] Speaker 1: bond market for the first time since 2017, seeking at
[0:30] Speaker 1: least $ 25 billion to support spending as AI cloud growth soars.
[0:34] Speaker 1: And DoorDash makes a $ 17 billion bet on Instacart, combining
[0:38] Speaker 1: two delivery giants as they take on Amazon and Walmart.
[0:42] Speaker 1: in the grocery wars. Alphabet, the parent company of Google.
[0:45] Speaker 1: Right now, this is a stock that's on track for
[0:47] Speaker 1: its biggest one-day decline on record. Actually, the story is
[0:51] Speaker 1: so interesting. Search query growth, fastest pace in five years.
[0:56] Speaker 1: But AI mode preferences with users is weighing on revenue
[1:00] Speaker 1: growth because it has lower monetization. Cloud growth, absolutely soaring.
[1:04] Speaker 1: Let's get the story of Bloomberg Equities reporter, Ryan Veselica.
[1:07] Speaker 1: This is pretty astonishing, right? $ 470 billion of market cap
[1:12] Speaker 1: wiped out as it stands. Summarize the Google story.
[1:15] Speaker 2: Hey, so I think you mentioned that this is going
[1:19] Speaker 2: to be the worst day on record for Alphabet since
[1:21] Speaker 2: it went public more than 20 years ago. So you're right,
[1:23] Speaker 2: this is pretty historic here. And I think the major
[1:26] Speaker 2: issue is that we're starting to have concerns about the
[1:30] Speaker 2: core businesses really for the first time of the AI era.
[1:33] Speaker 2: We've seen a lot of back and forth about Is
[1:36] Speaker 2: AI going to eat search? Is it going to pressure
[1:38] Speaker 2: these traditional businesses? And this is the first report where
[1:41] Speaker 2: it does feel like the answer to those questions might
[1:44] Speaker 2: be yes. Now, you mentioned the strength in the cloud business.
[1:46] Speaker 2: That's certainly a big positive here. But it does raise
[1:49] Speaker 2: the question if all of this spending on AI, if
[1:53] Speaker 2: it isn't translating into improved analytics, ad sales and improved
[1:57] Speaker 2: search results, improved YouTube results, then what is the real
[2:02] Speaker 2: path for Alphabet going forward? Is it going to have
[2:04] Speaker 2: to spend more to shore up these core businesses or
[2:08] Speaker 2: is it really just in a place where it is
[2:09] Speaker 2: sort of cannibalizing its own legacy businesses?
[2:14] Speaker 1: Search revenue missed estimates by $ 1. 5 billion, and the company
[2:17] Speaker 1: pushed overall deeper into negative free cash flow. So that's
[2:21] Speaker 1: where the focus is. Compare and contrast Microsoft. Azure cloud
[2:24] Speaker 1: computing growth 48% beyond expectations, and free cash flow looks
[2:29] Speaker 1: pretty good. What do we need to know?
[2:31] Speaker 2: Yeah, so this is sort of a repeat of what
[2:33] Speaker 2: we also saw last quarter where Microsoft really made a
[2:36] Speaker 2: strong case that all of its spending is translating into
[2:40] Speaker 2: improved growth. As you can see with the Azure cloud business,
[2:43] Speaker 2: Microsoft also remains cashflow positive, which is something that's increasingly
[2:47] Speaker 2: important where people are questioning all the spending and when
[2:50] Speaker 2: is it going to pay off? It really shows a
[2:52] Speaker 2: certain amount of fiscal discipline on their part. Now, I
[2:55] Speaker 2: think Microsoft did turn lower today, so there are some
[2:57] Speaker 2: questions out there and I think everything is just sort
[3:00] Speaker 2: of being pressured by the overall weakness in alphabet in
[3:03] Speaker 2: software and all these other parts of the market but
[3:05] Speaker 2: it did seem like microsoft once again made a pretty
[3:08] Speaker 2: strong case for itself in contrast to alphabet in particular
[3:12] Speaker 2: we've seen these two stocks really diverge over the past
[3:15] Speaker 2: several months Microsoft.
[3:16] Speaker 1: Is now down more than 1%. At the open was
[3:19] Speaker 1: up almost 2%. Bloomberg's Ryan Blasella can thank you very much.
[3:22] Speaker 1: The other thing going on with Microsoft is it's tapping
[3:24] Speaker 1: the bond market for the first time in more than
[3:27] Speaker 1: nine years, looking to raise at least $ 25 billion, according
[3:30] Speaker 1: to sources. The debt's being offered in 10 parts, with
[3:33] Speaker 1: maturity stretching from two to 40 years as Microsoft joins
[3:37] Speaker 1: this sort of broader rush to finance the AI build-out.
[3:40] Speaker 1: And with spending still climbing, are those billions actually delivering returns? Well,
[3:46] Speaker 1: Ryan's report would suggest in Microsoft's case, yes. Ayoko Yoshioka,
[3:49] Speaker 1: Wealth Enhancement Group Portfolio Consulting Director, is with us. The
[3:52] Speaker 1: difference between Alphabet, the parent of Google, and Microsoft is
[3:57] Speaker 1: negative free cash flow returns. and increasingly positive free cash flow.
[4:01] Speaker 1: Is that the simple calculus for you?
[4:03] Speaker 3: From an investor standpoint, absolutely. You know, it really goes
[4:06] Speaker 3: to show just given how strong AI demand has been,
[4:10] Speaker 3: and we've seen that whether it's from Meta or from
[4:13] Speaker 3: Alphabet or Microsoft, we're seeing these strong cloud growth numbers.
[4:17] Speaker 3: We're seeing strong revenue growth numbers, but it's really about
[4:21] Speaker 3: the overall return and that free cash flow that we're
[4:24] Speaker 3: going to get from this strong revenue growth.
[4:29] Speaker 1: Alphabet is headed for an absolute record in terms of
[4:33] Speaker 1: the amount of market cap that's being wiped out in
[4:36] Speaker 1: reaction to this earnings print. There are lots of really
[4:40] Speaker 1: good numbers right for Google. Cloud growth's at beyond 100%
[4:45] Speaker 1: year on year, but everyone is just sort of very
[4:47] Speaker 1: fixated on this core business mess. Have you ever seen
[4:52] Speaker 1: something like this, this kind of reaction?
[4:54] Speaker 4: Not with Alphabet.
[4:56] Speaker 3: You know, it's really just it goes back to what
[4:59] Speaker 3: is Alphabet's moat in this new world of AI? What
[5:03] Speaker 3: does the legacy business look like going forward? And I
[5:07] Speaker 3: think that's what investors are struggling with. You know, how
[5:10] Speaker 3: much of this is going to continue to grow if
[5:12] Speaker 3: people aren't going to click through on the ads and
[5:16] Speaker 3: the links when.
[5:17] Speaker 5: They do their search?
[5:18] Speaker 3: Search queries were actually up in the strongest in five years,
[5:23] Speaker 3: and yet their monetization was a miss when it comes
[5:27] Speaker 3: to classic search. So we'll have to see.
[5:31] Speaker 1: Yeah, let's look at that a little more closely. So
[5:34] Speaker 1: search query growth, fastest pace in five years, overall search
[5:39] Speaker 1: revenue growth, missed expectations. And the answer from Google was
[5:43] Speaker 1: that AI mode is also gaining traction, right, in parallel
[5:48] Speaker 1: with that query growth, but it has lower monetization. I
[5:53] Speaker 1: don't know, that doesn't explain much to me. Do you
[5:56] Speaker 1: understand that explanation from Alphabet?
[5:59] Speaker 3: Yeah, I mean, I think when you enter in a
[6:02] Speaker 3: query into Google and you get the answer that you
[6:06] Speaker 3: were looking for, you don't need to click through and
[6:09] Speaker 3: see the links that you used to have to click
[6:11] Speaker 3: through in order to find your answer. I think the
[6:14] Speaker 3: other thing, too, is if we're going to get that
[6:16] Speaker 3: through your typical AI mode within Google Search, Are you
[6:21] Speaker 3: going to pay up for Gemini and additional models that
[6:26] Speaker 3: Google releases? That's another thing that's probably in investors' minds.
[6:32] Speaker 1: I know that you look at this very much from
[6:34] Speaker 1: the free cash flow story perspective. Microsoft going back to
[6:39] Speaker 1: the bond markets. I would observe Microsoft is one of
[6:43] Speaker 1: the few companies that has AAA ratings from like both
[6:46] Speaker 1: Moody's and S & P and can do finance on
[6:48] Speaker 1: the terms that it wants. But what does that signal
[6:51] Speaker 1: to you that Microsoft pulled the trigger on that so
[6:53] Speaker 1: quickly after this print?
[6:55] Speaker 3: You know, for $ 25 billion in terms of a debt raise, they,
[6:58] Speaker 3: you know, just to contrast that, they reported $ 20 billion
[7:03] Speaker 3: in free cash flow this quarter and have almost $ 80
[7:06] Speaker 3: billion in free cash flow on a trailing 12-month basis.
[7:09] Speaker 3: And so I think adding, you know, $ 25 billion for
[7:13] Speaker 3: a AAA-rated company that is showing financial discipline in this
[7:17] Speaker 3: era of AI spend, I think the bond market will
[7:20] Speaker 3: be looking forward to that offering.
[7:25] Speaker 1: The AI trade isn't homogenous anymore insofar as you can
[7:31] Speaker 1: get evidence if you want it on who's turning the
[7:33] Speaker 1: spending into return, giving something to show for it. Who's
[7:39] Speaker 1: the winner right now after this phase of the earnings season?
[7:43] Speaker 3: I think it's clearly Microsoft, but I think one of
[7:45] Speaker 3: the things that we need to sort of pay attention to,
[7:48] Speaker 3: especially as we head into Amazon reporting later tonight, is
[7:53] Speaker 3: the portion in Alphabet's earnings that talked about the contribution
[7:58] Speaker 3: from TPUs. I think we're going to see a little
[8:00] Speaker 3: bit more from Broadcom as well, as well as Amazon
[8:04] Speaker 3: and Tranium. I think that's going to be an area
[8:07] Speaker 3: that's going to be of scrutiny and high importance as
[8:11] Speaker 3: we go into Amazon's earnings.
[8:14] Speaker 1: So I'll go back then to Alphabet and ask, what
[8:16] Speaker 1: is Google's AI story? You mentioned TPUs, right? They are
[8:20] Speaker 1: finding some joy in renting out TPU-based capacity or selling
[8:25] Speaker 1: TPUs direct. But they also put a lot of emphasis
[8:28] Speaker 1: on the 1 billion Gemini users. I don't really get
[8:32] Speaker 1: what they are. Are they at the frontier? Are they
[8:34] Speaker 1: just still a hyperscaler and cloud computing company?
[8:38] Speaker 3: I think they're trying to do both in order to
[8:40] Speaker 3: make sure that they are at the frontier of the
[8:42] Speaker 3: next revenue growth that's going to propel their company. And
[8:46] Speaker 3: you see why, because the legacy side is just not
[8:50] Speaker 3: as robust as it used to be. And so, yes,
[8:52] Speaker 3: they've got to do a little bit of both. They've
[8:54] Speaker 3: got to sell that capacity. And cloud growth is great.
[8:58] Speaker 3: The margins are fantastic on the cloud side. But they
[9:01] Speaker 3: are selling TPUs as well in order to keep that going.
[9:05] Speaker 1: I think to your point, the 103% growth in Google
[9:08] Speaker 1: Cloud was helped meaningfully by TPU system sales. That's how
[9:12] Speaker 1: they account for it. But what's important to understand is
[9:18] Speaker 1: that they've got to build up the inventory before the
[9:20] Speaker 1: revenue comes in. You mentioned Amazon. So take us there
[9:24] Speaker 1: to tonight. It's just AWS really, isn't it?
[9:27] Speaker 5: It is.
[9:28] Speaker 3: You know, we've seen hyperscalers really provide strong revenue growth.
[9:33] Speaker 3: So I think revenue growth is going to be one metric.
[9:36] Speaker 3: Free cash flow is going to be the other one
[9:38] Speaker 3: that it gets scrutinized alongside that CapEx spend. How much
[9:42] Speaker 3: is Amazon going to spend? But I also think that
[9:45] Speaker 3: TPU segment, what they're doing with Tranium is going to
[9:48] Speaker 3: be of high interest for investors.
[9:52] Speaker 1: Do you take any interest, Yoko, in Amazon.com, in the juggernaut,
[9:55] Speaker 1: the retail online juggernaut that's Amazon.com? Absolutely.
[9:59] Speaker 3: It provides that ecosystem that Amazon has and the flywheel
[10:05] Speaker 3: for everything that they do on the AWS side. So
[10:09] Speaker 3: it is something that we continue to see them scale.
[10:12] Speaker 3: And they've got the logistics business as well. They've got
[10:16] Speaker 3: a really good ecosystem that I think will continue to
[10:19] Speaker 3: sort of provide a little bit more of that moat
[10:21] Speaker 3: for Amazon going forward.
[10:23] Speaker 1: And it's still a business, the online stores, that's growing
[10:26] Speaker 1: at 35% year-on-year each quarter. Yoko Yoshiyoko, Wealth Announcement Group,
[10:30] Speaker 1: it's been great to have you back on the show.
[10:31] Speaker 1: Thank you very much. Another company that we're watching today,
[10:34] Speaker 1: by the way, ServiceNow. This is a big drop in
[10:37] Speaker 1: the stock, 25%, which.
[10:40] Speaker 1: Just checking my Bloomberg, I think also puts it on
[10:42] Speaker 1: track for a record. Yeah, I mean, this is a
[10:46] Speaker 1: story about AI displacing and disrupting as much as ServiceNow
[10:51] Speaker 1: is trying to benefit from it. 25% on track for
[10:54] Speaker 1: its biggest drop on record. The stock also now down
[10:57] Speaker 1: for four days in a row. Coming up, we've got
[10:59] Speaker 1: shares of DoorDash reacting to the confirmation of the company
[11:04] Speaker 1: is buying rival Instacart. DoorDash moving higher 7%. Instacart a
[11:08] Speaker 1: little bit off, but that's kind of been priced in
[11:10] Speaker 1: given the reports of that deal have been out there
[11:12] Speaker 1: a little while now. We're going to have the details.
[11:14] Speaker 1: This is Bloomberg Tech. Marvell is in advanced talks to
[11:29] Speaker 1: buy NVIDIA-backed Lamentum, the maker of optical technology for data centers,
[11:33] Speaker 1: that's according to sources who say the talks are still ongoing.
[11:36] Speaker 1: This is what shares of the two companies look like
[11:38] Speaker 1: right now in reaction to this Bloomberg report. Marvell down 12%,
[11:42] Speaker 1: Lamentum up 2%, 3%. I think there had been a
[11:45] Speaker 1: sharper reaction when the story broke. Outside of the main trade,
[11:48] Speaker 1: Bloomberg's Ryan Gould, part of the team that broke the story.
[11:51] Speaker 1: What do we know? Explain the specifics that we have
[11:54] Speaker 1: in our report, and then I guess we can get
[11:56] Speaker 1: into why this deal makes sense.
[11:58] Speaker 7: Yeah, thanks for having me, Ed, as always. I don't
[12:01] Speaker 7: think many people saw this coming in several ways. I
[12:04] Speaker 7: think just at the top here, you're looking at two companies,
[12:07] Speaker 7: one in Lumentum. so-called $ 83 billion of market cap until
[12:11] Speaker 7: recently being acquired by Marvell, which has made it quite
[12:16] Speaker 7: clear under Matt Murphy that they're looking to expand further
[12:18] Speaker 7: into optical. Lumentum supplies optical components that are crucial in
[12:23] Speaker 7: data centers and chips. These are obviously becoming so much
[12:27] Speaker 7: more important now as we think about just in terms
[12:29] Speaker 7: of what NVIDIA is doing with its chips, what Marvell
[12:32] Speaker 7: is trying to do with its own custom chips. These
[12:35] Speaker 7: are crucial components that you really can't run a data
[12:37] Speaker 7: center without. And I think that, you know, if you
[12:40] Speaker 7: look at what Lumentum is saying, their CEO said that
[12:42] Speaker 7: they're sold out to 2029, that they probably will be
[12:46] Speaker 7: able to meet sort of something like 70% of their
[12:48] Speaker 7: order backlog due to demand. I think this is just
[12:51] Speaker 7: really kind of a referendum on the AI trade as
[12:54] Speaker 7: we see.
[12:55] Speaker 1: It in its own way. Lamentum does lasers, optical components,
[12:59] Speaker 1: optical transceivers, take the electronic signal from the GPU, turn
[13:03] Speaker 1: it into light, move it between the servers inside the
[13:06] Speaker 1: data center. The stock reaction is kind of interesting, right?
[13:08] Speaker 1: So Marvell's down significantly. And that's investors voting with their
[13:13] Speaker 1: feet on, I guess, what we know of this deal.
[13:17] Speaker 7: Yeah, I mean, that's a good point to just pause
[13:20] Speaker 7: on because this is an enormous deal. I mean, you're
[13:22] Speaker 7: looking at a company in momentum that could end up
[13:24] Speaker 7: being something like, you know, 20 or 30% of Marvell's
[13:27] Speaker 7: market cap. There are plenty of questions out there from
[13:30] Speaker 7: the sell side this morning basically asking how could Marvell
[13:33] Speaker 7: do a deal like this. We are obviously asking those
[13:35] Speaker 7: questions too, but you would have to imagine that absent
[13:39] Speaker 7: some kind of massive financing package that you would be
[13:41] Speaker 7: thinking probably Marvell using quite a bit of its stock,
[13:44] Speaker 7: which has obviously run up through this year. Lumentum has too.
[13:48] Speaker 7: But we're also in a world where you want scale,
[13:51] Speaker 7: and I think just looking at the Marvell share reaction
[13:53] Speaker 7: this morning, how much of that is kind of being
[13:56] Speaker 7: influenced by the sell-off in the NASDAQ? You saw Google
[13:58] Speaker 7: with some disappointing figures you were just talking about at
[14:00] Speaker 7: the top of the show. I mean, I think there
[14:03] Speaker 7: are several factors here, and for it just to be
[14:05] Speaker 7: attributed to investors not really liking the deal when the
[14:08] Speaker 7: strategic logic is clearly so strong, I would just put
[14:12] Speaker 7: a big ring around that. But yeah, this is quite
[14:14] Speaker 7: an audacious attempt at tech M & A, I think,
[14:17] Speaker 7: just in where we are in the world, you know,
[14:18] Speaker 7: weak out from the midterms. Could you see a deal
[14:21] Speaker 7: like this further down the line in another administration? I'm
[14:23] Speaker 7: not so sure, but let's see. Let's see what happens.
[14:27] Speaker 1: The first thing I checked is Marvell's got less than
[14:29] Speaker 1: $ 4 billion of cash on its balance sheet. So I
[14:31] Speaker 1: think there are lots of questions. But terrific reporting, Lumos Rangold.
[14:34] Speaker 1: Thank you very much indeed. That's not the only deal
[14:37] Speaker 1: news being delivered up today. DoorDash has agreed to buy
[14:40] Speaker 1: rival Instacart for about $ 17 billion. Here's what DoorDash CEO
[14:44] Speaker 1: Tony Zhu had to say about the tie-up during a
[14:47] Speaker 1: call earlier.
[14:49] Speaker 8: When I think about this, you know, this really is
[14:51] Speaker 8: about giving every retailer of every size the ability to
[14:55] Speaker 8: compete in a world where technology is only accelerating faster,
[14:59] Speaker 8: disruption is happening more quickly, and the world's biggest companies
[15:03] Speaker 8: are becoming larger.
[15:04] Speaker 1: All right, let's bring in Bloomberg's Natalie Lung for the details.
[15:07] Speaker 1: What are the details? How is DoorDash going to get
[15:09] Speaker 1: this done?
[15:10] Speaker 9: Yeah, so this deal is still going to, you know,
[15:13] Speaker 9: pending antitrust regulator approval and Instacart shareholder approval. And it's
[15:18] Speaker 9: going to, you know, take a while for it to
[15:20] Speaker 9: close towards the end of next year, even in 2028. But,
[15:25] Speaker 9: you know, DoorDash is already promising a lot of things
[15:28] Speaker 9: to keep customers excited. The paid membership for DashPass and
[15:34] Speaker 9: Instacart Plus is expected to combine together in the future.
[15:38] Speaker 9: People just have to pay one of them. And obviously
[15:42] Speaker 9: this will offer more selection to both Instacart and DoorDash customers.
[15:47] Speaker 9: But the bigger thing here is really, as the CEO
[15:51] Speaker 9: said in the call, This will better set up DoorDash
[15:55] Speaker 9: to compete against giants like Walmart and Amazon, which have
[15:58] Speaker 9: very strong direct shopping websites and don't need to rely
[16:01] Speaker 9: on third-party apps like Instacart and Uber or DoorDash.
[16:06] Speaker 1: Yeah, I think, you know, within Scott's business, people probably
[16:08] Speaker 1: misunderstand as well that the area of success is high-margin advertising.
[16:13] Speaker 1: And then software, like they've got this back-end technology play
[16:17] Speaker 1: that DoorDash is going to get access to.
[16:19] Speaker 9: Yeah, so what you refer to, the advertising and the
[16:21] Speaker 9: enterprise part of the business makes up 30% of revenue.
[16:25] Speaker 1: Almost every quarter.
[16:26] Speaker 9: And so this is the real valuable asset that DoorDash
[16:30] Speaker 9: is acquiring here. And it actually has a track record
[16:33] Speaker 9: of acquiring these B2B tools in the past year. You
[16:36] Speaker 9: had Seven Rooms, which is the restaurant table management business.
[16:41] Speaker 9: And then it bought EdTech companies in Biosis. And it
[16:44] Speaker 9: also bought Grubhub's campus dining business. So you can see
[16:46] Speaker 9: DoorDash trying to expand their portfolio here in terms of
[16:49] Speaker 9: the software offerings for different industries.
[16:54] Speaker 1: All right, Bloomberg's Natalie Lung on confirmation of a deal.
[16:56] Speaker 1: It's been out there for a little while in the
[16:57] Speaker 1: news cycle, but now we know what it looks like.
[17:00] Speaker 1: In Trump's second term, big tech, and particularly AI companies,
[17:04] Speaker 1: have tightened their connection to the White House. It seemed
[17:06] Speaker 1: like a bet both sides would benefit from. AI firms
[17:09] Speaker 1: got kind of loose oversight to rapidly expand. And the
[17:12] Speaker 1: president got both an engine to power the economy and
[17:16] Speaker 1: the support of influential billionaires. But with the midterms less
[17:18] Speaker 1: than a week away, that now appears more like a
[17:21] Speaker 1: risky gamble. Bloomberg White House reporter Courtney Submaranian joins us. And,
[17:25] Speaker 1: you know, with the team, you go through the case
[17:26] Speaker 1: study of Meta. You know, Meta is a great case
[17:30] Speaker 1: study for what may or may not happen depending on
[17:33] Speaker 1: the outcome of the midterms.
[17:35] Speaker 6: Explain.
[17:37] Speaker 10: Yeah, we were looking at Meta's filings and other, you know,
[17:41] Speaker 10: big tech companies, recent filings, and we were seeing them
[17:45] Speaker 10: sort of lay out, you know, all of the risks
[17:48] Speaker 10: and chief among them were more regulatory challenges and laws that,
[17:54] Speaker 10: you know, could slow down the tech or increase the
[17:56] Speaker 10: costs associated with the data center build out. You know,
[18:00] Speaker 10: and the midterms, the conversation around the midterms so far
[18:04] Speaker 10: has been really been about AI disrupting politics, but we're
[18:08] Speaker 10: sort of at this point where we're seeing politics disrupt AI, right?
[18:14] Speaker 10: They bet huge on Trump. We saw Mark Zuckerberg at
[18:19] Speaker 10: the White House. They are on the phone with all
[18:22] Speaker 10: the key players in the West Wing.
[18:25] Speaker 4: They are donating to the president's big pet projects like
[18:29] Speaker 4: the ballroom.
[18:30] Speaker 10: But now we're sort of seeing companies like Meta bracing
[18:34] Speaker 10: for impact, so to speak, now that Democrats are poised
[18:38] Speaker 10: to take over Congress, where there has been a lot
[18:41] Speaker 10: of pressure to come up with some sort of federal
[18:44] Speaker 10: standard or regulatory framework for the industry.
[18:48] Speaker 4: And so it just sort of raises.
[18:49] Speaker 10: This question about whether this was all a failed gamble
[18:54] Speaker 10: for Silicon Valley to put all of their chips in
[18:58] Speaker 10: the Trump basket.
[18:59] Speaker 4: And What happens after the midterm?
[19:02] Speaker 10: I think everyone both in Silicon Valley and at the
[19:05] Speaker 10: White House are watching to see what happens next week
[19:10] Speaker 10: to see how that could reshape the industry.
[19:12] Speaker 1: I mean, one indicator across the board, across all those companies,
[19:16] Speaker 1: is what they're spending on lobbying. Just very quickly, what
[19:18] Speaker 1: do we know in the data?
[19:21] Speaker 10: Yeah, I mean, they've spent just in this election alone,
[19:25] Speaker 10: we've seen the Silicon Valley companies spend more than 70 million.
[19:30] Speaker 10: This is the most expensive midterm cycle in U.S.
[19:34] Speaker 4: History.
[19:35] Speaker 10: But they're also hiring up. They're hiring Democratic aligned staff.
[19:40] Speaker 10: They're hiring lobbyists. They're really readying themselves for what's expected
[19:46] Speaker 10: to be more congressional scrutiny, probably some congressional probes where
[19:51] Speaker 10: we'll see some of these CEOs dragged before Congress and
[19:56] Speaker 10: trying to shape.
[19:57] Speaker 4: The next chapter of AI policy. in, you know, the U.S.
[20:03] Speaker 10: Politics and but also with the economy. And I think
[20:08] Speaker 10: that is where the Democrats are sort of weighing how
[20:11] Speaker 10: far they're going to go. Right.
[20:13] Speaker 4: They don't know.
[20:14] Speaker 10: There's been a lot of proposals out there about a moratorium,
[20:17] Speaker 10: about a kill switch. So the Democrats need to agree
[20:22] Speaker 10: on a strategy before we.
[20:24] Speaker 4: Get to the next point.
[20:26] Speaker 1: Bloomberg's Courtney Subramanian, part of the team that has a
[20:28] Speaker 1: must read on the Bloomberg today. Thank you very much.
[20:30] Speaker 1: The AI trade is under pressure. Technology shares are lower
[20:34] Speaker 1: than ASDAQ 100 off by about one and a half percent,
[20:37] Speaker 1: 1.2 percent. It's kind of ended this rally that we
[20:39] Speaker 1: saw to start the week in global technology shares. A
[20:44] Speaker 1: big factor is what we got out of earnings, but
[20:46] Speaker 1: in particular, and very specifically, Alphabet, the parent of Google,
[20:49] Speaker 1: which is on track for its biggest drop on record
[20:53] Speaker 1: and also will erase the most market cap in a
[20:55] Speaker 1: session on record. It's probably down about $ 450, $ 470 billion
[21:00] Speaker 1: in market cap right now. And we're going to get
[21:02] Speaker 1: more into the details of what's going on with Bloomberg's
[21:04] Speaker 1: Sarah Fry, who leads the coverage of big tech here
[21:08] Speaker 1: in the Bloomberg newsroom. It was this idea that the
[21:11] Speaker 1: core businesses, search and advertising, had this miss, even in
[21:17] Speaker 1: the face of just incredible cloud growth. Give us all
[21:20] Speaker 1: the data points, everything we need to know.
[21:22] Speaker 11: Well, with an expensive business like going into AI, you
[21:27] Speaker 11: really need that core advertising revenue to keep up because
[21:31] Speaker 11: that is what they're using to deploy in capital into
[21:35] Speaker 11: building data centers, into developing their models, into the tokens
[21:38] Speaker 11: their own employees are using to build their next line
[21:42] Speaker 11: of products. It all starts with that core business being strong.
[21:46] Speaker 11: And if AI usage is starting to eat into that,
[21:50] Speaker 11: You know, these AI mode queries at the top of
[21:52] Speaker 11: Google search, those have become so much more popular, which
[21:57] Speaker 11: is a problem in a way because they don't monetize
[22:00] Speaker 11: as effectively and they're very expensive. So they need to
[22:04] Speaker 11: figure this out. They need to figure out a way
[22:05] Speaker 11: to drive more advertising revenue from those searches. They said
[22:09] Speaker 11: they're going to start building out advertising in international markets, etc.
[22:14] Speaker 11: But it still may not be as lucrative as Google
[22:18] Speaker 11: search was in the past, and it will be more expensive.
[22:22] Speaker 1: It was really interesting evening last night because you had
[22:24] Speaker 1: your beat reporters covering those two giants of technology, Alphabet
[22:29] Speaker 1: and then Microsoft. And they're like completely opposite stories, but
[22:32] Speaker 1: also kind of like the same story. Microsoft's cloud unit, Azure,
[22:36] Speaker 1: had growth that was beyond expectations. And like with a
[22:40] Speaker 1: night to sleep on it, the market seems to really
[22:42] Speaker 1: like that.
[22:44] Speaker 11: I think that it has to do with that cloud
[22:46] Speaker 11: backlog number that we've seen go up for both companies.
[22:51] Speaker 11: If you have enough demand in the future for cloud,
[22:54] Speaker 11: that can justify spending now for those customers that already exist.
[23:00] Speaker 11: And so for Microsoft and really for Google, if it
[23:03] Speaker 11: weren't for the decline in revenue, that would have been
[23:05] Speaker 11: a positive for them. But you're really looking forward to
[23:09] Speaker 11: the Amazon report tonight. We'll see what the picture looks
[23:12] Speaker 11: like more clearly once we have all three of these
[23:14] Speaker 11: major cloud companies in their results and can really dig
[23:17] Speaker 11: through them.
[23:20] Speaker 1: There is one other point of difference, which is Alphabet
[23:22] Speaker 1: kind of went deeper into negative free cash flow. Microsoft
[23:25] Speaker 1: has very good cash generation. They both also kind of
[23:29] Speaker 1: gave data points on like how the AI gets used.
[23:31] Speaker 1: So like on the Google side, Gemini has a billion users.
[23:34] Speaker 1: Microsoft was talking up Copilot. Like are those kinds of
[23:37] Speaker 1: data points getting traction?
[23:39] Speaker 11: I think those data points, they get traction, but it's
[23:42] Speaker 11: still so early. It's not enough to really... This early
[23:46] Speaker 11: interest in their coding tools or their agents, that's just
[23:54] Speaker 11: such a nascent business that even if there is interest
[23:57] Speaker 11: in experimentation... It's not really feeding the bottom line. I
[24:00] Speaker 11: will say on Google's free cash flow, a lot of
[24:03] Speaker 11: that was attributable to SpaceX, that investment in SpaceX that
[24:07] Speaker 11: we saw. And actually, I think, Ed, you were one
[24:09] Speaker 11: of the ones who helped break that news in prior
[24:11] Speaker 11: quarters that that investment in SpaceX was really affecting Google's
[24:16] Speaker 11: profit in a positive direction. In this case, we saw
[24:19] Speaker 11: the decline in SpaceX stock really affect them.
[24:23] Speaker 1: That's a really good point. It hasn't come up yet
[24:24] Speaker 1: in the program, so thank you for bringing it to us.
[24:26] Speaker 1: Bloomberg's Sarah Fry, who leads our coverage of big tech.
[24:29] Speaker 1: I want to stay with Microsoft beyond earnings, kind of.
[24:32] Speaker 1: The company is turning to the bond market. Bloomberg reporting
[24:36] Speaker 1: they're looking to raise at least $ 25 billion. It's the
[24:39] Speaker 1: first U.S. debt sale since 2017, all that reporting according
[24:43] Speaker 1: to sources. So then Bloomberg Intelligence comes out with a REACT.
[24:46] Speaker 1: and says it is another sign Microsoft's AI spending is
[24:50] Speaker 1: still climbing and that this broader hyperscale spending cycle has
[24:53] Speaker 1: yet to peak. Bloomberg Intelligence Senior Credit Analyst Robert Shiffman
[24:56] Speaker 1: is with us. Can you explain the model there? Why
[25:00] Speaker 1: does this move by Microsoft lead to the conclusion that
[25:04] Speaker 1: the cycle is yet to peak?
[25:06] Speaker 12: Well, first off, why have a AAA balance sheet if
[25:09] Speaker 12: you're not going to use it? Remember, Microsoft is rated
[25:11] Speaker 12: higher than the U.S.
[25:13] Speaker 9: Government.
[25:14] Speaker 12: They are spending a lot of money and they're going
[25:16] Speaker 12: to continue to spend a lot of money, unlike their
[25:18] Speaker 12: peers that are actually issuing equity, Meta, Alphabet, SpaceX, Oracle.
[25:25] Speaker 12: Microsoft is still buying back stock. So their free cash
[25:29] Speaker 12: flow looks a lot better than everybody else's. And they're
[25:32] Speaker 12: going to have the capacity to continue to spend on
[25:34] Speaker 12: CapEx as well as return cash to shareholders. I think
[25:38] Speaker 12: that's why the stock is performing so much better. And
[25:40] Speaker 12: why the credit's performing so much better is because they've
[25:42] Speaker 12: got so much less debt than everybody else. And that
[25:45] Speaker 12: might change a little bit because they're issuing 25 plus billion.
[25:49] Speaker 12: I think they could issue 100 billion today if they
[25:50] Speaker 12: wanted to because demand is gonna be blowout levels.
[25:54] Speaker 1: You know, Microsoft, simple story, right? They can finance on
[25:57] Speaker 1: good terms, right? They can borrow on terms that work
[25:59] Speaker 1: for them. They're the only company that I, maybe Johnson &
[26:03] Speaker 1: Johnson as well, right? Triple A rating from both Moody's
[26:05] Speaker 1: and S & P. What was interesting is like, I
[26:07] Speaker 1: saw some moves in US treasuries when this news broke.
[26:12] Speaker 1: And I guess, could you explain that? Like the idea
[26:15] Speaker 1: is that you flood the market with debt and then
[26:17] Speaker 1: investors have a choice to make on where they like
[26:20] Speaker 1: to position themselves?
[26:22] Speaker 12: Well, when you can buy, again, a higher-rated name than treasuries,
[26:28] Speaker 12: particularly out the curve, pick up 120 basis points, if
[26:32] Speaker 12: your alternative is to buy that corporate versus treasuries, you
[26:34] Speaker 12: can do it. Also, remember, when people buy credit, they
[26:38] Speaker 12: sell treasuries to hedge. So that's putting a lot of
[26:41] Speaker 12: pressure on treasuries as well. I think the alternatives that
[26:45] Speaker 12: you can get with these super high quality hyperscalers, what
[26:48] Speaker 12: we've consistently called the Mount Rushmore credit, give a lot
[26:51] Speaker 12: of alternatives to traditional government debt, particularly in a rising
[26:54] Speaker 12: rate environment.
[26:57] Speaker 1: The U.S. government is AA plus on S & P,
[27:00] Speaker 1: AA plus on Fitch. AA1 on Moody's, and I just
[27:05] Speaker 1: wanted to shift to say again that Microsoft has a
[27:08] Speaker 1: better credit rating than the US government. Real quick question,
[27:12] Speaker 1: why would you do debt but also just keep cash
[27:15] Speaker 1: on the balance sheet?
[27:16] Speaker 12: Well, listen, they're a little bit different than some of
[27:18] Speaker 12: their peers. You know, Alphabet ended their quarter, with some
[27:21] Speaker 12: $ 240 billion of cash. Microsoft has much less cash. It's
[27:24] Speaker 12: in the sort of $ 60 billion range. So you borrow
[27:28] Speaker 12: cash when you can, not when you have to. They're
[27:31] Speaker 12: in a little bit of a different position. They haven't
[27:34] Speaker 12: been borrowing. I think it gives them enormous financial flexibility.
[27:37] Speaker 12: If you look at their weighted average cost of capital,
[27:40] Speaker 12: the weighted average cost of debt is still pretty close
[27:42] Speaker 12: to zero. The cost of equity is in around 14%.
[27:44] Speaker 12: So I think all they need to do is to
[27:47] Speaker 12: catch up to some of their peers. What you can
[27:49] Speaker 12: do is you could borrow, again, and you can give
[27:51] Speaker 12: it back to shareholders, and you can just make money
[27:54] Speaker 12: on the gap between that cost of capital.
[27:57] Speaker 1: Robert Shiffman of Bloomberg Intelligence actually has a number of
[27:59] Speaker 1: reacts out this morning because there was also the news
[28:01] Speaker 1: from Oracle that them saying they'll get to positive free
[28:05] Speaker 1: cash flow soon. Go out and read that on the
[28:08] Speaker 1: Bloomberg terminal if you're a client. Shares of Samsung fell
[28:12] Speaker 1: after it planned to hike spending more than 60% this
[28:15] Speaker 1: year after selling out of high-end chips for 2027. but
[28:19] Speaker 1: failed to outline plans for sharing profits, which surged 15-fold.
[28:23] Speaker 1: Joining us, Bloomberg executive editor Peter Elstrom. We talked about
[28:26] Speaker 1: this in advance yesterday. So there are, again, two separate stories.
[28:29] Speaker 1: There's how well it's going for Samsung, and then there's
[28:32] Speaker 1: the shareholder return story. Let's start with how it's going,
[28:35] Speaker 1: particularly for his chips business.
[28:37] Speaker 13: Yeah, well, this is part of the big picture in
[28:40] Speaker 13: the AI trade, where we're seeing this very aggressive build-out
[28:43] Speaker 13: in AI infrastructure. Samsung, of course, makes memory chips, the
[28:46] Speaker 13: leading maker of memory chips, and it's done very well
[28:49] Speaker 13: in that business historically. So the numbers that they reported
[28:51] Speaker 13: were actually pretty good. Revenue was double what it had
[28:55] Speaker 13: been a year earlier. They made $ 60 billion, the equivalent
[28:58] Speaker 13: of $ 60 billion. Their profit margins are more than 50%.
[29:02] Speaker 13: And remember, this is a company that It sells not
[29:04] Speaker 13: just memory chips, but also refrigerators and microwaves and other
[29:07] Speaker 13: things like that. So those are pretty extraordinary profit margins.
[29:10] Speaker 13: But there were a couple of things that weighed on
[29:11] Speaker 13: the results. First, as you were talking about earlier with Sarah,
[29:15] Speaker 13: Alphabet's earnings kind of cast a bit of a sense
[29:18] Speaker 13: of gloom over the market. And then in addition to that,
[29:21] Speaker 13: Samsung said it's going to hike its capital spending this
[29:24] Speaker 13: year about 60%. There's a very sharp hike, greater than expected.
[29:29] Speaker 13: On top of that, they did not articulate exactly how
[29:32] Speaker 13: they're going to return cash to shareholders. They talked back
[29:34] Speaker 13: in August that they were going.
[29:36] Speaker 5: To return $ 80 billion in cash.
[29:40] Speaker 13: Either buybacks or dividends to its shareholders, but they didn't
[29:43] Speaker 13: give more detail on that front. So I think the
[29:45] Speaker 13: combination of those two things left investors a little bit
[29:49] Speaker 13: with some questions.
[29:51] Speaker 1: So we'll go back to yesterday's story, which is SK Hynix,
[29:54] Speaker 1: their rival in high bandwidth memory in particular, boosted shareholder returns.
[29:59] Speaker 1: That context is important, Peter.
[30:02] Speaker 13: That context is important. Yeah, SK Hynix was very clear
[30:04] Speaker 13: on that front. I think the takeaway from Samsung is
[30:07] Speaker 13: they're getting very aggressive here. I mean, this is a
[30:09] Speaker 13: very aggressive company to begin with. They found themselves behind
[30:12] Speaker 13: in the early years of HBM. They were losing out
[30:14] Speaker 13: to SK Hynix. They don't want to be in that position.
[30:17] Speaker 13: They're not used to being in that position. And I
[30:19] Speaker 13: think the sign that they're going to spend 60% more
[30:21] Speaker 13: in capital spending this year is a signal to the
[30:25] Speaker 13: rest of the industry that they're bidding to take a
[30:27] Speaker 13: leadership position again and make sure that they don't fall
[30:30] Speaker 13: behind in this segment.
[30:33] Speaker 1: Bloomberg's Peter Ahlstrom covering all things Asia Tech. Thank you
[30:36] Speaker 1: very much indeed. Okay, coming up, driverless truck firm Aurora
[30:40] Speaker 1: says it's on the road to some progress, some profitability
[30:45] Speaker 1: to getting some trucks out there. We're going to speak
[30:46] Speaker 1: with the company's CEO and talk about what it takes
[30:49] Speaker 1: to get driverless trucks delivering things in the real world.
[30:53] Speaker 1: Really looking forward to this one. This is Bloomberg Tech. Okay,
[31:08] Speaker 1: Aurora spent years trying to prove that driverless trucks can
[31:11] Speaker 1: work with more than half a million commercial driverless miles
[31:15] Speaker 1: now driven. Now comes the challenge of making them work
[31:18] Speaker 1: at scale. The company's ramping production toward 20 big rigs
[31:22] Speaker 1: a week by early December, but the real test comes
[31:25] Speaker 1: in 2027, when Aurora plans to grow from roughly about
[31:28] Speaker 1: 200 trucks to more than 1,000 on the road. What
[31:31] Speaker 1: does that take? Joining us now is Aurora co-founder and CEO,
[31:34] Speaker 1: Chris Thompson. It's great to have you back on the show.
[31:36] Speaker 5: Great to be here.
[31:37] Speaker 1: Thanks for having me. Actually, I thought a really good
[31:39] Speaker 1: place to start is like, 20 trucks by early December
[31:42] Speaker 1: a week, like maybe people think that's not very many
[31:45] Speaker 1: trucks or maybe people think, wow, that's an astonishing number
[31:48] Speaker 1: of trucks. So just explain how that process works because
[31:51] Speaker 1: you also have the OEM partners and why that is
[31:55] Speaker 1: or is not a big number.
[31:56] Speaker 5: Yeah.
[31:57] Speaker 14: So 20 trucks a week is a huge number, right?
[31:59] Speaker 14: We've been, it's going to be a thousand trucks a
[32:01] Speaker 14: year is what we can do with our partner at Roush.
[32:05] Speaker 5: Today we have two paths to bringing vehicles to scale.
[32:07] Speaker 5: So we're doing this work with Roush.
[32:09] Speaker 14: To take trucks from international, upfit them, add to them
[32:12] Speaker 14: the Aurora driver kit so they can become driverless trucks
[32:14] Speaker 14: and then go and operate for our customers. But we
[32:16] Speaker 14: have this other path where we're working with Volvo and
[32:18] Speaker 14: PACCAR where we're taking the Aurora driver kit to their factory.
[32:22] Speaker 14: They're installing it on the line and then going to
[32:25] Speaker 14: be launching that to their customers. And Volvo will begin
[32:27] Speaker 14: doing that in Q1 of next year.
[32:29] Speaker 1: Your competence is the sensor suite essentially and the software
[32:33] Speaker 1: that they bring the truck. How has it been different
[32:37] Speaker 1: applying that in a sort of scaled manufacturing environment relative
[32:40] Speaker 1: to like testing when you and I were on the
[32:42] Speaker 1: road that was several years ago, the company was in
[32:44] Speaker 1: a different place.
[32:45] Speaker 14: It's a whole level of additional rigor that you have
[32:48] Speaker 14: to put in to achieve this manufacturing goal. And this
[32:52] Speaker 14: is one of the areas where I think we've been
[32:54] Speaker 14: really intentional, where we've invested for many years to have
[32:57] Speaker 14: this multi-phase plan to grow. So we've had our second
[33:01] Speaker 14: generation hardware that we launched earlier this year. That allows
[33:04] Speaker 14: us to get to about 1,500 trucks a road, which,
[33:08] Speaker 14: while maybe small in terms of the 250,000 trucks manufactured
[33:10] Speaker 14: each year, It's a huge step forward. At that point,
[33:15] Speaker 14: the business is really working. Customers are really seeing value.
[33:18] Speaker 1: Can we talk about commercialization? In the somewhat limited world
[33:23] Speaker 1: of autonomous trucking or haulage, there are different ways you
[33:27] Speaker 1: can go about it, right? But you have customers. How
[33:29] Speaker 1: do you charge them to move a good from point
[33:32] Speaker 1: A to point B?
[33:32] Speaker 9: Yeah.
[33:33] Speaker 14: So today, we actually operate the trucks. And they pay
[33:37] Speaker 14: us like they would pay someone else to operate that
[33:39] Speaker 14: truck for them. What's really exciting is next year, we're
[33:43] Speaker 14: going to move to what.
[33:43] Speaker 5: We call drivers of service.
[33:45] Speaker 14: This really allows the customer to focus on what they
[33:47] Speaker 14: do best in the world, which is they own and
[33:49] Speaker 14: operate trucks. They understand the financials of that. They really
[33:52] Speaker 14: know how to maintain them, get the most out of them.
[33:54] Speaker 14: And we provide a driver to them that allows them
[33:57] Speaker 14: to be more fuel efficient, allows them to.
[34:00] Speaker 1: Get- In this case, the driver is, let's call it
[34:02] Speaker 1: a robot.
[34:02] Speaker 13: Right.
[34:03] Speaker 5: The right driver is the Aurora driver.
[34:04] Speaker 14: So this is our software and hardware that sees the
[34:07] Speaker 14: world around the vehicle, keeps it moving through it, keeps
[34:10] Speaker 14: that truck on the road, allowing them to maybe double
[34:12] Speaker 14: the utilization they get out of a truck today.
[34:14] Speaker 5: And that's a huge win for them economically.
[34:17] Speaker 1: Where are we at on the economics? Like, I guess
[34:20] Speaker 1: you'd measure it on a dollar per mile basis for
[34:22] Speaker 1: a human driven truck versus a driverless truck.
[34:26] Speaker 3: Yeah.
[34:27] Speaker 14: So the second generation hardware that we just launched, Right.
[34:30] Speaker 11: Right.
[34:30] Speaker 9: Right.
[34:48] Speaker 1: Macro sort of economic point is that if you would,
[34:51] Speaker 1: it's utilization really. So if you were to do 225,000
[34:55] Speaker 1: miles a year in one of these trucks, like you're
[34:58] Speaker 1: really getting something out of it. Like, but how would
[35:01] Speaker 1: that compare to what a human driver could achieve in
[35:03] Speaker 1: a year? Yeah.
[35:04] Speaker 14: So most humans, when they, most of these trucking companies,
[35:07] Speaker 14: when they're operating with people driving them, they drive somewhere
[35:10] Speaker 14: between 100, 125,000 miles a year with it.
[35:13] Speaker 5: So we're basically doubling it.
[35:14] Speaker 1: You're trying to target double.
[35:15] Speaker 14: And then with a customer like Detmar, which hauls fracking
[35:18] Speaker 14: sand in the Permian Basin, today it's really hard to
[35:22] Speaker 14: get people to move to Midland, Texas. It's a lovely community,
[35:26] Speaker 14: but it's not the place most people want to move.
[35:28] Speaker 14: And so they can only really get three loads of
[35:31] Speaker 14: fracking sand per day moved with a person driving the truck.
[35:34] Speaker 14: And they can't get a whole lot more people to
[35:36] Speaker 14: go there. We can do between five and six. So again,
[35:39] Speaker 14: for a business like that, this is an opportunity to
[35:42] Speaker 14: double their revenue.
[35:45] Speaker 1: You had a goal to, I think, have 200 trucks
[35:48] Speaker 1: this year, and that milestone kind of came and went.
[35:50] Speaker 1: But next year's 1,000. What's changed in your ability to
[35:54] Speaker 1: deliver on that?
[35:55] Speaker 14: Yeah, we're standing up this manufacturing line, and we went
[35:59] Speaker 14: through all of the normal kind of challenges of doing so.
[36:02] Speaker 14: So we had some supplier quality issues. We had some
[36:05] Speaker 14: material availability issues. And it's really been about a six-week
[36:09] Speaker 14: slip in the timeline that we expected. And so instead
[36:12] Speaker 14: of producing 20 trucks a week in October, we're going
[36:14] Speaker 14: to do that in December.
[36:16] Speaker 5: It really has no impact.
[36:17] Speaker 14: On our ability to go and scale and deliver the
[36:19] Speaker 14: 1,000 trucks next year.
[36:20] Speaker 1: The regulatory environment that we're in, I mean, Texas is
[36:24] Speaker 1: where a lot of the activity is happening, and that's
[36:26] Speaker 1: where you and I have spent time in the trucks. But,
[36:29] Speaker 1: you know, what are you allowed to do or not
[36:32] Speaker 1: allowed to do in terms of getting on the freeway
[36:34] Speaker 1: and moving stuff in a commercial manner?
[36:37] Speaker 9: Yeah.
[36:37] Speaker 14: So in most of the United States, we can operate
[36:40] Speaker 14: driverless trucks today. We're operating today in Arizona, New Mexico
[36:46] Speaker 14: and Texas. And we operate some of our testing routes
[36:49] Speaker 14: in areas beyond that, which is exciting as well. What
[36:52] Speaker 14: we've seen is really strong support at a federal level,
[36:56] Speaker 14: both from the administration and from Congress, where we're seeing
[36:59] Speaker 14: bipartisan action to support automated trucking. We're seeing the Department
[37:03] Speaker 14: of Transportation really take concrete steps to enable this technology
[37:06] Speaker 14: to benefit Americans.
[37:08] Speaker 1: So I feel like there's always a problem to be
[37:10] Speaker 1: solved for, right? And what I hear from the industry
[37:12] Speaker 1: is like there aren't enough drivers.
[37:13] Speaker 5: Yeah.
[37:14] Speaker 1: So then you must get support, you know, from industry
[37:17] Speaker 1: to say, like, we need this, Chris.
[37:18] Speaker 5: Like, get going, Chris.
[37:19] Speaker 14: We see immense demand from our customers. So we used
[37:22] Speaker 14: to expect to need a million drivers over the next decade.
[37:25] Speaker 14: With the policies we put in place to remove non-domiciled
[37:28] Speaker 14: commercial drivers from the market, we've added probably another 300
[37:32] Speaker 14: plus thousand drivers needed. And driving a truck is really hard.
[37:36] Speaker 14: You should thank anyone you meet who's willing to do it.
[37:38] Speaker 14: But we don't have enough Americans who are willing to
[37:40] Speaker 14: do that job. And the technology we're bringing is the
[37:43] Speaker 14: only way that we're going to keep the economy moving.
[37:46] Speaker 1: Chris Hermson, CEO of Aurora, demonstrating some progress with some
[37:51] Speaker 1: goals for the next year to come. Thank you so
[37:53] Speaker 1: much for being with us. Amazon sets report earnings after
[37:56] Speaker 1: the market closed, but it needs to deliver strong numbers.
[37:59] Speaker 1: The stock continues to struggle since last quarter, although it's
[38:03] Speaker 1: up 9% or so. Joining us, Bloomberg's Matt Day. And
[38:06] Speaker 1: the metric to watch is AWS and consecutive quarters of growth.
[38:11] Speaker 1: What are we expecting?
[38:13] Speaker 6: So we're expecting just shy of 40% growth, another quarter
[38:16] Speaker 6: of accelerating growth, quarter to quarter for AWS. I used
[38:20] Speaker 6: to say that would be their sixth in a row.
[38:22] Speaker 6: This looks like it represents sort of more capacity coming online,
[38:25] Speaker 6: but crucially for them, it's a lot of AI lab
[38:27] Speaker 6: business that they were just missing out on in past years.
[38:30] Speaker 6: It's finally starting to materialize as revenue for them.
[38:33] Speaker 1: Okay, so Matt, when you log on, how do you
[38:35] Speaker 1: prepare for the Amazon.com bit, right? Because every single day
[38:38] Speaker 1: there's an Amazon package outside my door. It is a
[38:42] Speaker 1: business unit that's still growing at 35%, but we just
[38:45] Speaker 1: seem fixated with AWS, right?
[38:49] Speaker 5: Yeah, that's right. And it's a struggle to.
[38:50] Speaker 6: Balance because AWS drives so much of Amazon's profits. Most quarters,
[38:54] Speaker 6: it's more profitable than the rest of the company combined.
[38:57] Speaker 1: That said, retail is still the bulk of their sales.
[38:59] Speaker 6: And I think people are watching, especially this quarter, going
[39:02] Speaker 6: into the holiday quarter, an important one for them where
[39:03] Speaker 6: revenue tends to bump. Whether the health of the consumer
[39:07] Speaker 6: is going to be a question mark there given rising
[39:09] Speaker 6: fuel costs, given rising inputs for Amazon. So it's something
[39:13] Speaker 6: we've got to watch, especially in the fourth quarter, but
[39:15] Speaker 6: it's always a challenge given that the cloud is really
[39:16] Speaker 6: where so much of.
[39:17] Speaker 1: The action is. And in line with everything else that's
[39:21] Speaker 1: happened so far this earnings season, spending. What's our expectation
[39:24] Speaker 1: on spending?
[39:26] Speaker 6: So last quarter, Amazon suggested they were going to spend
[39:29] Speaker 6: about $ 220 billion. in capital expenditures this year. That was
[39:32] Speaker 6: a little bit of an increase driven by memory shortages
[39:35] Speaker 6: and memory costs. I think investors would expect them to
[39:37] Speaker 6: announce further increases in the coming quarters.
[39:41] Speaker 1: But I guess we'll wait and see. Yeah, $ 220 billion
[39:46] Speaker 1: is a great deal. How do they like communicate their
[39:49] Speaker 1: AI story, right? There's the money AWS they make by
[39:53] Speaker 1: hosting workloads of others. But then, you know, there's the
[39:56] Speaker 1: Echo devices and Alexa Plus, those seem like very separated issues. Yeah,
[40:01] Speaker 1: that's right.
[40:01] Speaker 6: Amazon will make the case that, of course, they sell
[40:04] Speaker 6: AI models directly, but that AI also makes the other
[40:07] Speaker 6: parts of their business better.
[40:08] Speaker 5: You mentioned Echo and Alexa.
[40:09] Speaker 1: They'd say Alexa is a lot smarter, a lot.
[40:11] Speaker 5: More useful in your home.
[40:12] Speaker 6: Eventually, they hope that accrues as more revenue from prime
[40:15] Speaker 6: shoppers using voice to shop. They've also launched AI assistance
[40:18] Speaker 6: in their retail sites. They say that's making meaningful gains
[40:22] Speaker 6: in terms of consumer attention and making them more likely
[40:24] Speaker 6: to shop. We haven't seen hard numbers on most of
[40:27] Speaker 6: that stuff, but they're making sort of the case that
[40:29] Speaker 6: by infusing AI across their other more mature businesses, they're
[40:33] Speaker 6: going to reap some rewards over time.
[40:35] Speaker 1: All right, Bloomberg's Matt Day, who has a busy evening
[40:37] Speaker 1: with Amazon after the market closed. Thank you very much.
[40:39] Speaker 1: Another company after the close is Intel. So there's kind
[40:42] Speaker 1: of two stories. Like, is there a big PC route
[40:44] Speaker 1: that's going to hit Intel? Or are they going to
[40:47] Speaker 1: get games with servers, particularly CPU and the great data
[40:50] Speaker 1: center build-out? Both could be true. We're also looking more
[40:53] Speaker 1: broadly about what's happened and its earnings that's really driving
[40:56] Speaker 1: this market. The NASDAQ 100's lower. Alphabet, the parent of Google,
[41:00] Speaker 1: on track for its biggest drop on record. Microsoft's in there, too.
[41:04] Speaker 1: Check out the pod, recap all the combos. This is
[41:07] Speaker 1: Bloomberg Tech.

Shows are listed from Apple Podcasts' charts and directory, and Podcast Index where it is used. Every show and episode belongs to its publisher and plays from the publisher's own feed; this site hosts none of them.