# Zuckerberg Pledges ‘Aggressive’ Pricing With Meta’s First Pay-to-Use AI

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 9 Jul 2026, 22 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/7f534b8c-9e91-429a-b102-ae3c00090c6d/50b4801e-738c-47b9-88bd-b4820114b5be/audio.mp3?utm_source=Podcast&in_playlist=0ad812bf-fd15-4012-a18c-ae3c00090c76

Watch Paul and Scarlet LIVE every day on YouTube: http://bit.ly/3vTiACF. Bloomberg Intelligence hosted by Paul Sweeney and Jess Menton -Kurt Wagner, Bloomberg Senior Reporter covering social media, discusses Meta Platforms unveiling a version of its AI model, Muse Spark 1.1, that includes a new paid tier for developers, marking the first time Meta has charged businesses for access to its models. The new model's standout improvement is in its agentic capabilities, with "state-of-the-art or very close to it" agentic reasoning and tool use, and is also greatly improved when it comes to coding. -Ken Shea, Bloomberg Intelligence Senior Consumer Products Analyst, recaps PepsiCo earnings. PepsiCo Inc. said consumers pulled back in the second quarter as gas prices rose, slowing its efforts to revitalize its North American snack business. The company saw a decline in revenue in its North American food business and flat volume after cutting prices by as much as 15% in some brands. -Mary Ross Gilbert, Bloomberg Intelligence, Senior Equity Analyst, Covering Retail, recaps earnings from Levis Strauss. Levi Strauss & Co. raised its full-year projections for a second straight quarter due to an expanded selection of apparel and a focus on its own stores and website. Net revenue is now projected to grow 7% to 7.5% for the full year, up from the previous range of 5.5% to 6.5%, according to a statement. -Daniela Sirtori, Bloomberg Restaurants Reporter, discusses Starbucks developing in-house tools with the help of artificial intelligence that could replace some software applications it now buys from companies such as Microsoft Corp. and International Business Machines Corp. The coffee chain is building alternatives to a Microsoft system that tracks inventory and an IBM tool that manages maintenance, according to an internal presentation reviewed by Bloomberg News. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. You're listening to the
[0:10] Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
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[0:17] Speaker 1: Business App. Listen on demand wherever you get your podcasts,
[0:21] Speaker 1: or watch us live on YouTube.
[0:24] Speaker 2: So news from Meta Meta Platforms unveiled a version of
[0:27] Speaker 2: its AI model dubbed muse Spark one point one that
[0:31] Speaker 2: includes a new paid here for developers, marking the first
[0:34] Speaker 2: time Meta has charged businesses for access to its models.
[0:38] Speaker 2: Let's get the more details from Kurt Wagner, senior reporter
[0:41] Speaker 2: covering social media for Bloomberg News, who just sat down
[0:44] Speaker 2: with Mark Zuckerberg's Meta CEO and had a wine ranging interview. Kurt,
[0:49] Speaker 2: thanks so much for joining us here. Talk to us
[0:50] Speaker 2: about what you and mister Zuckerberg discuss regarding Meta's AI
[0:54] Speaker 2: strategy here.
[0:57] Speaker 3: Yeah, well, I mean the mode behind the interview was
[1:02] Speaker 3: this release that you just mentioned, the muse Spark one
[1:04] Speaker 3: point one, and we spend a good tunk of time
[1:07] Speaker 3: talking about where Meta stands in the AI race right now.
[1:11] Speaker 3: I think the prior models that the company has released
[1:14] Speaker 3: have really been seeing as sort of second tier behind
[1:18] Speaker 3: the open ais, the anthropics, and even the Googles of
[1:20] Speaker 3: the world. I think Mark Zuckerberg admitted to me in
[1:24] Speaker 3: our conversation that they're still trailing anthropic and open AI
[1:28] Speaker 3: in a lot of ways. But he was very proud
[1:30] Speaker 3: that this new model benchmarked better than the Google models,
[1:34] Speaker 3: and he said this was sort of a milestone for
[1:36] Speaker 3: them to, you know, in his words, kind of deliver
[1:39] Speaker 3: something that's a higher quality than what Google's doing. And
[1:42] Speaker 3: you know, they are racing to try and develop superintelligence.
[1:46] Speaker 3: They're racing to have the best model on the planet.
[1:49] Speaker 3: They have another one coming, it's called Watermelon. I don't
[1:52] Speaker 3: know exactly when that's going to be, but he talked
[1:54] Speaker 3: openly about how that is going to, in his mind,
[1:56] Speaker 3: push the frontier of AI development and progress. So, you know,
[2:01] Speaker 3: a big part of the conversation was muse spark one
[2:03] Speaker 3: point one and what that means for the business, But
[2:04] Speaker 3: a big part of it was just where do they
[2:06] Speaker 3: stand and does they feel like things are moving in
[2:07] Speaker 3: the right direction, And he feels very confident about where
[2:10] Speaker 3: they are.
[2:11] Speaker 4: Thank Kurt. Looking at metas stock, Meta's the ticker, it's
[2:15] Speaker 4: marginally higher now about four tenths of a percent, but
[2:18] Speaker 4: it had been lowered this morning on the back of
[2:21] Speaker 4: some of that news. Why do you think that is?
[2:22] Speaker 4: Obviously the stock is down this year, but of course
[2:25] Speaker 4: it was on such a tear in recent years after
[2:27] Speaker 4: a lot of those job tranches, and obviously it's moved
[2:31] Speaker 4: into AI and other vehicles there. What do you think
[2:34] Speaker 4: is going on as far as how shareholders are viewing this?
[2:38] Speaker 3: Well, the narrative around Meta's AI business for the last
[2:41] Speaker 3: six months or so has been that they're spending a
[2:43] Speaker 3: ton without a clear path for recovery, like where's all
[2:47] Speaker 3: this money going to come back into the business, And
[2:50] Speaker 3: in the last couple months, they've tried to answer that
[2:53] Speaker 3: in several ways. They have a consumer chatbot subscription that
[2:56] Speaker 3: they announced they're going to be selling access to AI
[2:59] Speaker 3: agent for businesses. Of course, there's today's news where they're
[3:04] Speaker 3: going to be selling their model to developers via this API.
[3:09] Speaker 3: And then we had a great story last week on
[3:11] Speaker 3: Bloomberg about the fact that they're also exploring a cloud business,
[3:14] Speaker 3: taking some of that compute capacity that they've acquired and
[3:17] Speaker 3: maybe reselling it or using it in other ways that
[3:21] Speaker 3: aren't just for its own products, and so I really
[3:23] Speaker 3: think we've started to see a potential business shape up
[3:26] Speaker 3: for them on the AI front in the last two
[3:28] Speaker 3: three months that didn't exist before. And I think you're
[3:30] Speaker 3: starting to see the stocks slowly, you know, reflect that
[3:33] Speaker 3: that people are saying, Okay, they're spending a ton, but
[3:36] Speaker 3: now we have a better sense of how they're trying
[3:37] Speaker 3: to make money from this that we didn't necessarily know
[3:39] Speaker 3: a few months ago.
[3:41] Speaker 2: So is there this seems to be this whole AI
[3:44] Speaker 2: chase if you will buy the technology space in general,
[3:48] Speaker 2: it's just iteration after iteration after iteration. Where does mister
[3:53] Speaker 2: Zuckerberg think a meta isn't in that game? Here? Is
[3:57] Speaker 2: this something that they can continue to invest in, continue
[3:59] Speaker 2: to proven.
[4:02] Speaker 3: One of the things that I asked him about was
[4:04] Speaker 3: why do this right? Like, there's so many companies, There
[4:08] Speaker 3: are several companies that are kind of racing for this
[4:10] Speaker 3: what you would call frontier AI model, This this tip
[4:13] Speaker 3: of the Iceberg, tip of the spear, And I'm like,
[4:15] Speaker 3: why spend all this money when you know you could
[4:19] Speaker 3: essentially license some of this technology from someone else who
[4:22] Speaker 3: spends all the money right, maybe make it cheaper. And
[4:24] Speaker 3: his answer was, look, if we don't control the technology,
[4:28] Speaker 3: we're at a disadvantage because their goal. Meta's goal is
[4:32] Speaker 3: to build personalized assistance for everyone in the world. So
[4:35] Speaker 3: they want every single person to be able to open
[4:36] Speaker 3: their phone or turn put on their smart glasses and
[4:39] Speaker 3: have that personal AI assistant there. And if you know
[4:43] Speaker 3: they're relying on open a ice technology or anthropics technology,
[4:46] Speaker 3: they just can't control what the priorities are. Mark Zuckerberg
[4:50] Speaker 3: is big on that. He's big on making sure that
[4:52] Speaker 3: no other companies have leverage over Meta, and so I
[4:55] Speaker 3: think for him, he's saying, it's worth the spend because
[4:58] Speaker 3: we can then, you know, bid the model that's going
[5:01] Speaker 3: to do exactly what we want. We don't have to
[5:02] Speaker 3: hope that someone else does it for us. And so
[5:06] Speaker 3: for him, it's worth throwing all this money at that problem,
[5:08] Speaker 3: even if there are going to be several competing models,
[5:11] Speaker 3: simply because he wants that control. Moving forward.
[5:13] Speaker 4: Of course, to your point, critics have questioned whether or
[5:16] Speaker 4: not the pivot will end up paying off. What did
[5:18] Speaker 4: he tell you as to why he thinks it will.
[5:22] Speaker 3: Well, he thinks that this is the most exciting technology
[5:25] Speaker 3: that has ever showed up in his lifetime, and so
[5:28] Speaker 3: he imagines this world. You know, what they did with
[5:30] Speaker 3: social media in some ways is a similar strategy. They
[5:33] Speaker 3: made it free, right, Facebook and Instagram and WhatsApp, those
[5:37] Speaker 3: are free tools. Obviously there's advertising you do sort of
[5:40] Speaker 3: pay if you will by giving meta access to your
[5:43] Speaker 3: attention and time with your data. But ultimately he's saying, hey,
[5:47] Speaker 3: we're trying to make a tool free, give it to
[5:48] Speaker 3: as many people as possible, and figure out how to
[5:50] Speaker 3: make money from it later. And I think that's sort
[5:52] Speaker 3: of what he sees here is he goes, hey, everyone's
[5:54] Speaker 3: going to everyone's life will benefit from me. I this
[5:56] Speaker 3: is his perspective, of course, and you know, let's make
[5:59] Speaker 3: this as cheap and widely accessible as possible and we'll
[6:02] Speaker 3: kind of figure out some of the business a little
[6:04] Speaker 3: bit down the road. And so for him, I think
[6:07] Speaker 3: that's the motivation is you want his product in as
[6:10] Speaker 3: many hands as possible, and so that's why he's willing
[6:12] Speaker 3: to sort of undercut on price with a lot of
[6:15] Speaker 3: the stuff they've announced.
[6:17] Speaker 5: Stay with us more from Bloomberg Intelligence coming up after this.
[6:23] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live
[6:27] Speaker 1: weekdays at ten Am Eastern on Apple Cocklay and Android
[6:30] Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
[6:34] Speaker 1: you get your podcasts, or watch us live on YouTube.
[6:37] Speaker 2: Pepska reported some earnings today. The company said consumers pulled
[6:42] Speaker 2: back into second quarter, slowing its efforts to revitalize it's
[6:45] Speaker 2: North American snack business. Stocks down four percent today, It's
[6:49] Speaker 2: off almost five percent year today. Let's break it down
[6:52] Speaker 2: some of those results. We can do that with Ken
[6:54] Speaker 2: Shay analysts there at Bloomberg Intelligence. Ken, what you learned
[6:58] Speaker 2: from Pepsi?
[7:00] Speaker 6: Yeah, Hi, Paul, Well. PepsiCo today pretty much gave a
[7:05] Speaker 6: report that was widely expected. Quite frankly. I mean, the
[7:08] Speaker 6: hit their numbers, maybe a little bit above top and
[7:12] Speaker 6: bottom line numbers. But what they said was that their
[7:16] Speaker 6: game plan that they set out earlier this year to
[7:20] Speaker 6: revitalize their businesses from the top line and a margin
[7:23] Speaker 6: point of view, are still in place, even though they
[7:26] Speaker 6: hit a speed bump in the second quarter, and that
[7:29] Speaker 6: speedbump is higher gas prices. No shocker there. People kind
[7:32] Speaker 6: of knew, you know, it was going to be a
[7:34] Speaker 6: tough quarter for them to make, you know, a really
[7:36] Speaker 6: good progress. They're big businesses Pepsi Food. That's about a
[7:42] Speaker 6: further sales, about forty percent of the profits. It's it's
[7:44] Speaker 6: the big enterprise to have there. It basically was a
[7:49] Speaker 6: little short of expectations, you know, consumers pulled back a
[7:52] Speaker 6: little bit, as you mentioned, despite the company's innovation efforts,
[7:56] Speaker 6: and the company basically have to make up some of
[7:58] Speaker 6: this lost ground, they said in the second half, particularly
[8:02] Speaker 6: the fourth quarter, to hit their numbers, which they reiterated.
[8:06] Speaker 4: He can talk to us about shrinkflation, because that's something
[8:08] Speaker 4: that PepsiCo got knocked on a few years ago when
[8:11] Speaker 4: they were having to boost some of the volumes in
[8:14] Speaker 4: some of their chips, because of course it produces the
[8:16] Speaker 4: world's most popular chips through its subsidiary Freedom Lay. But
[8:20] Speaker 4: what are you seeing with that and how does that
[8:21] Speaker 4: translate to margins?
[8:24] Speaker 6: Yeah, hi, Jess, Well, yeah, I agree, you know. Earlier
[8:27] Speaker 6: in the year, and actually, let me take a step back.
[8:30] Speaker 6: Since the pandemic, PepsiCo and many other big consumer companies had,
[8:35] Speaker 6: because of supply chain disruptions and cost inflation in general
[8:38] Speaker 6: and so on, had been pretty aggressive on the price
[8:41] Speaker 6: increase of unit pricing was up really really sharply over
[8:45] Speaker 6: the over the last few years. So earlier this year,
[8:48] Speaker 6: with the help of an activist, they said, look, we
[8:50] Speaker 6: need a better balance between volume and unit pricing, and
[8:54] Speaker 6: so we're going is going to roll back pricing a
[8:55] Speaker 6: little bit and try to get volumes back in, you know,
[9:00] Speaker 6: and by doing that, not only is it a better
[9:02] Speaker 6: balance and easier to manage quite frankly, but you're helping
[9:06] Speaker 6: operating efficiencies. You know, you need to have volumes moving
[9:10] Speaker 6: along in a positive way to get the you know
[9:13] Speaker 6: that fixed costs absorption kind of equation or work. So
[9:17] Speaker 6: what they're doing now basically is the getting back to
[9:19] Speaker 6: a more balanced approach. At the same time, though, when
[9:23] Speaker 6: they set that plan, that was before gas prices shot up.
[9:27] Speaker 6: So the challenge they're going to have in the second
[9:28] Speaker 6: half is they want to stick to the game plan
[9:32] Speaker 6: of being more balanced with vuyuing and pricing. But you know,
[9:35] Speaker 6: but they're going to be challenged by having an environment
[9:38] Speaker 6: where costs are back up again. You see the news
[9:40] Speaker 6: today and gas prices you're backed up. You know, the
[9:43] Speaker 6: company is going to have some cost issues. How they
[9:46] Speaker 6: reconcile that, it's a good question. We're gonna have to
[9:48] Speaker 6: wait and see.
[9:50] Speaker 2: Ken what does PEPSI say about its portfolio of brands.
[9:53] Speaker 2: Are they comfortable where they are? Are they linking to
[9:55] Speaker 2: add brands, are looking to pair back on some of
[9:58] Speaker 2: their brands? How are they fixed?
[10:01] Speaker 6: Well? I think PepsiCo was pretty comfortable. I mean, they
[10:03] Speaker 6: made some acquisitions in recent years, you know, Skeet Day Chips,
[10:06] Speaker 6: they had the Poppy probiotic SODA's last year. They spent
[10:11] Speaker 6: quite a bit of money on them. So I think
[10:13] Speaker 6: their game plan really is three prong pull to answer
[10:15] Speaker 6: your question. First, they set are setting out to have
[10:17] Speaker 6: their products be more affordable, and that was the prior question.
[10:20] Speaker 6: That is, you know, pull back a little bit on
[10:23] Speaker 6: either pricing smaller packaging sizes, maybe nture inflation, but also
[10:28] Speaker 6: on the list price side as well. Second, let's be
[10:31] Speaker 6: more in tune with where the consumers going in terms
[10:34] Speaker 6: of their diets, and so they're making bigger bets on protein, fiber,
[10:39] Speaker 6: what they call an enhanced fight, enhanced hydration, and they're
[10:43] Speaker 6: doing that with a lot of new products featuring all three.
[10:47] Speaker 6: And then finally, they're very well known to be in
[10:50] Speaker 6: the consumer in the grocery aisle and the convenience store,
[10:53] Speaker 6: and they want to be better known as an ingredient
[10:56] Speaker 6: in home preparation. So they want to bring Doritos into
[11:01] Speaker 6: the kitchen. Somebody's making tacos at home, Well, what about Dorito's.
[11:05] Speaker 6: That's only going to help. They've come out with something
[11:08] Speaker 6: called the walking Taco. When you take a bag of
[11:10] Speaker 6: Dorito's and you can make your you know, you know,
[11:14] Speaker 6: ground beef and put in your tomatoes and other cheese
[11:17] Speaker 6: and ingredients and you can you have a taco which
[11:19] Speaker 6: you can walk around with that's a portable one. You know,
[11:23] Speaker 6: it sounds kind of gimmicky, but it's doing well. They
[11:25] Speaker 6: promoting it, and you know, it's getting consumers to recognize
[11:29] Speaker 6: these brands to be more than just something they picked
[11:32] Speaker 6: up at the convenience store and grocery store.
[11:35] Speaker 4: So, Kain, are Americans buying back goods in large volumes?
[11:38] Speaker 4: To your point, how does that translate when it comes
[11:40] Speaker 4: to a lot of these consumer package good companies and
[11:43] Speaker 4: their ability to raise prices.
[11:45] Speaker 6: Well, they're gonna be They're going to be challenged to
[11:47] Speaker 6: hold prices. Like I said, in the second half, I mean,
[11:50] Speaker 6: Tisago did say, you know, we're seeing cost inflation picking up,
[11:54] Speaker 6: you know, in the second half, and didn't say whatthing
[11:57] Speaker 6: can do about it, but I would suspect you're going
[12:01] Speaker 6: to see some more price increases in the second half.
[12:04] Speaker 5: Now.
[12:04] Speaker 6: Having said that, one of the one of the silver
[12:07] Speaker 6: linings to the story for a lot of these consumer companies,
[12:09] Speaker 6: including Petsico, is that they're getting refunds from the tariffs.
[12:13] Speaker 6: You got to remember back in April they were deemed
[12:17] Speaker 6: to be illegal, and these companies are getting nice refunds.
[12:19] Speaker 6: What Pettico is doing about it if they're going to
[12:22] Speaker 6: apply a lot of these proceeds to help them reduce costs,
[12:26] Speaker 6: and you know, it may help them reduce the incentive
[12:31] Speaker 6: to take price increases.
[12:33] Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this.
[12:40] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[12:43] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[12:46] Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
[12:50] Speaker 1: you get your podcasts, or watch us live on YouTube.
[12:54] Speaker 2: Let's get back that Levi Strauss. They reported some earnings here.
[12:58] Speaker 2: Mary Ross, Gilbert je'sus senior Anol's covering all the retail
[13:00] Speaker 2: stuff from for Bloomberg Intelligence joins us. Talk to us
[13:04] Speaker 2: about Levi's what did they disclose on their earnings release.
[13:09] Speaker 7: So yesterday they had great numbers. Right, their organic growth
[13:14] Speaker 7: was up six percent. That was about two hundred basis
[13:17] Speaker 7: points better than what analysts were looking for. They were
[13:20] Speaker 7: looking for four percent. And their guidance they raise their
[13:23] Speaker 7: guidance and it's really due to the first half performance.
[13:26] Speaker 7: So their guidance now for organic growth is five and
[13:29] Speaker 7: a half to six percent. It was previously four and
[13:31] Speaker 7: a half to five and a half percent. They are
[13:33] Speaker 7: seeing strength across women's. Women's was up eleven percent in
[13:38] Speaker 7: the quarter. Beyond Yoga, which is their small brand but
[13:42] Speaker 7: growing fast was up sixteen percent, Asia up twelve percent.
[13:48] Speaker 7: In Europe, DTC up seven percent. But wholesale is the
[13:53] Speaker 7: biggest part of the business and so you have to
[13:55] Speaker 7: really look at the first half because you will have
[13:56] Speaker 7: fluctuations in the quarter based on shipping that was up
[14:00] Speaker 7: nine percent in the first half. So with all the
[14:03] Speaker 7: strength that they're seeing raising guidance, they're still upside to
[14:07] Speaker 7: their guidance because it's really based on the first half performance.
[14:11] Speaker 7: So what they're guiding into the second half is really
[14:14] Speaker 7: conservative and that's their objective they really want to be.
[14:18] Speaker 7: But what this says, is that the brand is relevant
[14:21] Speaker 7: around the globe across income groups. So for example, they
[14:26] Speaker 7: have the Levi's Levi's signature brand label which is in Walmart,
[14:33] Speaker 7: and that was up in the first half of high
[14:35] Speaker 7: single digits right right around you know, eight to nine percent,
[14:39] Speaker 7: and they're seeing that, you know, being high single digits
[14:43] Speaker 7: to low double digits in the second half. So again
[14:47] Speaker 7: no weakness anywhere with the consumer, even having you know,
[14:51] Speaker 7: at the low end and then at the high end
[14:53] Speaker 7: they're blue tab premium denim doing very very well, but
[14:57] Speaker 7: also non denim, they're non denim bottoms, which really allows
[15:00] Speaker 7: them to increase their addressable market was also up strong
[15:05] Speaker 7: in the quarter, so they're really gaining traction and there's
[15:10] Speaker 7: just more to go well.
[15:12] Speaker 4: Looking at its stock, LVI the ticker up about two
[15:15] Speaker 4: percent to date. Even on a year to date basis,
[15:18] Speaker 4: that stock is of about twenty percent if you pull
[15:21] Speaker 4: it back the last five years down about ten percent,
[15:25] Speaker 4: so obviously trailing broader benchmarks in that span of time.
[15:29] Speaker 4: What do you think moving forward is the biggest thing
[15:31] Speaker 4: that obviously shareholders want to hear from them as far
[15:34] Speaker 4: as improving When it comes to the outlook, for that
[15:36] Speaker 4: kind of growth in their margins.
[15:39] Speaker 7: Yeah, so it's a good question. I mean, first of all,
[15:41] Speaker 7: when you look at the margin expansion that they're looking
[15:44] Speaker 7: for for the full year, they did raise estimates a
[15:48] Speaker 7: tad bit, but it was actually below what consensus is
[15:51] Speaker 7: looking for on the margin side, so that could sort
[15:55] Speaker 7: of explain there was a little bit of volatility after
[15:57] Speaker 7: their earnings. Other than that, once again, you know, if
[16:00] Speaker 7: you look at the margin expansion they're experiencing in Europe,
[16:04] Speaker 7: they have a global Enterprise Resource program that they're expanding
[16:10] Speaker 7: throughout the globe that they're going to complete that in
[16:12] Speaker 7: twenty twenty seven, So in Europe where they sort of
[16:15] Speaker 7: started it, it's complete, and we saw their operating margin
[16:19] Speaker 7: expand four hundred basis points. That was partly due to
[16:22] Speaker 7: lower distribution center costs too, So I think that you're
[16:26] Speaker 7: really going to see margin expansion grow and again fast,
[16:32] Speaker 7: potentially faster than the top line. So I think there's
[16:36] Speaker 7: really a lot of traction here because women's is still
[16:39] Speaker 7: a smaller part of the business UNI versus men's, so
[16:43] Speaker 7: that's why you're seeing double digit growth there, but also
[16:46] Speaker 7: across categories and tops and wovens and outerwear, and then
[16:51] Speaker 7: with the campaigns that they have going with the World
[16:54] Speaker 7: Cup and the logo that they had to cover up
[16:58] Speaker 7: at Levi Stadium in San Francisco. That gave them a
[17:02] Speaker 7: great opportunity from a media campaign that actually drew over
[17:09] Speaker 7: a billion of impressions. So all of that is really
[17:12] Speaker 7: resonating with consumers and I really see upside and I
[17:18] Speaker 7: think that could really shift the performance and the shares
[17:23] Speaker 7: over time.
[17:25] Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this.
[17:32] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[17:35] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[17:39] Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
[17:42] Speaker 1: you get your podcasts, or watch us live on YouTube.
[17:46] Speaker 2: Interesting story on the Bloomberg terminal today, more good friends
[17:49] Speaker 2: at Starbucks. Starbucks is developing in house tools with the
[17:53] Speaker 2: help of artificial intelligence that could replace some software applications
[17:57] Speaker 2: and now buy some companies such as Microsoft and International
[18:00] Speaker 2: Business machines. Let's get some details here at Daniellis ort
[18:03] Speaker 2: Tory Joints is here. A restaurant reporter for Bloomberg News
[18:06] Speaker 2: based in Chicago. Danielle talk to us about Starbucks and
[18:09] Speaker 2: kind of what they're trying to do from a software
[18:12] Speaker 2: and AI perspective.
[18:14] Speaker 8: Sure, so really what they're doing is instead of reflexibly
[18:18] Speaker 8: by now you know, going out and buying software, now
[18:21] Speaker 8: what they're trying to do is look at, okay, does
[18:23] Speaker 8: it make sense for us to actually build some of
[18:25] Speaker 8: these applications in the house. You know, they customize a
[18:29] Speaker 8: lot of this software anyway. Just imagine what it takes
[18:32] Speaker 8: to really you know, personalize or order at Starbucks. Well,
[18:35] Speaker 8: for example, the pos the point of sales system has
[18:38] Speaker 8: to be able to reflect that, so barisis can actually
[18:41] Speaker 8: ring up your order. And so they're like, okay, we're
[18:43] Speaker 8: going to customize the software anyway, does it make sense
[18:45] Speaker 8: to build it? And we're in an age which you
[18:48] Speaker 8: know with artificial intelligence, it's just that conversation just gets
[18:51] Speaker 8: a little easier because AI can help.
[18:55] Speaker 4: I wanted to point out to you because software stocks
[18:58] Speaker 4: are actually lower on the back of this announcements. If
[19:01] Speaker 4: you're looking at IBM, that's down about two percent. The
[19:03] Speaker 4: ticker symbols IBM, of course, and then service now is
[19:07] Speaker 4: flat but marginally lower, and then salesforce down about two percent.
[19:11] Speaker 4: CRM is the ticker on that. So why the dynamic
[19:14] Speaker 4: there obviously is it more just because of the competitive landscape.
[19:18] Speaker 8: So this moved by Starbucks feeds into this broader conversation
[19:22] Speaker 8: and technology space about whether with AI, customers or maybe
[19:28] Speaker 8: startups can just you know, build tools that can replace
[19:32] Speaker 8: some of the software that are that is now sold
[19:34] Speaker 8: by some companies like IBM and Microsoft. So basically, I
[19:38] Speaker 8: think with Starbucks, what we're looking at is at a
[19:40] Speaker 8: case study of this actually happening inside a company. So
[19:43] Speaker 8: it's really fueling sort of this ongoing conversation in this space,
[19:46] Speaker 8: if that makes sense.
[19:48] Speaker 2: Yeah, this is this is what the market's been concerned about.
[19:51] Speaker 2: And we've seen sell off in some of these software
[19:53] Speaker 2: names and software service names because people are saying, boys,
[19:56] Speaker 2: some of these things can be kind of done with
[19:59] Speaker 2: AI and maybe cheaper and you know, and that's kind
[20:02] Speaker 2: of what we're seeing in the story. So, I mean,
[20:04] Speaker 2: in your story, Danielle, we see that Starbucks is spending
[20:07] Speaker 2: they spend about four hundred million dollars a year on
[20:09] Speaker 2: software alone. Are they thinking they can maturely reduce that?
[20:13] Speaker 8: They can? I mean, their chief technology officer has outright said,
[20:18] Speaker 8: as we reported that there are opportunities to cut spending
[20:21] Speaker 8: in software. This one part of Starbucks technology organization called
[20:25] Speaker 8: Enterprise Technology, is looking to cut their spending by about
[20:29] Speaker 8: ten million dollars by the end of this fiscal year,
[20:31] Speaker 8: which for Starbucks ends in September. So they're definitely basically okay,
[20:36] Speaker 8: taking a step back and saying, all right, first of all,
[20:39] Speaker 8: let's review every contract on service, make sure that we
[20:42] Speaker 8: have the best price there and are there places in
[20:44] Speaker 8: which it actually makes sense for us to be able
[20:46] Speaker 8: to build our own product with the help of artificial intelligence.
[20:50] Speaker 8: So it's definitely something that they're taking a second look at. Obviously,
[20:53] Speaker 8: this is also part of something broader that Starbucks is doing,
[20:56] Speaker 8: which is they are going through a turnaround and they
[20:59] Speaker 8: are looking to costs, so this review is also part
[21:02] Speaker 8: of that, and then we have AI helping make that
[21:05] Speaker 8: a little bit easier.
[21:06] Speaker 4: Of course, as you know the turnaround with Starbucks, this
[21:08] Speaker 4: has been ongoing for the last few years. Now, what
[21:12] Speaker 4: kind of timetable have they laid out to shareholders.
[21:16] Speaker 8: In terms of the turnaround itself? So they did an
[21:21] Speaker 8: issue for the first time some financial goals for twenty
[21:24] Speaker 8: twenty seven twenty twenty eight. You know, if we recall
[21:27] Speaker 8: when a Brian Nicol came in as CEO in twenty
[21:30] Speaker 8: twenty four, he actually pulled guidance basically just like totally reset.
[21:34] Speaker 8: And we actually have seen that the plan that he
[21:36] Speaker 8: has implemented, generally speaking, has started to yield results. Their
[21:40] Speaker 8: sales growth has picked back up, and he has really
[21:42] Speaker 8: focused on things like customer service, on just having products
[21:47] Speaker 8: that people really want to buy, and they also started
[21:49] Speaker 8: to remodel stores. So basically, the tech is sort of
[21:53] Speaker 8: the backdrop to all of this, right, Like a lot
[21:55] Speaker 8: of the tools they use are just things that are
[21:58] Speaker 8: behind the scenes to help them manage the business.
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