00:00Earnings season in technology can bring all kinds of beautiful stories.
00:04Did you have a tax dispute with Brazil on your bingo card for what Netflix would tell us about the world of streaming?
00:10I did not have Brazil tax issues on my bingo card.
00:15But I think the Netflix earnings were actually pretty decent.
00:19We forget that Netflix has actually come a long way from a free cash flow growth perspective.
00:25They were only generating about $1.6 billion about two and a half years ago.
00:29And now they're generating close to $8 billion in free cash flow.
00:33And that's slated to go to $11 billion.
00:36So we'd like to focus on that metric versus the Brazilian tax issue.
00:41OK, team, let's leave the shares up.
00:44Ioka, we're showing shares on the screen.
00:45The stock's down almost 10 percent on track for its biggest drop since April 2022.
00:50What was the big picture story about the health of streamers and streaming here and where Netflix sits in that landscape?
00:58Sure.
00:59I think from a consumer standpoint, you know, Netflix is one of those go-to programs that consumers are going to continue to go to.
01:07I think that, you know, for Netflix, the content you mentioned has been very solid.
01:13And even if the macro environment is a little shaky out there, I think Netflix will continue to see subscriber growth.
01:19And that's what we'd like to see over time.
01:22Well, Ioka, let's get back to our top story today.
01:25Overnight, Rachel Davey and I broke the story that Google is in early talks with Anthropic for a cloud computing deal, capacity in the high tens of billions of dollars.
01:37When we broke that story, Alphabet shares really jumped in aftermarket.
01:41They've given up some of that gain in the market open this morning and Amazon fell.
01:47Wealth enhancement has some exposure, particularly to Alphabet.
01:51What is your reaction to that reporting and what does it signal to you for those companies involved?
01:56You know, I think in general, the sort of clue to me is just that the infrastructure build-out is still in its early phases, right?
02:06You know, we've heard so many announcements over the last several months, and yet here we are with another one.
02:12And just when you thought you weren't going to get another announcement related to AI infrastructure build-outs, here we are with Google and Anthropic.
02:20I think that the race is clearly on, and we'll have to see who's really going to win.
02:26But the build-out is sort of still in its early phases.
02:30The cloud computing market, as we've always understood and talked about it, is AWS number one player, Google Cloud number three player.
02:41In the specifics of this story, both of those companies, as it relates to AI workloads, have some questions to answer here, right?
02:50So Amazon is also a significant investor in Anthropic.
02:54Our reporting says that Anthropic wants to use TPUs.
02:58What are you learning about the competitive nature of Alphabet's cloud offering or Google's cloud offering versus Amazon's in the AI domain?
03:08Sure.
03:08So I think we have to really dig into this in terms of, you know, what are the TPUs offering in terms of optimizing workflows that GPUs aren't?
03:16And how is this better suited for, you know, Google's sort of overall workflow and how they're going to be using AI through Gmail and Google Maps and a lot of their applications that they have in-house?
03:30And then how does that fit related to Amazon and how, you know, some of the algorithms are working for Amazon's, you know, suggestions for retail as well as advertising?
03:41I think there's still a lot to dig into here in terms of how this is all going to work out.
03:48Texas Instruments is worth lingering on, I think.
03:52You know, sometimes it's seen as almost like a crystal ball of what all kinds of end markets around the world will do coming up next because of how many analog chips go into all kinds of things.
04:04What was your read on the print there?
04:06Sure.
04:07So I think in general that, you know, as Ian said, the overall quarter and earnings were actually pretty decent, 14 percent growth.
04:14But I think the read through into industrial markets, into automotive, into some of the consumer electronics that are more basic really shows that we're not in a macro environment that is growing gangbusters.
04:28So outside of all of the AI investments that we're seeing in the economy, we're not seeing that sort of economic growth take off as much as I think people had hoped for.
04:37We're in it. This is it. Technology earnings season. My Super Bowl. I don't know if it's your Super Bowl.
04:46What was it that we were expecting to hear? And what do you need to hear from the technology sector, specifically the MAG-7, I suppose, to keep the direction of travel that we have seen in equity markets?
04:58Sure. So next week will be the big week for all of this, including a Fed meeting to cap it all off, too.
05:05So I think for us, we're always going to be looking at commentary around CapEx spend.
05:11I mean, this is what really set it off years ago. And we're going to continue to see whether or not that spend continues from the hyperscalers or whether or not they need to take a little bit of a pause.
05:22But I think we're going to continue to see that spend. I mean, we're seeing announcements left and right.
05:26And so we'd like to kind of dig into that during earnings season.
05:29Do you expect that tariffs specifically or any other Trump administration policy will play out on the calls or in the statements?
05:39In the tech side, maybe a little bit, but I don't think it's going to be as prominent as some of the consumer names I have talked about with tariffs and goods.
05:49I think it's going to be less of an issue. You know, I think we've we've seen all of this talk about exporting that has had a little bit more of an impact and the sort of tit for tat with China.
06:02That's probably going to be a little bit more of an impact. But overall, I really do think that investors are going to be focused on general CapEx spend, ROI around AI.
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