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00:00And right now we are two minutes away from the end of the trading day.
00:03Romain Bostic alongside.
00:05Katie Greifel taking you through to that closing bell with the global simulcast.
00:08Carol Masser and Tim Stenevich.
00:10Welcome to our audiences across all of our Bloomberg platforms, television, radio.
00:15With YouTube, Carol Masser, we should point out, I know it's Fed Day.
00:20But you have about $8 trillion in market capitalization set to report earnings in just a moment.
00:25Microsoft, Meta, Tesla, the biggest there.
00:27The Fed couldn't move the markets, but maybe those companies.
00:30I'm so glad you went there because just tracking the markets, you're right.
00:33Nothing really happened.
00:35But I think these companies, because they are so big and they're so much in terms of their
00:40percentage in terms of the market cap and market overall, but also in terms of the.
00:45narrative, where the spend's been happening, the AI story, we'll see whether or not we
00:49get a gut check on that.
00:50Whether or not it's good or bad.
00:52What does CapEx look like, especially from a company like.
00:55Microsoft, a company like Meta platforms, Katie, if Microsoft is spending money, it's a.
01:00Signal that others are spending money with Microsoft, if Meta is spending money, well, investors.
01:05Don't necessarily love that as much.
01:06Yeah, neither.
01:08Not necessarily in either of those two names.
01:10So I will point out, you take a look at Microsoft and Meta as compared to the other members of.
01:15The Magnificent Seven over the past three months, these are your two worst performers.
01:19So there's.
01:20A lot of skepticism to your point and exactly on that CapEx and where it's going for.
01:25Both of those names.
01:26I'm sorry for a TV viewer.
01:27Did you two get evicted from your.
01:30We forgot to make the rent payment.
01:31Yeah.
01:32All right.
01:32And we get the closing bills here in New York.
01:34We should also point out.
01:35We get some other earnings as well out of Lamb Research, Las Vegas Sands, Whirlpool and IBM.
01:40But obviously, Microsoft, Meta and Tesla are going to be the big focus in just a few minutes.
01:44The closing bills here.
01:45We're in New York on change on the Dow Jones Industrial Average on change on the S&P 500.
01:50Up about a tenth of a percent on the NASDAQ and the Russell 2000 lower on the day by.
01:55About a half of a percent.
01:58All right, guys.
01:59And just taking a quick check.
02:00Here on the S&P 500.
02:01It's funny.
02:01I had NI earnings up and I was just like, have they come across.
02:05You've got 190 names, Katie, to the upside, 313 to the downside.
02:10All right, let's take a look at the sector performance as we count down slightly more losers than what.
02:15In terms of what did perform today, energy putting up a gain of about seven tenths of a percent.
02:20Tech up about six tenths of a percent as we await these ginormous earnings.
02:25Communication services also in the green.
02:27In terms of what didn't perform so hot today on this Fed Day.
02:30Real estate down by nine tenths of a percent.
02:32Consumer staples, Carol, also off by about.
02:35Eight tenths of a percent.
02:36Microsoft earnings crossing the wire right now.
02:38First year on Bloomberg.
02:40We take a look at the headline number revenue in the most recent quarter.
02:43Eighty one point two steps.
02:45Eighty seven billion dollars.
02:45The street was looking for 80.3.
02:47EPS coming in at five dollars and six.
02:50I don't have a comparison for you just yet, but here's the intelligent cloud business.
02:55Thirty two point nine one billion dollars relatively in line with estimates.
02:58The street was looking on average.
03:00Average for thirty two point three nine.
03:03And we should also point to Azure and other.
03:05Cloud revenue XFX that was up 38 percent in the quarter right around what the street was.
03:10Looking for all right.
03:10All right.
03:11Let's go to Meta also crossing the Bloomberg terminal as we speak.
03:14I'm going to go right to.
03:15The outlook, the first quarter revenue looking at fifty three point five billion to fifty.
03:20Fifty six point five.
03:20The street estimate was for fifty one point twenty seven billion.
03:23The stock right now.
03:25Up and around but lower just about nine tenths to the downside.
03:28Now maybe kicking a little bit higher.
03:30Let's go to the fourth quarter revenue.
03:32Fifty nine point eighty nine billion better than.
03:35The street estimate of fifty eight point forty two billion ad revenue.
03:38So important.
03:40Let's see whether or not all those investments are paying off when it comes to getting more eyeballs.
03:45Ad revenue fifty eight point fourteen billion.
03:47That is a beat.
03:48Fifty seven.
03:49Fifty.
03:50Fifty six point seventy nine was the street estimate and also EPS eight dollars eighty eight cents.
03:55A share versus eight dollars and two cents the year before.
03:58So again, that's.
04:00That stock, though, a little bit lower down about one percent here in the aftermarket.
04:03That CapEx number.
04:05Yes.
04:06Twenty twenty six companies saying CapEx one hundred and fifteen billion to.
04:10One hundred and thirty five billion.
04:11The street was looking for about one ten.
04:13So meta and more important.
04:15Mark Zuckerberg still all in here on the A.
04:17I build out.
04:18Well, to that point, Mark Zuckerberg.
04:20You're saying that we had strong business performance in twenty twenty five.
04:23I'm looking forward to advance.
04:25You're saying personal super intelligence for people around the world in twenty twenty six.
04:28Lofty ambitions.
04:30Of course, but as you can see in the after hours reaction, investors want to know how do you translate that.
04:35Into actual profits and revenue and the bottom line here.
04:38I want to go back to this.
04:40This Cap CapEx here.
04:41It's in the press release.
04:42It's a headline in the Bloomberg.
04:44We anticipate.
04:45Twenty twenty six capital expenditures, including principal payments on finance leases to.
04:50be in the range of one hundred and fifteen to one hundred and thirty five billion dollars with year over year growth driven.
04:55by increased investments to support our meta super intelligence labs efforts and core business.
05:00That is so much higher and that is also a much bigger range than I would have anticipated.
05:05Up to one hundred and thirty five billion dollars to spend on CapEx.
05:08And I'm just just adding to that.
05:10total expense number one hundred and sixty two hundred sixty nine billion street was looking for one fifty one.
05:15And this really gets to the idea.
05:16I mean, I mean, we can quibble over the numbers from a fundamental basis, but we've seen this before with.
05:20Mark Zuckerberg, where when he basically decides he wants to go all in something, whether it was the metaverse and the.
05:25no legs people or some of the actual hardware stuff, he goes all in.
05:30Yeah, doesn't always sort of pay off, but he certainly makes big, big rolls of the dice.
05:33To your point, super intelligence.
05:35The idea of super intelligence, artificial intelligence that's throughout the press release.
05:40The word metaverse, not in here at all.
05:42This company rebranded from Facebook to.
05:45Meta, because Mark Zuckerberg a few years ago was going all in on the metaverse that pivot.
05:50It's took completely to A.I.
05:51I'm going to go back to, though, Microsoft right now, down about seven points.
05:55Six percent here.
05:55Can I just want, but just at that point before you move on to, I mean, the reality labs business, I mean, to your.
06:00Point, Tim, that's down 12 percent year over year.
06:02There's no real business there.
06:04It's nine hundred and fifty.
06:05Five million dollars, which would not be an issue if this wasn't like, you know, a fifty eight billion dollar quarter.
06:10This is an advertising company.
06:11Yep.
06:12Full stop.
06:12No.
06:12So when it comes, you know, to that pivot to the meta.
06:15Remember earlier this month that Bloomberg reported that meta is beginning job cuts.
06:20Basically, it's basically in reality labs as it shifts from the metaverse to its A.I. devices.
06:24So, yes.
06:25Zuckerberg tends to go all in, but that doesn't mean also that he doesn't occasionally shift.
06:30All right.
06:31I want to go back to Microsoft because it's down about seven percent here in the.
06:35Aftermarket, this is after the company again, CapEx is something we're talking about a lot.
06:40For these companies, but also Azure, always important for this company.
06:43Second quarter, Azure, another cloud revenue.
06:45X currency up thirty eight percent.
06:47That's what the street was expecting.
06:49And I think.
06:50It's safe to say with the spend that we continue to see with these companies, people are looking
06:53for even better.
06:55Yeah, actually, guys, let's jump to Tesla here.
06:59These numbers starting.
07:00It's going to trickle out right now.
07:01The EPS numbers coming in right now at 50 cents a share.
07:04That does look like it.
07:05The street was looking on average for about 45 cents.
07:08That's all the numbers we have right now.
07:09It's going to.
07:10It's going to take a while to parse through the Tesla release because, of course, they
07:12don't follow normal formatting for anything.
07:15But those shares slightly lower in the after hours trade, one percent down.
07:18Yeah, absolutely.
07:19It's going to be interesting.
07:20We get some of these figures here.
07:21It is interesting to see that price targets from the sell side.
07:25have been rising, even as Tesla's profit outlook really in question.
07:29You can see share.
07:30There is now down about one percent here as we start to get some more of these numbers,
07:34Tim.
07:34OK.
07:35Fourth quarter gross margin 20.1% that beat estimates of 17.1% fourth quarter.
07:40Operating income coming in above estimates at $1.41 billion.
07:44Fourth quarter revenue.
07:45Coming in just shy of $25 billion at $24.9 billion.
07:50That was just below estimates.
07:51Fourth quarter earnings per share coming in at $0.24.
07:55Versus $0.66, that's year over year, so that was not an estimate, but $0.24.
08:00For fourth quarter EPS.
08:02Fourth quarter free cash flow, $1.42 billion.
08:05The estimate there was for $1.59 billion.
08:08I mean, to be fair, and just listen.
08:10Listening to some of our team talk about from the Bloomberg Intelligence team, you know,
08:14what you want to hear.
08:15From Tesla, there's a lot of folks who want to hear about self-driving cars, autonomous cars.
08:20The taxi, and they also want to hear about robotics, because that is seen as the future of this company.
08:24Yeah.
08:25Free cash flow in the quarter for Tesla, $1.42 billion.
08:28That's slightly below estimates, but I want to go.
08:30Back to Katie's point, too, because I think she was referencing a great story that was on the Bloomberg Terminal,
08:34but just about how.
08:35Insane this valuation is, and the idea that a lot of investors don't think it's insane.
08:39This isn't really a bet.
08:40On cash flow or profitability, it's not in the short term.
08:43Or cars.
08:43It's a bet on moving.
08:45Exactly, Tim.
08:45It's a bet on these moonshots that we know Elon Musk is great at.
08:50At least advocating for whether he actually delivers on them.
08:52That's a whole nother question, but he is the consummate.
08:55He has focused our attention less on those cars, less on the cash generated from those cars.
09:00And more on whether Katie's going to have a humanoid robot to make her omelet in the morning.
09:03Which he did say last week.
09:05At Davos, she would have in the next year.
09:07Yeah, theoretically.
09:08I will say, to put it even more directly.
09:10I mean, it's a bet on Elon Musk specifically.
09:13Elon Musk's ability to sort of.
09:15engineer those moonshots.
09:16You think about the Musk premium in relation to Tesla shares.
09:20We've never actually exactly found out what that is, but I mean, you compare Tesla to some
09:24of the other cars.
09:25companies out there, it's in just a completely different league and it has been for years now.
09:29Yeah, it's not even value.
09:30As an auto company on the, on that investors valuing.
09:35I mean, this report, at least the knee-jerk reaction now higher by 3.8% shares did initially
09:39drop.
09:40on the release, but now shares are up for Tesla 3.8, close to.
09:454%.
09:45The company is saying that it does plan to invest further in those autonomous robots.
09:49And they.
09:50infrastructure for that.
09:50It also says that cyber cab, the semi and mega pack three, that's.
09:55Still on schedule, Katie Greifeld for 2026.
09:58So, uh, Elon Musk, once again, laying out.
10:00Some of these long term looks here and saying that maybe at least this year, we might start
10:03to see some of that stuff come on.
10:05Well, you can see that faith expressed right now in the after hours reaction, let's quickly
10:08pivot here to internet.
10:10international business machines, IBM, the red headline here that fourth quarter revenue
10:14came in at night.
10:1519.69 billion dollars that is above the estimate of 19.2.
10:20one billion dollars, they see their full year cash flow increasing by about one billion
10:25dollars year over year, their fourth quarter free cash flow came in at seven point five.
10:30five billion dollars that is above the estimate of about six point eight five billion dollars.
10:35IBM shares higher by about two percent right now.
10:37All right, let's go back to Tesla again.
10:40getting some commentary about, uh, some of the future perhaps revenue.
10:45uh, drivers, and this is what investors are kind of banking on, but we are talking about
10:48remain mentioned this.
10:50cyber cabs semi and mega pack three on schedule for 2026.
10:53That's this year.
10:55Tesla to invest further in autonomous robots infrastructure and ramping six new production
11:00lines across products.
11:01And so we're continuing to look now at Tesla now up about three point four percent.
11:05here in the aftermarket.
11:06You know, I'm going through, uh, some more numbers here coming out of Microsoft.
11:10here.
11:11We're talking about a company with 81 billion dollars in revenue in the most recent quarter
11:14and opera.
11:15operating income of about 38 billion.
11:17The company's saying, though, of that income, at least on the.
11:20net income basis, about seven point six billion dollars of that actually came from its investment.
11:25investments, a gain on its investments in open A.I.
11:28I know, Katie Greifeld, you're.
11:30always concerned about the Ouroboros here, this sort of circular thing here, but at least
11:34in the short term.
11:35maybe a little bit of a benefit of some of those investments here, so contributing to
11:38the company's bottom line.
11:40There you have it.
11:41All right.
11:42Just a quick check.
11:43Meta platforms up about three percent.
11:45here in the aftermarket.
11:46Microsoft down about five point three percent.
11:48And then we've got Tesla, which.
11:50has been bouncing around.
11:51That one is right now, as I pull it up, up about three point six percent.
11:55here in the aftermarket.
11:56So we'll be looking forward to those calls with the analysts and investment community.
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