So Dan, can you start by walking us through Nvidia's latest earnings?

Sure.

What Nvidia showed is that they're by far the largest game in AI chips by quite a long shot.

Their revenue has now surpassed $80 billion a quarter, which is more than just about any other chip company in the world makes in an entire year.

And they also, they gave this interesting detail in the call where they see that the current fiscal year, they're gonna have about $20 billion in revenue from what are called CPU chips.

Now, these are actually not the chips that Nvidia's known for.

It's known for GPU chips that are big in AI computing.

What do you think is behind this apathy from Wall Street regarding Nvidia, despite its consistently strong earnings?

What are tech executives saying? How are they framing these cuts?

It does depend on the company a little bit, but you don't have the company saying, "Hey, we're doing this because our business is having trouble." Block, the company that used to be called Square, they were, were really upfront about, you know, they cut down about forty percent of their workforce and said, "This is to basically get us ready for AI.

This new technology allows us to do a lot more, and we're gonna be really aggressive with it." And then in the case of Meta, they starkly said, "Part of this is that we're freeing up more resources to invest in AI," and Meta is spending a lot of money on AI.

And so I think they're trying to get other parts of their operating expenses a little bit more in line.

And what are some of the risks associated with the layoffs for these companies?

That remains to be seen because investments in AI are, are consuming a lot of capital, and it's on the premise that these services will be super, super valuable in the years to come and produce more revenue and more earnings.

And I think the risk that companies are dealing with here is that if you've created this state of fear amongst your employees about what's gonna happen to me, you create an incentive for your employees to start looking elsewhere.

Especially the employees that are talented that might have good options, they might think, "Why would I stick around here and work for a company that's trying to eliminate my job?" And then what this does to the whole image of AI, these companies are trying to get these massive data centers built, that's part of their investments, and if you build on the image that AI is this job killer, you're gonna push more opposition to it into communities and governments and so forth.

What are tech executives saying? How are they framing these cuts?

It does depend on the company a little bit, but you don't have the company saying, "Hey, we're doing this because our business is having trouble." Block, the company that used to be called Square, they were, were really upfront about, you know, they cut down about forty percent of their workforce and said, "This is to basically get us ready for AI.

This new technology allows us to do a lot more, and we're gonna be really aggressive with it." And then in the case of Meta, they starkly said, "Part of this is that we're freeing up more resources to invest in AI," and Meta is spending a lot of money on AI, and so I think they're trying to get other parts of their operating expenses a little bit more in line.

And what are some of the risks associated with the layoffs for these companies?

That remains to be seen because investments in AI are consuming a lot of capital, and it's on the premise that these services will be super, super valuable in the years to come and produce more revenue and more earnings.

And I think the risk that companies are dealing with here is that if you've created this state of fear amongst your employees about what's gonna happen to me, you create incentive for your employees to start looking elsewhere, especially the employees that are talented that might have good options.

They might think, "Why would I stick around here and work for a company that's trying to eliminate my job?" And then what this does to the whole image of AI, these companies are trying to get these massive data centers built.

That's part of their investments.

As you've kind of gotten to know these different executives and how they work, how they operate and how this landscape has just changed from, you know, maybe like six years ago until now.

Well, I go back even further because like I got into, I kind of stumbled into technology journalism graduating college in the mid-90s.

And that was like, I came into it right during the rise of that first dot-com bubble.

Netscape had gone public.

Companies like Cisco were all the rage.

Microsoft was, of course, huge then.

And so it's been interesting to watch the evolution in a broad scale of how technology kind of rises and falls.

Oh, I see.

Why do these companies feel the need to do this? What is the competitive pressure here?

They're in a race to build up AI services, get as much market share, getting users really accustomed to their AI platforms.

So for Google, you know, they have Gemini.

Gemini competes with ChatGPT and Claude and these other kind of AI models.

Google wants as many users as they can using Gemini, so they're, they're gonna build and invest in that because you need the AI infrastructure to power that and to grow the services.

So how are investors responding to the announcements of all this spending? I mean, obviously there's been some investor concern about AI spending overall over the past few months, but as you said, it could be critical to some of these companies' central functions, so what's the verdict there?

Honestly, it's mixed because it depends on [laughs] the day you ask that question.

We saw last week when Meta announced, they put out this really big CapEx number, this projection, but they also had really strong results, and it was pretty clear AI was helping that business go up, and so you saw the stock go up.

What happened?

In this case, I boil it down to simplicity versus complexity.

Meta, 98% of their business is advertising.

They've been able to, like, use AI in ways to, like, improve that, drive more engagement, better targeting, and so forth, and that's showing up in their growth.

And they projected a really strong, essentially, a growth acceleration for the first quarter, which kind of sold the message that AI is actually helping them, and it gave them essentially a pass on what's been this spending...

All of the big companies have been spending a ton on AI.

Meta is spending the most relative to its revenue, and it's gonna spend even more.

And what about Microsoft?

What happened?

In this case, I boil it down to simplicity versus complexity.

Meta, ninety-eight percent of their business is advertising.

They've been able to, like, use AI in ways to, like, improve that, drive more engagement, better targeting and so forth, and that's showing up in their growth.

And they projected a really strong, essentially a growth acceleration for the first quarter, which kind of sold the message that AI is actually helping them, and it gave them essentially a pass on what's been this spending...

All of the big companies have been spending a ton on AI.

Meta is spending the most relative to its revenue, and it's gonna spend even more.

And what about Microsoft?

To start, Dan, walk us through Micron's results.

Well, it was a record quarter for them in both revenue and earnings in terms of the most amount they've ever made in a quarter.

Revenue jumping 57%.

Really beat Wall Street's expectations.

The real story though was the forecast they gave for the current quarter, the fiscal quarter that ends in February, where they're projecting about 18.7 billion dollars in revenue which is, like, more than 30% above what Wall Street expected, plus a huge jump in operating earnings.

And this comes from the fact that, like, right now is a really great time to be in the memory chip business.

AI has created this demand for this very specialized type of memory that works within the AI systems and so a lot of the production capacity is going towards this very high value memory and what that does is that leaves less production capacity for the chips that go in your phone or in your PC.

So what I'm hearing, and let me know if this is fair to say, is the AI gold rush really to blame for potentially more expensive phones and PCs next year?

To start, Dan, walk us through Micron's results.

Well, it was a record quarter for them in both revenue and earnings in terms of the most amount they've ever made in a quarter, revenue jumping 57%, really beat Wall Street's expectations.

The real story, though, was the forecast they gave for the current quarter, the fiscal quarter that ends in February, where they're projecting about $18.7 billion in revenue, which is, like, more than 30% above where Wall Street expected, plus a huge jump in operating earnings.

And this comes from the fact that, like, right now is a really great time to be in the memory chip business.

AI has created this demand for this very specialized type of memory that works within the AI systems.

And so a lot of the production capacity is going towards this very high-value memory, and what that does is that leaves less production capacity for the chips that go in your phone or in your PC.

So what I'm hearing, and let me know if this is fair to say, is the AI gold rush really to blame for potentially more expensive phones and PCs next year?

You could look at it that way, sure.

So what makes Google special here?

Google just has a lot of things going in its favor right now.

It's got its own internal AI that's doing well that Microsoft doesn't have, because Microsoft still depends a lot on OpenAI for that element.

Google has actually been designing its own silicon, its own chips, a little bit like Nvidia, which gives it a competitive element there.

All these worries about the sustainability of AI and AI spending don't seem as serious for them.

So if a company like OpenAI struggles, that has major implications for Microsoft and Nvidia and these other companies, um, but OpenAI struggling is actually good for Google.

They're really the only company that has what you might call a vertically integrated model here.

How is this vertical integration, as you say, helping Google compete with ChatGPT, which of course is from OpenAI?

What do you think was the goal of Oracle's Investor Day?

They obviously wanted to put more meat on the bone essentially to help people understand, and so what happened is they gave even better growth numbers than they did in their call a month ago because they said in the last 30 days, they've had even more business come in, and they gave some breakdowns of the gross margins of various parts of their business.

There were some reports a couple weeks ago about how the AI business, the margins are really, really low, and they're trying to make the point that, yes, they're low at the first because they get new chips in.

All the expenses are front-loaded, but they don't have full revenue coming in yet from that, and so they tried to give more color on that.

The thing they did not do was give a sense of, like, what's gonna happen spending-wise, how much they're gonna have to spend, and what that's gonna mean for the company's debt load.

Are they gonna sell more stock? Have to raise a lot more debt? Because based on what they've projected for the revenue they have to service, they have to spend a lot because they have to light up a lot more data centers and a lot more capacity to power that revenue.

So they left a few key questions unanswered, even though they did give more details about the growth they're seeing.

So what's your take? Are we in a bubble, and- and if so, what's the risk to Oracle if we are in such a bubble?

What do you think was the goal of Oracle's Investor Day?

They obviously wanted to put more meat on the bone essentially to help people understand.

And so what happened is they gave even better growth numbers than they did in their call a month ago because they said in the last 30 days they've had even more business come in, and they gave some breakdowns of the gross margins of various parts of their business.

There were some reports a couple of weeks ago about how the AI business, the margins are really, really low, and they were trying to make the point that, yes, they're low at the first because they get new chips in.

All the expenses are front-loaded, but they don't have full revenue coming in yet from that.

And so they tried to give more color on that.

The thing they did not do was give a sense of, like, what's gonna happen spending-wise, how much they're gonna have to spend, and what that's gonna mean for the company's debt load.

So what's your take? Are we in a bubble, and, and if so, what's the risk to Oracle if we are in such a bubble?

Why is this deal so important for AMD?

Well, AMD has been competing against Nvidia in, right in the sweet spot, which is called GPUs.

These are the specialized chips that are super key to artificial intelligence computing.

Nvidia's pretty much had the majority of that market because they had such an early lead in that technology.

So far, AMD's only been able to get a very small slice of it.

This deal includes a portion that OpenAI will actually buy a lot of stock in AMD if it hits certain milestones.

And if you're OpenAI, you don't want to depend on a single supplier for a key component, so it's very much in their interest to have a pretty much competitive market for GPUs.

Yeah, I was wondering, obviously investors think this is good news for AMD, but does this also kind of put pressure on the company to compete with the industry leader?

Give us that side of the coin.

Yeah, they're certainly not hurting for money to invest.

These are the biggest companies in the world by market capitalization and often by revenue as well, and they have it.

And what they see, Microsoft, Amazon, Google, all these companies, is that if they don't stake out a strong position – in artificial intelligence, generative AI, they could go, they could be obsolete.

The tech industry is replete with companies that were once incredibly powerful and all of a sudden weren't because they missed a key technological trend.

We've talked about Intel a lot over the past few months, what's going on with them.

They're a great example of that.

Dan, what do you make of the explosion of debt into this space? Is it something that should be worrying to people? Does it signify some sort of riskier move?

And do you think Salesforce deserves the reputation that it has as a sort of bellwether of whether the cloud software business will continue to exist, and that it's sort of flailing as a cloud software business?

I don't believe they're flailing.

What they're dealing with is they've become a very large company, and so driving big sales, big growth that they used to do when they were a company that made 20 billion a year, they were able to grow their revenue double digits every year.

Now, they're making 40 million a year, and it just gets harder to do that.

And so, they're dealing with that sort of optical, like, slowing of growth that comes with that size.

And that's all true.

What Wall Street's expecting is Salesforce now has a lot of their own AI stuff that they're trying to sell, these AI agents, and Wall Street is trying to see can this stuff sell and kinda rejuvenate that revenue growth, and prove the case that a software company like Salesforce has a role to play in the age of AI.

How have some of Salesforce's peers been performing in the same vein of do they come out under this cloud of concern around the existential fears of business software, and have they performed somewhat better by Wall Street's expectations?

rivals.Dan, walk us through Amazon's latest investment in online grocery delivery.

It's a pretty significant expansion of what they've been trying to do for years.

They've been working in groceries for years.

They bought Whole Foods.

They've done other efforts to kind of get some share in this business.

And what they did the most recent move was they lowered the price threshold.

If you're a Prime member, you can now get access to these perishable goods groceries Amazon has added for free shipping threshold of around $25.

Why has Amazon struggled so much to compete in that specific space with the likes of Walmart, Kroger, some of those other big players?

Dan, we'll talk about Waymo in a moment, but first help us understand Tesla's valuation, because that number is pretty staggering.

That's been a long time in coming, even well before they launched robo-taxis.

Tesla's basically valued at $1 trillion so they're up there with your big tech companies like Meta, Google, Amazon, Microsoft.

But they have by far the biggest what you call valuation multiple.

So if you look at their stock price relative to projected earnings, which is a very common measure, Tesla's stock price is about 150 times projected earnings for the next four quarters.

All those big tech companies I mentioned are all in the kind of mid-teens to low 30 range for multiple.

So that gives you an idea of the gap that we're talking about here.

So what would it take to get to that kind of valuation? Because if we sort of look at the landscape of self-driving cars, obviously Waymo is the market leader, but Tesla, if it has a quick expansion of the robo-taxi or if other services do tweaks to their software or whatever it might be to catch up to Waymo, is that a risk to its overall competitiveness, and then ultimately its valuation?

So Dan, what's got investors down?

Well, you have to pick your reasons for it at this point, because going into this, Apple has a lot of problems going on.

They're facing this challenge of tariffs and this trade war between the US and China, and China's still where most of their products are made.

They're also facing the risk that there's been these legal cases that are threatening fees from their app store, the commission they get, plus the payments they get from Google.

Those are all very important contributors to their profitability.

Now, specifically to this conference, Apple is seen as now trailing behind where it should be in AI, on top of these other problems, has really made investors concerned.

What could some of those things look like? I realize that's a lot of speculation, but is there still room to be surprised from the developer's conference, do you think?

Well, there's always room to be surprised, but one thing to keep in mind is Apple is primarily a hardware company.

Dan, what are some of those challenges?

I don't think there's a business right now that's more politicized than chips, and especially AI chips.

These AI chips are front and center in the trade war with China between the US and China.

The Trump administration, and the Biden administration before that, really wanted to make sure China did not get its hands on the latest AI chips to get more competitive with the US.

And so, that governs everything that NVIDIA can do in terms of how it can sell its chips into other countries.

And it's been a back and forth.

The Trump administration did recently kill a rule that the Biden administration had set up where it was gonna be a lot harder for NVIDIA to sell chips into other countries, even, like, friendly ones to the US.

What are you gonna be looking out for?

Can you just walk us through those?

Well, it's substantial, and right now there's a lot of estimates because there's a lot of complicated factors in.

I have some estimates that, like, about a quarter or 25% of its earnings per share this year could get hit by this.

And if you took at a higher level, you know, what's called the gross margins, which is what's, essentially what's left in profits after you make your stuff, that could be like a 9% hit.

And those are really important for Apple because Apple has the biggest profit margins amongst other makers of, essentially, consumer electronics.

Their margins are the envy of that world, and they're a very big appeal to investors because, for investors, Apple's kind of been a slow growth business for a while.

The iPhone's very mature.

And then the next question is, if they do rely on price increases, because that seems to be the easiest and most immediate lever that they can pull to offset this tariff impact, how likely is it that consumers will pay that higher price? It's usually these big ticket items, these more discretionary purchases that are the ones that consumers just put off.

Could you take a little step back and remind us why is Intel struggling so much right now?

The main problem is they fell behind in their chip manufacturing technology.

They used to be considered the world's leader.

They could make the chips at, you know, essentially the smallest bits of circuitry to make the most advanced processors.

Then TSMC pulled ahead of them years ago, partially because Intel made some bad bets in terms of their technology, and when you lose that lead in the chip business, it's really hard to get back, and you can't get it back overnight.

And so Intel's been, over the last, I'd say, four years, really been in this ambitious race to catch up.

Under the last CEO, they were trying to leapfrog their manufacturing tech to get caught up to TSMC, which was supposed to happen this year.

Yeah, I mean, could you talk about that? What was Gelsinger's plan, and what happens to that now? You know, splitting up the company, is that something that we're still gonna see happen?

But Nintendo's stock has already jumped roughly 34% over the past three months, which is outperforming all but two S&P 500 stocks in that same time.

And that's anticipation for what's supposed to be a big console, and this is actually, if you wanna talk about risks against being a sure thing, Nintendo's own history has shown that they've had really big-selling consoles and then sometimes they followed up with something that didn't do well. The two most recent consoles before the Switch were a great example. Y- Their first Wii console was huge. Sold a little over 100 million units. The follow-up to that, called the Wii U, was a complete flop.And it sold, like, about one-eighth that number. It was a huge disappointment. So there's no guarantee at all that the Switch 2 is going to be the same kind of hit. Judging the Switch 2 by the s- first Switch might be a tough compare, even if the Switch 2 does really well on its own.

Are there any possible headwinds on the horizon for this?

For s- the Switch 2 and then for the Grand Theft Auto games, they have a pretty clear shot. The bigger question for the game industry, especially in the release of Grand Theft Auto, since we don't know exactly when that's going to hit, there's a lot of other game publishers that are holding back their own release plans. It's like releasing a little movie against the latest Marvel extravaganza or something. Like, nobody wants to go directly against this game. And so, you might see more quiet release cycle overall in the fall, and that's kind of a risk for the industry, because right now, the industry had a rough year last year. Analysts expect the growth to return this year, but that growth, hope, is really pinned on these two things, and if they disappoint or come out later, then the industry could be in for another rough year. (music)

Right. So right now, Sonos' market cap is around 1.6 billion, but still, those are trillion-dollar companies. This is a billion-dollar company, and it used to be worth a little bit more before last year. Last year, Sonos rolled out what it called its most extensive app redesign ever. It turns out it was also their most expensive app redesign, too. Why?

Well, this app redesign was really ambitious. They needed to really overhaul this, and part of it was because they were launching their first headphone product which was actually the first Sonos product really designed to be operating out of the house, out of the home network. And so they had to rearchitect their entire, like, essentially their foundation. And the problem is, they've been shipping speakers now since 2009 is when they were shipping their first ones, so they have a large fleet of old devices, and speakers are not something people upgrade every other year the way we do phones. And so there's a lot of speakers out there that are old, running on old code, and they wanted to bring the entire architecture up, and that turned out to be far more difficult than they envisioned, um, and it did not go smoothly. This happened in May. By the time Sonos reported its results in September, its quarterly results, it had to change its forecast and its financials were really disappointing. I've actually never seen an instance in my 20-plus years of tech reporting where an app update has essentially off-tracked a company's financial (coughs) forecast like that.

Hmm. After I wrote about Sonos, I heard from so many frustrated users that I lost count. There was a moment when I could feel sympathy with Sonos customer service, and I'm sure you've heard from lots and lots of them too. How would you describe their relationship with Sonos these days and their loyalty to the brand?

Well, if you go from the ones that I've heard from, they tell me, "I'm done with Sonos," kind of in that vein. In reality, if you've spent a lot of money investing in the system, you, you're probably compelled to be patient and figure out how to get it working again. Some people might have enough money that they can afford to just say, "Oh, forget it. I'm gonna go to something else." Sonos is unique in the sense, it's not that they have the market to themselves, but they have within audio, premium audio, there's, like, some brands that are really super expensive, really for what you might call audiophile, and that's not quite the market Sonos plays in. Sonos has, over the years, built up a pretty devoted customer base. I don't think they're gonna lose all of them despite all the, all the anger that you and I have heard on it, but if you look at their sales, a lot of their sales are to existing customers. If you're somebody who's been burned by this, you're gonna be much more hesitant to buy that new thing, at least until you're convinced the company has really put this behind it.