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When you're thinking about inflation and how much it has strained consumers' finances in recent years, it's also affecting charities that depend on donations for their fillent anthropic work. And a new study for Wells Fargo on Giving in America Today that analyze consumers feelings on charitable giving. Three quarters of Americans say that generosity is a part of their core values, though how feel like they don't have enough money to give. Although giving remains a study for most,
nearly a third are donating less this past year. So what exactly gives Tim? And as the calendar nears twenty twenty five, can a new incoming administration Washington change those feelings in anticipation of favorable tax policies? So here to impact the survey for us is Stephanie Buckley, head of Trust in Philanthropic Services at Wells Fargo, joining us from Los Angeles. Thanks so much Stephanie for being here with us.
Walk us through sort of this latest report, and why is it that you're starting to see not even just you know, inflation that especially over the past few years that had weighed on consumers, but you're also seeing it in particular corners of the market when it comes to charities in those donations.
Absolutely, our survey result was very interesting. I was interested to see what was going on, and as you noted, roughly twenty nine percent gave less, but yet seventy eight percent again, as you noted, are have generosity as one of their core values. So it's an interesting mix. And in terms of.
The inflation that we're seeing, you know, a.
Lot of it is if you think about it, like if you go to the grocery store for one hundred dollars, it used to be a whole basket of groceries coming out. Now maybe I get a bag of groceries. And I think people are really feeling that pinch, and so that is carrying over into the philanthropic world, and that's what we're seeing.
It.
I feel like going into the philanthropic world this year in a different way than last year. I mean, by pretty much every measure, inflation has eased from where it was a year ago, and of course where it was two years ago.
Yes, but what we're seeing and what we're seeing with our clients in particular, is they don't yes, it's easing a bit, but they're not feeling that it's easing enough that they have a lot of extra funds to give. And that's what the survey was showing, is that people just don't feel like they have the extra But the other side of it is they still fill that tug that pool to give to charity and to help others
who are in need. And so again the surveys showed that that core value, most of them still have the core value of generosity. And we even saw some who what we call the sacrificial giving who will say, you know, I'm going to defer my own needs to help others who may be in a worse situation than I am.
So when it comes to different types of tax policies, I know a lot of people want to point to that is potentially something that could help out the situation, but walk us through kind of the difficulties there and what would need to happen in order to see that help charitable giving, because there's a lot of different types of things when it comes to deductions that are a little bit more convoluted not as easy to decipher.
Yeah, that's a great question. What we're seeing is what the past tax changes. The standard deduction went up significantly, and what that meant is that less people are itemizing their deduction and for gifts to charities, that's an itemized deduction. So for some people they feel like, well, if I'm not going to get that extra tax benefit, and maybe I don't feel like I have a lot of extra money,
I'm not going to give. But for those who are itemizing, that is a big lever that they can use because essentially that charitable gifting, if they are itemizing their deductions, whatever they give to charity is going to proportionately reduce some of their tax axes. And so we are seeing that and that was a big thing that came out
when the standard deduction raised significantly. As we know with the current incoming administration, they were the ones that did that big jump in the standard deduction, so likely it's
going to maintain. And for charities, that shift was focusing on their larger donors who are itemizing, and those donors who give maybe it's the ten one hundred, one thousand dollars amounts which might seem small, but honestly, for charities that is a significant lifeblood for them to get those smaller amounts because those smaller amounts over a large amount
of people do add up for them. So it is important for all levels of donors that give to charity to continue to give to support the charities that are doing the important work.
Stephanie, I'm wondering if your survey accounted for income level or net worth level in terms of people who gave, and what you can tell us about how giving changes across income spectrums, like as a proportion of how much money people have, how much they give.
Now again, when it comes to giving, interesting enough, what studies historically so not just the walls part of a study, but those at the lower income levels often give a higher percentage of their assets. And the other piece too, that I think is important to talk about in terms of giving. It's not just giving money, right, so we call what the treasures the five te's. It's also giving time.
It's also giving of your expertise, it's giving you know, in addition to the treasure, it's giving testimony, it's the actual service. And so part of what I think is important when we talk about philanthropy is to broaden the conversation beyond just the treasure in the in the five t's,
it's to broaden it to all sorts of aspects. And when you are that inclusive, what we find is those who are at the lower income levels typically give more to society than those who are at the higher in terms of like a percentage of assets.
So how are the demographics of donor shifting?
Well, again, as I mentioned before, if we're talking about and what usually the measurable piece of it is the treasure right, we can measure how much people are giving based on tax returns or what charities are reporting that they received for donations in a particular year. And so again with the higher standard deduction, as I mentioned before, what we're measuring the treasure amount is those who are in the higher income who have the ability to overcome
the hurdle of the standard deduction, are giving more. They're becoming the larger base of donors for a lot of charities and charities we are seeing that in the giving numbers, and as part of that, they are also looking at those who, like I said before, give those lower amounts, and those amounts are critical. So I think The important part for people to realize is, you know, maybe you're not getting the benefit of the day action, but the
charities still need those those gifts. You say, well, ten dollars, what is that going to do? It actually does a lot, especially when it's multiplied across a larger, break larger group of people who are giving.
So let's look forward to twenty twenty five and how you and the team at Wells Fargar are thinking about a new administration when it comes to charitable giving. We know a big part of the priorities of the incoming Trump administration is to extend the Tax Cuts and Jobs Act when they do when it does expire next year. How did that shift I believe it was twenty seventeen.
How did that change charitable giving in the first administration based on previously because of rules about deduction and those sorts of things.
Yep.
In some ways, as I've said before, it's changed who is giving. But in other ways, I think it also has encouraged those who maybe are not in an agreement with thet to really give to support the causes that are important to them. So one of the things we're seeing is, for example, you know, maybe women's rights. A lot of people are rising up and saying, you know what, that is important to me, and I want to give
to that cause. So in other ways where they might not have been as encouraged to do it before, they're really focusing on that. And that's another note too that I think is important to be aware of, is that a lot of people want to be able to be strategic with their philanthropy. They want to be able to say, like, hey,
whatever I'm giving here is really making a difference. And so as part of that, it's important for people to think about, you know, maybe just not what we call spreading pockets of sunshine here and there, but to say, you know, how much do I have in my budget to give to philanthropy or to give to the charities I want to support this year, and to focus a good portion on those particular causes where they know that giving a large amount can get a bigger impact for what's truly important to them.
Stephanie Buckley, head of Trust Philanthropic Services at Wells Fargo, joining us this afternoon. All right, well, look at chairs of Hewlett Packard Enterprise kind of jumping all over the place, higher by about one point six percent right now, in the after hours, the company did report better than expected quarterly revenue and a jump in sales of servers to power AI work We've got with us right now, Crawford del Pratt, President over at I d C, joining us
here in the Bloomberg Interactive Brokers studio. Welcome back, Crawford. You've had a chance to dive into these numbers a little bit. What sticks out to you?
Yeah, so great to see you guys, Thanks for having me. So, look, this is a record revenue quarter for for HPE, and I think it's it's indicative of a number of things. It's indicative of this extraordinary server and storage growth that we're seeing. So, you know, just for context, the server business was a single digit growth business for multiple years.
I d C.
Overall, we forecast you know, wait for it, thirty seven percent growth in servers and storage this year in dollars. Okay, So what's driving that. It's an architectural shift to AI, right and we are seeing that service providers and then ultimately enterprises will need to upgrade their infrastructure to support these new what we call AI workloads.
So especially because when you hear AI, always think of maybe companies like an Nvidia, maybe not as sexy as a name quite like this, but when it comes to especially sort of the it spending side of things with HPE as well as some of its other competitors, who do you think can really benefit from this Beyonce when we're talking about other type of chip type semiconductor type stocks.
Yeah, So when you start looking at what's happening with AI, and this is what you're seeing in HPEES numbers, is that you have to upgrade your overall infrastructure. So that means that companies like HPE are benefiting, companies like Dell are benefiting. You're seeing also ultimately you'll see the software stack associated with managing your infrastructure. Ultimately your applications will benefit. But that's going to take a longer period of time.
But in the near term, you know, beyond the Nvidia, you're seeing that the entire infrastructures that needs to get grinded. Now for let's just get back to HPE for a second. What's also happening at HPE is that a number of years ago they went on diversification strategy. They bought a company called Uruba Networks and a Ruben Networks expanded their footprint in the enterprise. So last quarter, HPE, you had a tougher reaction from Wall Street because they saw their
gross margins dip. They saw them dip again, but that was really related to a slow down and a stall in the enterprise infrastructure space in a RUBA networks what'll we call the edge of the network, the wireless and wireless infrastructure. And as that infrastructure now is working through its inventory, HP saw a sequential increase in that business, even though it's still down twenty percent year over year.
Sequentially that business is starting to stabilize and their gross margins will start to have started the stabilized as well, although like I said, they were down about four hundred BIPs. Now, I think going forward, what you're seeing at the company is and you're seeing this in other companies as well, like Dell, that the demand is just sustained for infrastructure and the demand for n HP's case, HPEES case, the demand for infrastructure around the network will likely increase and
it'll forget. They announced that they have the air intent required Juniper Networks that will add their ability to get the service provider side of the network and they expect to close that deal sometime in early twenty five. So it's a very interesting story. Is this company is really reinventing itself and is seeing the benefit of that reinvention in their numbers.
What's it trying to leave behind?
So, what it's trying to leave behind is running on that X eighty six Intel treadmill of commoditization, right. I mean, so you know, HPE sat back a number of years ago and said, where are the largest profit pools that we can prosecute in the enterprise networking at the top of the list. That's why they went after Ruba software. That's why they brought out things like es Morale Storage. That's why they and by the way, Dell Body MC right. Yeah, in the in the case of HPE, they brought out Electro,
which is their new storage platform. Now they're looking at at networking and saying, huh, well, there's also this service provider networking, this really high capacity, high bandwidth networking. Juniper adds that that's what is So what they're trying to do is they're they're basically the gravitational force of commoditization, is what they're leading. They're trying to leave behind.
Jessman and Timsten of Akure the Bloomberg Interactive Brokers Studio. We're actually back with Crawford del President at IDC International Data Corp, joining us in the Bloomberg Interactive Broker Studio once again. And so we were just speaking Crawford about obviously HPE posting higher than expected fourth quarter revenue due to that continuing AI demand and looking at that stock HPE, and after I was trading up close to two percent.
But another stock I wanted to point out that a lot of tension is given to is super Micro SMC. Now at a certain point it was one of the worst performing stocks in the S and P five hundred this year just because of those questions surrounding its accounting practices. Though if you look here to date, it's recovered some of those losses and it's actually help around forty five percent. You were talking about kind of the exposure when it
comes to service providers. If you're thinking about like Metas Salesforce, Microsoft, SMCI doesn't exactly have the same kind of broad reach that some of its competitors do when it comes to a company like this, and especially some of the accounting news that has come past. How do you make of this and is its stock performance so far?
Yeah, So when you look at super Micro, it's a fascinating company because where an HPE or a Dell or Lenovo sells a broad range of products that address the needs of many many different kinds of enterprises and also service providers, certainly super Micro has a range of products, but really what they do is a significant amount of engineering and innovation really for what we call ultra dense
service provider applications. And so you know you're a hyperscaler, so you're a Microsoft, or you're a or you're a Meta, or you're a Google. Super Micro is going to do that really really tight engineering between the components as well between between component suppliers as well as the actual physical box and bring that box out and and and allow
you to have a very very dense environment. The downside of that is that they don't have the same distribution channel, they don't have the same reach that you would see at a Lenovo or at a Dell. So the concentration of customers is very very high.
Oh, it's incredible. You go to this, Uh, well, the concentration of customers, the concentration of who they're buying.
From both Okay, yeah, yeah, yeah.
Because they see that on both it's like it's pretty remarkable. I mean, they're a huge customer of Nvidia. Yeah, oh absolutely, it's like they're one of the top customers there.
So so think about the AI and actually this this is a great metamor think about the AI kind of market right now is an upside down triangle. At the top of the triangle or the service providers, and that's where the majority of your demand is coming. Okay, that's the animal that's eating all the Nvidia processors right now.
So that's the Microsoft's and the Amazon that's.
The hyperscalers, the Microsofts, the Amazon's, the salesforces, the the metas and as that triangle comes down, it gets narrow or narrow because the enterprise customers haven't really stepped up and bought into generative AI in the same way within their data center.
Is that but if they do it, wouldn't they just go to a hyperscaler. Well that's just it, rather than doing it on prem potentially.
But what we see is we see a lot of customers. I'm not saying this is a customer, but a customer like a a JP Morgan or something like that, but significant investment in custom applications, and those custom applications they want to be able to take those data stores that
they're creating in their custom applications. Those are in their own data centers, and they will ultimately want to train their own large language models and have their custom applications be able to use those large language models to be able to get generative AI answers to serve their customers and their employees in new ways. That is when the bottom of the pyramid starts to get wider, because then enterprises start buying into this technology. But we're not there yet.
Where we are is the top is what's consuming the vast majority of these processors. And what's interesting about generative AI is that usually with these compute architectures, it becomes a law of diminishing returns, where the performance starts to tap out no matter how much capacity you throw at it. We haven't seen that yet. With generative AI. You can keep throwing processing capacity at it and the system gets more and more and more capable, and you can also get significant speed gains. Yeah.
One of my favorite functions in the terminal is s PLC, so you to see the supply chains. I'm sure to me have been looking at.
To customer.
US for our radio listeners so that they know so you can get engauge there. So super Micro has been in the S and P five hundred for less than a year.
It got at it.
Yeah, this you got added toward the end of the first quarterback in March. So I mean, what do you make of kind of like what's next here after it's trying to get over this hurdle with the accounting issues.
Yeah again, you know, and I see you know, we we we don't pick stocks, but I but I will tell you that from a from a performance standpoint, there is such a significant amount of engineering and so much as a significant amount of a demand within that company. I believe that in the long term they are going to benefit continue to benefit from this AI boom, particularly as service providers continue to invest. So you know, take that,
take that with what you will. But I don't see a world where super Micro is not continuing to participate in this market.
Okay, Crawford, I'm going to go off script a little bit, sure, because I want to get your take on this. You're in Boston, that's where you're absolutely Okay, you spend a lot of time in the Bay Area. Have you taken a weaimo.
I have not taken away moh, but I have crossed the street in front of one and it didn't hit you. It didn't hit it didn't.
You're that I like to see. Yeah, here's why I ask. I was out in San Francisco a few weeks ago. Now anyone can take these way mos. You don't have to be on a list anymore. I downloaded the app further right, I don't. I mean it was I was only able to go within San Francisco. That's all I needed to do. I know they're training them, Yeah, they're they're training them to go to the airport. Now you can't get on the highway with them. Yet it blew my mind. It was incredible. I was a skeptic. I'm
totally sold. Now after this one twenty eight minute trip. Are we are we going? Where do the companies that you cover just in the last minute that we have, Yeah, where are the companies that you cover play in that space? Like if if we're working to a world where these are all going to be these are going to be all over, how do the companies that you cover benefit.
Boy, there's there's number, there's a number of ways. And it also blew my mind. One of my team members sent me a video of her in a wamo and bananas. It's it's driving itself. It's driving itself around a lot of ways. So companies like so think of a driverless vehicle as a little data center, a little smart connected node on the network. It has its own network inside of it, and it's obviously consuming a lot of processing
power from the network. But what's different about a self driving vehicle is the amount of processing it needs to do. We call this compute at the edge of the network because it has to decide very very rapidly. Is that a human, is that a mailbox? Is that a dog? Is that a shadow? And it has to be able. It can't compute that at the core of the network.
It's got a computer at the edge. So the kinds of companies that benefit from that is surprise in Nvidia, where you know they've been a key partner to FSD so full self driving at Tesla for quite some time. Also, over time, maybe companies people don't think as much about Samsung, so they're going to be making a lot of the semiconductor content as well as the LED technology where you see these cars are become big curve displays.
Over time, We've got a bit more time with you, and you know when we're chatting. Just now, before we did some news, we were talking about driverless cars, and I'm curious about you haven't had the chance to ride one some of your employees, have you mentioned? I was saying that I wrote in one in San Francisco a few weeks ago. Anyone listening or watching right now knows that because they can't stop talking about it. It was a Jaguar. Yeah, it was electric Jaguar. It was totally clean.
I got in like you know, you can choose the music. It's I was facetiming with my parents to like show how cool this was. But I really I was so skeptical of the technology before and now that I was able to experience it, it was just absolutely remarkable. And I do envision a world where we see auto accidents just plummet as a result of technology such as this. Am I am I dreaming? Or is that something that happens in our lifetime?
No, I don't think you're dreaming. I think it does fall in the category of the old Paul Sappho from Stanford Free so I don't confuse a clear view with a short distance.
He's a futurist.
Yeah, he's a futurist. And I think we are going to get there, but I think we're going to go through kind of an icky period. And that period is where the self driving cars don't make mistakes, but the humans do. And I think that's going to have really tough situation, a tough impact on things like insurance, and
it's gonna make it, you know, potentially more expensive. And that may actually get to a point where people start to say, do I want to be the person not using self driving because it's costs a lot for me to get in this vehicle and use this vehicle, because the risk that I may be distracted by doing something, looking at a phone, having a bad day, whatever, the
car never never has that. So I think eventually we will get there, but it's going to take us probably longer than people think because roads are complicated, Uh what's not gonna and they're complicated all over the world and all I mean, I self driving in Rome. You know, it gives me, gives me, It gives me, gives me a headache. But I think that we are very close to being able to see it on highways, being able to see it on UH in a lot of US
cities and in a lot of North American cities. And I think we're probably fat It's probably closer than people think. I think it's you know, probably in the next in the next five years, you're probably going to start to see more and more modes, more and more companies bringing out the kind of technology the Tesla can bring out, where you know, you've got one hand on the steering wheel, but really, if you want to go pretty pretty full self pretty full sell driving, you can.
I've actually never been in aweimo or anything like that.
You're not the only one. There are only a few cities where they do this. They do it in Austin, they do it in Phoenix, there was a story about Miami. Of course, San Francisco, Yeah, in San Francisco.
So when you're thinking about legislation coming out of Washington, obviously we have a new administration coming in, but kind of realistically over the course of years, because this will take a while. As you were mentioning, what do you think would need to happen? Because also you were talking about the complications of roads and depending on what type of city you're in.
Yeah, so there's going to be a lot of legislation that's gonna that that's going to need to be addressed here, which is why I think it's going to take a long time, much longer than the five years I mentioned for full self driving. But the kind of assist where you know, what Tesla has today is really only what Tesla has where you have one a little couple fingers on the steering wheel and the car is doing the vast majority of the driving. That's going to go to multiple manufacturers.
What I was in, what I was in was full self driving. I mean I wasn't even in.
The Yeah, yeah, so what you were in is going to take a lot longer from a legislation standpoint, where we're going to have to see, again, this is going to get complicated because our state's comfortable with it is the federal government going across you know, if you if you want to go across state line, states have to have agreements, and if states don't have agreements, then it becomes a federal issue. And I think that could take, you know, a lot longer than the technology could take it.
It's also hard from a rules perspective, and I mean rules in the sense of like rules of the road. For example, I had to drive recently and I was driving my car in New York City and there was a car double parked in front of me, so I couldn't get around it. In order to get around it, I had to actually go over a double yellow line.
There were no cars coming right. But what I did was not considered following the rules in the sense of like if a computer, like I don't know if a computer would do that, if I were in a self driving car, would I have just sat.
Would you have just sat there and been frustrated because you it's an obvious solution that's not going to harm anybody, and you know it's it's the kind of thing you could do potentially. And now those kinds of things, you know, can be those kinds of conditions can be programmed in, but probably not for a long time. I'll give you another example. What about the example where people start to
figure out where the vulnerabilities are in these vehicles. So if you want to see that, you know I'm making this up, But if you want to see the vehicle behave in maybe a strange way, come up very close to the back corner of it, or you know, you to figure.
Out sort of bad actors, not necessarily.
Bad actors, but just people that try to figure out where the vulnerabilities are so that they can get around them faster potentially, or you know, potentially, you know, try to game the system in some way when you're a driver and you're and you're driving sort of against if you will, a full sell driving vehicle.
Looks like Alphabet's robotaxi service is going to launch in Miami in twenty twenty six, so maybe that's down.
More of these cropping up.
I'm just waiting for New York, that's right.
How how complicated is that?
Like?
Will?
I mean, it seems very start getting out to some of those boroughs, you start getting downtown, it starts to get a little bit complicated. But I would say I don't think New York is meaningfully more complicated. San Francisco can be pretty complicated as well.
Yeah, I'm talking to a friend who works intact and he was saying New York's tough because there aren't very many legal places to pull over where San Francisco there are a lot of like driveways that people can pull into to get into one of these things. But yeah, yeah, it could be complicated here. See Crawford, always love it when you stop by. Thanks for sticking extra, Thanks so much for the time, Crawford Del Pratt, President at id C,